Quantification and Costing of Construction Works Flashcards
1
Q
Why were the New Rules of Measurement introduced?
A
- Prev Standard Method of Measurement (SMM7) purely designed for BoQ production for tender purposes
- Therefore lack of guidance and uniformity when preparing cost estimates and cost plans
- NRM introduced to provide common and consistent basis, to give employers more confidence around what’s been included
2
Q
If producing estimates and cost plans, which measurement rules represent industry best practice for capital building and building maintenance works in the UK?
A
NRM (new rules of measurement)
3
Q
Why should you use the NRM?
A
- Common and consistent basis for production of cost documents
- Adds confidence to clients
- If QS / firm pursued for negligence, NRM (if followed)would provide means of defence - represents best practice
- If not following NRM, would need good defence why this approach taken
4
Q
Can you name the 3 documents in the NRM suite?
A
- NRM 1 - Order of cost estimating and cost planning for capital building works
- NRM 2 - Detailed measurement for building works
- NRM 3 - Order of cost estimating and cost planning for building maintenance works
5
Q
Can you provide a brief overview of each of the NRM documents?
A
NRM 1
- Guidance for quantification of building works for purpose of preparing cost estimates and cost plans
- ‘Cornerstone’ of good cost management of construction projects, enables effective and accurate cost advice to be given to clients and other project team members
- Facilitates better cost control
NRM 2
- Prep BoQ and quantified schedules of works
- Rules invaluable for designing and developing standard / bespoke schedules of rates
NRM 3
- Guidance for quantification and description of maintenance works for purpose of preparing initial order of cost estimates
- Rules aid procurement and cost control of maintenance works
6
Q
How is risk dealt with under NRM?
A
- Risk allowances not a standard percentage
- Should be properly considered assessment of risk, considering completeness of design and other uncertainties such as extent of site investigation undertaken
7
Q
What are the 4 categories of risk identified in NRM?
A
- Employer change
- Employer other (funding risks, policy / spending practices)
- Design development (items of work missed as design developed)
- Construction (site risk, contamination, obstruction)
8
Q
Why is it important to measure the works according to industry standards and best practice?
A
- Greater consistency and accuracy of pricing
- Ensure all parties price on same basis, reduce risk of dispute
9
Q
Is it mandatory for Chartered Surveyors to follow procedures set out in NRM?
A
No, however when allegation of professional negligence made against a surveyor, the adjudicator / court likely to take account contents of any relevant guidance notes published by RICS in deciding whether surveyor acted with reasonable competence
10
Q
Structure of NRM 1?
A
- Intro
- Measurement rules for order of cost estimating
- Measurement rules for cost planning
- Tabulated rules of measurement for elemental cost planning
- Appendices (definitions for GIA, NIA, functional units, elemental breakdowns, templates, general info for cost plan productions)
11
Q
How does NRM define the ‘cost limit’ for the project?
A
NRM 1
Max expenditure the client is prepared to make related to completed building (inc construction, professional services, other project costs, items required post completion, during operation and risk allowances
12
Q
How does NRM define the ‘base cost estimate’ for the project?
A
NRM 1
Evolving estimate of known factors without allowances for risk / uncertainty / inflation. Sum of works cost estimate, project and design team fees estimate, other development and project costs
13
Q
Structure of NRM 2?
A
- General Introduction
- Detailed measurement of building works
- Rules of measurement for building works
- Appendices
14
Q
Key headings for contractor preliminaries identified in NRM 2?
A
- Employer’s requirements
- Site accommodation
- Site records
- Completion and post-completion requirements
- Main contractor’s cost items
- Management and staff
- Site establishment
- Temporary services
- Safety and environmental protection
- Control and protection
- Mechanical plant
- Temporary works
- Site records
- Completion and post completion requirements
- Cleaning
- Fees and charges
- Site services
- Insurance, bonds, guarantees, warranties
15
Q
Types of BoQ under NRM2?
A
Firm
- Reliability of tender price increases in relation of accuracy of quants provided. If no design changes, firm BoQ at tender stage = final cost
Approximate
- Not enough detail to prepare firm, decided by client that time/cost to produce firm one not warranted
- No lump sum price provided, but tender price totals
- Qty’s subject to remeasurement on completion by QS / cost manager
16
Q
How do you measure structural steelwork under NRM 2?
