Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Please note: References to the masculine include, where appropriate, the feminine.
Extracts from Parrys Valuation and Conversion Tables, A W Davidson (1989),
(Estates Gazette) reproduced by permission of the College of Estate Management
which owns the copyright.
Appendix A, Section 2.3 is reproduced from the Building Cost Information Service publication,
Standard Form of Cost Analysis: Principles, Instructions and Definitions (1969).
Published by RICS Business Services Limited
a wholly owned subsidiary of
The Royal Institution of Chartered Surveyors
under the RICS Books imprint
Surveyor Court
Westwood Business Park
Coventry CV4 8JE
UK
No responsibility for loss occasioned to any person acting or refraining from
action as a result of the material included in this publication can be accepted by the
author or publisher.
ISBN 0 85406 865 1
RICS Business Services Limited (RBS) December 2003. Copyright in all or part
of this publication rests with RBS, and save by prior consent of RBS, no part or parts
shall be reproduced by any means electronic, mechanical, photocopying, recording or
otherwise, now known or to be devised.
Typeset and printed by Q3 Print Project Management Ltd, Loughborough.
1998 FOREWORD
Knowledge is of two kinds: we know a subject ourselves, or we know
where we can find information upon it.
Samuel Johnson (17091784)
The fact that our profession serves a changing world increases the need for
it to rely on well thought-out and reliable practices and procedures. Events
move at an ever-increasing pace, imposing a requirement for quicker
response times. Modern communication methods such as facsimile and now
e-mail result in the need for information to be available almost instantly.
This is made more difficult by an industry growing in complexity and which
is subject to increasing customer expectations in terms of service and
quality.
The RICS has published this Surveyors Construction Handbook to help
surveyors meet these needs. It is intended to become an important source of
reliable information and guidance to all Chartered Surveyors who practise in
construction. Much of the excellent information produced by the divisions
in the past has now been updated for inclusion. Other material not yet
revised will be added. The whole will be regularly reviewed and updated as
necessary. RICS practice panels are continuing to produce information for
inclusion to make it a useful construction reference document.
We hope that this Handbook will become an invaluable aid to your
day-to-day activities.
ACKNOWLEDGEMENTS
Professor Roy Morledge, Professor of Construction Procurement at The
Nottingham Trent University, for contributing the text of Part 3, Section 1.
Major D.R. Bassett, Royal Engineers, for his contribution to the research
underpinning the construction time charts in Part 3, Section 1; Central Unit for
Procurement, HM Treasury (now Office for Government Commerce), for
permission to use CUP guides extensively in the drafting of Part 1, Section 1
and Part 3, Section 1.
Alan Turner, JP FRICS ACIArb, author of Building Procurement, for
permission to use a number of the diagrams from his text in Part 3, Section 1.
CONTENTS
Foreword
Acknowledgements
List of Abbreviations
Introduction
A
B
C
D
E
F
1
1
1
2
3
3
3
1
1
3
3
4
6
8
8
9
1
1
Introduction
1
1.2.1 Why Value Engineering?
2
1.2.2 Applicability
2
1.2.3 At What Stage Should Value Engineering be Carried Out?
3
1.2.4 Who Should Carry Out Value Engineering?
4
1.2.5 How Long Should It Last?
5
1.2.6 Preparing for a Value Engineering Workshop
5
1.2.7 Functional Analysis of Design Relative to the Clients
Requirements
5
1.2.8 Pricing the FAST Diagram
8
1.2.9 Presenting a Design Solution to a Value Engineering Workshop 8
1.2.10 The Workshop
8
1.2.11 Assessing the Value of the Workshop
9
1.2.12 Implementing the Results
10
1.2.13 Feedback from Post-Occupancy Evaluation
10
Appendix A: Health Centre Value Tree
1
Appendix B: Typical Example of a Value Engineering Process
1
Appendix C: Further Reading
1
Contents (12/03)
Page 1
Contents (12/03)
1
1
1
1
1
5
10
14
15
1
1
1
1
1
1
1
1
1
1
2
1
Introduction
2.3.1 Elements
2.3.2 Elemental Cost Analysis
2.3.3 Other Uses
Appendix A: BCIS Standard Elements
Page 2
1
1
2
4
4
8
11
13
14
1
1
1
1
2
3
3
5
6
8
1
1
Introduction
Definitions: The Difference Between a Project Manager and
Lead Consultant
Benefits of Appointing a Chartered Surveyor as Lead Consultant
Issues to Consider before Undertaking the Role
Schedule of Lead Consultant Duties
1
1
1
2
3
3
1
1
2
3
4
7
8
9
11
1
1
1
1
2
12
25
29
1
1
1
3
11
19
34
1
Contents (12/03)
1
1
1
3
13
14
16
20
1
1
1
Page 3
1
1
1
4
4
7
9
13
1
1
1
1
1
1
1
Introduction
1
4.3.1 Definitions
2
4.3.2 The Rationale for Risk Management in the Construction Process 2
4.3.3 The Risk Management Process
5
4.3.4 Summary
14
Appendix A: Further Reading
1
Introduction
Extension of Time Clauses
Assumptions
Extension of Time Under a JCT Contract
Notice by the Contractor of Delay to Progress
The Award of an Extension of Time during the Contract
Period and Before the Completion Date
The Award of an Extension of Time after the Completion Date
Relevant Events
Concurrent Delays
Consequential Entitlement
Contents (12/03)
1
1
1
2
3
4
5
6
8
15
16
17
18
1
1
1
1
1
2
2
3
4
5
6
7
12
13
4.5.10 Administration
4.5.11 Extension of Time under an ICE Contract
4.5.12 Extension of Time under a GC Works Contract
Appendix A: Further Reading
13
14
14
1
Index
1
1
2
1
1
1
2
4
1
1
1
2
2
1
1
2
3
3
4
4
5
6
20
1
1
1
1
Contents (12/03)
Page 5
LIST OF ABBREVIATIONS
ABE
ABI
ACA
ACE
AQL
BCIS
BEC
BMI
BRE
BRECSU
BREEAM
BSI
BSRIA
BWIC
CA
CAWS
CDM
CD-R
CECA
CIB
CIBSE
CIC
CIRIA
CITES
CCT
CSM
DBFO
DoE
DETR
DMS
DOM
EC
EU
FAST
FCEC
GNP
HBF
HMSO
HSE
IChemE
ICE
IDMA
The Surveyors Construction Handbook
Page 1
IFC
JCT
LCC
LQ
M&E
MERA
MW
NEC
NEDO
NJCC
NSC
OMR
PFI
PSA
RIBA
RICS
VAT
WCD
WORM
WRC
Page 2
Abbreviations (10/02)
I NTRODUCTION
INTRODUCTION
A Aim and Scope of this Handbook
A1
The aim of this Handbook is to help both building and quantity surveyors to
provide construction-related professional services effectively and efficiently.
It seeks to achieve this by providing guidance which reflects what is often
good custom and practice, and relevant information (including references to
other useful material). It should be appreciated that this Handbook does not
attempt comprehensive coverage of necessary or good practice. The
Handbook is addressed to surveyors providing services to clients (as defined),
not surveyors undertaking the role of the clients representative who gives
instructions to surveyors on behalf of the Client.
A2
A3
A4
A5
The document is drafted on the basis of UK law and practice, although much
of it is relevant to practice elsewhere.
B Arrangement of Content
B1
B2
Introduction (4/98)
Page 1
I NTRODUCTION
C Status of Content
C1
C2
Page 2
Introduction (4/98)
INTRODUCTION
On the other hand, it does not follow that a Member will be adjudged
negligent if he has not followed the practices recommended in this Handbook.
It is the responsibility of each individual surveyor to decide on the appropriate
procedure to follow in any professional task. However, where Members
depart from any practices recommended in this Handbook, they should do so
only for good reason. In the event of litigation, the Court may require them to
explain why they decided not to adopt a recommended practice.
In addition, Guidance Notes are relevant to professional competence in that
each surveyor should be up to date and should have informed himself of
Guidance Notes within a reasonable time of their promulgation.
C3
D Currency of References
The cases cited and the editions quoted were up-to-date at the time of writing.
However, readers should check current rulings and additions.
E Invitation
RICS Books would welcome comments upon and suggestions for additions
and amendments to this Handbook. They should be provided in writing to
RICS Books Publishing, Surveyor Court, Westwood Business Park,
Coventry, CV4 8JE.
F Subscription Service
Any change of address should be notified to the address appearing below:
The Surveyors Construction Handbook Subscription Service
RICS Books
Surveyor Court
Westwood Business Park
Coventry CV4 8JE
Tel: 020 7222 7000 ext 647
Page 3
PART 1, SECTION 1
1.1.1.1
1.1.1.2
The type of client will affect the criteria which must be met if the client is to
be satisfied with the project.
1.1.1.3
1.1.1.4
This is not to say that owner occupiers are unconcerned about time. Indeed,
certainty of completion date may be a key issue. Nor is it fair to suggest that
developers are unconcerned about building performance or cost. There are
market conditions where both of these issues may become important.
1.1.1.5
Page 1
PART 1, SECTION 1
(b) Marketability
maximise prompt or future disposal (freehold or otherwise).
(c) Use-related
optimise operational requirements of intended occupier(s)
provide greatest flexibility in potential uses
reflect intended occupiers requirements/preferences/ability to afford
meet social/management/occupiers special needs (e.g. disabled).
(d) Environmental
minimise health and safety risks
choose materials which reflect sustainability
aesthetically please (e.g. impression on occupiers customers)
minimise any alterations to specific features
reflect planning authoritys brief/policies
minimise potential opposition
reflect corporate style or personal preferences of proposed
occupier/employees
maximise comfort of occupants
minimise inconvenience to others during construction.
(e) Timing
construct within a defined period
minimise risks of delay during construction.
G
1.1.1.6
The importance of each of these criteria will be relative to the objectives of the
client, the business case for the project and to the extent to which he/she is
able to cope with risk (see 3.1.2.9). It is important that the client seek
investment appraisal advice in respect of the project and that the appraisal
considers what if questions to ensure that the impact of changes of key
components in the appraisal is clearly understood. A chartered surveyor will
be able to assist the client in these matters. However, the giving of advice on
some of the requirements listed above is, of course, outside the competence of
the surveyor. Where such a particular requirement is important to the client
and outside the clients expertise, the client should be advised to seek other
professional advice.
1.1.1.7
Many construction projects suffer from poor definition due to inadequate time
and thought being given at an early stage1. This is often because there is a
sense of urgency fuelled by the desire for an immediate solution. Investing
time at the beginning of a project in developing a complete definition taking
account of all the requirements will reduce the likelihood of changes later. The
later that changes are made in a project, the more they are likely to cost in both
direct and knock-on effects (see 3.1.4.14 and 3.1.2.14(f) & (g)).
Page 2
Construction Industry Board, Briefing the Team, Thomas Telford Publishing, London, 1997.
PART 1, SECTION 1
1.1.2.1
1.1.2.2
This advice can be offered by a member of the clients design team or can be
a separate function. It may be more difficult for a design team member to
remain impartial in carrying out this process and it is recommended that any
expert retained should be solely for this purpose. This function can be
identified as the role of the principal adviser and may encompass:
1.1.2.3
1.1.3.1
Page 3
PART 1, SECTION 1
(c) number of people that are to occupy the building, together with their space
requirements;
(d) schedule of accommodation and quality of internal environment;
(e) standards;
(f) equipment and special services/requirements;
(g) when the building needs to be available for use;
(h) quality and cost limitations;
(i) life span;
(j) site; and
(k) statutory controls.
G
1.1.3.2
This is the initial control document for the early planning of the project;
without it, little constructive work can be done. If all the information required
for the project brief is not readily available, it is better to issue it in an
incomplete form and to update it progressively1.
1.1.4.1
This section briefly explains the clients responsibilities through the life of a
construction project. In carrying out their role, clients, depending on their
knowledge and expertise, will need help from their professional advisers,
project managers and other consultants, whose roles are also explained in this
handbook. This section aims to outline the clients task in setting policy and
formulating strategy, and explains how it should be carried out.
1.1.4.2
The success of any project will depend upon the motivation given by the
client. Experienced clients may take a leading role in the procurement process;
less experienced clients will need to seek advice or to appoint advisers to
assist them. Where projects are of a large or complex nature it may be
advisable to consider the appointment of a project manager.
1.1.4.3
Page 4
Construction Industry Board, Briefing the Team, Thomas Telford Publishing, London, 1997.
PART 1, SECTION 1
access to all information relevant to their tasks and the projects objectives and
status (see 3.1.4.11).
G
1.1.4.4
The client has substantial influence on the design of the project in respect both
of functional efficiency and of overall appearance, and, therefore, has to take
particular care to:
(a) understand fully the purpose of the building; ensure that the requirements
of the users are accommodated; and communicate those requirements to the
designers (see 3.1.1.10); and
(b) appoint designers with proven ability in designing buildings which satisfy
users requirements and harmonise with and contribute to the quality of the
built environment. The selection of the right people is emphasised as a key to
success (see 3.1.4.8).
