TRADITIONAL & MODERN QUANTITY SURVEYING

PRACTICE

Lecture by Upul S. Ranaweera PG Cert. in Arb., BSc. (Hons) QS, Dip. in Eng., IEng., MIIES, MAIQS, MRICS Chartered Quantity Surveyor Contract Manager RICS - Assessor/Counsellor AIQS - Assessor/Counsellor

4 April 2015

Origin of Quantity Surveying

Origin of Quantity Surveying dated back to ancient Egyptian civilization who used to dedicate personnel to carry out estimates and costing for their magnificent structures and buildings (such as pyramids).

Quantity Surveying developed in to a occupation during 17th century for the restoration of London after the Great Fire.

In 1836 the Quantity Surveying profession received a recognition when the new Houses of Parliament of Great Britain, designed by Sir Charles Barry, became the first major public contract to be fully measured and tendered using detailed bill of quantities for financial accountability

TRADITIONAL QUANTITY SURVEYING PRACTICE

In olden days the duties of a Quantity Surveyor were limited to:- a) measuring quantities or surveying quantities for proposed construction works to arrive the value of the proposed works and

b) measuring quantities or surveying quantities to arrive the value of the completed works.

This scope has been extensively evolved and currently the Quantity Surveyor has to undertake not only the above conventional Quantity Surveying works but to perform overall cost management role in the Construction Industry. Now the term Quantity Survey is evolving as Construction Cost Directors/Construction Cost Managers in the Construction Industry. The history of the Quantity surveyor from the middle of the seventeenth century.

TRADITIONAL QUANTITY SURVEYING PRACTICE

This traditional role, that is still practiced by some and especially by small to medium sized projects can be briefly described a measure and value system. Approximate estimates of the initial cost of building are prepared using a single price method of estimating, and where this cost was acceptable to the client then the design was developed by the architect.

TRADITIONAL QUANTITY SURVEYING PRACTICE

Subsequently the Quantity surveyor would produce bills of quantities for tendering purposes, the work would be measured for progress payments and a final account prepared on the basis of the tender documentation (see Fig. 1.1for Traditional Quantity Surveying activities)

TRADITIONAL QUANTITY SURVEYING PRACTICE

10. Settlements of contractual claims and dispute resolution

9. Financial statements ,Discharge and Final Accounts

8. Interim valuations and payments

7. Cost control during construction

6. Tendering and Estimating

5. Preparation/compilation of Tender/Contract documents.

4. Measurement and quantification leading to preparation of Bill of Quantities.

3 . Procurement /Standard Form advice

2. Cost planning/cost controlling during planning

1. Preliminary cost advice (approximate estimates)

TRADITIONAL QUANTITY SURVEYING PRACTICE - Figure 1 - Traditional Quantity Surveying activities

At the very inception of a construction project, the prospective Employer required know to what will be the budget/approximate estimate of the prospective project and other cost impacts;

1. Preliminary cost advise(approximate estimates),Life Cycle Cost, Cost Benefit analysis, Cost moduling etc.

to get a decision, whether to go ahead or to amend the scope or to post phone or cancel the project.

The Quantity Surveyor with his vast knowledge in construction cost and considering the present day market conditions and changes in social , political and economic conditions he will give his cost prediction. Refer module COST STUDIES for details

1. Preliminary cost Cond.

If the predicted approximate estimate is within the limit of his purse and considering other factors the Employer will requested the Engineer/Architect to proceed with the developing of required drawings and other tender documents.

2 Cost planning and Pre contract cost controlling

During this period the Quantity Surveyor has to a another vital duty called cost planning and pre contract cost controlling. The following techniques are used when performing cost planning 1) Elemental cost planning 2) Comparative cost planning 3) Cost plan in use. Refer module COST STUDIES for details

2 Cost planning and Pre contract Cond

The following are some of the Standard leading form of contracts * JCT form (Joint Contract Tribunal). * FIDIC form (International form)(Federation Internationale Dse Ingenieurs Counseils. * NEC form (New Engineering Contacts) * ICTAD form (Institute for Construction Training and Developments Sri Lanka) (SCA/1,SBD/01( Contract 10million to 100 million),SBD/02(Contract over 100million)SBD/03 (Contract up to 10million),SBD/04(For Design & Build Contracts)

3. Advice on suitable Form of Contract and suitable Procurement Method.

The following are some of the leading procurement methods * Traditional methods * Design and build * Management contracting * Construction management * Build, operate and transfer (B.O.T) (Financial Arrangement)

3.1...suitable Procurement Method.