A
Section 15 - measured in tonnes, itemised according to lengths (n.e. 1m / 1-9m / >9m), weight (n.e. 25kg/m / 25-50kg/m / 50-100kg/m) and type (columns, beams, rafters, bracing, purlins, cladding rails)
17
Q
What items would you measure in association with structural steelwork under NRM 2?
A
- Framing erection
- Permanent formwork
- Cold rolled purlins and cladding rails
- Isolated structural member
- Filling hollow sections
- Surface preparation and treatment
- Localised protective coatings
18
Q
How do you measure brickwork walls under NRM?
A
Masonry- section 14
- Measured in sqm, itemised according to wall thickness, type of construction and method of formation
19
Q
Other items to measure in association with brickwork / masonry?
A
- Chimney stacks
- Arches
- Brick reinforcement
- Forming and closing cavities
20
Q
How do you deal with ground water under NRM 2?
A
Section 5 - Excavating and Filling
- Measured on itemised basis, original below ground level stated and reference to whether water is polluted
- If post contract water level differs from pre-contract level, measurements must be taken and revised accordingly
- Method and place of discharge left to discretion of contractor unless stated otherwise
21
Q
What are levels 1, 2, 3 [and 4] mentioned in NRM?
A
- [Section 4 and] Appendix B of NRM2, describes the logic and arrangement of the levels for elemental cost planning, in increasing amounts of detail
L1 - group element (i.e. facitating works)
L2 - element - key part of group element (i.e. major demolition works)
L3 - sub-element (i.e. soft strip works)
[L4 in Section 4 - component- building work forming sub-element)]
22
Q
Structure of NRM 3?
A
- General introduction
- Measurement rules for building maintenance works
- Measurement rules for order of cost estimating
- Cost planning of repair and maintenance works
- Calculation of annualised costs for repair and maintenance works
- Elemental cost planning
- Appendices
23
Q
Can you name some of the pricing documents we might use at tender stage?
A
- Bill of quantities (BoQ)
- Schedule of rates (SoR)
- Contract sum analysis (CSA)
- Schedule of work (SoW)
- Priced activity schedule
24
Q
Why might a CSA make it difficult to agree post contract cost changes?
A
- Higher level breakdowns (usually elementally) so contractor substantiation is required to agree costs post contract
- More difficult to determine if an item has been costed for and how priced
25
Name some of the pricing options for construction contracts?
- Lump sum
- Cost plus / cost reimbursable
- Remeasurement
- Target cost
- Guaranteed maximum price (GMP)
26
How are obstructions dealt with on site? What package do you see them included?
- Usually as a prov sum
- Included in groundwork / earthwork contractor's package (responsible for excavating foundations)
27
What is a preamble?
- Explanation of a document, commonly found in contracts, specs and BoQ
- Can help with document interpretation
- Includes description of parties to the contract
- Measurement procedures adopted
28
The client has requested to use a Standard form of building contract. Explain the different types of SBC available and what level of pricing document you would expect to use for each.
1. SBC with quantities, with approximate quantities, without quantities
2. Pricing document depends on size and complexities of the project, typically you would expect:
- With quants -> full BoQ prepared by PQS
- With approx -> BoQ used on re-measurable basis
- Without quants -> pricing schedule / BoQ may or may not have qty's to be verified by tendering contractor
29
What is a lump sum contract?
- Provides payment of set amount
- Amount determined by contractor estimating their cost to provide the work and add OH&P margin
30
Key advantages to lump sum contracts?
- Contractor takes on pricing risk, benefits from increased profit if actual costs turn out to be below estimated costs
- Cost certainty for the employer
31
Disadvantages of lump sum contracts?
- Higher risk to a contractor if they underestimate costs- decreased profit margins
- This can result in higher claims for variations
- May increase tender price as a result of additional risks faced
32
What is a cost-plus contract?
Cost reimbursable contracts - involves employer paying contractor for costs incurred during project + pre-agreed profit percentage
33
What are the key advantages of cost-plus contracts?
- Flexible, so inaccuracies in initial bid aren't as detrimental as lump sum contracts
- Allow employers to make design changes along the way and contractors know they'll be paid for extra time / materials for changes
34
Key disadvantages of cost-plus contracts?
- Final contract sum uncertain until the end
- No incentive for efficiency- contractor may deliberately incur higher costs to increase profit
35
When might a cost-plus strategy be appropriate to use?