1.1.4.5
Page 5
PART 1, SECTION 1
Clients Role
Pre-Design Phase
Pre-Construction Phase
Construction
Post-Construction
Procurement strategy
(3.1.1.13)
Design overview
(3.1.4.12)
Commissioning
(3.1.1.17)
Appoint adviser
(3.1.1.6)
Design overview*
(3.1.4.12)
Define clients
responsibilities (3.1.1.7)
Project Brief
(3.1.1.12)
Whole-life Costs
(3.1.4.15)
Appointment of PM (if
appropriate) (3.1.4.7)
Value Engineering
(3.1.4.17)
Change control
overview
(3.1.4.19)
Procurement strategy*
(3.1.1.13)
Value management
(3.1.4.16)
Appointment of constructors
(3.1.4.9)
Confirming the business
case (3.1.1.9)
Procurement
Strategy
Procurement strategy
development (3.1.2)
Implementation
Resources (Client)
(3.1.4.35)
Contractual arrangements
(3.1.4.10)
Organisational structure
(3.1.4.6)
Contractual arrangements*
(3.1.4.10)
Systems and controls*
(3.1.4.11)
Implementation policy
(3.1.4.2)
*
()
1.1.5.1
Page 6
PART 1, SECTION 1
1.1.5.2
project
against
the
objectives
(the
1.1.5.3
1.1.5.4
The client should also co-ordinate and resolve conflicts between all interested
sections of the client organisation including (see 3.1.4.6):
(a) user groups who will work in the building;
Kelly, J., MacPherson, S., and Male, S. (1992), The Briefing Process: A Review and Critique, RICS, Department of
Building Engineering and Surveying, Heriot Watt University. This document is out of print.
2
Construction Industry Board, Briefing the Team, Thomas Telford Publishing, London, 1997.
Page 7
PART 1, SECTION 1
(b) specialist groups responsible for technical systems within the building,
e.g. communications, computers;
(c) facilities management who will manage the completed building
including maintenance and security;
(d) finance and accounts who will plan and control expenditure and pay bills
as they arise; and
(e) legal advisers who will advise on and monitor the clients formal
relationships with outside parties.
G
1.1.5.5
The client is responsible for ensuring that all necessary decisions are made on
time. Timely decisions are necessary to avoid delays and increased costs: the
decision-making process requires as much planning and management as any
other activity. This will include (see 3.1.4.11):
(a) scheduling the key decisions to be made;
(b) identifying the decision makers and their required procedures;
(c) ascertaining the time required for making decisions;
(d) establishing a formal programme for decisions;
(e) warning decision makers regarding forthcoming submissions making
sure items are on the agenda;
(f) preparing on time fully detailed submissions and/or presentations in full
compliance with procedural requirements;
(g) following up submissions throughout the decision making process; and
(h) promptly communicating decisions made to the parties affected by
them.
Page 8
1.1.6.1
Due to the complexity of modern buildings and the potentially large number
of parties involved in the process the client may wish to appoint a single
person to draw the process together and manage it to ensure that the overall
performance, time, cost and quality requirements are achieved. The project
manager may be a member of the client organisation who is given sole, or
predominant, responsibility for the project. Project management practices also
exist to enable appointment to be made on a consultancy basis. In this case,
PART 1, SECTION 1
selection should be based upon resources, reputation, and price; and services
should be clearly identified.
G
1.1.6.2
It should be emphasised that the role of the project manager should be to act
as part of the client organisation.
The process of selecting and appointing the design team and the cost
consultant is carried out by the client who may seek the advice of his/her
advisers. The terms and conditions of these appointments are governed by the
procurement strategy adopted for the project.
The selection of those who will actually construct the project is often key to a
successful outcome. Selection should always be on quality as well as price and
ideally the procurement strategy governing when they are appointed should
facilitate the early involvement of constructors in the design process.
The selection of procurement strategy is a complex one and is referred to in
Part 3 section 1 of this handbook.
Page 9
Part 1, Section 1
Appendix A (01/03)
Page 1
PART 1, SECTION 2
Page 1
PART 1, S ECTION 2
Value engineering has grown in popularity for the simple reason that it
actually works. Construction projects can often take on a life of their own
when members of the design team become focused on their own particular
problems and time constraints. Consequently, the true objectives of the client
get lost along the way. Value engineering relates design proposals directly
back to a clients business, thus ensuring that a management system is in place
which forces designers to justify their decisions when tested against the
clients required function.
1.2.1.2
1.2.2 Applicability
1.2.2.1
Essential
Complexity
Optional
Low
Low
High
Value
1.2.2.2
Page 2
PART 1, SECTION 2
1.2.3.2
This section of the handbook considers the evaluation of a design at the end of
the scheme design phase, but the process will be the same whenever it is
carried out. The objectives of the project should remain the same throughout
the process and they should be validated at the beginning of each workshop.
The objectives of each workshop may be different. If the project objectives do
change the whole direction of the project will need to reassessed.
1.2.3.3
It is important that time for the value engineering process and any resultant
redesign is included in the scheme design programme at the outset.
Page 3
PART 1, SECTION 2
1.2.4.2
Page 4
1.2.4.3
The optimum size of a value engineering panel would depend upon the
complexity of the project as well as the skills of the facilitator. However, it is
considered that panels of more than twelve members are difficult to manage.
Panels with fewer than four members could be considered ineffective.
However, it is important that all stakeholders are represented even if this
results in a larger group.
1.2.4.4
PART 1, SECTION 2
The length of time taken over the value engineering workshop will depend on
the complexity of the project and the level of design detail that has been
completed.
1.2.5.2
1.2.6.2
1.2.7.2
1.2.7.3
The FAST system uses a function diagram which identifies the basic
function what is required on the left-hand side and more detailed secondary
functions working from left to right until all the means of achieving these
Page 5
PART 1, SECTION 2
functions how are they to be fulfilled are identified on the right. See figure 2
for an example of a FAST diagram. It should be understood that this is a
broad-brush technique.
The objective of functional analysis is to produce a complete description of
the end purpose of the design in terms of what it must do.
Reference is sometimes made to different types of FAST diagram: Classical
FAST, Technical FAST or Customer/Task FAST.
The original FAST diagram was a presentation of the user-related and
product-related functions of a design solution. It was a technique used to
assemble the functions of a product in a hierarchy and to assess why and
how they are delivered. This is known as a Classical FAST.
Subsequently it was recognized that all functions did not fit into the flow logic
so it was decided to separate out the functions that are always active, whether
the product is operational or not. It was also decided to separate out those
functions that only occur one time regardless of repetitiveness of the process.
This diagram describes what a product, element or component must do and is
known as a Technical FAST.
It was then recognized that, ideally, it is the customer who should determine
the value of the product and that the FAST diagram should include the
customer/user in the development of value study projects. The resulting FAST
Figure 2: FAST Diagram
Page 6
PART 1, SECTION 2
1.2.7.5
1.2.7.6
VALUE TREE
A Value Tree is a diagram that describes the business driver (mission) for a
project or need and the criteria that need to be satisfied in order to achieve it.
A Value Tree should be developed at an early stage in order to inform the
brief. However, it can be developed at any stage in order to confirm the brief.
It will generally be carried out by the client organization in order to establish
whether a project is the solution to their needs. The criteria are then developed
further into the functions required in order to achieve them. The scope line for
a project will begin to the right of the Value Tree.
1.2.7.7
Appendix A gives an example of part of a Value Tree and a FAST diagram for
a health centre.
Function elements (object functions) are defined in the BCIS publication,
Standard Form of Cost Analysis: Principles, Instructions and Definitions and
in Section 2.3 of this handbook.
A typical example of a value engineering process is included in Appendix B.
Page 7
PART 1, SECTION 2
As the FAST diagram progresses and different solutions are found, it becomes
possible to establish alternative costs for achieving a given function.
However, it is important that all functions are clearly defined if costs of
alternative proposals are to be meaningful. Also, it should be remembered that
it is the design solutions to the functional requirements that are being priced
and compared to the value and importance that the client puts on that function.
For example, the client can identify the value of savings from reduced energy
consumption or may rank this as important for other reasons. The value
engineering teams task is to put a price on the various design solutions
suggested that will achieve this end. It is creativity in finding the most
economical solution that is the essence of the value engineering exercise.
1.2.8.2
Fees and value added tax (VAT) and other financial and fiscal matters may
also need to be considered.
Page 8
PART 1, SECTION 2
1.2.11.2
The financial benefit should then be identified against all elements within
categories (i) or (ii).
1.2.11.3
A major benefit of the workshop which will be enjoyed by the panel members
is a better understanding of the project functions and common ownership of
the team-based designs solutions which have evolved.
Page 9
PART 1, SECTION 2
1.2.12.2
Once the workshops proposals have been sanctioned by the client, decisions
should be fed back to the design team, briefing those members whose work is
affected as to why the changes were made.
1.2.12.3
Page 10
It is important for any client to carry out a project review to demonstrate how
project objectives have been achieved and particular problems overcome. As
part of the project evaluation process, it should be established whether the
project represents best value for money and whether or not key design changes
made as a result of value engineering have achieved the benefits expected.
These should always be set against the cost of carrying out the exercise.
Part 1, Section 2
Appendix A (revised 10/01)
Page 1
BACKGROUND
A retail client with a regular development programme for a series of new
stores (typical size 8,000m2) entered into a partnering agreement with key
members of the construction team for four new projects.
To encourage value engineering, the partnering contractors share in any
savings that relate to any accepted proposals.
For two of these projects the client opted for a design and build contract for
the services installations (mechanical, sprinklers and electrical).
In an effort to reduce costs and ultimately add value to the schemes, the client
set a target of reducing the costs on these projects by 10 per cent, with no
material effect on quality or health and safety.
To set a benchmark for this reduction model cost plan costs for a typical store
(derived from historical records) were modified to suit the new scheme
layouts. Allowances were included for any items that were classified as site
specific (e.g. acoustic requirements stipulated by the district surveyor). Cost
plan figures were based on the clients current specification.
Due to the volume of developments undertaken by the client and the repetitive
nature of the works, the savings generated by value engineering can be
incorporated in any future schemes.
B2
Part 1, Section 2
Appendix B (12/99)
Page 1
Original installation:
Traditional ventilation
10%
5%
25%
At the development phase, the proposed method was discussed with other
members of the design team to ensure that any impact on the other building
elements, the project programme and the interface with other subcontractors
were taken into account.
Page 2
Part 1, Section 2
Appendix B (12/99)
Part 1, Section 2
Appendix C (revised 10/01)
Page 1
Page 2
Part 1, Section 2
Appendix C (10/01)
PART 2, SECTION 1
Page 1
PART 2, SECTION 1
2.1.1.1
DEFINITION
Pre-contract cost planning is the technique by which the budget is allocated to
the various elements of an intended building project to provide the design
team with a balanced cost framework within which to produce a successful
design. It allows for the redistribution of the budget between elements as the
design develops.
Cost management is the total process which ensures that the contract sum is
within the clients approved budget or cost limit. It is the process of helping
the design team design to a cost rather than the quantity surveyor costing a
design.
Page 2
PART 2, SECTION 1
2.1.1.2
OBJECTIVES
(a) To ensure that the client obtains an economical and efficient project in
accordance with the agreed brief and budget;
(b) to make the design process more efficient, thus reducing the time needed
to produce a successful design;
(c) to ensure that all requirements arising from the clients brief to the design
team are included in the cost planning process (e.g. the engineering services
should also be subject to the cost planning process); and
(d) to advise the client and members of the design team of cost-in-use or
life-cycle costing techniques.
2.1.1.3
GENERALLY
(a) A general principle applies throughout the cost planning process that any
agreed budget or cost limit is seen as the maximum cost, and the quantity
surveyor should, at all times, work with the other design team members to
satisfy the client at a lower cost if possible, whilst still maintaining the desired
objectives for quality and function.
(b) If, at any time, sums have been included in the approved budget, for
example, for abnormal site costs which subsequently are found to have been
wholly or partially unnecessary, the consequential saving should always be
notified to the client.
2.1.1.4
DESIGN STAGES
References to Design Stages are to the RIBA Plan of Work (taken from the
RIBA Handbook of Architectural Practice and Management) and refer to the
main stages through which a project design typically passes. The links to the
cost planning procedures outlined in this section are summarised here:
Design Stages
Quantity Surveyor
Stage B: Feasibility
Page 3
PART 2, SECTION 1
2.1.1.5
VALUE ENGINEERING
A value engineering exercise may be carried out on all or part of the design
during the design process. (For further details see part 1, section 2 of this
handbook.)
This might affect both the clients requirements and the chosen design
solution and changes would, therefore, affect the budget and the cost plan.
2.1.2.1
2.1.3 Budget
I
2.1.3.1
DEFINITION
Budget is the total expenditure authorised by the client which is the
responsibility of the design team at the end of the feasibility stage (Design
Stage B).
2.1.3.2
OBJECTIVES
(a) To establish the limit of expenditure necessary to meet the clients brief.
The clients and projects status with regard to VAT (Value Added Tax) will
also need to be established;
(b) to provide the client with a statement of the likely area and quality of
building, which is achievable within the limit of expenditure;
(c) to provide a statement of the recommended methods of construction and of
the contractual procedures to achieve the required occupation date; and
(d) to provide the client with alternative budgets for different occupation dates
and qualities of building, if appropriate.
2.1.3.3
INFORMATION REQUIREMENTS
(a) The ideal requirements from the client and members of the project team
to the quantity surveyor are given below. On projects where this level of
information is not available, the quantity surveyor should state clearly any
assumptions made. It is possible to produce a typical elemental estimate for
Page 4
PART 2, SECTION 1
Page 5
PART 2, SECTION 1
2.1.3.4
METHODS OF PREPARATION
(a) The method of preparation depends on the type of project involved.