The Bill of Quantities is a document which consisting of list of adequately described work items along with the accurate quantities with related units or money allocations displayed under different trades in accepted sequence to indicate the entire scope of works of a project and will have to be prepared by a Quantity Surveyor in accordance with the rules and recommendations laid down in one of the reputed Standard Method of Measurements. SMM7,CESSM3,POMI etc.

4. Measurement and quantification leading to preparation of Bill of Quantities

4. Bill of Quantities - The objects

a) To provide the uniform information of the quantities of work as to enable tenders to be prepared efficiently and accurately.

b) Help Employers/ Consultants for Apple to apple comparison of the Tender.

c) When a Contract has been entered into, to provide for use of the priced Bill of Quantities in the valuation of work executed under original scope, and to use as a based in valuing any future varied Works.

Tender(Bid) Documents * Form of Tender( Bid) with Appendix

* Form of Agreement (Agreement)

* Information and Instructions to Tenderers * Particular Conditions (Part 2)(Contract Data) * General Conditions of Contract (part 1)

CONTD..

5. Preparation/Compilation of Tender/Contract documents/ Tender (Bid) Documents

* Particular Specifications

* General Specifications

* Drawings

* Bill of Quantities/Schedule of rates

* Specimen Standard Forms (Bonds & Guarantees)

5. Preparation(Compilation) of Tender, Contract documents, Tender (Bid) Documents Cond

* Duly filled and signed above mentioned Tender Documents PLUS

* Memorandum of Understanding/Letter of Intent (If any)

* Letter of Acceptance (ACCEPT)

* All pre-tender and post-tender correspondence (Prior to issuing Letter of Acceptance.) (Note : optional- explain)

5. Preparation(Compilation) of Tender, Contract documents, Tender (Bid) Documents Cond

6. Tendering & Estimating All Quantity Surveyors are essential to be Estimators .But all Estimators are not essential to be Quantity Surveyors.

6. Tendering & Estimating Cond Calling tenders ,Opening tenders ,tender evaluation based on predetermined estimate, Preparing reports on tenders are to be done by the architects/contract administrators quantity surveyor where estimating and converting scientifically prepared estimate to tender after considering various factors (site visits reports ,capacity ,amount of provisional sums ,professional team etc.) by the contractors quantity surveyor.

7. Cost control during construction During the construction period the Quantity Surveyor should advise the Architect/Contract Administrator ,before issuing the Variation Orders by preparing the variation accounts to predict the cost changes due to prospective variation orders and other required cost controlling works such as cost reports ,comparative cost options etc. (Cost Report to the Employer by predicting the anticipated final account)

During the construction period the Contractors Quantity Surveyor should advise the Contractor by preparing cost proposals, cost/value comparisons ,loss /profit predictions , anticipated final value and anticipated final cost (Cost Reports to the Contractor)

7. Cost control during construction Cond..

8. Interim valuations and payments After establishing the Contract the Contractors are entitled to claim the value of work executed and other values such as Materials on Site, Variations ,Adjustments of Provisional Sums, Cost fluctuations , Claims ,Recovery of Advance Payments ,Liquidated damages as stipulated in the Contract.

Hence the Contractors Quantity Surveyor has to prepare and the Architects /Contract Administrators Quantity Surveyor has to certify.