- Where nature / scope of work can't be properly defined at outset
- Pricing strategy would suit emergency work (i.e. infrastructure repairs / immediate reconstruction following a fire)
36
How would you undertake an audit on a cost reimbursable contract?
- Upon submission of application, ensure provided in agreed format and detail
- Review costs incurred for labour, plant, materials, staff, OH&P
- Reconcile info against fee schedules and rates
- Check timesheets, staff grades and rates, project codes, invoices, etc.against contract rates
- Make any adjustments necessary
37
What is a remeasurement contract?
- Works carried out based on pre-agreed unit rates
- Actual work qty measured and tendered rates applied
- Contractor paid for actual work so final project value derived based on unit prices and exact quantities
38
Advantages of remeasurement contracts?
- Works tendered on approximate quantities, so contractor still incentivised to submit competitive tender prices
- Contractor's risk comparatively low (compared to lump sum)
39
Disadvantages of remeasurement contracts?
- Less cost certainty until project complete
- Less general accuracy of cash flow forecasting
- Higher employer risk (compared to lump sum)
40
What is a target price contract?
- Target cost set early in project
- Upon completion, cost savings / overrum shared between employer and contractor based on pre-agreed formula or %
- 'Pain and gain' mechanism
- Mechanism for sharing risk and opportunity (main difference between this and conventional contract)
41
Advantages of target price contracts?
- Contractor and employer incentivised to reduce costs
- Encourages active and equitable risk sharing, based on clearly defined risk allocation at project outset
42
Disadvantages of target price contracts?
- Employer and contractor must share pain and gain - employer exposed to greater risk
- Complex target price, pain/gain share may not easily be understood by all parties
43
If the employer wanted a target cost contract using NEC form, which main options would you use?
- Option C - Target contract with activity schedule
- Option D - Target contract with BoQ
44
If it was found that a bill rate was blatantly wrong (i.e. £100 instead of £1) how would this be resolved?
- Works valued in accordance with agreed rate in contract
- If error identified in tender, rate can be amended in accordance with tendering rules alternative 2, otherwise both parties have to stand by rate
45
Can you define contractor's overheads and profit please?
- Overheads applies to works carried out by people in company not directly chargeable project (i.e. business infrastructure, head office, marketing, IT)
- Profit is the money contractor makes after accounting for costs and expenses
- % can vary according to risk, workload and economic climate
46
What is a GMP contract?
- Sets limit the employer will pay contractor, regardless of actuall costs incurred
- If actual works cost higher than GMP, contractor bears additional cost
- If actual works cost lower, contract set out which party benefits from savings (usually split between employer and contractor using pre-agreed formula / %)
47
Advantages of a GMP?
- Establishes employer's max financial commitment (subject to employer variations), even if contractor's costs exceed target
- Both contractor and employer have potential to benefit from savings
48
Disadvantages of a GMP?
Contractor maintains risk of cost overrun whilst usually having to share savings
49
What is a BoQ?
- Means of breaking project down into exact quantities measured in industry-wide recognised format
- Includes all project/building components and prelims
- Usually based on mature drawings and specifications, contractor inserts cost / rate against each item
- Precise tool for pre and post contract cost control (i.e. managing variations, project expenditure, cash flow)
50
What is the purpose of a BoQ?
- Provide estimator with accurate picture of scope of works, provide a common and consistent basis for pricing
- Used in tender submissions- forms basis of tender analysis and allows like-for-like comparison to be undertaken
- Throughout post contract stages provides basis for valuations and interim payments and valuing variations
51
Why use a BoQ over a SoW?
- SoW less detailed and doesn't have quantities for specific work items
- Simplifies tender process- tendering contractors pricing same quantities
- Simplifies tender analysis
52
Advantages of a BoQ?
- Ideal for post-contract cost control
- Simplified tender analysis
- Detailed and comprehensive
- All tenderers pricing same items and quants
- Effective document for interim payments and preparing final account
53
Disadvantages of BoQ?
- Expensive and time consuming
- Potential for errors when measuring the project
54
When would a BoQ with approximate quantities be used?
Remeasurement forms of contract
55
What's the risk with using approximate quantities?
Could be incorrect and may be eventually subject to a re-measure- could be more time consuming
56
How would you check that items measured for BoQ were accurate?
Internal QA system- upon completion review of drawings by spot check measures, senior colleague(s) reviewing scope of works
57
What would you do if a contractor told you that you measured a staircase in the BoQ that didn't exist?
