Quantity Surveying

Quiz 1 Coverage

Building Construction Estimating

Is the determination of probable construction costs of any given project based on the working drawing and project manuals.

(The workng drawings and the project manuals they constitute majority of the contract documents. Together they define the scope.)

Working Drawings

Contain information ralative to the design, the location, the dimension, and the construction of the project.

Project Manual or Specifications

Written supplement to the drawings and includes information pertaining to the materials and workmanship. As well as the bidding process to be followed.

Estimate

An assessment of the probable total cost of some future activity.

• To prepare budget for future expenditures

• To try to anticipate what something will cost to implement

The basic approach to estimating are:

• Identify the work items that have to be completed to finish the project

• Measure the size of these work items

• Assess the likely cost of this work

Direct Costs

Materials, Labor, Equipements, Subcontractor

Indirect Costs

General Conditions or project overhead

Design-build (Delivery System)

The contractor acts as both the designer and the general contractor.

Construction-manager (Delivery System)

Contractor is involved in the design process, providing expertise in construction methods and costs, as well as managing the construction process.

Design-bid-build (Delivery System)

The client designs and then will look for bids and the bidder will build.

Conceptual, Preliminary, and Detailed

Basic Types of Estimates

Conceptual Stage

Drawings are not available or they are very limited.

What exists is often a vague verbal or written description of the project scope, which may be accompanied by a few sketches.

Preliminary Estimate

Contractor prepares and maintains a cost estimate based on the current, but incomplete, design.

Detailed Estimate

Includes determination of the quantities and costs of everything that is required to complete the project. It includes materials, labor, equipment, insurance, bonds, and overhead, as well as an estimate of the profit.
The contractor must have a complete set of contract documents.

Assembly Estimate

Rather than bidding each of the individual components of the project, the estimator bids the components in groups known as assemblies.

Square Foot Estimate

Prepared by multiplying the square footage of a building by a cost per square foot and then adjusting the price to compensate for differences in the building heights, length of the building perimeter, and other building ocmponents.

In some cases, a unit other than square footage is used to measure the size of the building (SQM)

Parametric Estimates

Use equations that express the statistical relationship between building parameters and the cost of the building.
The building parameters used in the equation may include the gross square footage, number of floors, length of perimeter, percentage of the building that is common space, and so forth.

Model Estimation

Uses computer models to prepare an estimate based on a number of questions answered by the estimator. This is similar to assembly estimating, but it requires less input from the estimator.

Project Comparison Estimates

Prepared by comparing the cost of a proposed project to a completed project.

When preparing an estimate using this method, the estimator starts with the cost of a comparable project and then makes adjustments for differences in the project.

Quantity Surveying

A process of measuring the work of the project in the form of a series of quantified work items. Unit price bid.
Contractors are all bidding based on the same quantities, and the estimator spends time developing the unit prices.

Competitive Bidding and Negotiated Bidding

Types of Bids

Competitive Bidding

Each contractor submits a lump-sum bid or a proposal in competition with other contractors to build the project.

Negotiated Bidding

The parties arrive at a mutually agreed upon price, terms and conditions, and contractual relationship

Agreement, General Conditions, Supplementary General Conditions (Special Conditions), Working Drawings, Specifications, and Addenda

Contract Documents

Agreement

IS the document that formalizes the construction contract, and it is the basic contract. It incorporates by reference all of the other documents and makes them part of the contract. It also states the contract sum and time allowed to construct the project.

General Conditions

Define the rights, responsibilities, and relations of all parties to the construction contract.

Supplementary General Conditions (Special Conditions)

Used to amend or supplement portions of the general conditions.

Working Drawings

The actual plans (drawings, illustrations) from which the project is to be built. They contain the dimensions and locations of building elements and materials required, and delineate how they fit together.

Specifications

Are written instructions concerning project requirements that describe the quality of materials to be used and their performance.

Addenda

is a drawing or information that modifies the basic contract documents after they have been issued to the bidder, but prior to the taking of bids. They may provide clarification, correction, or changes in the other documents. For projects built with the design-build and construction-manager deliver systems, the contract documents are more limited than for project built with the design-bid-build delivery system because the contractor is involved in the design and selection of the specifications for the project. These documents can be as simple as an agreement with a conceptual description of the project.

Lump-Sum Agreement (Stipulated Sum, Fixed Price)

• Contractor agrees to construct the project in accordance with the contract documents, for a set price arrived at through competitive bidding or negotiation.

• Contractor agrees that the work will be satisfactorily completed regardless of the difficulties encountered.

Unit-Price Agreement

• Contractor bases the bid on estimated quantities of work and on the completion of the work in accordance with the contract documents.

• Owner of the contracting agency typically provides the quantity takeoff.

