Thursday, July 3, 2008

Extension of Time, EOT

Extension of time is not a strange word for a Quantity Surveyor. When we say this, we will automatically link the EOT to the following:-

a) Additional preliminaries which the Contractor will be entitled to
b) Amended Completion Date
c) Liquidated damages

Recently, the Contractor of my project claimed for 4 months EOT with over 30 million USD claim for additional associated cost. It was a surprise to us as a Consultant while the project has just started for 1 year and still have 2 years to go. Well, the most surprise thing is the monetary claim of USD 30 million. Therefore, what I intend to write on this post is relating to the monetary claim associated with EOT - we referred it as compensation due to prolongation.

As normal, it would put it in question and answer form as it is a better way to illustrate.

Question: Will be Contractor be automatically entitled to compensation due to prolongation when EOT is granted to him?

NO. Entitlement to an EOT does not automatically lead to entitlement to compensation and vise versa. Contractor will only be entitled to compensation if EOT is granted because of the delay is caused by the Employer. The Contractor will not be entitled to compensation if the EOT is granted due to force majeure, as per the conditions of contract. There may be other reasons which the Contractor can be granted EOT but not for monetary compensation which will be stated in the conditions of contract.

Question: Will be Contractor be entitled to compensation due to prolongation for concurrent delay (where Contractor Delay to Completion occurs or has effect concurrently with Employer Delay to Completion)?

If the Contractor incurs additional costs that are caused both by the Employer Delay and concurrent Contractor Delay, then the Contractor should only recover compensation to the extent it is able to separately identify the additional costs caused by the Employer Delay from those cause by the Contractor Delay. If it would have incurred the additional costs in any event as a result of Contractor Delays, the Contractor will not be entitled to recover those additional costs.

Question: What is the basis of calculation of compensation for prolongation

Compensation for prolongation shall be assessed based on work that actually done unless otherwise expressly provided in the contract (e.g. by evaluation based on contract rates). The objective is to put the Contractor in the same financial position it would have been if the Employer Risk Event had not occurred.

Question: When is the period for evaluation of compensation

It should be evaluated as soon as possible when the Employer Risk Event was felt. The evaluation is not recommended to be done only the the end of the contract as will be difficult to assess the effect at that time if no proper records have been kept.

Having other questions? Feel free to write down some so that we can discuss together.

Wednesday, July 2, 2008

Bill of Quantities

This is post is to discuss the basic information regarding Bill of Quantities (BoQ).

Question: What is BoQ?

It is a list of items of work which are briefly described to provide a measure of the extent of work in order to allow pricing of the work. The work included in the item is defined in detail by the rules in Method of Measurement.

Question: What is the function of BoQ?

BoQ may serve as:-
a) A breakdown of the tendered price, with no contractual status, but providing information for the selection from tenderers;

b) A estimate measure of the work for the tendered price, to be used to arrive at a revised contract price once the actual quantities of work carried out are measured. This is the remeasure form of contract.

c) A schedule of rates as the contract basis for valuing variations in the work.

d) A basis for measure of the value of work competed for interim payments.

Question: When mistake (in Quantity or description) is found in the BoQ, can it be a variation order which give rise to cost implication to a contract?

It depends on the types of contract. For construction contract without quantities - normally is called lump sum contract (based on drawing and specification where BoQ may just be used to derive the tender sum), mistake in the BoQ cannot give rise to variation order.

For construction contract with quantities, mistake in description within BoQ can give rise to variation order provided BoQ has higher precedence than the Contract Drawings and Specification within the Contract document. For substantial mistake in the quantity within the BoQ, it will be corrected and dealt with as an variation order.

Question: Must the BoQ be prepared according to Standard Method of Measurement (SMM)

No. Standard Method of Measurement is just the guideline how construction works should be described and in what way they should be measured. It is recommended that the SMM to be followed in order to provide standard framework for measuring the construction works but it is not a must. In fact, most of the QS consulting firms now have varied the measurement rules for some items.

Tuesday, July 1, 2008

Design Responsibility of the Contractor?

