Cost Control

Question 1

What is the difference between Site Overheads and company Overheads?

Question 2

Variations - What are the ways a variation should be Formulated/Costed?

Answer 2

1. By agreement
2. Bill of quantity rates
3. Adjusted rates - Where work & conditions are dissimilar
4. Market Rates - Based on similar work done in same locality & material cost
5. Dayworks - Time + plant & materials
6. Omitted Work - Credits based on contract values

Question 3

Cash Flow - How can a Contractor improve Cash Flow at the Tender Stage?

Answer 3

1. Money can be loaded into under-measured items
2. Money can be loaded into items that will be completed early such as excavation & sub-structures
3. Money can be loaded into Prelims

Question 4

Cash Flow - How can a Contractor improve Cash Flow at the Contract/ Construction Stage

Answer 4

1. Ensure claims are submitted on time
2. Over-measure the works in progress
3. Over-value materials on-site
4. Agree on the value of variations ASAP
5. Remedy defective work quickly so payment isn’t held back
6. Use trade credit facilities cleverly i.e. 30-60 days on materials

Question 5

Cash Flow - How can a Contractor improve Cash Flow Post-contract

Answer 5

1. Submit all documents quickly.
2. Make sure there are no delays to retention being released i.e. O&Ms & Health & Safety Files submitted on time.
3. Get agreement on the Final Account quickly
4. Ensure to collect Retentions as early as possible

Question 6

Cash Flow - What are the different methods to produce an S Curve & how is it presented?

Answer 6

1. S- Curve. Proven by research to work. The S Curve is best applied to projects where Provisional Sums are evenly spread. It does not allow for high-expenditure items early in the project.
2. Types of S Curve are - 1/4:1/3 Rule, Cumulative Percentage Value, Bar Chart Programme & The Good Guess Method.

Question 7

Cash Flow - Explain the 1/4:1/3 Rule

Answer 7

1. 1/4 of total expenditure will occur in the 1st 1/3 of the project
2. 1/2 of total expenditure will occur in the 2nd 1/3 of the project
3. 1/4 of total expenditure will occur in the final 1/3 of the project

On a graph, Project Value (€) will be shown on the Vertical and Time (Weeks/Months) shown on the Horizontal

Question 8

Cost Control - What are the main sources of Information available to the Contractors QS

Answer 8

1. Contract Bills of Quantities - They contain a breakdown of how the job was priced. Not ideal for Civil Projects as BOQs are approximate & full remeasure will be required.
2. Estimates of Cost - Provides a better breakdown of the total cost allowed in a BOQ
3. Method Statement - Details assumptions made by the estimators & management team
4. Master Programme - Contains the sequence and timing of all aspects of the project

Question 9

Cost Control - What additional items can be added to the 4 main types of information available to QS’s?

Answer 9

1. Interim Valuations,
2. Financial info on: Labour, Plant Materials, Sub-Contractors, Salaries, All other Site Costs

Question 10

LADs - What is meant by liquidated and ascertained Damages?

Answer 10

1. LADs are essentially a way for a client to safeguard against losses and costs due to a project running on due to delays caused by the Contractor, provided the Contractor has no grounds for an Extension of Time
2. A sum of money, specified in the Contract will be deducted from the Contractor’s account to compensate the client.
3. LADs must be calculated on a realistic basis and are not a punishment payment.

Question 11

LADs - What are the benefits of Liquidated Damages

Answer 11

1. Certainty - Both parties have a degree of certainty should the programme run over.
2. Limitation of Liability - If a contract is breached, the LADs limit the damages available to the client. The Employer cannot seek further damages.
3. Saves Time and Expense - The process is much simpler as it is a contract stipulation, rather than the alternative of going through the courts.
4. Incentive - Contractors are incentivised to finish the project on time and are unlikely to unnecessarily delay works/completion.

Question 12

Explain how the following changes are valued under the RIAI Standard Form of
Contract (assume a 65 week contract).

The contract is on programme at week 58 with all the internal doors fixed. The Architect issues an instruction to remove a number of the corridor doors and frames and replace them with acoustic door sets. Delivery of these units is quoted as 14
weeks.

Answer 12

1. It needs to be established if the doors installed are as per the contract specification. If they are as per the contract spec, it can be deemed to be a variation. If they are not as per the spec the doors must be removed and replaced by the contractor at his own expense. (Clause 8)
2. The substitution of contract works is a variation under (Clause 2).
3. Assuming the doors are a variation, the architect’s request must be priced in accordance with Clause 13.
4. The Contractor shall be paid for the original door sets and any associated works.
5. The Contractor shall be paid for the cost of removing the installed door sets, making good finishes & disposal of doors & frames.
6. As no cost available in BOQ for the same door types, the QS must get market rates for purchase & installation or get a supply & install cost from a specialist installer.
7. The Contractor will be permitted to add for profit on the Specialist Installers costs.
8. The programme will be affected by at least 7 weeks. Additional time must be allowed to complete the remaining contract works and the installation of the doors.
9. An Alternative Proposal could be offered. If it suited the client, installing the doors at a later date may cost more for the doors themselves but savings could be made by having the building available to them on the original contract date.