• Type of contracting is most prevalent in road construction.

Cost-Plus-Fee Agreements

• The contractor is reimbursed for the construction costs as defined in the agreement.

• However, the contractor is not reimbursed for all items, and a complete understanding of reimbursable and non-reimbursable items is required.

• This arrangement is often used when speed, uniqueness of the project, and quality take precedence.

• This contract arrangement allows for construction to begin before all the drawings and specifications are completed, thus reducing the time required to comlete the project.

Fixed Fee (Cost-Plus-Fee Agreements)

The advantage of this is that it removes the temptation for the contractor to increase construction costs to increase his fee. The disadvantage is that the contractor has little incentive to keep the costs low, because the fee is the same if the project is over budget as it is if the project is under budget.

Fixed Fee with Guaranteed Maximum Cost (g-max)

The advantage of this are that a guaranteed maximum cost is assured to the owner, and it generally provides an incentive to contractors to keep the costs down since they share in any savings. Again, the contractor assumes a professionoal status.
Disadvantages are that drawings and specifications must be complete enough to allow the contractor to set a realistic maximum cost.

Sliding Scale Fee

This provides an answer to the disadvantages of the percentage fee, because as the cost of the project increases, the percent fee of construction decreases.

The contractor is motivated to provide strong leadership so that the project will be completed swiftly at a low cost. The disadvantage is that extensive changes may require modifications of the scale.

Fixed Fee with a Bonus and Penalty

With this type of fixed fee, the contractor is reimbursed the actual cost of construction plus a fee.

A target cost estimate is set up; and if the cost is less than the target amount, the contractor receives a bonus in the form of a percentage of the savings. If the cost goes over the target figure, there is a penalty (reduction of percentage).

Bonds or Surety Bonds

• Are written documents that describe the conditions and obligations relating to the agreement. In law, a surety is one who guarantees payment of another party’s obligations.

• Is not a financial loan or insurance policy, but serves as an endorsement of the contractor.

Bid Bond

Ensures that if a contractor is awarded the bid within the time specified, the contractor will enter into the contract and provide all other specified bonds.

If the contractor fails to do so without justification, the bond will be forfeited to the owner.

Performance Bond

• Guarantees the owner that the contractor will perform all work in accordance with the contract docments and that the owner will receive the project built in substantial agreement with the documents.

• It protects the owner against default on the part of the contractor up to the amount of the bond penalty.

Labor and Material Bond (Payment Bond)

• Guarantees the payment of the contractor’s bill for labor and materials used or supplied on the project.

• It acts as protection for the thrid parties and the owner, who are exempted from any liabilities in connection with claims against the project.

Subcontractor Bonds

• Performance, and labor and materials (payments) bonds are those that the _____ must supply to the prime contractor.

• They protect the prime contractor against financial loss and litigation due to default by a subcontractor.

License or Permit Bond

• Required of the prime contractor when a state law or municipal ordinance requires a contractor’s license or permit.

• The bond guarantees compliance with statutes and ordinances.

Lien Bond

Provided by the prime contractor and indemnifies the owner against any losses resulting from liens filed against the property.

Project Manual / Specifications

A document that accompanies the drawings and includes information on how to bid the project, the contractual obligations of the successful contractor, and the specifications for the materials used in the construction.

Construction Specification Institute (CSI) or Master Format

Standard Format for organizing the specification

Invitation to Bid (advertisement for Bids)

Provides information that enables potential Bidders to decide whether to participate in the procurement at hand.

Net Financial Contracting Capacity

A financial measure used in Philippine government procurement to assess a bidder’s ability to undertake a project.

• To determine a bidder’s financial eligibility to win a government contract.

= [(Current assets - Current Liabilities) x K] - Value of ongoing projects

(where K is a multiplier based on the contract duration. K = 10 for a contract duration of one year or less, 15 for a contract of more than one year up to two years, and 20 for a contract duration of more than 2 years)

International Federation of Consulting Engineers

Is the global reprensentative body for national associations of consulting engineers and represents over one million engineering professionals and 40,000 firms in about 100 countries worldwide.

FIDIC Contracts

Are widely used in international projects, especially in the Middle East and Africa. These contracts provide a framework for managing large construction projects, particularly when multiple parties from different countries are involved.

New Engineering Contract

Originated in the UK but is used globally, especially in Australia and Nigeria. ___ contracts are designed to promote collaboration between the parties involved in the project, which helps in reducing disputes and improving project delivery.

American Institute of Acrchitects (AIA)

The ___ contracts are primarily used in the United States but can also be seen in international projects where US firms are involved. These contracts are very detailed, focusing heavily on the relationship between the owner, architect, and contractor.

