Key Issue 1 - Case Study Flashcards
What types of inflation are there in construction?
- Tender Price Indices (TPI) (The BCIS All-In-TPI) This is the inflation used during tender stage till order place.
- Output price indices (OPI) (BCIS All-In-OPI) This is used convert construction output volume figures from current to constant prices. I.e., to reflect works completed in the future.
- Resource Cost Indices (RCI) – Cost of labour, materials, and plant. (This is often General Building Cost Index).
What are the current inflation rates?
• The consumer pricing index is 7.8% in 12 months
- Between Q1 21 and Q1 22:
Material growth was 18% !
General Inflation is 9%
Why wouldn’t you value engineer with the Façade Sub-Contractor?
- The sub-contractor perhaps lacked the knowledge of how to value engineer as they were likely to sub-let this out.
- They may have seen the design opportunity and saw this as an opportunity they would pursue.
Where would you find a sub-contractor’s design responsibility in the contract?
• recital no 3 of the agreement
Further clarification in:
Section 2 ‘Carrying out the Sub-Contract works’, Clause 2.2 of the JCT D&B Sub-Contract and defined clearly in numbered documents (scope document).
And numbered documents
If you went with Option 1, what tender route were you proposing to use?
• As it was a stand along acoustic product, I would have looked to procure this through a single stage competitive tender.
Why was the plan to buy the plant screen with the façade contractor?
• A competitive and fast-paced tender meant the works were wrapped up within the curtain walling scope, on reflection there should have been more consideration.
Where does it define in the sub-contract who holds the design risk?
- Sub-Contracts designed works, clarified in Recitals no. 3.
* Then extent is clarified in Section 2 of the sub-contract ‘Sub-Contractors Designed works.
How did you carry out value engineering?
- I understood the problem (i.e., we were over budget)
- I identified different solutions (i.e., acoustic screen, VE option etc)
- I evaluated and advised on each solution
- I then advanced with the best option and explored this in greater detail
- I then identified and advised senior management on the best solution.
In what stage of the RIBA does Value Engineering typically take place?
- Usually, contractor led 4-5 stages.
* Can be offered in earlier stages as a selling point.
What is the overall purpose of value engineering?
• To achieve overall optimum best value (value changes depending on parties involved).
What is a key consideration when value engineering?
• I must consider the true value to all parties, i.e. at Norwood Zurich wanted a building that achieved the employers requirements. We wanted to deliver that and within our budget. = i.e., value engineering option worked.
What resources are needed when carrying out Value Engineering?
- Time
- Information
- Skills and Knowledge (Competent people)
- Clear plan.
What is value engineering?
• Maximising project value and achieving the objectives, whilst finding efficiencies through cost, time, or quality.
Why did you take the consideration to value engineer this screen?
- There was the benefit of reducing cost by focusing on the fundamental requirement of the works and considering alternative approaches.
- The RICS guidance note suggests that is not uncommon to have unchallenged assumptions…
How did you manage risk throughout the VE process?
- I advised the team on the information received, for example I requested all test data and ensure the offered solution was achieving our Employers requirements.
- I held frequent team meetings to discuss the process throughout the VE exercise, reviewing any risks is an important stage of the value engineering process.
