Quantification and Costing

Question 1

Name some methods of measurement

Answer 1

• NRM2 (New Rules of Measurement)
• CESMM4 (Civil Engineering Standard Method of Measurement 4) – published by ICE
  o For civil engineering projects
• RMM2 (Network Rail’s Method of Measurement) – 3 volumes that are similar to NRM
  o Provides supplementary information to CESMM4
• SMM7 (Standard Method of Measurement) – superseded by NRM

Question 2

How do SMM7 and NRM2 differ?

Answer 2

NRM2 was brought into directly replace SMM7 to encourage best practice and reflect the changes in construction processes since SMM was created.
- elements being broken down further within NRM2 with 41 work sections against the 22 trade sections in SMM7
- clearer definitions of prime cost and provisional works and allowances for risks
- NRM2 is compatible with BIM
- allows scope to create composite descriptions of work items, thus removing the need for the contractor to price large numbers of low value tasks that add little to the overall pricing exercise

Question 3

What is NRM?

Answer 3

A suite of documents written to provide a standard set of. measurement rules that are understandable by anyone involved in a construction project. It consists of three volumes.

Question 4

What is NRM1?

Answer 4

Order of Cost Estimating and Cost Planning for Capital Building Works:
Provides a framework for preparation of pre-contract estimates and cost plans using an elemental breakdown to better see the advantages of clear and transparent cost data

Question 5

What is NRM2?

Answer 5

Detailed Measurement for Building Works:
Provides detailed guidance on preparation of BoQs which can then be used to price upon using unit rates

Question 6

What is NRM3?

Answer 6

Order of Cost Estimating and Cost Planning for Building Maintenance Works:
Used to consider the maintenance and running costs of the building to assist with life cycle costs and is structured to match NRM1.

Question 7

What is the structure of NRM2?

Answer 7

Split into three sections:
1. Measurement in context with the RIBA Plan of Work and OGC Gateway Process
2. Outlines benefits of detailed measurement and purpose of NRM2
3. Tabulated rules for measurement

Question 8

What are the advantages of using a bill of quantities based on NRM2?

Answer 8

• forms an identical basis for tender evaluation
• transparency
• provides a basis for post contract management:
  – valuing variations
  – final account preparation
  – interim valuations
  – auditing
• familiar format.

Question 9

What does building up a price from first principle mean?

Answer 9

To break down on a project into its constituent parts to identify costs for labour, plant and materials individually (+OH&P).

Question 10

What are preliminaries?

Answer 10

Prelims address and communicate to the contractor items that are not directly related to any component, element, or work section

Question 11

What is a preamble?

Answer 11

First section of a BoQ that assists the reader in understanding the unit price items and a high-level description of the method of measurement of those unit items

Question 12

What is a prime cost sum?

Answer 12

An allowance included within the contract for supply of works or materials to be carried out by a nominated subcontractor or supplier, or a statutory authority. These costs may vary once the work has been carried out.

Question 13

What is a provisional sum?

Answer 13

An allowance, usually estimated by a cost consultant, that is inserted into tender documents for a specific element of the works that is not yet defined in enough detail for tenderers to accurately price. They can be defined or undefined.

Question 14

What is a defined provisional sum?

Answer 14

Described in sufficient detail that the contractor is expected to have made allowance for them in their programming, planning and pricing preliminaries.

e.g. Cost of installing a timber frame where the specific type of timber has not yet been specified and so its price is not known

Question 15

What is an undefined provisional sum?

Answer 15

Less well described and so the contractor cannot be expected to make allowance for them. Therefore, the contractor may be entitled to EOTs or additional sums and the client undertakes the cost and scheduling risks.

e.g. unknown ground conditions

Question 16

How does NEC recommend dealing with provisional sums?

Answer 16

Provisional sums are not included under the NEC.

Question 17

What is the risk with provisional sums?

Answer 17

That the actual cost and time exceeds that allowed for in the provisional sum because the nature of the item changes between tender and instruction

Question 18

How would you price a provisional sum?

Answer 18

Depends on the level of information available:
* use the drawings to ascertain any possible quantities & build up a rate based on the work involved.
* price any allowances for access.
* If a specialist piece of plant, possibly obtain a quotation for the item if there was sufficient information available.
* Include for overheads & profit

Question 19

What’s the difference between a provisional sum and a prime cost?

Answer 19

Prime cost is limited to the cost of supplying the relevant item and does not include the cost of any work that relates to it (such as its installation).

Question 20

What would happen if the employer employed a third party to undertake some provisional sum work?

