Quantification & Costing Flashcards
(39 cards)
What are Standards of measurement
Provide a uniform basis for measuring building works for industry-wide consistency and to allow benchmarking, encourage the adoption of best practice and help avoid disputes.
Provides a structure for the information that should make up the descriptions.
Defines unit of measurement for each item - m, m2, m3, number, tonnes, and so on.
Provides rules as to what is included within each item.
NRM
provide a standard set of measurement rules for estimating, cost planning, procurement and whole-life costing for construction projects.
NRM1- provides guidance on quantification of building works in order to prepare order of cost estimates and cost plans, as well as approximate estimates.
NRM2- establishes detailed measurement rules allowing the preparation of bills of quantities, quantified schedules of works and schedules of rates.
NRM3- allows the quantification and description of maintenance works. Can be used for initial order of cost estimates, general cost plans and asset-specific cost plans.
SMM7
Provides detailed information, classification tables and rules for measuring building works. This has since been replaced by NRM2.
RICS Code of Measurement Practice guidance note
Code which provides guidance and definitions for the accurate measurement of buildings, the calculation of the sizes (areas and volumes) and the description or specification of land and buildings on a common and consistent basis
Code defines gross internal area, gross external area, and net internal area detailing the inclusions and exclusions, how to use them and when each is most suited to be used.
Gross external area (GEA)- the area of a building measured externally at each floor level e.g. rating council tax to houses/ bungalows
Gross internal area (GIA)- the area of a building measured to the internal face of the perimeter walls at each floor level e.g. the valuation of new homes for development purposes
Net internal area (NIA) the usable area within a building measured to the internal face of the perimeter walls at each floor level e.g. estate agency/ valuation of offices
Methods of measurement for cost plan
Initial cost appraisal
Elemental cost plan
Approximate quantities cost plan
Pre-tender estimate
Tender pricing document
Contract sum
Initial cost appraisal
studies of options prepared during the feasibility study stage
Elemental cost plan
Prepared during the project brief stage and carried through to detailed design.
Focuses on estimating costs for different elements or components of a construction project. It provides a detailed breakdown of costs associated with each element such as; foundations, structures, finishes, services.
Approximate quantities cost plan
(from the end of detailed design through to tender). First attempt to measure defined quantities from drawings
Pre-tender estimate
(prepared alongside tender documentation). BoQ with approximate rates, plus the Employer internal costs etc.
Tender pricing document
(strictly speaking this is not a priced document but is part of the tender documentation issued to the contractor for pricing). BoQ which is issued to tenderers for them to populate with their rates.
Contract sum
(agreed with the contractor during the tender period and adjusted during the construction period). Sum of the populated BoQ. This is adjusted by CE’s during the project lifecycle.
What is a PES
A PES is a Project Estimate Summary. It details all the costs associated with a project splitting the costs out into the different project stages (feasibility, concept, detailed design, construction ,handover) as well as the different elements (TfL staff, internal TfL services, surveys/ design, implementation/build, risk) and across the financial years.
Assumptions are crucial for the PES as well as stating where the pricing has come from. We have internal estimating guidance which can be used to provide guidance on the percentage of costs to allocate towards risk/ our internal staff.
Depending on the stage the project is at and the information available will depend on the accuracy and detail of the PES. This will also impact the tolerances for accuracy.
The PES is then used to advise on the appropriate budget number for a project.
How was OLBI PES produced
Initial meetings held with PM, CM and SPM to understand project requirements and timelines.
The PES included all internal labour to support these works e.g. engineering, construction management, management overheads etc. A reasonable percentage for internal labour was used based on the general guidance for internal labour support from the estimating guidance and also looking at other projects within the portfolio. The portfolio projects often have less internal labour costed to the project as the core team- PM, PE & CM get charged to a separate staff line.
The risk was calculated again using a percentage based on the estimating guidance and previous PES. I also took into account the discussions with the PM regarding the potential risks which could result in a cost increase.
The third party costs for the R&D for new OLBI’s and the install were taken from a recent quotation received with inflation applied using the BCIS TPI.
