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MP - APC Study Flash Cards > Quantification and costing of Construction Works > Flashcards

Quantification and costing of Construction Works Flashcards

(51 cards)

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1
Q

What are the various types of pricing documents?

A
  • Bill of Quantities
  • Activity Schedule
  • Milestone Schedule
  • Schedule of Rates
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2
Q

What are the different forms of obtaining prices for works (contract price mechanisms)?

A
  • Fixed Price lump Sum
  • Re-Measurable
  • Target Cost
  • Cost Reimbursable (Cost Plus)
  • Guaranteed Maximum Price (GMP)
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3
Q

What is a Fixed Price Lump Sum Contract?

A

A firm price is agreed between the parties to deliver works by which only changes to the price can be made through implementation of variations or claims.

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4
Q

What is a Re-measurable contract?

A

Where the rates are pre-agreed and used in calculating the cost of the quantities which are re-measured and reassessed against the original approximate quantities to determine the increase or decrease of the contract price.

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5
Q

What is a cost reimbursable/ cost plus contract?

A

The contractor is paid for works delivered properly and reasonably in performing the obligations under the contract. The contractor is paid for the cost incurred, plus their OH&P.

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6
Q

When is a cost reimbursable/ cost plus contract best suited?

A

When quick mobilisation is required to deliver the works as soon as possible, and design certainty is not present and cost certainty is least in priority.

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7
Q

How does a Target Cost contract operate?

A

A target is set by the parties and is managed through variations or claims in regards to increases or decreases. The contractor is paid through actual cost incurred in providing the works, plus fee. If the actual cost is below the target, both parties receive gain share in the savings, however if it is above the target both parties would be liable for the overspend.

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8
Q

When is a Target Cost contract best placed to be used?

A
  • When a start on site is needed soon
  • Risks are not well defined or unknown
  • Incentivises/ penalises the contractor in regards to cost management
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9
Q

What is a Guaranteed Maximum Price (GMP)?

A

There is a maximum ceiling of the contract price and any savings below the GMP is shared between the parties. The risk of overrun on the GMP is held solely by the Contractor. The GMP is only adjusted based on accepted variations or claims.

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10
Q

What are the benefits and limitations with GMP contracts?

A

Benefits:

  • Provides greater cost certainty than target cost
  • Incentivises the contractor in coming below the GMP
  • The contractor takes on all risks

Limitations:

  • The GMP may be high due to all of the risks priced by the contractor
  • The ER and scope will need to be well defined to avoid any potential variations
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11
Q

What are some of the risks associated to projects which span over multiple years?

A

Inflation, Overheads and Exchange Rates.

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12
Q

What are some of the factors which affect OH&P?

A
  • Project location
  • Project type
  • Market conditions
  • Tenderer’s direct and indirect overhead costs
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13
Q

What are Prime Costs?

A

Rates or costs contained under a BoQ where it is needed in part, i.e. supply only, or installation only, exclusive of OH&P.

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14
Q

What are Preliminaries?

A

Costs associated with the management of the works, i.e. management staff, site accommodation, plant, etc.

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15
Q

What are some of the factors influencing preliminaries costs?

A
  • Project location
  • Project duration/ programme
  • Complexity of project
  • Value of project
  • Level of temporary works
  • Time related, mobilisation and demobilisation costs
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16
Q

What are some of the validation checks which can be conducted on a preliminaries cost submission?

A
  • Market testing
  • Benchmarking against similar schemes
  • Utilising previous estimates, rates and cost plans
  • In house cost databases
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17
Q

What is the typical percentage cost of preliminaries?

A

Typically 11-15% on the construction cost. If higher there may be reasons behind this such as:

  • Tower cranes
  • Night time/ weekend working
  • Road closures/ rail possessions
  • Re-routing main services
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18
Q

What is inflation?

A

The increase of prices due to the economy of a country.

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19
Q

How is inflation considered under construction projects?

A

Under cost plans or contracts inflation can be factored in. Indices can be used to determine the uplift needed to predict inflation.

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20
Q

What is tender inflation?

A

The increase in prices between the PTE and the tender return

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21
Q

What is construction inflation?

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A

The increase in prices from the date of tender return and peak of the construction period.

22
Q

What is Tender Price Index?

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A

Indices which measures the inflation adjustment needed to uplift the tender return prices to current day economic conditions.

23
Q

How is inflation estimated as per NRM?

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A

Inflation estimate = Tender Inflation + Construction Inflation

24
Q

If quantities cannot be measured at the point of tender what should you use?