Answer 20

Under many contracts including the JCT, provisional sum work forms part of the overall scope of works whether it is defined or undefined. As such, unless the contract provides otherwise, the Contractor may bring a claim for breach of contract and for loss of profits against the Employer.

Question 21

What are dayworks?

Answer 21

NRM2: The method of valuing work on the basis of actual time spent by the contractor’s completing it, accounting for labour, the materials used and the plant employed

Question 22

Can the PM /QS substitute their own estimate of the hours it should have taken to do the work if they believe the days recorded are too high?

Answer 22

No - as long as the daywork sheets have been signed and dated by properly authorised persons, the quantity surveyor has no power to do so

Question 23

What is builder’s work in connection (BWIC)?

Answer 23

Builder’s work that is necessary as a result of other works e.g. as a result of the installation of M&E services, asbestos removal, cutting, reinstating, plastering etc. may be required. BWIC will usually be set as a % of the services cost

Question 24

What are fixed charges?

Answer 24

Method related charges that do not vary with time e.g Service Connection Charges

Question 25

What are time related charges?

Answer 25

Considered proportional to time taken to carry out the works e.g. Cabin Hire

Question 26

What pricing documents are available under the NEC4 ECC?

Answer 26

1. Activity Schedule - Programme driven and allocates each “activity” a price. Payment for each activity is only made once it is completed
2. Bill of Quantities - sets out in detail what materials are required according to the drawings for the project, and the contractor can then price based on the required quantities
3. Defined Cost - the actual costs incurred by the Contractor on the Works minus retention and any costs which would fall within the overheads covered in the Fee.

Question 27

Why and when would you recommend a BoQ to a Client?

Answer 27

Why:
* Simplifies tender analysis
* Defines the extent of the work that needs to be carried out and also provides the estimated contract sum
When:
* When there is enough design information to quantify materials

Question 28

What types of BoQ’s are available? (NRM2)

Answer 28

1. Firm – lump sum for fully designed projects
2. Approximate – subject to remeasurement as built. Used where there is insufficient detail to prepare a firm BoQ or where the time or cost of a firm BoQ is not warranted
   Typical projects are major excavation and earthworks

Question 29

What is the RIBA plan of work?

Answer 29

Framework that organises the process of delivering projects and administering building contracts into a number of key work stages

Question 30

What are the RIBA work stages?

Answer 30

0. Strategic Definition –
1. Preparation and Briefing
2. Concept Design
3. Spatial Coordination
4. Technical Design
5. Manufacturing and Construction
6. Handover
7. Use

Question 31

How would you prepare a bill of quantities?

Answer 31

• Meet with design team to establish when information will be available
• Compile all information necessary from design team inc. drawings, specifications and schedules
  o Ensure this is the latest info by comparing against the document register
  o Ensure there’s enough information to produce firm BoQ
• Establish which MoM to adopt
• Break down the specific materials into categories
• Commence take-off from the substructure upwards
• Address general items, prelims and any preambles
• Have it checked by other members of the team
• Carry out regular meetings and reviews to ensure that nothing has been missed

Question 32

How does the 2020 RIBA plan of works differ from the 2013 edition

Answer 32

It has a bigger focus on sustainable outcomes and strategies

Question 33

How is a mistake/ambiguity in a bill of quantities corrected post-contract in the NEC4?

Answer 33

Clause 60.6 allows for this

Question 34

How should you deal with arithmetical errors in tender returns?

Answer 34

Process for dealing with errors should have been outlined in the ITT. There are typically two options:
* Allow the contractors to correct their error; or
* Contractors to stand by their price
JCT tendering practice note 2017 provides guidance on this and recommends the above two options.

Question 35

How does payment work under the NEC4 Option C?

Answer 35

Amount Due =Price for Work Done to Date (PWDD) - less amounts to be paid by or retained from the Contractor.

PWDD = total Defined Cost the Project Manager forecasts will have been paid by the next assessment date, plus the Fee.

Defined Cost is the amount of payments to Subcontractors for subcontracted work (without taking account of deductions) and the cost of components in the Schedule of Cost Components for other work, less Disallowed Cost.

Question 36

What are the advantages and disadvantages of using an activity schedule?

Answer 36

Advantages:
* Can form the basis of the Programme
* Simplifies the administration of the payment process
* Means of transferring the quantification risk for accurately taking off the works to the Contractor.
* contractor largely bears the risk of carrying out the work at the agreed prices.

Disadvantages:
* it can be difficult to properly assess tender returns if you wish to understand why there are large price variances on certain items between suppliers
* it is possible for contractors to front load their price in order to provide positive cashflow.