What is the design responsibility of the Contractor? Will the Contractor be liable for defective design?

Well, these questions are really depend on what type of building contract does the Contractor and the Employer go into? Is it a design and build contract? Or it is a conventional construction contract where the Contractor will only construct a structure based on the Consultant Designer's design.

It is quite clear that if the contract is design and build contract, the Contractor is responsible for the design. But the next question will arise, to what extent the Contractor liable to the design? The answer is the Contractor will be wholly liable to that. Any defective design will be the fault of the design and build contractor.

For conventional construction contract, I would rather refer it to non-design-and-build contract, the Contractor is basically responsible only to develop shop drawings based on tender drawings designed by the Consultant Designer (the Engineer and Architect). The question of whether they are liable for defective design depends on whether or not they are aware that the design of the Consultant Designer is defective.

If the Contractor is aware of the design defect, they should write letter informing the same to the Designer or Employer. The Contractor has no responsibility to propose an alternative design replacing the defective design. Proper notice to the consultant and Employer will release them from being liable to defective design. However, failure in doing so may cause the Contractor to be partially liable for the defective design.

This post is mainly to share some knowledge and experience of the writer which it is not intended to be used by anybody without proper legal advice from the legal adviser. The writer will not accept any liability or loss as a result of the use of information contained herein.

Monday, June 23, 2008

Just To Share Some of My Experience Gained During My Industrial Training

In March 2002, after I completed my 3-year QS course in a university in Malaysia, I sent a couple of application letters to a few QS consultant firms in order to get my industrial training done – which was one of the faculty requirements before I could graduate from the university.

A boss of a QS firm (lets name it “The Firm”) asked me for an interview after 1 week. I was interviewed by 3 bosses (lets name them “Boss 1”, “Boss 2” & “Boss 3). Within 20 minutes of interview the Bosses accepted my application and allowed me to having my industrial training in their firm.

It was merely a three-month period. In the first week I was instructed by Boss 1 to tidy up the racks storing Tender Documents, Contract Documents, Tender Reports, Feasibility Studies, Final Accounts, etc. I was told to arrange those documents in accordance with developers, then followed by projects, then followed by date. Even though the racks were messy and dusty, after spending few days in touching with all these stuffs, I got a little more familiar with the projects handled or being handled by The Firm, as well as the documents that a QS will normally need to prepare.

Later on I was asked to help a senior QS to do taking off for a high rise service apartment. It was actually a remeasurement based on as-built drawings in order to prepare final account for the project. I was responsible for the taking off of concrete, formwork and reinforcement for floor beams. At the beginning I found it was a tedious task, but later I felt I was lucky to be part of the team. In those few weeks I have learned how to use QS software (VQSM) to do measurement; My skill in MS Excel has improved; My knowledge in taking off has increased after being taught by my senior and Bosses.

Sometimes I was also brought by Boss 2 or Boss 3 to attend progress meeting, client-consultant meeting, technical meeting and tender interview – other places for me to learn. I met developers (i.e. the clients), architects, engineers and contractors. In fact I was happy to attend such meetings with my Bosses as during the meeting I wouldn’t need to ask and wouldn’t be asked too. I merely needed to listen, understand and learn. From those meetings I started knowing the issues that are normally discussed within the meetings; the questions that are normally asked by the client and consultant during the meeting; and most importantly the role of a QS in a construction project.

After few weeks, Boss 1 requested a few junior staff, including me, to do a quick measurement for a office building. It was a initial design prepared by an architect and Boss 1 had to prepare a preliminary cost estimate for such building. I was responsible for floor and ceiling finishes this time. I was taught the ways of doing rough and fast measurement, making logical and practical assumptions, as well as getting useful information by analysing previous similar projects. Again my skill in using software and taking off improved a lot.

I was also assigned to execute a very important task during this three-month training – receiving calls for The Firm everyday. I improved my communication skill as well as my English language. I became braver when talking with somebody in English. Apart from this, once in a while Bosses or seniors would ask me to help them asking quotations for certain products. It was again the time for me to learn my communicating skill. In fact it updated me with the up-to-date cost of materials and building technology too.