Unusual projects, projects of great complexity and projects containing a large
element of alterations are more difficult to budget accurately at an early stage.
(b) For most types of project, it is possible to build up an elemental budget
using the parameters set out under G 2.1.3.5. This can be based on cost
information from previous projects, from the RICS Building Cost Information
Service (BCIS), other published sources, or on an appropriate cost model.
(c) The main elemental quantities of hypothetical buildings can be generated
using agreed parameters, to which rates applicable to agreed quality and
performance standards can be applied. An example of a method of calculating
hypothetical quantities is described in Appendix C to this Section.
(d) Once the budget has been established, it provides the first cost plan for the
project, and the framework for the actual design to be developed.
2.1.3.5
Page 6
PART 2, SECTION 1
(a) Quantity
in addition to the briefed areas, a statement of the allowances (e.g.
circulation) used to calculate a gross floor area;
the number of storeys of a possible solution;
the storey height(s);
the square index or wall/floor ratio (see appendix C to this section);
the density of vertical division or partition/floor ratio (see appendix C
to this section);
proportion of window area;
floor loadings;
thermal resistance values of fabric;
air change rates;
heating and hot-water loads;
lighting levels;
total electrical load;
areas of the brief with special functions of significant cost;
road area and number of car parking spaces;
paved pedestrian areas; and
length of boundary walls or fencing.
(b) Quality
A general statement of quality and specification which relates to the
rates used for the budget calculation. This should cover specifically at
least the following: foundations, roof, external walls, floors and
vertical circulation, internal vertical division, internal finishes,
lighting and other services. External works should include roads,
paths, landscape, boundary walls and fences, and service mains,
planting and the like.
G
2.1.3.6
INFLATION
(a) The prediction of future inflation may not be necessary for some clients,
and a statement of cost at current prices may be adequate. Where an
assessment of inflation is required for more than a few months ahead, a range
of probable inflation is best provided. This can be calculated using
predictions published, for example by BCIS or the Department of Trade and
Industry. The assumptions upon which the prediction is made should be
stated.
(b) Some clients, particularly in the public sector, have their own inflation
controls. Where the client requests that a particular level of inflation be
included in the budget, the quantity surveyor should inform the client if he or
she believes it to be unrealistic.
2.1.3.7
COST REPORTING
If at any time during the design process it becomes apparent that the agreed
budget is likely to be exceeded without the brief being changed, the client
should be informed and instructions requested. Likewise, if it becomes
Page 7
PART 2, SECTION 1
apparent that the whole of the agreed budget will not be required, the client
should be informed.
2.1.4.1
DEFINITION
The cost plan at outline proposals stage is a statement of the probable cost of
the project at Design Stage C which sets out the cost targets for the main
elements of a building, together with their approximate quantity and quality
parameters.
2.1.4.2
OBJECTIVES
(a) To describe, together with the outline proposal drawings, the chosen
distribution of the resources within the budget to provide a balanced design to
meet the clients needs;
(b) to set cost targets for the main elements so that, as the design develops, the
targets can be checked and adjustments made so that the overall cost of the
project is managed within the budget;
(c) to provide the design team with controls which communicate the costs,
quantity, quality and time parameters to be followed; and
(d) to provide the opportunity for consideration of life-cycle costs.
2.1.4.3
INFORMATION REQUIREMENTS
The basic information requirements from the members of the project team to
be provided to the quantity surveyor are as follows:
(a) Information required from the client:
the budget. Where alternative budgets have been quoted in the budget
report, the client should state the preferred alternative;
confirmation of the programme for design and construction times stated
in the budget report;
confirmation of the brief;
acceptance or variation of any other matters within the budget report;
and
authority to proceed.
(b) Information required from the designer:
outline drawings of the building and site works indicating alternative
solutions; and
an indication of the preferred specification for the main elements.
(c) Information required from the structural engineer:
outline proposals or alternative structural solutions.
Page 8
PART 2, SECTION 1
2.1.4.4
METHODS OF PREPARATION
(a) The method of preparation should be appropriate to the level of detail
available for each element and may be:
the measurement of approximate quantities and the application of rates
to the quantities generated;
comparison of the requirements with analyses of previous projects of a
similar character;
use of appropriate cost models; and/or
a mixture of the above methods.
(b) Evaluation should be made of the alternative forms of construction, or
systems, of the key elements, e.g. structural elements, and service
installations. The key elements on each project will vary. However, they are
likely to be those with major financial consequences, and to include the
structural and service elements.
Page 9
PART 2, SECTION 1
2.1.4.5
2.1.4.6
2.1.4.7
Page 10
PART 2, SECTION 1
2.1.4.8
INFLATION
Any changes in inflation forecasts should be reported periodically.
2.1.5.1
DEFINITION
The cost plan at scheme design stage is a statement of the cost of a selected
design at Design Stage D which details the cost targets for all elements of a
building, together with the quantity and quality parameters described by the
scheme drawings and specifications.
2.1.5.2
OBJECTIVES
(a) To set out for the design team the actual distribution of resources described
by the scheme design;
(b) To set cost targets for all the elements so that, as the detail design develops,
the targets are checked and adjustments made in order that the overall cost of
the project is managed within the budget; and
(c) To provide the whole design team with a control document which
describes, in detail, the costs, quantity, quality and time parameters which
have been adopted.
2.1.5.3
INFORMATION REQUIREMENTS
The information to be provided to the quantity surveyor is as follows:
(a) Information required from the client:
confirmation or otherwise that the cost plan prepared at the outline
stage is accepted;
confirmation of the brief;
an indication of any preferred alternatives in a previous cost plan;
acceptance or variation of any other matters within the previous cost
plan report; and
authority to proceed.
(b) Information required from the designer:
scheme drawings and scheme specifications.
(c) Information required from the structural engineer;
scheme drawings and scheme specifications;
Page 11
PART 2, SECTION 1
2.1.5.4
METHODS OF PREPARATION
(a) The method of preparation is normally by measurement of approximate
quantities from the proposed scheme drawings. The degree of detail to be
measured should relate to the cost significance of the elements in the particular
design. The pricing should be similarly related. Some elements may still be
most suitably priced on an elemental unit rate basis, where the cost significance
is low. Major elements will normally need to be priced in greater detail.
(b) The preliminary engineering and specialist services scheme drawings and
outline specification notes will be required from the consulting engineers,
from which approximate quantities of equipment can be measured and priced
using all-in rates. Pipework and cables will normally still need to be priced on
an overall basis relating to floor area or service points at this stage. This
ensures that the likely implications of the builders work are understood by the
design team and the costs are taken into account.
Page 12
PART 2, SECTION 1
2.1.5.5
2.1.5.6
2.1.5.7
INFLATION
Any changes in inflation forecasts should be reported.
2.1.6.1
DEFINITION
Cost checking is the process of calculating the costs of specific design
proposals and comparing them with the cost plan during the whole design
process (Design Stages DF).
2.1.6.2
OBJECTIVES
(a) To confirm that as the design develops, the cost remains within the budget;
and
(b) To reduce the abortive design work and lost time caused through
proceeding too far in the design process before realisation that the budget will
be exceeded.
2.1.6.3
PRINCIPLES
(a) The methods will vary according to the stage reached in the design process.
Normally, however, this takes the form of measurement of approximate
quantities from the consultants drawings to provide a check on the quantity
and quality of parameters set down in the appropriate cost plan. The gross
floor area should always be the first check at any stage.
(b) The dominant considerations in deciding the priorities for cost checking
elements are as follows:
Page 13
PART 2, SECTION 1
2.1.6.4
2.1.7.1
DEFINITION
(a) Action after receipt of tenders is that required at the tender stage (Design
Stage H) in analysing each tender and updating information for the client and
consultants.
(b) The following points should be noted:
In most cases, sound cost planning will produce tenders within budget.
If, due to market conditions or late changes in designs and
specification, adjustments need to be made to a tender, information on
potential savings will need to be identified by the design team; and
If there are significant changes from the initial tender documents,
consideration should be given to the need for seeking revised tenders.
2.1.7.2
OBJECTIVES
(a) To obtain a contract sum within the approved budget; and
(b) To provide suitable analyses for future projects.
Page 14
PART 2, SECTION 1
2.1.7.3
INFORMATION REQUIREMENTS
Information to be provided to the quantity surveyor is as follows:
(a) Information required from the client:
acceptance of potential savings, if required;
details in respect of any analyses required. (Where the client body is a
Public Authority or similar, where standard analyses are always
required, consideration of this matter should be given during the
preparation of the Bills of Quantities); and
permission to submit analyses to BCIS if appropriate.
(b) Information required from the designer, architect, building surveyor and
other consultants;
a provisional list of potential areas of saving (to be considered during
tendering period and before tender acceptance); and
a detailed list of drawings and other sources of data from which to
determine actual savings, if required.
(c) Information required from other sources:
indexing of the tender by BCIS to establish confirmation of tender
levels, if appropriate.
The basic information requirements from the quantity surveyor are as follows:
(d) Information to be provided to the client involves a report containing:
a statement of the cost reconciled to the latest budget;
any further information in respect of the construction programme; and
an updated preliminary cash-flow forecast, where appropriate.
(e) Information to be provided to the designer:
a copy of documents sent to the client; and
a detailed reconciliation between the tender and the latest cost plan.
(f) Information to be provided to the other consultants:
such information as relates to their area of design and associated costs.
Page 15
OBJECTIVE
To ensure that all costs used are up to date and accurate.
A2
SOURCES
A2.1
A2.2
A2.3
Published indices
tender indices and cost studies on regional variations BCIS;
the published indices of the Department of Trade and Industry;
Price Adjustment Formulae for Construction Contracts (NEDO) Indices
Department of the Environment, Transport and the Regions;
Architects Journal; and
Building.
A3
Part 2, Section 1,
Appendix A (05/03)
Page 1
Page 2
consideration of the tender period of the analysis and its relationship to the
current projects tender period;
high levels of inflation demand constant checking and revision of rates and
prices;
the assumption that cost information in elemental cost analysis is tendered
price information, whereas a significant amount could be in prime cost or
provisional sums;
initial quotations from specialists are likely to be low;
building regulations can be statutorily amended, e.g. energy conservation
measures have increased the U value (a measurement of thermal
resistance) requirements for insulation properties of roofs and walls. Care
must therefore be taken to ensure that the analysis used is consistent with
current building standards;
firm price or fluctuating contract terms;
special planning conditions applying either to the analysed or to the
current project; and
site-specific constraints in either the analysed or current project.
Part 2, Section 1,
Appendix A (05/03)
OBJECTIVE
B1.1
To communicate clearly the basis of the budget and cost plans to the client,
designer and consultants.
B2
FORMAT
B2.1
B2.2
B2.3
Additional information to be sent to the design team once the cost plan is
prepared is set out in the Report to the Design Team. The main parameters
affecting the cost targets should be clearly set out.
B2.4
The level of detail to be included in these documents should relate to the size
and complexity of projects. Simple projects may require less information than
shown in the example; complex projects significantly more.
Part 2, Section 1,
Appendix B (05/03)
Page 1
Site works:
Alterations:
%
%
Page 2
Part 2, Section 1,
Appendix B (05/03)
zzz
Alternative 1
0
Alternative 2
0
Formation of contract
Construction commencement
Alternative 2
1Q
2Q
3Q
4Q
5Q
6Q
7Q
8Q
9Q
Balance
Total
As Budget Cost
Alternative 1
Alternative 2
Part 2, Section 1
Appendix B (4/98)
Page 3
Area m2
Min. floor to
ceiling height (m)
Max. floor
loadings kN/m2
Comment
Quality Standards
External elevations:
Internal finishes:
Lighting:
Site works:
Other (specify):
Page 4
Part 2, Section 1
Appendix B (4/98)
Alternatives
Cost:
extra/saving
Comment
Signature:
____________________________________________
Firm:
____________________________________________
Date: ____________________
____________________________________________
____________________________________________
____________________________________________
Part 2, Section 1,
Appendix B (05/03)
Page 5
Quantity
Gross floor area
m2
(Perimeter on plan
m.)
No. of storeys
m.
intermediate floors
m.
highest floor
m.
Floor/roof zone
m.
Number
____________________
Type
_______________________________
Structural
Ground bearing pressure
kN/m2
Floor loadings:
Intermediate
Highest
Roof loading:
Environmental
Fabric U values:
Roof
W/m2C
Walls (average)
W/m2C
Ground floor
W/m2C
kW
kW
Page 6
Part 2, Section 1,
Appendix B (05/03)
W/m2)
REPORT
TO DESIGN
TEAM
(continued)
REPORT
TO CLIENT
AND DESIGN
TEAM
(continued)
TECHNICAL QUANTITY AND QUALITY PARAMETERS (continued)
Lighting levels
(Specify spaces, lux level and load in W/m2)
kW
w/m2)
kW
w/m2)
Special areas with higher than average service or other costs (specify)
Other
External Works
Site area
Road area
hectares
m2
m2
m2
No.
Area
m2
Other
Part 2, Section 1
Appendix B (4/98)
Page 7
REPORT
TO DESIGN
TEAM
(continued)
REPORT
TO CLIENT
AND DESIGN
TEAM
(continued)
COST PLAN
Building: .....................................................................................................