9. Financial statements ,Discharge and Final Accounts Providing financial statement as various stages during the construction period as specified in the contract and agreeing all work done under original scope ,variation orders, provisional sums, fluctuation claims (if any) and other all general claims the quantity surveyor is completing the final accounts and obtain the Contractors agreement and the statement of discharge

10. Settlements of contractual claims and dispute resolution Giving notices, contemporary records, disruption claims, Extension of Time claims, amicable settlements to be done . Dispute resolution activities also to be handled

1. Modern Quantity Surveying Practice

CONTD.

1. Investment appraisal 2. Advice on cost limits and budgets 3. Whole life costing 4. Value Engineering 5. Risk analysis 6. Insolvency services 7. Cost engineering services 8. Sub contract administration 9. Technical auditing 10.Project management 11.Facilities management 12.Advice on contractual disputes 13.Employers agent

1. Investment Appraisal

One of the key areas of long-term decision-making that firms must tackle is that of investment - the need to commit funds by purchasing land, buildings, machinery and so on, in anticipation of being able to earn an income greater than the funds committed. In order to handle these decisions, firms have to make an assessment of the size of the outflows and inflows of funds, the lifespan of the investment, the degree of risk attached and the cost of obtaining funds.

The main stages in the capital budgeting cycle can be summarized as follows: * Forecasting investment needs. * Identifying project(s) to meet needs. * Appraising the alternatives. * Selecting the best alternatives. * Making the expenditure. * Monitoring project(s).

2. Advice on cost limits and budgets,

There is one thing that is definite, if you are entering into a realty investment that involves construction, you need a well defined budget. You do not want to be ball parking the figures particularly if you are going to be arranging financing to carry out the construction.

It is imperative that you know your construction budgets limits. If you dont then you could end up with a building partially finished, with no money to carry on, and end up in a most disastrous financial situation. Refer module COST STUDIES

3. Whole life costing Whole-life cost, or Life-cycle cost (LCC), refers to the total cost of ownership over the life of an asset. Also commonly referred to as "cradle to grave" or "womb to tomb" costs. Refer module COST STUDIES

4. Value Engineering

Value Engineering can be defined as an organized approach to providing the necessary functions at the lowest cost From the beginning the concept of value engineering was seen to be cost validation exercise, which did not affect the quality of the product. The straight omission of an enhancement or finish would not be considered as value engineering.

Refer module COST STUDIES

5. Risk analysis No construction project is risk free. Risk can be managed, minimized, shared, transferred or accepted. It cannot be ignored Sir Micheal Lathem The Quantity Surveyor should advice on risk in construction and take steps to manage the risk at minimum cost. Refer Module on Production Organisation

6. Insolvency services The construction industry is responsible for more than its fair share of bankruptcies and liquidations. Limited liability companies become insolvent and then go into liquidation. The Quantity Surveyors expert knowledge in cost, he will help to perform the insolvency services.

7. Cost engineering services Cost engineering is an area of engineering practice concerned with the "application of scientific principles and techniques to problems of cost estimating, cost control, business planning and management science, profitability analysis, project management, and planning and scheduling."

Cost engineering practitioners tend to be: specialized in function (e.g., cost estimating, planning and scheduling, etc.); focused on either the asset management or project control side of the process; and focused on a particular industry (e.g., engineering and construction, manufacturing, information technology, etc.); or asset type (e.g., chemical process, buildings, software, etc.).

8. Sub contract administration The Contractors Quantity Surveyor should have ability to select, control, and manage its subcontractors. Making a proper letter of invitation to obtain proper quotation Evaluation Sub-contract agreement Certifying valuations Final accounts Discharge

9. Technical auditing Compare the final account with contract bills Examine the records available Discuss aspects with relevant staff Examine the procedure used Prepare a report on the findings

10. Project Management Currently, potential investors prefer to have Quantity Surveyors to handle project management services since cost factor is more prominent among the factors; QUALITY, TIME and COST

11. Facility Management One of the simplest and most direct definition of facilities management is that given by the Royal Institution of Chartered Quantity Surveyors ,which states that FM involves the total management of all services that support the business of an organization and identifies the opportunity that this relatively new discipline provides to the Quantity Surveying profession.