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A
  • Utilise approximate quantities, if there are many uncertain quantities there is merit in using a re-measure form of contract.
  • If there are a few, then utilise Provisional Sums
25
What type of information does a function unit rate provide?
Provides an estimate on the cost per function of that asset, i.e. SAR per hotel key, hospital bed, per m2 of the structure, etc.
26
What does a wall to floor ratio aim to provide?
Information showing the spatial efficiency of a building, meaning the relationship between floors and walls in a structure. i.e. the lower the ratio, the cheaper the building.
27
What is Gross Internal Floor Areas (GIFA) ?
The measured area of a building up until the internal skin of the external wall at all floors. Typically excludes windows, balconies, voids, external staircases and external car parks.
28
What is Gross External Area (GEA)?
The measurement of a building of all areas up until the external skin of the perimeter walls at each floor.
29
What is Net Internal Area (NIA)?
The measurement of usable areas in a building up until the internal skin of the external perimeter walls at each floor. It excludes columns, structural walls, voids, circulation space, lift lobbies, toilets and janitor rooms.
30
What is a BoQ?
It is abbreviated for Bill of Quantities. It records items of work to be delivered in connection to the scope of works, design and specifications. It captures the quantities, unit of measure, rates and costs which have been agreed upon by the parties.
31
Why are BoQ's prepared using a standard method of measurement?
- It ensures that all elements of a building are measured in a systematic way and priced. - It is familiar with all industry professional, therefore ensuring standardised tender returns. - It enables easy tender analysis and post contract administration.
32
What are the advantages of using a BoQ as a pricing document?
It allows detailed pricing to be performed by tenderers and allows for easy comparative analyses, compared to activity schedules.
33
What are the disadvantages of using a BoQ as a pricing document?
It takes very long to produce, as time is needed to study the design and specifications and measure it.
34
What is an Advance Payment?
Where the contractor receives an up front payment from the client to mobilise, and is recovered through small percentage deductions under interim payment certificates. Typically an advance payment bond is provided, to give security to the client.
35
What is a payment valuation?
The process of assessing the payment due to the contractor in respect of progress made to date.
36
What are the key components of a payment valuation?
- Preliminaries - Measured Works - Variations - Provisional Sums - Materials held on site/ off site - Advance payment made and recovery - Deductions for retention and release of retention
37
What would be detailed under a payment certificate?
- Project details; reference, contract value, client and contract info - Interim Payment Reference Number - Date of certificate - Previously certified, cumulatively certified, and period amount due - Advance payments made, and recovered - Deductions for retention performed, and released - Signatures of approvers
38
How would you assess payment valuations?
The progress made to date in respect of preliminaries, measured works and variations would be assessed based on the below: - Resident Engineers feedback - Site visits - Review of programme showing actualised tasks - Work and material inspection request forms - Vesting certificates
39
How would you go about in valuing materials held off-site?
Request a vesting certificate, ensuring it is vested in the name of the client and clearly set aside denoting that it is in the name of the client. I would further ensure that a valid materials held off site bond is in place along with the relevant insurances. Lastly, I would ensure that the materials being applied for is reasonable in quantity.
40
What is a vesting certificate?
A document which confirms the title transfer of materials from one party to another.
41
What are the options for conducting payment valuations?
- Milestone achievement based - Monthly payment validation of quantities delivered
42
What are on account payments?
When works have been delivered in principle, however the exact quantum is yet to be determine. This assessment is then replaced with an accurate valuation through determining the exact quantity of work delivered.
43
When should daywork rates be used?
When there are no comparative rates in the BoQ for the element of work delivered and a fair and reasonable rate cannot be agreed upon.
44
What is the payment process under NEC contracts?
Contractor submits an interim application within 7 days of the assessment date. PM has to assess, certify, issue payless notice and make payment within 14 days thereafter. Total duration is 21 days.
45
What is the payment process under ICE contracts?
Contractor submits an interim application. Engineer has to assess, certify and issue payless notice within 14 days thereafter. Payment is made 7 days after certification. Total duration is 21 days.
46
What is the payment process under FIDIC contracts?
After receiving the statement, the Engineer is to issue a payment certificate within 28 days. Payment is made 28 days thereafter. Total duration is 56 days
47
What is final accounting?
The process of closing out the contract between the parties through coming to a financial settlement. The original contract value and implemented variations are agreed upon to enable a final payment.
48
Who typically produces the final account statement?
The cost consultant
49
What is the purpose of a final account?
To conclude the financial position of a contract agreement.
50
What are the components of a final account statement?
- Summary - Original contract value - Implemented Variations - Provisional Sums - Prime Cost Adjustments - Taking Over Certificate/ Completion checklist
51
What is the procedure to complete a final account?
- Undertake a site visit, if necessary - Prepare a draft statement of final account with all supporting information for the contractor's review - Discuss and negotiate on areas of differing views - Obtain agreement in principle, update the Statement of Final Account and issue it for approval

MP - APC Study Flash Cards (18 decks)

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