Element
Total cost
Substructure
2A
2B
2C
2D
2E
2F
2G
2H
2
Frame
Upper floors
Roof
Stairs
External walls
Windows and external doors
Internal walls and partitions
Internal doors
Superstructure
Cost per m2
Element unit
quantity
Element unit
rate
3A Wall finishes
3B Floor finishes
3C Ceiling finishes
Internal finishes
4
Fittings
5A
5B
5C
5D
5E
5F
5G
5H
5I
5J
5K
5L
5M
5N
5O
5
Sanitary appliances
Services equipment
Disposal installations
Water installations
Heat source
Space heating and air treatment
Ventilating systems
Electrical installations
Gas installations
Lift and conveyor installations
Protective installations
Communications installations
Special installations
Builders work in connection
Builders profit and attendance
Services
Building sub-total
6A
6B
6C
6D
6
Site works
Drainage
External services
Minor building works
External works
Preliminaries
Total (less contingencies)
Contingencies
Construction costs
Page 8
Part 2, Section 1
Appendix B (4/98)
REPORT
TO CLIENT
AND DESIGN
TEAM
(continued)
REPORT
TO DESIGN
TEAM
(continued)
COST PLAN
Building: .....................................................................................................
Elements
Specification included in
budget/cost plan
Alternatives
Cost + or
Substructure
2A Frame
2B Upper floors
2C Roof
2D Stairs
2E External walls
2F
5A Sanitary appliances
5B Services equipment
5C Disposal installations
Page 9
Part 2, Section 1
Appendix B (4/98)
REPORT
TO CLIENT
AND DESIGN
TEAM
(continued)
REPORT
TO DESIGN
TEAM
(continued)
SPECIFICATION
Building: ................................................................................................
Elements
Specification included in
budget/cost plan
Alternatives
Cost + or
5D Water installations
5E Heat source
5F
5G Ventilating systems
5H Electrical installations
5I
Gas installations
5J
5K Protective installations
5L
Communication installations
5M Special installations
5N Builders work in connection with
services
5O Builders profit and attendance on
services
6A Site work
6B Drainage
6C External services
6D Minor building works
Page 10
Part 2, Section 1
Appendix B (4/98)
REPORT
TO CLIENT
AND DESIGN
TEAM
(continued)
REPORT
TO DESIGN
TEAM
(continued)
COST TARGETS
Building: ..........................................................
Elements
Page 11
Part 2, Section 1
Appendix B (4/98)
Rate
Target cost
19 ...............
Cost per m2
SQUARE INDEX
This is an alternative way of expressing the relationship between the floor area and the
external walls. It describes the degree to which the perimeter length of an actual
building exceeds that of a building of the same area which is a perfect square. Any
single storey building can be described, as can also multi-storey buildings, with a
constant shape on each floor.
Formula s =
4 a
Part 2, Section 1
Appendix C (4/98)
Page 1
The quantities calculated in this, or similar ways, can then be used with selected
element unit rates to calculate budgets and cost plans for projects in the earliest stages
of design, or for checking the approximate cost difference of alternative design
solutions.
A percentage can be used to split wall from window, e.g. window and door area
= external walls w = 945 m2 30% = 284 m2.
Page 2
Part 2, Section 1
Appendix C (4/98)
where
A=
n=
a=
s=
f=
d=
w=
Part 2, Section 1
Appendix C (4/98)
Page 3
Part 2, Section 1,
Appendix D (05/03)
Page 1
Hackett, M. et al., Pre-Contract Practice and Contract Administration for the Building
Team (9th edition), Blackwell, Oxford, 2002
Hall, F. and Greeno, R., Building Services Handbook (2nd edition), Butterworth
Heinemann, Oxford, 2003
Institution of Civil Engineers, Management of International Construction Projects,
Thomas Telford, London, 1985
Jaggar, D. et al., Building Design Cost Management, Blackwell, Oxford, 2002
Jaggar, D. and Morton, R., Design and the Economics of Building, E & FN Spon,
London, 1995
Jaggar, D. M. and Liverpool John Moores University, Civil Engineering Cost Analysis
(CECA), BCIS, Kingston upon Thames, 1997
Kelly, J. et al., Best Value in Construction, Blackwell, Oxford, 2002
Kharbanda, O. P., Stallworthy, E. A. and Williams, L. F., Project Cost Control in
Action (2nd edition), Gower Technical Press, Aldershot, 1987
Latham, M. and Department of the Environment, Constructing the Team: Joint Review
of Procurement and Contractual Arrangements in the United Kingdom Construction
Industry: Final Report July 1994, HMSO, London, 1994
Masterman, J., Introduction to Building Procurement Systems (2nd edition), Spon
Press, 2001
McCabe, S., Benchmarking in Construction, Blackwell Science, Oxford, 2001
Miller, F., Building and Civil Engineering Cost-Value Comparisons, Ruthtrek
Limited, Herne Bay, 1992
Neil, J. N., Constructing Cost Estimating for Project Control, Prentice Hall Inc., New
Jersey, 1982
Nisbet, J., Estimating and Cost Control, Batsford, London, 1961
Pilcher, R., Project Cost Control in Construction (2nd edition), Blackwell Scientific
Publications Ltd, Oxford, 1994
Royal Institution of Chartered Surveyors, Developing an Appropriate Building
Procurement Strategy (see part 3, section 1 of this handbook)
Seeley, I. H., Building Economics: Appraisal and Control of Building Design Cost and
Efficiency (4th edition), Macmillan, Basingstoke, 1996
Stone, P. A., Building Design Evaluation: Costs in Use (3rd edition), Spon, 1980
Stone, P. A., Building Economy, Design Production and Organisation (3rd edition),
Pergamon Press, Oxford, 1983
Strategic Forum for Construction, Accelerating Change, Rethinking Construction,
2002
Ward, S. A., Cost Engineering for Effective Project Control, John Wiley & Sons, New
York, 1992
Page 2
Part 2, Section 1,
Appendix D (05/03)
Wilson, R. M. S., Cost Control Handbook (2nd edition), Gower Publishing, Aldershot,
1983
ARTICLES AND REPORTS
Abdullah, R. Z. and Tyler, A. H., Meeting the Problems of Cost Control Systems,
Building Technology & Management, 24(4) August/September 1988, 1416(3)
Baxendale, A. T., Integration of Time and Cost Control, Chartered Institute of
Building (Construction Papers 7), Ascot, 1992
Betts, M. and Gunner, J., Consultant Cost Control in The Pacific Rim, Cost
Engineering, 34 (1) January 1992, 1724(8)
Bowen, P. and Edwards, P., Interpersonal Communication in Cost Planning During
the Building Design Phase, Construction Management & Economics, (1996) 14,
395404(10)
Costing Services, Building Services, 14(11) November 1992, 2531(7)
Farrow, J. J. and Rutter, D. K., Performance Setting and Monitoring on Building Projects
for Contractors, Chartered Institute of Building (Construction Papers 67), Ascot, 1996
Ferry, D. J. O. and Flanagan, R., Life Cycle Costing: a Radical Approach, CIRIA
Report 122, Construction Industry Research and Information Association, London,
1991
Gilmour, J. and Skitmore, M., A New Approach to Early Stage Estimating,
Chartered Quantity Surveyor, 11(9) May 1989, 3638(2)
Kaka, A. P. and Price, A. D. F., Modelling Standard Cost Commitment Curves for
Contractors Cash Flow Forecasting, Construction Management & Economics, 11(4)
July 1993, 271283(13)
Ministry of Education Building Bulletin No. 4, Cost Study, first edition March 1951,
second edition March 1957, third edition 1972
Ministry of Public Building and Works/International Tutor Machines Ltd, Cost
Control in Building Design, R and D Building Management Handbook 4, HMSO,
London, 1968
Morris, A., A Rational Approach to Cost, Building, 260(7889) 21 April 1995, 33(1)
Skitmore, M. et al., The Accuracy of Construction Price Forecasts, University of
Salford, Salford, 1990
Southgate, T., A New Approach, Chartered Quantity Surveyor, 11(3) November
1988, 3536
Watson, B., Cost Planning Engineering Services Contracts, Cost Engineer, 28(4)
1990, 810(3)
Watson, K., Procurement the Key Area for Cost Control, Construction Computing,
(52) April 1996, 1213(2)
Part 2, Section 1,
Appendix D (05/03)
Page 3
PART 2, SECTION 2
Following the recession of the early 1990s construction clients are generally
more streamlined and competitive and some recognise that their ongoing
property costs may provide them with the business edge they need. There is
therefore increased attention to life cycle costing. The following Sub-sections
expand on this trend by covering recent changes in the industry and their
effect on LCC.
2.2.1.2
VALUE ENGINEERING
Value engineering involves preparing structured option appraisals during the
design process so demonstrating value for money for clients. Its use is
Page 1
PART 2, SECTION 2
increasing and with it comes the opportunity and need for LCC to be part of
the options appraisal criteria.
2.2.1.3
2.2.1.4
(ii)
It follows that the selection of materials for certain elements of a structure that
may involve maintenance, (particularly where access to those elements
involves working at height), complies with the spirit of Regulation 13. For
example, the selection of PVCu window frames with easy clean hinges
involves limited maintenance and allows cleaning from the inside. Similarly
marble flooring is cheaper than cork tiles over a 60-year period and while the
decision to use marble is economically sound it also removes health hazards
Latham, M., Sir, (1994), Constructing the Team: Joint Review of Procurement and Contractual
Arrangements in the United Kingdom Construction Industry: Final Report, HMSO London
Page 2
PART 2, SECTION 2
associated with fumes and vapour when cork has to be resealed. In purely
capital cost terms, the selection of the materials referred to above may be more
expensive than their traditional counterparts.
The use of life cycle costing places initial capital cost in the context of future
maintenance expenditure, and helps justify decisions which have beneficial
health and safety implications.
2.2.1.5
2.2.1.
Page 3
PART 2, SECTION 2
electricity and performs better. Similarly, condensing gas boilers can save
1020% of fossil fuel bills with pay back in five years.
It is also worth noting that oil is becoming increasingly harder to extract and
environmental concerns generally will increase in the very near future.
Sainsbury has been the first grocery retailer to produce an environmental
report and recognises that energy probably accounts for its single biggest
direct environmental impact. Significantly it is also the third largest
controllable cost in running a typical supermarket.
2.2.1.7
2.2.1.8
BUILDING SUSTAINABILITY
If there is to be a conscious shift of opinion towards sustainable buildings i.e.
those which have a viable life expectancy beyond their initial designed use,
then there has to be a simultaneous re-examination of a buildings costs in use
or perhaps more correctly costs in uses.
Buildings have not been traditionally designed for anything beyond their
immediate requirement. However, as more are being converted to alternative
uses it is probably only a matter of time before investors in property call for
properties to be constructed with a view to extending the buildings usable
life, e.g. conversion to house a growing less mobile and aged population. Such
consideration is more valid the shorter the predicted current building life, e.g.
some light industrial units for English Partnerships have been designed for a
ten-year life. Similarly, Hertfordshire County Council have housing and
nursing homes with a 20-year life expectancy.
Such a concept will require building layouts and structures to be more flexible
with maintenance, re-servicing and conversion to alternative uses being
simplified and made more economical. A cost in use study at design stage may
justify larger bay sizes, raised flooring or greater storey heights to demonstrate
continual viability for future generations.
A cost in use study would explore the economics involved of using a building
for its notional design life and for its intended use in the usual way. However,
supplementary investigations would explore potential alternative uses for the
building and the conversion cost (and possibly the cost in use for a further
notional period). If sufficient consideration were to be given at the initial
design stage for potential future uses of a building, it could be used to
demonstrate the continued asset value of the property and go a considerable
Page 4
PART 2, SECTION 2
2.2.2.2
Page 5
PART 2, SECTION 2
Page 6
PART 2, SECTION 2
8%
5%
3%
16%
8%
8%
3%
4%
7%
Page 7
PART 2, SECTION 2
In the no risk return discount rate method, for example, the calculation
should be as follows:
Treasury Bond rate of return
Inflation rate
8%
5%
Page 8
PART 2, SECTION 2
in the worked examples). However, all expenditure throughout the life of the
building could be included if the total building analysis were required.
The major categories of costs are:
capital costs
financing costs
operation costs
annual maintenance costs
intermittent maintenance, replacement and alterations costs
occupancy costs
residual values and disposal costs.
Page 9
PART 2, SECTION 2
(c) Operation costs include estimates of rent, rates, energy costs, cleaning
costs, building related staffing costs and other staffing costs.
(d) Annual maintenance costs average maintenance costs are available but
once details of design are completed, a more relevant estimate can be
produced based on information obtained from manufacturers or maintenance
managers.
(e) Intermittent maintenance, replacement and alteration costs replacement
costs can be produced using normal cost estimating techniques.
In seeking a realistic assessment of the life of materials and components,
reference should be made to manufacturers, maintenance managers and other
sources of such data (as discussed in 2.2.4).
(f) Occupancy costs the cost of performing the function for which the
building is intended (e.g. producing motor vehicles). Occupancy costs are
distinguished from operation costs, as they relate to costs attributable to a
specific process undertaken by the client, which may change within the life of
the building. As an example, a car manufacturer may change to the production
of heavy goods vehicles. This would impact on his occupancy costs, whereas
his building related operation costs could be relatively unchanged. Some
clients might not require the surveyor to take these costs into account, as not
relating directly to the building.
