Quantification and costing (of construction works) (L3)

Question 1

On the Thirlmere Service Reservoir, when advising on the CE for omission of fencing, was the Contractor satisfied that your advised method was suitable?

Answer 1

o Yes
o Given that the time for preparing a forecast Defined Cost assessment is unrecoverable for a Contractor under an Option A

Question 2

Why did you consider this was the best option?

Answer 2

o Due to the time it would take producing a forecast defined cost assessment being unduly lengthy in relation to the value of the compensation event
o I also calculated a cost per m based on the Price from the activity schedule and compared this to a similar item for fencing in SPONS, which was rebased for both time and location to use as a benchmark

Question 3

What are the advantages and disadvantages of a Contract Sum Analysis as a pricing document?

Answer 3

o Advantages include:
 Transparency – provides a breakdown of costs aiding understanding of the contract sum
 Simplifies valuation of variations/ CEs - can be used to more easily price and value variations/ CE
 Supports payment valuation – in lump sum contracts (e.g. Option A)
o Disadvantages include:
 Time-consuming to prepare – due to itemising every section of work
 Limited detail – for description of activities can cause issues with payments
 Potential disputes – if costs allocated to certain elements are seen as unrealistic

Question 4

Tell me about a specific variation/ CE you have successfully agreed.

Answer 4

o On the Thirlmere Service Reservoir project, the PM gave an instruction and notified a CE which removed the requirement from the Contractor to provide fencing
o My task was to agree the assessment of this CE
o Due to the time it would take producing a forecast Defined Cost assessment being unduly lengthy in relation to the value of the CE, I proposed to use the Price from the Activity Schedule
o Both the Project Manager and Contractor where happy with such proposal and agreed to use the Price from the Activity Schedule as the basis for assessing the CE

Question 5

Tell me about a time you have advised on the most suitable pricing document.

Answer 5

o On the NSW Bushfire Clean-up project the nature of the work was known but could not be quantified due to the unknown number of properties requiring attention
o We needed to procure consultants and sub-contractors to undertake the works and at speed
o Due to this combination, I advised that a schedule of rates should be used as the pricing document when procuring professional services and subcontractors to undertake the required works
o This allowed us to quickly procure consultants and subcontractors and to obtain rates for all likely activities that may form part of the clean-up works

Question 6

Tell me about a time you have advised on the most suitable method of measurement.

Answer 6

o I have not had the opportunity to advise on the most suitable method of measurement.
o However, I am aware that NRM1 is used during the feasibility and design development stages for cost estimates and cost planning
o NRM2 is used during procurement and construction for detailed measurement of building works and
o NRM3 is used for cost estimates and cost planning of building maintenance works
o However, I have had the opportunity to advise on the most suitable means of costing construction works for example
o On the Thirlmere Service Reservoir project, the PM gave an instruction and notified a CE which removed the requirement from the Contractor to provide fencing
o My task was to agree the assessment of this CE
o Due to the time it would take producing a forecast Defined Cost assessment being unduly lengthy in relation to the value of the CE, I proposed to use the Price from the Activity Schedule as the method of costing the works
o Both the Project Manager and Contractor where happy with such proposal and agreed to use the Price from the Activity Schedule as the method of costing the works

Question 7

In terms of negotiating the final account how would you deal with an item that you could not agree on, say the value of a variation?

Answer 7

o In the event that a final account cannot be settled amicably through negotiation
o It would be advisable for the parties to consider other alternative dispute resolution options such as mediation and conciliation
o The presence of a third party may help put perspective on issues
o If resolution is still not reached then adjudication would be the first formal step for resolving the dispute
o It should be noted that negotiation or agreements outside of the contract terms should only be carried out where formally instructed to by the employer

Question 8

What are the different options considered for assessing prolongation costs?

Answer 8

o Fluctuations – increases in the cost of staff costs, materials or plant arising from general inflation as a result of the delay
o Tine-related costs/ preliminaries – associated with having to remain on site longer due to the delay such as:
 Site establishment
 Running costs
 Staff and labour