A review of the inclusions, exclusions & assumptions of the quotation was had with the PM to ensure no additional activities/ plant/ labour/ materials needed to be allowed for.
BCIS
Building Cost Information Service (BCIS). It can be used to forecast the cost of a building project using actual not synthesised prices. The BCIS construction data helps with creating particular estimates for option appraisals, providing early cost advice and planning costs and benchmarks. Includes a full range of building tender, cost and output indices and average building prices. Pricing and estimating information.
Inflation indices
Inflation indices are used to adjust pricing based on different market conditions such as time and location. The base cost is from the date pricing is obtained (year & quarter), the appropriate indexation rate can then be calculated adding the quarterly/ yearly indexation between base date and expected date. The base cost is then multiplied by the indexation to provide a more accurate estimate.
OLBI PES use of inflation indices
For the OLBI PES I was provided with pricing from August 2022 (2Q 22) and the estimate was to be updated and aligned with programme showing 2Q 23 for the first tranche, and 2Q 24 for the second tranche. I used the TPI index from December 2021 and identified the inflation indices for each date (3.3 for T1 and 8.4 for T2) the quoted costs were multiples by these indices to reflect the expected change in prices.
Pricing documents
Activity schedule
Bill of Quantities
Schedule of Rates
Activity schedule
(used for Option A or C contract)- the works are split out into activities and a cost/ % of the total cost is allocated to each activity so on completion of that activity the cost can be paid. New activities can be added under the CE process, or the cost of existing activities can be adjusted via the CE process.
Bill of Quantities
(used for Option B or D)- provides project specific descriptions and measured quantities for the work to be undertaken. Against each item in the Bill of Quantities, the Tenderer inserts their unit rate for that work and then extends it by the stated quantity to arrive at the total cost for the work described in that Bill of Quantities item. All extended amounts are then totalled to arrive at the tender amount.
Schedule of Rates
Schedule of rates may be used for contracts where the scope is yet to be defined so a detailed take off or an activity schedule can not be produced.
The Employer may request for certain materials/ labour/ plant rates to be specified plus a mechanism for yearly price adjustments (if applicable) which can then be used to form the basis of the works.
-An example of this is a fixed price for the annual maintenance of gas compressors in the form of an activity schedule was requested and then a schedule or rates was requested detailing the likely labour for any ad-hoc maintenance required. The evaluation process included a simple CE model to financially score and compare the SoR element of the tender.
Negotiation techniques for contract sum
Negotiation of a contract sum may include the omission of certain activities/ risk/ inflation e.g. contractor on PAS tried to add a price increase on the fixed price for their works owing to steel increase, however a copy of the quotation from the supplier showed that it was valid through to the date of award.
Negotiation techniques for variations
Negotiation of variations/ CE’s could include discussion on the rates being used, application of price adjustment indexation if applicable/ quantity/ measurement of the works. It is important to work with the contractor QS and follow the contract to come to an agreed value. Communication and collaboration are key skills for negotiation, as well as record keeping/ documentation of negotiations to provide evidence/ reminder of discussions.
Negotiation techniques for final account
A final account is an agreed statement concerning the amount of money to be paid at the end of a building contract by the employer to the contractor. This may require negotiation if there are still unagreed CE’s/ variations, there could also be negotiation required over the application of liquidated damages. This is why it is important to try to resolve CE’s/ variations/ disallowed cost as and when they arise in the contract to prevent prolongation of completion at the end of a project.
OSR negotiation & quantification of ELF
I produced a liabilities schedule for subbie accounts, identifying the fixed price for measured work reviewing additional items presented to date as either CE’s, contra charge or disallowable cost. I identified further allowances in the latest forecast allocating these into the three identified categories.
I held regular meetings with the appropriate contractor’s administrators discussing and obtaining additional information to allow items to be correctly assessed and categorised. Clear communication was vital for successfully establishing contractual principles, negotiating and agreeing the valuation of the subcontractor EFCs.
I adjusted the price adjustment indexation for staff rates to the correct index (BCIS PAFI not RPI) and identified additional items within prelims which relate to programme and should be included within the fixed price.