(g) Residual values and disposal costs estimate of the resale value and the
cost of disposing of the building, plant, land and other assets after the expiry
of the life cycle. Many buildings, particularly those with an open market
value will have a significant residual value. Care should be taken in assessing
this value as it can have a major effect on the life cycle costing calculations
(see Appendix A).
PART 2, SECTION 2
The following example shows the net discounted cost, after tax relief, of
1,000 spent on differing types of expenditure.
Expenditure
No relief
Where capital
allowances are
allowed on 50% of
capital expenditure
Where capital
allowances are
allowed on 100%
of capital
expenditure
Relief given
on
maintenance
100%
1,000
1,000
1111
222
350
889
778
650
1,000
1,000
1,000
i.e. 50% of 1,000 25% reducing balance 35% Corporation Tax with future allowances discounted at
10% per annum (a discounting calculation is required in order to establish the above figures).
2.2.3.2
TYPES OF ALLOWANCES
The types of allowances and rates of depreciation often change.
Following the Finance Act 1985, capital allowances available that relate to
Real Property were as follows:
Page 11
PART 2, SECTION 2
Allowable expenditure
Plant and machinery
Industrial buildings
Agricultural buildings
Dredging
Scientific research
Cemeteries and crematoria
Dwelling houses let on assured tenancies
only expenditure expended prior to
1 April 1987
Hotels
Enterprise zone building expenditure
Mining and certain related construction works
4% (straight line)
4% (straight line)
100%
40% plus a ratio based upon usable life
Subsequent to the Finance Act 1997 first year allowances were changed and at
the time of writing were still being finalised.
In certain circumstances allowances may be at a higher rate i.e. they relate to
specific incentives, certain assisted projects or expenditure relates to a
transitional period e.g. terms of the Finance Act 1984 (applicable until 31
March 1987).
Different types of allowances, initial, first year and writing down are
explained in the Glossary of Terms (Appendix D).
Straight line allowances are calculated as a percentage of original cost and at
4% the allowance is spread evenly over 25 years. A reducing balance
computation is achieved each year by first deducting all previous allowance
amounts from original cost and then applying the allowable percentage to the
balance, i.e. 25% in the first year, 25% of 75% in the second, and so on. While
the building itself may be subject to a 4% straight line allowance the plant and
machinery in the building will receive a 25% reducing balance.
It should be noted that the significant part of capital allowance relief on a 25%
reducing balance basis comes in the first five to seven years. This is included
in the above example where the tax relief amount is a product of the
incremental annual writing down allowance, discounted.
Regional development grants (or their Northern Ireland equivalent) may also
be available. These are not treated as taxable and may be disregarded when
assessing the capital cost upon which tax relief is calculated.
Currently the running and maintenance costs of an asset are deductible in full
(i.e. 100% allowance) against taxable profits in the year of expenditure.
2.2.3.3
Page 12
PART 2, SECTION 2
2.2.3.4
2.2.3.5
DYNAMICS
The surveyor should therefore appreciate the variables and frequent changes
that occur in respect to the application of taxation allowances.
These arise because:
(a) the Government uses taxation to impose fiscal policy and influence the
economy and therefore statutes are introduced amending previous rates of
depreciation, regulations and entitlements;
(b) the interpretation of entitlement is affected by case law precedents.
Page 13
PART 2, SECTION 2
(c) the Inland Revenue practices and extra statutory concessions develop to
address specific issues or vagaries.
2.2.3.6
APPLICATIONS
Taxation allowances provide the opportunity for innovative funding
arrangements whereby the tax relief can be exported to a party who can
enjoy more benefit from the entitlement.
They also need to be advised during property transfers so the relevant
balancing adjustments can be calculated and the purchasers advised of their
proper entitlements.
2.2.3.7
WORKED EXAMPLES
Worked example 2.2.5.3 summarises the effect of capital and revenue
allowances. Worked example 2.2.5.6 includes a detailed calculation of the
capital and revenue allowances.
Business Rates
Large plant and machinery regarded as an integral part of the building can
attract additional rates which can be influenced by design niceties (such as how
the plant is covered over). Expert advice should be sought in such a situation.
Further reading for taxation
Tolleys Capital Allowances, Tolley Publishing Co. Ltd generally published
annually.
Butterworths Yellow Tax Handbook, Butterworth & Co. (Publishers) Ltd
abstract of Statutes
Tax Statutes and Statutory Instruments, CCH Editions Ltd incorporating
extra statutory concessions
PART 2, SECTION 2
Page 15
PART 2, SECTION 2
PROJECT LIFE
Discount Rate
Discount Rate
SHEET NUMBER:
ELEMENT:
60 Years
4.00% per annum
COSTS
Capital Costs
Aluminium Glazed
Hardwood Glazed
Vision Panels
Softwood
Metal
Contingency
1750.00 m2
Repaint
Repaint
New ironmongery
Repaint
Repaint
Repaint
New ironmongery
Repaint
Repaint
Repaint
New ironmongery
Repaint
Repaint
Repaint
New ironmongery
Repaint
Repaint
Repaint
OPTION 2 Repaint
Repaint
New ironmongery
Repaint
Repaint
Repaint
New ironmongery
Repaint
Repaint
Repaint
New ironmongery
Repaint
Repaint
Repaint
Page 16
OPTION 3
Softwood
OPTION 4
Metal
Finish Life
40 Years
Finish Life
30 Years
Finish Life
20 Years
Finish Life
30 Years
Maintenance
Period
4 Years
Maintenance
Period
4 Years
Maintenance
Period
4 Years
Maintenance
Period
4 Years
Estimated
Cost
Present
Value
35,000
35,000
Estimated
Cost
Present
Value
20,000
20,000
10.89 m2
9.99 m2
5.90 m2
17.99 m2
Year Present
Cost
4
340
8
340
Estimated
Cost
Present
Value
14,000
14,000
Estimated
Cost
17,000
Capital Costs
OPTION 1
OPTION 2
Hardwood Glazed
Vision Panels
OPTION 1
Aluminium Glazed
1000.00 m2
700.00 m2
850.00 m2
Total Year 1
LCCM5
Internal Doors
Unit: 20 m2
35,000
218
17,000
20,000
14,000
17,000
4,927
200
4,520
118
13,068
4,927
340
340
291
248
11,988
4,520
300
300
256
219
12
16
20
6,040
340
340
6,040
340
340
3,773
182
155
24
28
32
6,040
340
340
6,040
340
340
2,356
113
97
36
40
44
6,040
340
340
6,040
340
340
1,472
71
61
48
52
56
4
8
6,040
340
340
300
300
6,040
340
340
919
44
38
12
16
20
6,000
300
300
6,000
300
300
3,748
160
137
24
28
32
6,000
300
300
6,000
300
300
2,341
100
86
36
40
44
6,000
300
300
6,000
300
300
1,462
62
53
Present
Value
2,670
7,080
2,670
360
8,140
21,588
8,140
PART 2, SECTION 2
PROJECT LIFE
Discount Rate
60 Years
4.00% per annum
Discount Rate
Maintenance
OPTION 2
Hardwood Glazed
Vision Panels
OPTION 3
Softwood
OPTION 4
Metal
Finish Life
40 Years
Finish Life
30 Years
Finish Life
20 Years
Finish Life
30 Years
Maintenance
Period
4 Years
Maintenance
Period
4 Years
Maintenance
Period
4 Years
Maintenance
Period
4 Years
Present
Value
Estimated
Cost
Present
Value
Estimated
Cost
Present
Value
Estimated
Cost
Present
Value
300
300
6,100
300
300
6,100
300
300
6,100
300
300
6,100
300
300
6,100
256
219
3,810
160
137
2,380
100
86
1,486
62
53
928
39
33
3,810
17,000
5,241
Year Present
Cost
New ironmongery
Repaint
Repaint
Repaint
OPTION 3 Repaint
Repaint
New ironmongery
Repaint
Repaint
Repaint
New ironmongery
Repaint
Repaint
Repaint
New ironmongery
Repaint
Repaint
Repaint
New ironmongery
Repaint
Repaint
Repaint
OPTION 4 Repaint
Repaint
Repaint
Repaint
Repaint
Repaint
Repaint
Repaint
Repaint
Repaint
Repaint
Repaint
Repaint
Repaint
Replacement
OPTION 4
LCCM5
Internal Doors
Unit: 20 m2
OPTION 1
Aluminium Glazed
Estimated
Cost
COSTS
OPTION 1
OPTION 2
OPTION 3
SHEET NUMBER:
ELEMENT:
48
52
56
4
8
6,000
300
300
320
320
12
16
20
6,000
300
300
913
39
33
320
320
274
234
3,820
320
320
3,820
320
320
2,386
171
146
24
28
32
3,820
320
320
3,820
320
320
1,490
107
91
36
40
44
3,820
320
320
3,820
320
320
931
67
57
48
3,820
52
320
56
320
4
300
8
300
12
6,100
16
300
20
300
24
6,100
28
300
32
300
36
6,100
40
300
44
300
48
6,100
52
300
56
300
Year Present
Cost
40
35,000
30
20,000
20
14,000
40
14,000
30
17,000
3,820
320
320
581
42
36
35,000
7,290
20,000
6,166
14,000
14,000
6,389
2,916
62,560
17,109
47,000
15,776
46,480
15,917
44,400
14,993
75,628
22,037
58,988
20,297
53,560
18,586
65,988
23,132
57,037
40,297
32,586
40,132
Page 17
PART 2, SECTION 2
2.2.5.2
Page 18
PART 2, SECTION 2
Element: Services
PROJECT LIFE
Discount Rate
Unit: 3,000 m2
60 Years
4% per annum
Discount Rate
4.00% per annum
(Interest Rate (7%), Inflation (3%)
COSTS
OPTION 1
Air Conditioning
U/Floor Trunking
OPTION 2
HW Heating &
Ring Main Electrics
OPTION 3
OPTION 4
Finish Life
15 Years
Finish Life
25 Years
Finish Life
Finish Life
Maintenance
Period
5 Years
Maintenance
Period
7 Years
Maintenance
Period
Years
Maintenance
Period
Years
Estimated
Cost
Present
Value
750,000
750,000
Estimated
Cost
Present
Value
450,000
450,000
Estimated
Cost
Present
Value
Estimated
Cost
Present
Value
Capital Cost
Air Conditioning U/Floor Trunking
HW Heating & Ring Main Electric
250 m2
150 m2
Contingency
5%
Total Year 1
Capital Costs
37,500
22,500
787,500
472,500
25.00 m2
Year
75,000
1,696,762
5.00 m2
4,500,000
1,696,762
15,000
339,352
900,000
339,352
Present
Cost
OPTION 1
Overhall
5
Equipment 10
5,000
5,000
5,000
5,000
4,110
3,378
Overhall
Overhall
Equipment 15
Equipment 20
5,000
5,000
5,000
5,000
2,776
2,282
Overhall
Overhall
Equipment 25
Equipment 30
5,000
5,000
5,000
5,000
1,876
1,542
Overhall
Overhall
Equipment 35
Equipment 40
5,000
5,000
5,000
5,000
1,267
1,041
Overhall
Equipment 45
5,000
5,000
856
Overhall
Overhall
Equipment 50
Equipment 55
5,000
5,000
5,000
5,000
704
578
OPTION 2
Genearl repaint/repair
7
14
2,000
2,000
2,000
2,000
1,520
1,155
Genearl repaint/repair
Genearl repaint/repair
21
28
2,000
2,000
2,000
2,000
878
667
Genearl repaint/repair
Genearl repaint/repair
35
42
2,000
2,000
2,000
2,000
507
385
Genearl repaint/repair
Genearl repaint/repair
49
56
2,000
2,000
2,000
2,000
293
222
300,000
300,000
112,535
42,214
OPTION 3
OPTION 4
Replacement
Year
OPTION 1
OPTION 2
15
Present
Cost
600,000
600,000
333,159
30
45
600,000
600,000
600,000
600,000
184,991
102,719
25
50
300,000
300,000
OPTION 3
OPTION 4
Total Maintenance/Replacement Costs
1,855,000
641,278
616,000
160,375
6,355,000
2,338,040
1,516,000
499,728
3,125,540
972,228
Page 19
PART 2, SECTION 2
2.2.5.3
25 years
17.5%
30,000
2,000
5,000
5%
33%
Taxation Calculation
The capital cost for plant and machinery receives a 25% reducing balance.
Maintenance and running costs receive 100% allowance.
Year 1 with gantry calculation:
Capital
Maintenance
=
=
2,908
291
3,199
=
=
2,181
291
2,472
The methodology applies for the rest of the 25 years as summarised overleaf.
The client initially considered that the gantry would pay for itself due to
savings in maintenance and cleaning cost.