12. Advice on contractual disputes Due to the specialist knowledge in contract conditions his advices are requested to solve contractual disputes.

13. Employers Agent Services of quantity surveyors are requested by the Employers to act as the Employers `Agent considering quantity surveyors knowledge in various disciplines related to construction industry specially with related to construction cost.

RICS Professional Regulation and Consumer Protection department February 2000 Professional ethics guidance note

ETHICS & VALUES OF A QUANTITY SURVEYOR RICS has a set of central values it expects members to apply in their work. Following this set of values is one of the key features that defines the professionalism of all chartered and technical surveyors. You must base all your actions and judgments on these core values:

1. Act with integrity. Never put your own gain above the welfare of your clients or others to whom you have a professional responsibility. Respect their confidentiality at all times and always consider the wider interests of society in your judgments.

2. Always be honest. Be trustworthy in all that you do never deliberately mislead, whether by withholding or distorting information

3. Be open and transparent. Share the full facts with your clients, making things as plain and intelligible as possible. 4. Be accountable. Take full responsibility for your actions, and dont blame others if things go wrong

5. Act within your limitations. Be aware of the limits of your competence and dont be tempted to work beyond these. Never commit to more than you can deliver. 6. Be objective at all times. Give clear and appropriate advice. Never let sentiment or your own interests cloud your judgement

7. Always treat others with respect. Never discriminate against others. 8. Set a good example. Remember both your public and private behavior could affect your own, RICS and other members reputations

9. Have the courage to make a stand. Be prepared to act if you suspect a risk to safety or malpractice of any sort

Any Questions in QS Practice?