- Check drawings, bills of quantities to see if correct
- Refer back to tender drawings, check if design change
- Depending on form of contract, remeasure section and notify the Contractor of actual quantities (otherwise it could be an instruction to omit this element of the works)
58
How would you prepare a BoQ?
- Meet with design team, establish when necessary info available and ensure sufficient
- Compile information inc drawings, specifications, schedules, document registers
- Discuss method of measurement to be adopted with client
- Prior to commencement- consider size of project, break dorks down into sections, i.e. substructure, superstructure
- Commence take off, substructure upwards
- After measurement, address general items section and any preambles
- Meeting to review any updated drawings and ensure no works items missed / overlooked
59
How would you structure a BoQ?
In accordance with NRM 2:
- prelims
- facilitating works
- substructure
- superstructure
- internal finishes
- FF&E
- services
- external works
- prov sums
- dayworks
60
How would you describe the preliminaries section in a Bill of Quantities?
- This details items of work required to enable contractor but not associated within permanent measured works items
- Includes items like site setup, management and supervision, insurances, temp services and protection
61
How do you evaluate a variation based on a BoQ item that contains an error?
- Assuming same nature and conditions applicable, variation based on BoQ rate within contract
- Both parties could agree to amend rate to one that's fair and reasonable
62
Who owns the copyright to a BoQ?
Originator owns copyright, generally QS who provides client permission to use doc for intended purpose
63
How would you deal with a situation where it was discovered a part of a BoQ was missing after the main contractor was on site?
- Check to see if included as part of tender documents and ultimately contract sum
- If not, responsibility would lie with Employer
- If still required, treated as variation
- Request contractor price works (supplementary provision 2) and advise Employer on level of costs involved before issuing instruction
64
What would you include within the BoQ where works are to be carried out by Nominated Subcontractor?
Prime cost sum would be incorporated, including allowances for:
- Cost of Nominated Subcontractor work
- Contractor to price for attendances i.e. accommodation, welfare, storage, handling, materials, cleaning
- % addition for any other charges and profit
65
What are contractor preliminaries?
- Items not alocated to specific element/sub-element/component but necessary for contractor to complete works
- May include management and staff, site establishment, temporary services, security, safety and environmental protection, insurances
66
When assessing costs for contractor preliminaries at tender stage, what are the key considerations to determine if they are fair and reasonable?
- Length of contract, inc method and sequencing
- Type of project (i.e. size)
- Overall build cost
- Need for temp works
- Security works
- Extent of contractor's design responsibilities
67
Examples of contractor preliminaries which might be considered abnormal? (over and above a 'standard' project)
- Tower cranes
- Weekend / evening working
- Road/train line closures / traffic management
68
Difference between fixed and time related preliminaries?
- Fixed prelims = one-off costs (i.e. purchasing equipment)
- Time related = dependent on duration (i.e. weekly hire)
69
What information is required to measure preliminaries?
- Contract duration
- Location
- Type of project (new build vs refurb)
- Project size and area
- Security
- Methodology, programme
- Services
- Accommodation
- Sectional completion
- Contractor design work
- Insurances / bonds
70
What are method related charges?
- One-off item related to method of carrying out work, doesn't form part of permanent works
- Not considered proportional to item of works being carried out
(i.e. temp propping)
71
What are time related charges?
Method related charges considered proportional to time taken to carry out works i.e. plant hire
72
What are fixed charges?
Method related charges that don't vary with time, i.e. set up / service connection charges
73
How would you price a contractor's preliminaries?
- % construction cost supplemented by benchmarked data
- NRM 2 states it's not possible for QS / Cost Manager to quantify main contractor's prelims as it's for them to interpret the information, so I wouldn't dictate what they should include
- issue items in preliminary pricing schedule in tender in line with NRM 2
74
What regulation governs measurement practice?
- Code of measuring practice
- Weights and Measures Act 2015
75
Are you aware of any recent / upcoming changes to measurement standard?
Cost prediction (2020) and revised NRM documents in 2021 now incorporate international construction measurement standards (ICMS)
76
Different types of international standard of measurement?
IPMS, ICMS
77
What methods of measurement are you familiar with?
- NRM
- IPMS
- ICMS
- CESMM4
- SMM7
78
Advantages of using a method of measurement document in construction?
- Internationally recognised
- Consistency in tendering and pricing
- Easily identify what's included/excluded
- Beneficial to agree post-contract variations
- Allows cost data to be comparable
79
When was IPMS introduced?