However:
with gantry investment
without gantry investment
Page 20
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Financing
Operation
30,000
Capital
Year
750
750
750
750
750
750
750
750
750
750
750
750
750
750
750
750
750
750
750
750
750
750
750
750
750
Annual
1,750
250
1,750
250
1,750
250
1,750
250
Intermittent
Maintenance
Costs
Occupacy
(2,000)
Disposal/
residual value
(1,250)
2,500
750
750
1,000
750
750
2,500
750
750
1,000
750
750
2,500
750
750
1,000
750
750
2,500
750
750
1,000
750
750
30,000
TOTAL
131
438
131
131
175
131
131
438
131
131
175
131
131
438
131
131
175
131
131
438
131
131
175
131
131
5,250
VAT 17.5%
(1,119)
2,938
881
881
1,175
881
881
2,938
881
881
1,175
881
881
2,938
881
881
1,175
881
881
2,938
881
881
1,175
881
881
35,250
TOTAL
inc VAT
311
973
296
298
397
303
307
991
320
330
440
360
383
1,092
454
509
679
679
808
1,660
1,211
1,518
2,024
2,472
3,199
Less tax
allowance
(1,430)
1,965
585
583
778
578
574
1,947
561
551
735
521
498
1,846
427
372
496
202
73
1,278
(330)
(637)
(849)
(1,591)
(2,318)
35,250
NET TOTAL
0.295
0.310
0.326
0.342
0.359
0.377
0.396
0.416
0.436
0.458
0.481
0.505
0.530
0.557
0.585
0.614
0.645
0.677
0.711
0.746
0.784
0.823
0.864
0.907
0.952
1.000
Present value
of
1
@ 5%
CLIENT:
PROJECT TITLE: Retail Development/Shopping Mall
JOB NO:
OPTION: Cleaning with gantry curtain walling to new facace
36,541
(422)
609
191
199
279
218
227
809
245
253
354
263
264
1,028
250
229
320
137
52
953
(258)
(524)
(733)
(1,443)
(2,207)
35,250
PRESENT
VALUE
36,541
36,963
36,354
36,163
35,964
35,685
35,467
35,239
34,431
34,186
33,933
33,580
33,316
33,052
32,024
31,775
31,546
31,226
31,089
31,037
30,084
30,343
30,866
31,600
33,043
35,250
CUMULATIVE
PRESENT
VALUE
PART 2, SECTION 2
Page 21
Page 22
It is assumed that VAT will remain at around 17.5% and the client is the end
user under VAT rules.
The capital cost includes allowances for preliminaries and associated builders
work.
FORECASTERS ASSUMPTIONS
Discount rate:
(1 + 11%)
total
291
3,199
2,908
PART 2, SECTION 2
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Financing
Operation
5,000
Capital
Year
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
Annual
1,500
1,500
1,500
Intermittent
Maintenance
Costs
Occupacy
Disposal/
residual value
1,500
3,000
1,500
1,500
1,500
1,500
1,500
3,000
1,500
1,500
1,500
1,500
1,500
6,500
1,500
1,500
1,500
1,500
1,500
3,000
1,500
1,500
1,500
1,500
1,500
5,000
TOTAL
263
263
263
263
263
263
263
525
263
263
263
263
263
1,138
263
263
263
263
263
263
263
263
263
263
263
875
VAT 17.5%
1,763
3,525
1,763
1,763
1,763
1,763
1,763
3,525
1,763
1,763
1,763
1,763
1,763
7,638
1,763
1,763
1,763
1,763
1,763
3,525
1,763
1,763
1,763
1,763
1,763
5,875
TOTAL
inc VAT
582
1,163
582
582
582
582
582
1,163
582
582
582
582
582
2,521
582
582
582
582
582
1,163
582
582
582
582
582
Less tax
allowance
1,181
2,362
1,181
1,181
1,181
1,181
1,181
2,362
1,181
1,181
1,181
1,181
1,181
5,117
1,181
1,181
1,181
1,181
1,181
2,362
1,181
1,181
1,181
1,181
1,181
5,875
NET TOTAL
0.295
0.310
0.326
0.342
0.359
0.377
0.396
0.416
0.436
0.458
0.481
0.505
0.530
0.557
0.585
0.614
0.645
0.677
0.711
0.746
0.784
0.823
0.864
0.907
0.952
1.000
Present value
of
1
@ 5%
CLIENT:
PROJECT TITLE: Retail Development/Shopping Mall
JOB NO:
OPTION: Cleaning with gantry curtain walling to new facace
26,444
349
732
384
404
424
445
467
981
515
541
568
596
626
2,849
690
725
761
799
839
1,763
925
971
1,020
1,071
1,124
5.875
PRESENT
VALUE
26,444
26,095
25,363
24,978
24,575
24,151
23,706
23,239
22,257
21,742
21,202
20,634
20,037
19,411
16,562
15,872
15,147
14,386
13,587
12,749
10,986
10,061
9,090
8,070
6,999
5,875
CUMULATIVE
PRESENT
VALUE
Page 24
It is assumed that VAT will remain at around 17.5% and the client is the end
user under VAT rules.
The capital cost includes allowances for opening lights now required, without
capital allowances.
FORECASTERS ASSUMPTIONS
Discount rate:
(1 + 11%)
Capital cost as plant and machinery with 100% tax allowance NIL
PART 2, SECTION 2
PART 2, SECTION 2
2.2.5.4
9,013 0.41726*
= 9,013
= 3,761
= 387
Page 25
Page 26
SERVICES
FITTS
FURN
INT
FABRIC
EXT
FABRIC
STRUCTURE
DISPOSAL INST
HEAT SOURCE
HEAT SYSTEM
VENTILATION
5.5
5.6
5.7
WATER SUPPLY
5.3
5.4.2.
SERVICES EQUIPMENT
5.2
INTERNAL DRAINAGE
SANITARY APPLIANCES
5.1
5.4.1.
DOORS
3.4
4.1
FLOORS
CEILINGS
3.2
3.3
INTERNAL WALLS
WINDOWS
2.3
3.1
EXTERNAL WALLS
2.2
EXTERNAL DOORS
ROOF
2.1
2.4
STAIRS
STRUCTURE
1.1
1.2
ELEMENT
CODE
5.6.1. Boilers/equipment
5.5.1. Radiators/fires
5.4.1.1.
Insulation
5.3.3.
Stainless steel
Units/Worktops
5.3.2.
3.4.2. Ironmongery
Timber
Timber
3.3.2. Skirtings
Timber/Vinyl
3.3.1. Flooring
Plasterboard
Ceramic
3.2.1. Ceilings
Brick/pboard
Timber/Metal
2.4.4. Ironmongery
2.4.3. Painting
2.4.2. Pointing
2.3.4. Ironmongery
2.3.3. Painting
2.3.2. Pointing
2.3.1. Window Op
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UPVC
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T = Test until
/ = Decorate
/ = Inspect &
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10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
<
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<
<
<
<
Facing Brick
Lead
2.1.2. Flashings
<
<
2.2.1. Walls
Concrete Tiles
Timber
Timber
Concrete/Brick
1.2.1. Stairs
1.1.3. Openings
Timber
1.1.2. Floors
COMPONENT
1 = Renewal/Replacement
1
1 = Inspect/Consider
02/12/98
Timber
KEY
1.1.1. Roofs
SUB-ELEMENT
Date Printed
Cost
Cumulative
PART 2, SECTION 2
EXT
WORKS
SERVICES
PROTECTIVE INST
COMMUNICATION
LANDSCAPING
BOUNDARIES &
ENCLOSURES
DRAINAGE
EXTERNAL SERVICES
OUTBUILDINGS
5.11
5.1.2
6.1.1
6.1.2
6.2
6.3
6.4
GAS INSTALLATION
5.9
LIFT INSTALLATION
ELECTRICAL INST
5.8
5.10
ELEMENT
CODE
<
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<
<
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T
<
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<
1
1
COST IN ,000s of
6.4.1. Binstores/platts
/ = Decorate
/ = Inspect &
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1
1
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Close Light
replacement
T = Test until
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
6.1.1.2. Grass/planting
5.12.2 Telephones
<
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1
<
<
5.8.2. Switchgear
<
COMPONENT
1 = Renewal/Replacement
02/12/98
1 = Inspect/Consider
<
KEY
SUB-ELEMENT
Date Printed
Cost
Cumulative
PART 2, SECTION 2
Page 27
Page 28
SERVICES
FITTS
FURN
INT
FABRIC
EXT
FABRIC
STRUCTURE
Disposal inst
Heat source
Heat system
Ventilation
Electrical inst
5.4.2
5.5
5.6
5.7
5.8
Water Supply
5.3
Internal drainage
Services Equipment
5.4.1
Sanitary Appliances
4.1
5.2
Doors
3.4
5.1
Floors
Ceilings
3.2
3.3
Internal walls
Windows
2.3
3.1
External walls
2.2
External doors
Roof
2.1
2.4
Stairs
Structure
1.1
1.2
ELEMENT
CODE
25
100
50
20
5
60
5
5
5
5
5.6.1. Boilers/equipment
25
100
50
20
inc
inc
inc
20
20
100
100
100
100
100
60
5
5
5
5
5
60
5
5
5
5
5
60
5
5
5
5
5
60
5
5
5
5
5
60
5
5
inc
50
20
inc
10
inc
290
20
275
10
inc
83
inc
50
20
inc
10
inc
inc
400
inc
inc
20
inc
60
650
inc
60
inc
inc
125
20
inc
60
inc
inc
125
100
100
5 200 5
1500
100
200
40 40 40 40 40 40 40 40 40 750 40 40 40 40 40 40 40 40 40 750
20
inc
60
inc
inc
125
5 450 5
inc inc inc inc inc inc inc inc inc 160 inc inc inc inc
10 10 10 10 10 10 10 10 10 200 10 10 10 10 10 10 10 10 10 200
60 60 60 60 60 60 60 60 60 800 60 60 60 60 60 60 60 60 60 800
inc
inc
20
inc
inc inc inc inc inc inc inc inc inc inc inc inc inc inc 480 inc inc inc inc
inc
5.1.1. Radiators/fires
20
inc
83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83
inc
50
20
inc
10
5.3.3. Insulation
25
100
50
inc inc inc inc inc inc inc inc inc 60 inc inc inc inc inc inc inc inc inc
25
100
50
10 11 12 13 14 15 16 17 18 19
inc inc inc inc inc inc inc inc inc 210 inc inc inc inc inc inc inc inc inc
100
125
Stainless steel
Units/Worktops
10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10
3.4.2. Ironmongery
Timber
Timber
3.3.2. Skirtings
Timber/Vinyl
3.3.1. Flooring
Plasterboard
Ceramic
3.2.1. Ceilings
Brick/pboard
Timber/Metal
2.4.4. Ironmongery
2.4.3. Painting
2.4.2. Pointing
2.3.4. Ironmongery
2.3.3. Painting
10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 2100
inc
2.3.1. Window Op
20 20 20 20 20 20 20 20 20 150 20 20 20 20 20 20 20 20 20 150
2.2.3. Ventilation
2.3.2. Pointing
20 20 20 20 20 20 20 20 20 20 20 20 20 20 220 20 20 20 20
inc
Timber/Glass
75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 2380
Years
1
2.2.2. Rendering
Facing Brick
Lead
UPVC
2.1.2. Flashings
2.2.1. Walls
Concrete Tiles
Timber
Timber
1.2.1. Stairs
Concrete/Brick )
Timber )
1.1.2. Floors )
1.1.3. Openings )
Timber
COMPONENT
02/12/98
1.1.1. Roofs
SUB-ELEMENT
40
inc
10
60
inc
83
inc
inc
inc
100
10
10
20
20
75
21
140 140
25
100
50
20
inc
inc
100
100
60
60
60
5 450
650
inc
60
inc
125
250
100
960
735
3,400
1500
3,330
1,380
360
125
875
485
1,040
870
4,020
5 200
40 40 40 40 40 40 40 40 750
20
inc
60
inc
inc
125
10 10 10 10 10 10 10 10 200
60 60 60 60 60 60 60 60 800
0
3,607
780
120
550
60
120
83 83 83 83 83 83 83 83 1200
290
20
275
10
540
145
545
420
1,000
290
2,390
120
1,000
990
4,555
150
600
300
Cost
Cumulative
inc
inc
50
20
inc
10
100
10 10 10 10 10 10 10 10 10
10 10 10 10 10 10 10 10 10
inc
inc
20
20 20 20 20 20 20 20 20 220
20 20 20 20 20 20 20 20 150
75 75 75 75 75 75 75 75 75
25
100
50
22 23 24 25 26 27 28 29 30
PART 2, SECTION 2
EXT
WORKS
SERVICES
Communication
Landscaping
5.1.2
6.1.1
6.1.2
External services
Outbuildings
6.3
6.4
Drainage
Protective inst
150
25
100
inc
25
25
inc
inc
150
25
100
inc
25
25
inc
inc
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29
100
10
10
100 240
6.4.1. Binstores/platts
PRESENT VALUE
40
50
50
25
inc
100
200
40
50
25
inc
100
50
40
40
50
25
inc
100
50
40
50
500
400
inc
500
750
300
750
525
1,000
1,270
Present Value
3701 24942
(Present Value)
31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59
60 (Yrs 3160)
518 518 1208 518 1448 1208 518 518 1208 4068 518 1208 518 518 9013 518 518 1208 518 8673 1048 518 518 1208 1448 518 1208 518 518 15460 57902 115804
(Current cost)
50
25
inc
100
50
489 461 1014 410 1082 852 344 325 715 2272 273 600 243 229 3761 204 192 423 171 2704 308 144 136 298 337 114 251 101 96 2692
40
Repeat Years
40
50
25
inc
100
50
10,200
3,650
2,400
690
525
150
200
Cost
Cumulative
518 518 1208 518 1448 1208 518 518 1208 4068 518 1208 518 518 9013 518 518 1208 518 8673 1048 518 518 1208 1448 518 1208 518 518 15460
40
10 10 500 10 10 500 10 10 500 10 10 500 10 10 3000 10 10 500 10 10 500 10 10 500 10 10 500 10 10 3000
100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 750
10
6.1.1.2. Grass/planting
10
n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
75
150
25
inc
inc
30
50 50 50 50 50 50 50 50 50 50 50 50 50 50 500 50 50 50 50 50 50 50 50 50 50 50 50 50 50 500
10 10 10 10 75 10 10 10 10 75 10 10 10 10 75 10 10 10 10 75 10 10 10 10 75 10 10 10 10
25
25
5.12.2. Telephones
5.11
Gas installation
Lift installation
5.10
6.2
4
inc
Close Light
Years
1
inc
COMPONENT
5.8.2. Switchgear
SUB-ELEMENT
5.9
ELEMENT
CODE
PART 2, SECTION 2
Page 29
PART 2, SECTION 2
2.2.5.5
PART 2, SECTION 2
Value Added Tax on all capital costs would affect the financial benefits
of options 2 and 3 which require considerable capital expenditure;
Capital Allowances would help support options 2 and 3.