I’ve learned some other skills and gained some other experiences during this industrial training, which is not able to be fully shared with you all here. The Bosses were very knowledgeable, experienced and very willing to share while the colleagues were helpful and friendly. Thus I decided to work for The Firm after I completed my industrial training. I worked for The Firm for three years plus before I went for my further study in 2006.

Sunday, June 22, 2008

Useful links for Institutions relating to Quantity Surveying

These are the useful links for some institutions in the world relating to Quantity Surveying:-

1) Australia - Australian Institute of Quantity Surveyors (AIQS)
2) Brunei - Institution of Surveyors, Engineers and Architects (Brunei) (PUJA(B))
3) Canada - Canadian Institute of Quantity Surveyors (CIQS)
4) China - China Engineering Cost Association (CECA)
5) Fiji - Fiji Institute of Quantity Surveyors (FIQS)
6) Hong Kong - Hong Kong Institute of Surveyors (HKIS)
7) India - The Instition of Surveyors (INDIA) (ISI)
8) Ireland - Society of Chartered Surveyors (SCS)
9) Jamaica - The Jamaican Institute of Quantity Surveyors (JIQS)
10) Japan - Building Surveyor Institute of Japan (BSIJ)
11) Kenya - Institute of Quantity Surveyors of Kenya (IQSK)
12) Malaysia - The Institution of Surveyors, Malaysia (ISM)
13) New Zealand - New Zealand Institute of Quantity Surveyors (NZIQS)
14) Nigeria - The Nigerian Institute of Quantity Surveyors (NIQS)
15) Pacific & Asia – Pacific Association of Quantity Surveyors (PAQS)
16) Singapore - Singapore Institute of Surveyors and Valuers (SISV)
17) South Africa - Association of South African Quantity Surveyors (ASAQS)
18) Sri Lanka - Institute of Quantity Surveyors of Sri Lanka (IQSSL)
19) UK & Worldwide - Royal Institution of Chartered Surveyors (RICS)
20) UK & Worldwide - Institute of Civil Engineering Surveyors (ICES)
21) USA & Worldwide - International Cost Engineering Council (ICEC)

What is Quantity Surveying?

This may be a question raised by of students who are going through the process of selecting courses offered by universities or colleges. I had asked the same question too when I was offered the course. Therefore, I'm writing this particular post to answer some of the frequently asked questions for those who think they may choose for this course.

1) Question: What do we study on the quantity surveying course?

Syllabus for the course varies for every college or university. However, the main subjects will cover cost estimate for construction works, standard method of measurement, construction contract, building economics, procurement, specification and construction technology.

2) Question: What is the job of a quantity surveyor?

The major role of a quantity surveyor is to control and monitor the cost of a construction project and advise the client (developer/owner) on financial and contractual status of the project. QS need to prepare interim payment for contractors, prepare financial statements for the clients, prepare tender and contract documents, prepare cost for changes in the contract, advise on contractual claims, etc.

3) Question: Whom a quantity surveyor will normally work with?

Quantity surveyors will normally work with the client (who is financing a construction project), the contractor (builder of the project) and the designers (engineers and archtiects).

4) Question: Where can a quantity surveyor work in?

A quantity surveyor can choose to work:-
a) directly in the client (developer/owner) organisation;
b) with a QS consulting firm which carries out work on behalf of a client organisation;
c) with construction companies who are the builders or suppliers; or
d) with financial institutions, eg. banks, in advising loan and payment for a construction project.

5) Question: Does quantity surveyor design?

Quantity surveyors have nothing to do with design as it is engineers and architects' responsibilities. QS merely estimates the cost implication for certain design and make their advice on the financial aspect on the design.

6) Question: Do we have a governing institution for quantity surveyors?

Yes. RICS (Royal Institute of Chartered Surveyor) is a international governing institution for quantity surveyors. It helps to set, maintain and regulate standards.

Having some more questions? Feel free to write down your comment and I will try my best to answer it.