Traditional & Modern Quantity Surveying PracticeOrigin of Quantity SurveyingTRADITIONAL QUANTITY SURVEYING PRACTICEIn olden days the duties of a Quantity Surveyor were limited to:-a) measuring quantities or surveying quantities for proposed construction works to arrive the value of the proposed works and b) measuring quantities or surveying quantities to arrive the value of the completed works. This scope has been extensively evolved and currently the Quantity Surveyor has to undertake not only the above conventional Quantity Surveying works but to perform overall cost management role in the Construction Industry. Now the term Quantity Survey is evolving as Construction Cost Directors/Construction Cost Managers in the Construction Industry. The history of the Quantity surveyor from the middle of the seventeenth century. This traditional role, that is still practiced by some and especially by small to medium sized projects can be briefly described a measure and value system. Approximate estimates of the initial cost of building are prepared using a single price method of estimating, and where this cost was acceptable to the client then the design was developed by the architect. Subsequently the Quantity surveyor would produce bills of quantities for tendering purposes, the work would be measured for progress payments and a final account prepared on the basis of the tender documentation (see Fig. 1.1for Traditional Quantity Surveying activities)Slide Number 7At the very inception of a construction project, the prospective Employer required know to what will be the budget/approximate estimate of the prospective project and other cost impacts; The Quantity Surveyor with his vast knowledge in construction cost and considering the present day market conditions and changes in social , political and economic conditions he will give his cost prediction. Refer module COST STUDIES for detailsIf the predicted approximate estimate is within the limit of his purse and considering other factors the Employer will requested the Engineer/Architect to proceed with the developing of required drawings and other tender documents. During this period the Quantity Surveyor has to a another vital duty called cost planning and pre contract cost controlling. The following techniques are used when performing cost planning1) Elemental cost planning2) Comparative cost planning3) Cost plan in use. Refer module COST STUDIES for detailsThe following are some of the Standard leading form of contracts * JCT form (Joint Contract Tribunal). * FIDIC form (International form)(Federation Internationale Dse Ingenieurs Counseils. * NEC form (New Engineering Contacts) * ICTAD form (Institute for Construction Training and Developments Sri Lanka) (SCA/1,SBD/01( Contract 10million to 100 million),SBD/02(Contract over 100million)SBD/03 (Contract up to 10million),SBD/04(For Design & Build Contracts) The following are some of the leading procurement methods * Traditional methods * Design and build * Management contracting * Construction management * Build, operate and transfer (B.O.T) (Financial Arrangement) The Bill of Quantities is a document which consisting of list of adequately described work items along with the accurate quantities with related units or money allocations displayed under different trades in accepted sequence to indicate the entire scope of works of a project and will have to be prepared by a Quantity Surveyor in accordance with the rules and recommendations laid down in one of the reputed Standard Method of Measurements. SMM7,CESSM3,POMI etc.Slide Number 15Tender(Bid) Documents* Form of Tender( Bid) with Appendix* Form of Agreement (Agreement) * Information and Instructions to Tenderers* Particular Conditions (Part 2)(Contract Data) * General Conditions of Contract (part 1) * Particular Specifications * General Specifications * Drawings* Bill of Quantities/Schedule of rates* Specimen Standard Forms (Bonds & Guarantees) * Duly filled and signed above mentioned Tender Documents PLUS * Memorandum of Understanding/Letter of Intent (If any) * Letter of Acceptance (ACCEPT) * All pre-tender and post-tender correspondence (Prior to issuing Letter of Acceptance.) (Note : optional- explain)6. Tendering & Estimating All Quantity Surveyors are essential to be Estimators .But all Estimators are not essential to be Quantity Surveyors.6. Tendering & Estimating CondCalling tenders ,Opening tenders ,tender evaluation based on predetermined estimate, Preparing reports on tenders are to be done by the architects/contract administrators quantity surveyor where estimating and converting scientifically prepared estimate to tender after considering various factors (site visits reports ,capacity ,amount of provisional sums ,professional team etc.) by the contractors quantity surveyor.7. Cost control during constructionDuring the construction period the Quantity Surveyor should advise the Architect/Contract Administrator ,before issuing the Variation Orders by preparing the variation accounts to predict the cost changes due to prospective variation orders and other required cost controlling works such as cost reports ,comparative cost options etc. (Cost Report to the Employer by predicting the anticipated final account) During the construction period the Contractors Quantity Surveyor should advise the Contractor by preparing cost proposals, cost/value comparisons ,loss /profit predictions , anticipated final value and anticipated final cost (Cost Reports to the Contractor)8. Interim valuations and paymentsAfter establishing the Contract the Contractors are entitled to claim the value of work executed and other values such as Materials on Site, Variations ,Adjustments of Provisional Sums, Cost fluctuations , Claims ,Recovery of Advance Payments ,Liquidated damages as stipulated in the Contract. Hence the Contractors Quantity Surveyor has to prepare and the Architects /Contract Administrators Quantity Surveyor has to certify. 