(g) Renewal and Refurbishment Costs
General building refurbishment has been allowed in ten-year cycles; electrical
and mechanical plant replaced after 20 years with a refurbishment after ten
years or mid-life; felt roofs replaced after 20 years; profiled metal decking,
windows and doors after 30 years. All costs are calculated using traditional
cost estimating and included as present costs.
(h) Cost Comparison
The detailed calculation is summarised over for option 2 which is the most
cost effective over 40 years.
Year 0 Expenditure
203,000
1,164,900
1,262,100
Option 1
Option 2
Option 3
1,960,950
1,607,896
1,843,068
Life Cycle
Option 1
Option 2
Option 3
6%
6%
6%
0
20
40
287,900
1,859,000
2,444,420
1,164,900
1,593,000
1,762,522
1,262,100
1,826,100
2,047,091
8%
8%
8%
0
20
40
287,900
1,614,000
1,960,950
1,164,900
1,515,000
1,607,896
1,262,100
1,721,100
1,843,068
10%
10%
10%
0
20
40
287,900
1,423,000
1,632,562
1,164,900
1,451,000
1,506,721
1,262,100
1,638,100
1,709,146
Page 31
Page 32
Value 1200
EXPENDITURE
Present Value of 1 @ 8%
5.2
5.2
7.1
5.2
7.1
1.7
12
1.4
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
18
NVP=1,607,896
1165
17
16
15
14
13
12
11
5.2
7.1
1.7
12
1.4
-8
14
15
16
17
18
19
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
10
97
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
21
22
23
24
25
26
27
28
29
5.2
7.1
1.7
12
1.4
-8
69
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
-7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5
300
300
20
5.2
7.1
1.7
12
1.4
-8
-7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5
5.2
7.1
1.7
12
1.4
-8
13
31
32
33
34
35
36
37
38
39
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
5.2
7.1
1.7
12
1.4
-8
-7.5
310
310
40
41
15
0.1 0.09 0.09 0.08 0.07 0.07 0.06 0.06 0.05 0.05 0.05
5.2
7.1
1.7
12
1.4
-8
-7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5
393
393
30
213
291
70
492
57
-363
-55
-308
2,393
16
2,369
000
Total Value
1608
5.2
5.2
7.1
1.7
12
1.4
-8
12
1164.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 209.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 319.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 412.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 329.9
7.1
7.1
1.7
12
1.4
-8
11
1.7
12
12
1.7
1.4
1.4
-8
190
190
10
1,123
Staff Costs
27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4
5.2
Operation Costs
Value
7.1
Security
1.7
12
Maintenance
Rates
Cleaning
1.4
Fuel
Value -62.5
Water
-8
-7.5
-55
Land Sale
Revenue Costs
-7.5
Annual Rental
Capital Income
8.5
Furniture
15.5
Relocation Costs
Capital Costs
000
CLIENT
JOB TITLE
JOB NO
DATE
PART 2, SECTION 2
PART 2, SECTION 2
2.2.5.6
100 = 3.88%
[(1.03) 1]
The client has agreed that the discount rate can be rounded to 4%.
(c) Building Life
It has been agreed with the client to use a 20-year life cycle.
(d) Description of Existing Building
Late 1950s office block of multi-storey framed construction with curtain wall
cladding to front and rear. Solid party walls to both sides. Single-storey
concrete basement.
(e) Description of Existing Engineering Services
Gas-fired low pressure hot water boiler situated in basement serving perimeter
convector system with warm air ventilation to central parts of the building.
Fluorescent luminaires to all office areas and tungsten fittings to circulation.
The Surveyors Construction Handbook
Page 33
PART 2, SECTION 2
1500 m2
70%
110
9.7 m2
700 m2
The adjacent buildings will continue to remain in use as offices during and
after the development.
The structural engineers have advised that no work is required to party walls,
other than temporary shoring.
(h) Summary
Net Present Value
k
OPTION A
demolish existing building and rebuild to the
clients specific requirements, incorporating
all air air conditioning systems;
OPTION B
refurbish the existing building to meet as far as
practicable, the clients requirements, re-using
systems wherever possible.
% difference (A extra on B)
3889
2177
79%
The net present value is a key factor in the option appraisal. However other
less tangible benefits and disadvantages of each option should be carefully
considered in relation to the business objectives. It is also recommended that
a sensitivity analysis be carried out, for instance to look at different discount
rates and time frames.
The calculation of the above is detailed below.
Page 34
Present value
Present value of 1 at 4%
NET TOTAL
VAT 17%
Total
Disposal/residual value
Occupancy
intermittent
annual
Maintenance:
Operation
Financing
Capital
Costs
OPTION A
Year
131
23
154
102
52
.9615
50
2154
377
2531
2531
2531
61
.9246
66
88
154
23
131
27
104
68
.8890
76
78
154
23
131
27
104
104
2154
27
72
.8548
84
70
154
23
131
27
104
77
.8219
94
67
161
24
137
27
104
76
.7903
96
61
157
23
134
27
104
74
.7599
97
57
154
23
131
27
104
72
.7307
99
55
154
23
131
27
104
71
.7026
101
53
154
23
131
27
104
103
.6756
153
74
227
34
193
62
27
104
10
68
.6496
105
52
152
23
134
27
104
11
77
.6246
124
55
179
27
152
21
27
104
12
64
.6006
106
48
154
23
131
27
104
13
61
.5775
106
48
154
23
131
27
104
14
69
.5553
124
56
180
27
153
22
27
104
15
58
.5339
108
49
157
23
134
27
104
16
54
.5134
106
48
154
23
131
27
104
17
52
.4936
106
48
154
23
131
27
104
18
50
.4746
106
48
154
23
131
27
104
19
81
.4564
177
80
257
40
217
86
27
104
20
PART 2, SECTION 2
Page 35
Page 36
89
Financing
Operation
104
18
122
75
47
.9615
45
904
158
1062
1062
1062
Total
VAT 17.5%
Present value
Present value of 1 at 4%
NET TOTAL
52
.9246
56
66
122
18
104
15
89
56
.8890
63
59
122
18
104
15
89
Disposal/residual value
intermittent
Occupancy
15
annual
Maintenance:
904
Costs
Capital
OPTION B
Year
58
.8548
68
54
122
18
104
15
89
71
.8219
86
56
142
21
121
17
15
89
62
.7903
78
48
126
19
107
15
89
59
.7599
78
44
122
18
104
15
89
58
.7307
79
43
122
18
104
15
89
56
.7026
80
42
122
18
104
15
89
80
.6756
118
57
175
26
149
45
15
89
10
55
.6496
85
41
126
19
107
15
89
11
63
.6246
101
46
147
22
125
21
15
89
12
50
.6006
84
38
122
18
104
15
89
13
49
.5775
84
38
122
18
104
15
89
14
61
.5553
110
50
160
24
136
32
15
89
15
46
.5339
87
39
126
19
107
15
89
16
43
.5134
84
38
122
18
104
15
89
17
41
.4936
84
38
122
18
104
15
89
18
40
.4746
84
38
122
18
104
69
15
89
19
64
.4564
140
63
203
30
173
15
89
20
PART 2, SECTION 2
PART 2, SECTION 2
CAPITAL
OPTION A
GFA: 1500 m2
Elemental Cost Plan
OPTION B
Total cost
k
/m2GFA
Total cost
k
/m2GFA
Demolition
70.0
47.0
14.0
9.0
Substructure
42.0
28.0
Superstructure
315.0
210.0
17.5
12.0
External walls
490.0
327.0
101.0
67.0
Internal walls
14.5
10.0
54.0
36.0
Internal finishings
84.0
56.0
105.0
70.0
Fittings/fixtures
2.0
1.0
Sanitary appliances
9.5
6.0
9.5
6.0
21.0
14.0
21.0
14.0
Mechanical services
252.0
168.0
94.5
63.0
Electrical services
147.0
98.0
126.0
84.0
Lift installation
77.0
51.0
91.0
60.0
External work
21.0
14.0
7.0
5.0
Drainage
8.5
6.0
3.0
2.0
Sub-total
1553.5
1036.0
643.5
429.0
Preliminaries
(% of sub-total)
232.0
15%
96.5
15%
Contingencies
(% of sub-total)
46.5
3%
19.5
3%
1833.0
1222.0
759.5
506.0
321.0
17.5%
144.5
19%
2154.0
904.0
Page 37
PART 2, SECTION 2
OPERATION
OPTION A
OPTION B
per annum
per annum
13617
9964
Cleaning
OPTION A
Budget allowance 7.00 per m2
10500
OPTION B
Budget allowance 9.00 per m2
NB: existing building materials more
labour intensive for cleaning
13500
75000
OPTION B
Budget allowance 42.00 per m2
63000
4308
OPTION B
OPTION B
Budget allowance 0.2% of building cost
(904)
Total operation costs
Total k to life cycle cost summary
Page 38
1808
103425
88272
104
89
Small Power
60
100
80
5.50
5.50
5.50
1.076**
1500
1500
1500
1500
114,840
33,000
52,800
240,000
(f)
kwh*
13617
6316
1815
2904
2582
per
annum
(g)
f c/100
1500
1500
1500
1500
(d)
m2
Area
20
10
20
190
(e)
w/m2
Energy
rate
3 9,600
33,000
52,800
285,000
(f)
kwh*
OPTION B
1000
9964
2178
1815
2904
3067
per
annum
(g)
f c/100
*NB: formula for kwh = area (d) energy rate (e) unit energy cost (c) building usage (a) diversity (b)
58***
10
20
160
(e)
w/m2
m2
(d)
Energy
rate
OPTION A
Area
2200
50
(c)
(b)
2000
(p/kwh)
(%)
(hrs per
annum) (a)
Unit
energy
cost
Diversity
Building
usage
Lighting
Electricity
Heating Option A
Gas
SYSTEM
ENERGY
PART 2, SECTION 2
Page 39
PART 2, SECTION 2
ANNUAL MAINTENANCE
OPTION A
/m2
General building maintenance
Engineering services maintenance
Lifts service agreement
OPTION B
per annum
/m2
per annum
4.00
6000
4.00
6000
12.00*
18000
4.00
6000
1.50
2250
1.50
2250
26,250
14,250
27k
15k
Page 40
paintwork, etc.
electrical (luminaires)
Totals
mechanical (equipment)
Engineering services:
paintwork, etc.
carpets
Internal finishings:
Costs
Roof renewal
Year
OPTION B
electrical (luminaires)
Totals
mechanical (equipment)
Engineering services:
carpets
Internal finishings:
Costs
Roof renewal
Year
OPTION A
INTERMITTENT MAINTENANCE
17
16.5
5.5
11
5.5
0.5
3.0
3.0
3.0
3.0
45
44.5
14
14
5.5
11
10
62
62
14
42
5.5
0.5
10
3.0
3.0
11
3.0
3.0
11
21
21
21
12
21
21
21
12
13
13
14
14
32
32
15.5
5.5
11
15
22
21.5
15.5
5.5
0.5
15
3.0
3.0
16
3.0
3.0
16
17
17
18
18
19
19
69
68.5
14
14
5.5
14
11
10
20
86
86
14
42
5.5
14
0.5
10
20
PART 2, SECTION 2
Page 41
PART 2, SECTION 2
TAX
VAT
CHARGEABLE
VALUE
VAT RATE
OPTION A
OPTION B
320.8
56.2
OPTION A
Capital costs
Fees
1833
321
17
17
OPTION B
Capital costs
Fees
759.5
144.5
17
17
132.9
25.3
Total VAT to
capital costs
377
158.2
Total k to
life cycle
cost
summary
377
158
VAT is chargeable directly on all running costs items and appears on the summary.
Corporation Tax
The client currently pays corporation tax at the rate of 31%.
This percentage has been assumed for all calculations.