Joint Contracts Tribunal (JCT)

These contracts are primarily used in the UK but are also adopted in countries that follow British legal systems, like India and Nigeria. They focus on fair risk allocation between the contractor and the client, making them ideal for projects where both parties want to share the risks and rewards.

Technical Specifications

Written descriptions of materials, construction systems and workmanship.

• Define the quality of materils and the results to be provided by the application of construction methods

• Generally follow the CSI MasterFormat

• Include the type of materials required, their required performance, and the method that must be used to obtain the specified results.

Design

descriptive specification which the contractor follows and the owner taked responsibility

Performance

Specifies the operational requirements of a component or installation (what the final installed product must be capable of doing)

Proprietary

The exact product or method is specified to ensure a preffered product (require the use of a single approved product type for any particular installation)

Open

Very non-restrictive allowing a number of choices

Alternates

generally spelled out on a separate listing in the project manual, and they are listed on the proposal form

• A request for a price for substituting one material for another, for adding to the scope of work, or for deducting from the scope.

Bidding Period

The period after the basic contract documents have been issued to the bidders and before the bids are due.

Organization

A plan for completing the estimate.

• Maintaining complete and up-to date files

• Must include a complete breakdown of costs for the project, both of worl done by company forces (in-house) and of work done by subcontractors.

• Usign appropriate software can be an effective way to keep organized.

• Must be systematically done, neat, clear, and easy to follow.

Work up Sheets

Used to make calculations and sketches and to generally “work up” the cost of each item.

Summary Sheets

Where all costs contained on the workup sheets are condensed and totaled.

Home Office Overhead Costs

Include items that cannot be readily charged to any one project, but represent the cost of operating the construction company

• Incurred regardless of any specific project.

• Also known as General Overhead, Inderect Overhead Costs

Office, Salaries, Miscellaneous, Depreciation

Job Overhead Costs

Include all overhead expenses that will be incurred as a result of executing a specific project.

Also known as General Conditions, Direct Overhead, or Indirect Field Costs

Compromises all costs that can be readily charged to a specific project but not to a specific item of work on that project.

Contingencies

Some items are left out or not foreseen

For price escalation

Often an excuse for poor estimation

Design Factors, Site Factors and Economic Factors

What are the factors affecting the cost of a building?

Design Factors

• Shape

• Groupings of buildings

• Number of storeys

• Height of each storey

• Size

• Circulation Space

• Internal Layout

• Specifications

• Working Conditions

Site Factors

• Locations

• Topography

• Geology

• Environmental rules and regulations

• Site Access

• Existing Services

• Existing Site Use

• Size of Site

• Adjoining Properties

Economic Factors

• Amount of Work

• Availability of resources

• Desirability of the project

• Borrowing capacity

• Micro-economics of the tendering

Elemental Cost Planning

Cost of the building is split up into different elements

Elements

Part of a building which performs a specific function

• Substructure

• Superstructure

• Internal finishes

• Fitting and furnishings

• Services

• External Works

Life Cycle Cost / Whole Life Cost

Includes

• Initial or procurement costs, including design, construction or installation, purchase or leasing, fees and charges

• Future cost of operation, maintenance and repairs, including management costs such as cleaning, energy costs, etc.

• Future replacement costs, including loss of revenue due to nonavailability

• Future alteration and adaptation costs, loss of revenue due to nonavailability

• Future demolition/recycling costs

Value Engineering

Part of the overall value management process which should be carried out during the pre-contract process mainly during the design stage

Procurement

Is the overall act of obtaining goods and services form external sources (i.e. a building contractor) and includes deciding the strategy on how those goods are to be acquired by reviewing the client’s requirements (i.e. time, quality, and cost) and their attitude to risk.

Tendering

Is an important phase in the procurement strategy but procurement involvrs much more than simply obtaining a price.

it is

• The bidding process, to obtain a price; and

• how a contractor is actually appointed

SIngle-Stage Tendering

The most common type of tendering strategy.

Invitation to tender documents are issued to a number of competing contractors who are all given the chance to bid for the project based on identical tender documentation.

Two-Stage Tendering

Often used where time is constrained

Used if the design process would benefit from the technical input of a contractor in the later design stages.

Used to obtain the early appointment of a contractor.

Negotiated Tender

• Effectively a single-stage tender with a single contractor who returns with an initial price.

• Then negotiated with the client’s professional team (usually the professional quantity surveyor - PQS).

• benefit is the speed with which a price can be obtained for the works.

• competitive advantage of a formal bidding process is compromised.

• Many public bodies and government departments will not allow negotiated

Early Contractor Involvement (ECI)

a form of negotiated tender but emphasis is put on the contractor as the lead designer from the outset of the project