Incorporated to RICS guidance in 2016
80
Difference between IPMS 1,2 and 3?
1 - GEA to include balconies (stated separately)
2 - GIA measure to dominant face
3 - NIA to include columns
81
What are the current RICS publications for measurement?
- Cost prediction professional statement (1st) from 2021
- Code of measuring practice (6th edition)
- NRM1-3 (3rd edition - October 2021)
82
What is meant by abbreviation of GEA?
- Gross External Area
- Area of building measured externally at each floor level
83
What is meant by abbreviation of GIA?
- Gross Internal Area
- Measure of internal face of perimeter wall at each floor level
- Excludes external open sided balconies, external walls, fuel stores
84
What is meant by abbreviation of NIA?
- Net Internal Area
- Area of usable space measured to internal face of perimeter wall at each floor level
- Excludes internal structural walls and columns, spaces with headroom <1.5m, permanent lift lobbies, toilets, cleaners' cupboards and plant rooms
85
Where are all these abbreviations defined?
Code of Measuring Practice, published by RICS
86
What is the purpose of the Code of Measuring Practice?
Precise definitions to permit accurate and consistent measurement of buildings
87
What do you measure in accordance with?
NRM as I'm in UK construction sector, but could depend on the location and client I'm working with (i.e. Rail / civils projects would use CESMM)
88
How would your approach to measurement change if you worked in, say, Dubai?
Need to measure in accordance with the method of measurement appropriate for the country
89
What would you expect the percentage of NIA to GIA to be?
- Depends on project type being undertaken (i.e. school/hospital/office)
- i.e. office building - 70-85% (70% relatively inefficient, 85% extremely efficient)
90
What items would you include for when measuring for example a basement?
- Depends on form of basement construction
- i.e. piled walls and clear site I measure:
- excavation and disposal of topsoil
- continuous piles to walls inc piling rig, hard standing piling mat, testing, cutting
- excavation and disposal of arisings
- prep of excavated surface
- waterproof
- blinding
- concrete to basement slab and walls
- reinforcement
- formwork (to walls)
- finishes to concrete
- internal finishes
91
How do you measure cut and fill?
- Obtain drawings with existing and proposed levels
- Divide excavation into grid, establish average existing and proposed level
- This determines area to be cut in and which was filled
92
Is the quantity for excavation similar to disposal?
Yes, providing no backfilling required and assuming measurement doesn't allow for bulking / shrinkage / wastage
93
How would you prepare an estimate for M&E works?
- Ask specialist M&E surveyor to undertake estimate
- For feasibility estimates, the M&E would be included in sqm / functional unit rate
94
How do you measure something unique, i.e. a client statute?
- If it can be broken down easily into parts in accordance with method for measurement, use this as basis for measurement
- Otherwise insert item with detailed description to include a provisional sum
95
What modern measurement software are you familiar with?
- Pdf readers (i.e. Foxit)
- Bluebeam
- BIM / CAD measure
96
What are the benefits and limitations of modern measurement software?
Benefits
- Saves time
- More precise and accurate measurements
- Remote working and collaborative measure
- Environmental and economic (no printing)
Limitations
- Costly
- Requires use of apt technology (i.e. laptops)
- Requires more intensive (and costly) training
97
What are first principles (with costing)?
Splitting an item into labour, plant, materials, prelims, OH&P, design and risk
98
When have you used first principles to build up a rate?
i.e. floor finishes, obtained material cost from supply, made allowance for small tools, labour required to lay 1sqm, added contractor's OH&P, design, risk and prelims to give bottom line figure with estimate
99
What are STAR rates?
Used when no BoQ rates to rely on - agreed through variation process that become 'locked' - set precedance for variations moving forward on a project
100
What is a built up rate?
- Rate the estimator will arrive at for pricing an item in a BoQ
- Includes labour, materials, plant, any waste and travel, OH&P
101
Give an example where you agreed a variation?
- i.e. xxx project -> re-design to add in dormers, contractor submitted costs to carry out the works (i.e. remove completed roof tiles, scaffolding etc.)
- Checked contract whether equivalent rates could be extracted, whether there was anything to be omitted from the scope of works
- Queried with the contractor, obtained substantiation
- Notified EA/CA upon agreement, they gained client acceptance and issued instruction
102
How would you interrogate costs?
Market different materials, benchmark against other schemes, review the time allowed for completing works and compare labour rates to BCIS
