Bill of Quantities & Life Cycle Cost Flashcards
863 What is a BoQ?
- Is the breaking down of a project into exact quantities which are measured in an industry-wide recognised format
- Includes all components of a project as well as prelims
- Usually based on mature drawings and specifications. At tender stage, the contractor inserts their costs/rates against each item
- This then provides the precise tool for per and post contract cost control such as managing variations
864 Why would you use a BoQ instead of a SoW?
- BoQ are much more detailed than a SoW
- BoQ simplifies the tender process as the bidders will all be pricing the same way. This also makes the tender analysis easier
865 What are the key disadvantages of the BoQ? (342)
- That it passes the risk for the quantification of the works onto the Client (or their consultant) If the BoQ is incorrect it could give rise to a CE.
- More expensive for the Clients consultant to produce this as it is very time consuming
866 What are the advantages of using a BoQ?
- Works are measured precisely and in detail so an accurate price and be obtained
- Competitive pricing from bidders as they are all using the same source
- Makes it easier to manage change
- Aids with post contract cost control
- Helps with interim valuations
867 What are the two key types of BoQ?
Firm – Will give a more reliable tender price. In theory, if there are no design changes a well prepared BoQ will predict the final cost
Approximate quantities – Used when there is not enough detail to prepare a firm BoQ or where the Client decides that preparing a BoQ is not warranted. Such contracts do not provide a lump sum contract but rather a tender price total as the quantities are subject to remeasure.
868 When would a BoQ with approx. quantities be used?
If you were using a remeasurement contract.
869 What is a cash flow projection?
This is a financial planning tool that shows the predicted flow of cash in and out of a project. Typically shown month on month for the duration of the project.
When the construction phase is underway the projection for the cash flow will typically be an “S” curve.
870 What are the differences between and employers and contractor cash flow?
The contractors cash flow will show only money in relation to the actual construction of the project. Whereas the Clients cash flow will contain pre contract and post construction costs as well as costs for other services like design teams, PM/CM etc
871 How will the employer benefit from an accurate cash flow projection?
- Will assist with planning expenditure and ensure the appropriate level of funding is in place for future payments
- Will enable the Client to plan for and anticipate period of cash shortages and take corrective action when necessary
- Allows employer to understand financial commitment
- Can be used as a sense check for monthly valuations
872 If contractor is behind on their cash flow what might this indicate?
This could potentially mean that they are behind on their programme or that a change has occurred and the cash flow needs to be updated to reflect the change.
873 If contractor is ahead of their cash flow what might this indicate? (350)
- That the contractor is ahead of programme
- The contractor is over claiming
- Or there has been a change and the cash flow needs to be updated to reflect the change
874 What is the purpose of post contract cost reporting?
- Provide an overview of the Clients current financial commitment
- To inform the Client of the likely outturn cost. Including showing a variance against budgets and tender sums
- Give the Client an understanding of potential savings or overspends
875 What information are you likely to include in a post contract cost report?
878 What is life cycle costing?
This is an objective measurement of what a building or particular element is likely to cost over its life time. From purchasing, installing, running costs, maintenance, refurbishment, replacement to decommissioning or demolition. It enables options to be compared from a lifetime perspective. With a view to understanding the overall ownership/running costs.
879 What are the advantages of LCC?
Long term value: Allows the cost of the asset to be considered over the whole of its lifetime and not just the capital cost. May give the project a higher overall value even if the upfront costs are not significantly reduced. The process will promote better durability, reduced maintenance, fewer risks, operation efficiency and may lead to an increased overall asset lifespan.
Green building certification credits: Life cycle credits are included in many green building certification schemes such as BREEAM
Reliable planning and reduced risk: Excellent planning tool that covers long spans of time. If properly utilised it can reduce financial and operational risks. It will also promote:
* Consideration of long term implications of decisions
* Enables informed decisions to be made on material selection
* Can be used to plan future maintenance requirements