9. Financial statements ,Discharge and Final AccountsProviding financial statement as various stages during the construction period as specified in the contract and agreeing all work done under original scope ,variation orders, provisional sums, fluctuation claims (if any) and other all general claims the quantity surveyor is completing the final accounts and obtain the Contractors agreement and the statement of discharge10. Settlements of contractual claims and dispute resolutionGiving notices, contemporary records, disruption claims, Extension of Time claims, amicable settlements to be done . Dispute resolution activities also to be handledModern Quantity Surveying Practice1. Investment AppraisalOne of the key areas of long-term decision-making that firms must tackle is that of investment - the need to commit funds by purchasing land, buildings, machinery and so on, in anticipation of being able to earn an income greater than the funds committed. In order to handle these decisions, firms have to make an assessment of the size of the outflows and inflows of funds, the lifespan of the investment, the degree of risk attached and the cost of obtaining funds.The main stages in the capital budgeting cycle can be summarized as follows:* Forecasting investment needs.* Identifying project(s) to meet needs.* Appraising the alternatives.* Selecting the best alternatives.* Making the expenditure.* Monitoring project(s).2. Advice on cost limits and budgets,There is one thing that is definite, if you are entering into a realty investment that involves construction, you need a well defined budget. You do not want to be ball parking the figures particularly if you are going to be arranging financing to carry out the construction. It is imperative that you know your construction budgets limits. If you dont then you could end up with a building partially finished, with no money to carry on, and end up in a most disastrous financial situation. Refer module COST STUDIES3. Whole life costing Whole-life cost, or Life-cycle cost (LCC), refers to the total cost of ownership over the life of an asset. Also commonly referred to as "cradle to grave" or "womb to tomb" costs. Refer module COST STUDIES4. Value EngineeringValue Engineering can be defined as an organized approach to providing the necessary functions at the lowest costFrom the beginning the concept of value engineering was seen to be cost validation exercise, which did not affect the quality of the product. The straight omission of an enhancement or finish would not be considered as value engineering. Refer module COST STUDIES5. Risk analysisNo construction project is risk free. Risk can be managed, minimized, shared, transferred or accepted. It cannot be ignored Sir Micheal LathemThe Quantity Surveyor should advice on risk in construction and take steps to manage the risk at minimum cost.Refer Module on Production Organisation 6. Insolvency servicesThe construction industry is responsible for more than its fair share of bankruptcies and liquidations. Limited liability companies become insolvent and then go into liquidation. The Quantity Surveyors expert knowledge in cost, he will help to perform the insolvency services. 7. Cost engineering servicesCost engineering is an area of engineering practice concerned with the "application of scientific principles and techniques to problems of cost estimating, cost control, business planning and management science, profitability analysis, project management, and planning and scheduling."Cost engineering practitioners tend to be: specialized in function (e.g., cost estimating, planning and scheduling, etc.); focused on either the asset management or project control side of the process; and focused on a particular industry (e.g., engineering and construction, manufacturing, information technology, etc.); or asset type (e.g., chemical process, buildings, software, etc.).8. Sub contract administrationThe Contractors Quantity Surveyor should have ability to select, control, and manage its subcontractors. Making a proper letter of invitation to obtain proper quotationEvaluationSub-contract agreementCertifying valuationsFinal accountsDischarge9. Technical auditingCompare the final account with contract billsExamine the records availableDiscuss aspects with relevant staffExamine the procedure usedPrepare a report on the findings10. Project ManagementCurrently, potential investors prefer to have Quantity Surveyors to handle project management services since cost factor is more prominent among the factors; QUALITY, TIME and COST11. Facility ManagementOne of the simplest and most direct definition of facilities management is that given by the Royal Institution of Chartered Quantity Surveyors ,which states that FM involves the total management of all services that support the business of an organization and identifies the opportunity that this relatively new discipline provides to the Quantity Surveying profession.12. Advice on contractual disputesDue to the specialist knowledge in contract conditions his advices are requested to solve contractual disputes.13. Employers AgentServices of quantity surveyors are requested by the Employers to act as the Employers `Agent considering quantity surveyors knowledge in various disciplines related to construction industry specially with related to construction cost.RICS Professional Regulation and Consumer Protection departmentFebruary 2000Professional ethics guidance noteETHICS & VALUES OF A QUANTITY SURVEYOR RICS has a set of central values it expects members to apply in their work. Following this set of values is one of the key features that defines the professionalism of all chartered and technical surveyors. You must base all your actions and judgments on these core values:1. Act with integrity. Never put your own gain above the welfare of your clients or others to whom you have a professional responsibility. Respect their confidentiality at all times and always consider the wider interests of society in your judgments.2. Always be honest. Be trustworthy in all that you do never deliberately mislead, whether by withholding or distorting information3. Be open and transparent. Share the full facts with your clients, making things as plain and intelligibleas possible.4. Be accountable. Take full responsibility for your actions, and dont blame others if things go wrong5. Act within your limitations. Be aware of the limits of your competence and dont be tempted to work beyond these. Never commit to more than you can deliver.6. Be objective at all times. Give clear and appropriate advice. Never let sentiment or your own interests cloud your judgement7. Always treat others with respect. Never discriminate against others.8. Set a good example. Remember both your public and private behavior could affect your own, RICS and other members reputations9. Have the courage to make a stand. Be prepared to act if you suspect a risk to safety or malpractice ofany sortAny Questions in QS Practice?