The cost manager/quantity surveyor plays a pivotal role in the financial and contract management of construction projects, although the exact nature of the service they provide depends on the project employer’s terms of engagement. This can mean acting as consultant in a range of roles including cost and advisory services for budget setting to initiate a project, cost management through the design and construction phases, contract administration and acting as the client side project manager to oversee the entire building process.
Cost Management of Construction Projects focusses on the cost manager/quantity surveyor engaged by the project client, and discusses key elements that help drive project success including measurement (based on the New Rules of Measurement published by RICS), procurement, cost planning, contract administration and project cost management. With examples, it provides a thorough guide to the role in the workplace and in the field, directly addressing the day to day situations faced by the cost manager/quantity surveyor.
Donald Towey MRICS has extensive experience of the construction industry. His experience began as an estimator with a glass/glazing contractor in Manchester. Following a number of positions with UK contractors he relocated to Australia and has worked with a number of developers and main contractors, as well as doing freelance work. He is currently working in contracts management in Sydney.
Table of Contents:
Preface xi
1 Practice Procedures 1
1.1 Organisation and structure 1
1.1.2 Marketing and regulating 3
1.2 Methods of appointment 6
1.2.1 Client engagement 6
1.2.2 Contracts of services 10
1.2.3 Contracts of service 11
1.3 Business development 13
1.3.1 New business and cold calling 14
2 RICS New Rules of Measurement (NRM) 19
2.1 What is NRM? 19
2.1.1 Status of NRM 19
2.2 RICS NRM2: Detailed measurement for building works 21
2.2.1 Usage 21
2.2.2 Structure 22
2.2.3 Information required for BQ preparation 22
2.2.4 Tabulated works sections and rules 25
2.2.5 Measurement rules for building components/items 29
2.3 Taking off 36
2.3.1 Measurement example – Substructure 42
2.3.2 Measurement example – Superstructure walls 45
2.4 Bill of quantities (BQ) 46
2.4.1 Composition 63
2.4.2 Breakdown structure 63
2.4.3 Cost centres 74
2.4.4 Bills of addendum and reduction 76
2.4.5 Software and BQ production 79
3 Pre-contract cost management 81
3.1 Cost planning 81
3.2 Plans of work 83
3.3 Development 85
3.4 Design influence on cost 88
3.4.1 Time, cost and quality relationships 88
3.4.2 Redundant performance and circulation areas 89
3.4.3 Building height 90
3.4.4 Modulation 91
3.4.5 Building shape 92
3.4.6 Buildability 94
3.4.7 Environmentally friendly buildings 95
3.4.8 Life-cycle costs 96
3.5 Setting a budget 98
3.5.1 Client preparation 98
3.5.2 Estimating techniques for the feasibility study 98
3.5.3 Estimate techniques for setting the budget 109
3.6 Early design development 115
3.6.1 Creating cost targets 115
3.6.2 Element measuring 120
3.6.3 Element rate costing 124
3.7 Ongoing design development 130
3.8 Self-checking of design development 141
3.9 Action on variances 142
3.9.1 Value management 143
3.10 Final design proposals and production information 144
3.11 Cost planning accuracy 145
4 Procurement systems 147
4.1 Procurement definition 147
4.2 Meeting the client’s objectives 147
4.3 Influencing reports and the need for change 149
4.3.1 The Banwell Report 149
4.3.2 Constructing the Team (Latham) 149
4.3.3 Rethinking Construction (Egan) 150
4.3.4 Achieving Excellence in Construction (OGC) 151
4.3.5 Modernising Construction (NAO) 151
4.3.6 Strategies for Sustainable Construction (Government) 152
4.3.7 Never Waste a Good Crisis (Wolstenholme) 152
4.4 Procurement routes 154
4.4.1 The client’s brief and influence on procurement routes 154
4.4.2 Traditional pathways 155
4.4.3 Design and build 162
4.4.4 Construction management schemes 164
4.4.5 Private Finance Initiative (PFI) 168
4.4.6 Public Private Partnership (PPP) 174
4.4.7 Prime contracting 177
4.4.8 Partnering and strategic alliances 180
4.4.9 Project alliances 181
4.4.10 Framework arrangements 183
4.4.11 Public procurement and European legislation 184
4.5 Appropriate procurement selection 187
4.5.1 Risk analysis 187
4.5.2 Risk management 189
4.5.3 Health and safety management 189
4.5.4 Consultant selection 195
4.5.5 Contractor selection 196
4.5.6 Pre-qualification Questionnaire (PQQ) 198
4.5.7 Invitation to Tender (ITT) and the tender period 199
4.5.8 Tender assessment 201
4.5.9 Due diligence 205
5 Construction contracts 211
5.1 Freedom of contract and contract law 211
5.1.1 Formation of a contract 212
5.2 Construction contracts 213
5.2.1 Contract characteristics 214
5.2.2 Selection of suitable forms 216
5.2.3 Remedies for breach of contract 220
5.3 Industrial standard forms of contract 226
5.3.1 The Joint Contracts Tribunal (JCT) 226
5.3.2 New Engineering Contract (NEC) 232
5.3.3 GC/Works Contracts 235
5.3.4 Association of Consultant Architects (ACA) 236
5.3.5 Institution of Civil Engineering (ICE) 237
5.3.6 Institution of Engineering and Technology (IET) 238
5.3.7 Institution of Chemical Engineers (IChemE) 238
5.3.8 Fédération Internationale des Ingénieurs-Conseils (FIDIC) 240
5.3.9 Be Collaborative Contract 241
5.3.10 Orgalime 242
5.4 Form recommendation 242
5.5 Pre-contract signing audit report 245
5.6 Commitment to commence 247
5.7 Project insurances 249
5.7.1 Contract works insurance 249
5.7.2 Injury to persons 251
5.7.3 Damage to surrounding property 251
5.7.4 Joint Fire Code 252
5.7.5 Public and products liability insurance 252
5.7.6 Off-site materials insurance 253
5.7.7 Professional indemnity insurance 253
5.8 Project securities 254
5.8.1 Cash retention 254
5.8.2 Bank guarantees 254
5.8.3 Bonds 255
5.9 Contract administration 256
6 Post-contract cost management 258
6.1 Professional appointment 258
6.1.1 Project initiation 258
6.1.2 Project identification and document control 259
6.2 Conflict management 263
6.2.1 Conflict avoidance 263
6.2.2 Dealing with conflict 264
6.3 Cost management 267
6.3.1 Cash flow 267
6.3.2 Breakdown of the contract sum 269
6.3.3 Variations to the contract sum 272
6.3.4 Contractor’s claims 281
6.3.5 Third party variations and claims 283
6.3.6 Spurious, contentious or vague variations and claims 284
6.3.7 Fluctuations 287
6.3.8 Valuation of works in progress 289
6.3.9 Final account 298
6.3.10 Project Bank Accounts (PBA) 302
6.4 Insolvency 304
6.4.1 In administration 305
6.4.2 Winding up 306
6.4.3 Contractor insolvency 306
6.4.4 Client insolvency 308
6.5 Client progress reports 309
6.5.1 Works in progress reports 309
6.5.2 Defects liability period reports 310
6.6 Performance feedback 311
Further Reading 313
Index 314
About the Author :
Donald Towey MRICS has extensive experience of the construction industry. His experience began as an estimator with a glass/glazing contractor in Manchester. Following a number of positions with UK contractors he relocated to Australia and has worked with a number of developers and main contractors, as well as doing freelance work. He is currently working in contracts management in Sydney.