Tax allowance - running costs
100% tax deductible based upon total inclusive of VAT*, e.g. running cost
VAT
Total
Tax allowance @ 31%
100
17.50
117.50
36.43
Page 42
122
243
75
Total
Apply current tax rate 31%
121
reducing balance
Capital allowances
OPTION B
102
328
Total
154
174
reducing balance
Capital allowances
OPTION A
TAX ALLOWANCE
66
212
122
90
88
285
154
131
59
190
122
68
78
252
154
98
54
173
122
51
70
227
154
73
56
180
142
38
67
216
161
55
48
155
126
29
61
198
157
41
44
143
122
21
57
185
154
31
43
138
122
16
55
177
154
23
42
134
122
12
53
171
154
17
57
184
175
74
240
227
13
10
41
133
126
52
167
157
10
11
46
147
147
55
179
179
12
38
122
122
48
154
154
13
38
122
122
48
154
154
14
50
160
160
56
180
150
15
39
126
126
49
157
157
16
38
122
122
48
154
154
17
38
122
122
48
154
154
18
38
122
122
48
154
154
19
63
203
203
80
257
257
20
PART 2, SECTION 2
Page 43
PART 2, SECTION 2
CAPITAL ALLOWANCE
GFA: 1500 m2
70
42
315
490
14.5
84
2.0
9.5
21
252
147
OPTION A
% tax allowable
k
Tax allowable
k
Total cost
k
OPTION B
% tax allowable
k
20
100
100
60
0.4
9.5
252.0
88.2
14
17.5
101
54
105
9.5
21
94.5
126
30
30
100
100
60
Tax
Remarks
allowable k
5.3
16.2
9.5
94.5
75.6
Lift installation
External work
Drainage
Sub-total
Preliminaries (% of sub-total)
77
21
8.5
1553.5
233
100
27.5
27.5
77.0
427.1
64.1
91
7
3
634.5
96.5
100
45.4
45.4
91.0
292.1
43.8
Contingencies (% of sub-total)
Total construction cost
Professional fees
(% of construction cost)
VAT
Total tax-allowable capital costs
to previous page
46.5
1833
321
27.5
12.8
45.4
8.9
27.5
88.3
19.5
759.5
144.5
45.4
65.6
377
27.5
103.7
696
158
45.4
71.7
482.1
Page 44
Taken on proportion of
construction costs
PART 2, SECTION 2
2.2.5.7
No Income Tax
Single Rate
2
0.9804
1.9416
2.8839
3.8077
4.7135
5.6014
6.4720
7.3255
8.1622
8.9826
9.7868
10.5753
11.3484
12.1062
12.8493
13.5777
14.2919
14.9920
15.6785
16.3514
17.0112
17.6580
18.2922
18.9139
19.5235
20.1210
20.7069
21.2813
21.8444
22.3965
22.9377
23.4683
23.9886
24.4986
24.9986
25.4888
25.9695
26.4406
26.9026
27.3555
27.7995
28.2348
28.6616
29.0800
29.4902
29.8923
30.2866
30.6731
31.0521
31.4236
34.7609
3
0.9709
1.9135
2.8286
3.7171
4.5797
5.4172
6.2303
7.0197
7.7861
8.5302
9.2526
9.9540
10.6350
11.2961
11.9379
12.5611
13.1661
13.7535
14.3238
14.8775
15.4150
15.9369
16.4436
16.9355
17.4131
17.8768
18.3270
18.7641
19.1885
19.6004
20.0004
20.3888
20.7658
21.1318
21.4872
21.8323
22.1672
22.4925
22.8082
23.1148
23.4124
23.7014
23.9819
24.2543
24.5187
24.7754
25.0247
25.2667
25.5017
25.7298
27.6756
4
0.9615
1.8861
2.7751
3.6299
4.4518
5.2421
6.0021
6.7327
7.4353
8.1109
8.7605
9.3851
9.9856
10.5631
11.1184
11.6523
12.1657
12.6593
13.1339
13.5903
14.0292
14.4511
14.8568
15.2470
15.6221
15.9828
16.3296
16.6631
16.9837
17.2920
17.5885
17.8736
18.1476
18.4112
18.6646
18.9083
19.1426
19.3679
19.5845
19.7928
19.9931
20.1856
20.3708
20.5488
20.7200
20.8847
21.0429
21.1951
21.3415
21.4822
22.6235
5
0.9524
1.8594
2.7232
3.5460
4.3295
5.0757
5.7864
6.4632
7.1078
7.7217
8.3064
8.8633
9.3936
9.8986
10.3797
10.8378
11.2741
11.6896
12.0853
12.4622
12.8212
13.1630
13.4886
13.7986
14.0939
14.3752
14.6430
14.8981
15.1411
15.3725
15.5928
15.8027
16.0025
16.1929
16.3742
16.5469
16.7113
16.8679
17.0170
17.1591
17.2944
17.4232
17.5459
17.6628
17.7741
17.8801
17.9810
18.0772
18.1687
18.2559
18.9293
6
0.9434
1.8334
2.6730
3.4651
4.2124
4.9173
5.5824
6.2098
6.8017
7.3601
7.8869
8.3838
8.8527
9.2950
9.7122
10.1059
10.4773
10.8276
11.1581
11.4699
11.7641
12.0416
12.3034
12.5504
12.7834
13.0032
13.2105
13.4062
13.5907
13.7648
13.9291
14.0840
14.2302
14.3681
14.4982
14.6210
14.7368
14.8460
14.9491
15.0463
15.1380
15.2245
15.3062
15.3832
15.4558
15.5244
15.5890
15.6500
15.7076
15.7619
16.1614
7
0.9346
1.8080
2.6243
3.3872
4.1002
4.7665
5.3893
5.9713
6.5152
7.0236
7.4987
7.9427
8.3577
8.7455
9.1079
9.4466
9.7632
10.0591
10.3356
10.5940
10.8355
11.0612
11.2722
11.4693
11.6536
11.8258
11.9867
12.1371
12.2777
12.4090
12.5318
12.6466
12.7538
12.8540
12.9477
13.0352
13.1170
13.1935
13.2649
13.3317
13.3941
13.4524
13.5070
13.5579
13.6055
13.6500
13.6916
13.7305
13.7668
13.8007
14.0392
8
0.9259
1.7833
2.5771
3.3121
3.9927
4.6229
5.2064
5.7466
6.2469
6.7101
7.1390
7.5361
7.9038
8.2442
8.5595
8.8514
9.1216
9.3719
9.6036
9.8181
10.0168
10.2007
10.3711
10.5288
10.6748
10.8100
10.9352
11.0511
11.1584
11.2578
11.3498
11.4350
11.5139
11.5869
11.6546
11.7172
11.7752
11.8289
11.8786
11.9246
11.9672
12.0067
12.0432
12.0771
12.1084
12.1374
12.1643
12.1891
12.2122
12.2335
12.3766
Page 45
PART 2, SECTION 2
No Income Tax
PRESENT VALUE OF 1
RATE PER CENT
Years
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
60
Page 46
2
.9803922
.9611688
.9423223
.9238454
.9057308
.8879714
.8705602
.8534904
.8367553
.8203483
.8042630
.7884932
.7730325
.7578750
.7430147
.7284458
.7141626
.7001594
.6864308
.6729713
.6597758
.6468390
.6341559
.6217215
6095309
.5975793
.5858620
.5743746
.5631123
.5520709
.5412460
.5306333
.5202287
.5100282
.5000276
.4902232
.4806109
.4711872
.4619482
.4528904
.4440102
.4353041
.4267688
.4184007
.4101968
.4021537
.3942684
.3865376
.3789584
.3715279
.3047823
3
.9708738
.9425959
.9151417
.8884870
.8626088
.8374843
.8130915
.7894092
.7664167
.7440939
.7224213
.7013799
.6809513
.6611178
.6418619
.6231669
.6050164
.5873946
.5702860
.5536758
.5375493
.5218925
.5066917
.4919337
.4776056
.4636947
.4501891
.4370768
.4243464
.4119868
.3999871
.3883370
.3770262
.3660449
.3553834
.3450324
.3349829
.3252262
.3157535
.3065568
.2976280
.2889592
.2805429
.2723718
.2644386
.2567365
.2492588
.2419988
.2349503
.2281071
.1697331
4
.9615385
.9245562
.8889964
.8548042
.8219271
.7903145
.7599178
.7306902
.7025867
.6755642
.6495809
.6245970
.6005741
.5774751
.5552645
.5339082
.5133732
.4936281
.4746424
.4563869
.4388336
.4219554
.4057263
.3901215
.3751168
.3606892
.3468166
.3334775
.3206514
.3083187
.2964603
.2850579
.2740942
.2635521
.2534155
.2436687
.2342968
.2252854
.2166206
.2082890
.2002779
.1925749
.1851682
.1780463
.1711984
.1646139
.1582826
.1521948
.1463411
.1407126
.0950604
5
.9523810
.9070295
.8638376
.8227025
.7835262
.7462154
.7106813
.6768394
.6446089
.6139133
.5846793
.5568374
.5303214
.5050680
.4810171
.4581115
.4362967
.41552-7
.3957340
.3768895
.3589424
.3418499
.3255713
.3100679
.2953028
.2812407
.2678483
.2550936
.2429463
.2313774
.2203595
.2098662
.1998725
.1903548
.1812903
.1726574
.1644356
.1566054
.1491480
.1420457
.1352816
.1288396
.1227044
.1168613
.1112965
.1059967
.1009492
.0961421
.0915639
.0872037
.0535355
6
.9433962
.8899964
.8396193
.7920937
.7472582
.7049605
.6650571
.6274124
.5918985
.5583948
.5267875
.4969694
.4688390
.4423010
.4172651
.3936463
.3713644
.3503438
.3305130
.3118047
.2941554
.2775051
.2617973
.2469785
.2329986
.2198100
.2073680
.1956301
.1845567
.1741101
.1642548
.1549574
.1461862
.1379115
.1301052
.1227408
.1157932
.1092389
.1030555
.0972222
.0917190
.0865274
.0816296
.0770091
.0726501
.0685378
.0646583
.0609984
.0575457
.0542884
.0303143
7
.9345794
.8734387
.8162979
.7628952
.7129862
.6663422
.6227497
.5820091
.5439337
.5083493
.4750928
.4440120
.4149644
.3878172
.3624460
.3387346
.3165744
.2958639
.2765083
.2584190
.2415131
.2257132
.2109469
.1971466
.1842492
.1721955
.1609304
.1504022
.1405628
.1313671
.1227730
.1147411
.1072347
.1002193
.0936629
.0875355
.0818088
.0764569
.0714550
.0667804
.0624116
.0583286
.0545127
.0509464
.0476135
.0444986
.0415875
.0388668
.0363241
.0339478
.0172573
8
.9259259
.8573388
.7938322
.7350299
.6805832
.6301696
.5834904
.5402689
.5002490
.4631935
.4288829
.3971138
.3676979
.3404610
.3152417
.2918905
.2702690
.2502490
.2317121
.2145482
.1986557
.1839405
.1703153
.1576993
.1460179
.1352018
.1251868
.1159137
.1073275
.0993773
.0920160
.0852000
.0788889
.0730453
.0676345
.0626246
.0579857
.0536905
.0497134
.0460309
.0426212
.0394641
.0365408
.0338341
.0313279
.0290073
.0268586
.0248691
.0230269
.0213212
.0098759
PART 2, SECTION 2
No Income Tax
Years
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
60
2
1.0000000
.4950495
.3267547
.2426238
.1921584
.1585258
.1345120
.1165098
.1025154
.0913265
.0821779
.0745596
.0681184
.0622020
.0578255
.0536501
.0499698
.0467021
.0437818
.0411567
.0387848
.0366314
.0346681
.0328711
.0312204
.0296992
.0282931
.0269897
.0257784
.0246499
.0235963
.0226106
.0216865
.0208187
.0200022
.0192329
.0185068
.0178206
.0171711
.0165557
.0159719
.0154173
.0148899
.0143879
.0139096
.0134534
.0130179
.0126018
.0122040
.0118232
.0087680
4
1.0000000
.4901961
.3203485
.2354900
.1846271
.1507619
.1266096
.1085278
.0944930
.0832909
.0741490
.0665522
.0601437
.0546690
.0499411
.0458200
.0421985
.0389933
.0361386
.0335818
.0312801
.0291988
.0273091
.0255868
.0240120
.0225674
.0212385
.0200130
.0188799
.0178301
.0168554
.0159486
.0151036
.0143148
.0135773
.0128869
.0122396
.0116319
.0110608
.0105235
.0100174
.0095402
.0090899
.0086645
.0082625
.0078820
.0075219
.0071806
.0068571
.0065502
.0042018
5
1.0000000
.4878049
.3172086
.2320118
.1809748
.1470175
.1228198
.1047218
.0906901
.0795046
.0703889
.0628254
.0564558
.0510240
.0463423
.0422699
.0386991
.0355462
.0327450
.0302426
.0279961
.0259705
.0241368
.0224709
.0209525
.0195643
.0182919
.0171225
.0160455
.0150514
.0141321
.0132804
.0124900
.0117554
.0110717
.0104345
.0098398
.0092842
.0087646
.0082782
.0078223
.0073947
.0069933
.0066163
.0062617
.0059282
.0056142
.0053184
.0050396
.0047767
.0028282
6
1.0000000
.4854369
.3141098
.2285915
.1773964
.1433626
.1191350
.1010359
.0870222
.0758680
.0667929
.0592770
.0529601
.0475849
.0429628
.0389521
.0354448
.0323565
.0296209
.0271846
.0250045
.0230456
.0212785
.0196790
.0182267
.0169043
.0156972
.0145926
.0135796
.0126489
.0117922
.0110023
.0102729
.0095984
.0089739
.0083948
.0078574
.0073581
.0068938
.0064615
.0060589
.0056834
.0053331
.0050061
.0047005
.0044149
.0041477
.0038977
.0036636
.0034443
7
1.0000000
.4830918
.3110517
.2252281
.1738907
.1397958
.1155532
.0974678
.0834865
.0723775
.0633569
.0559020
.0496508
.0443449
.0397946
.0358576
.0324252
.0294126
.0267530
.0243929
.0222890
.0204058
.0187139
.0171890
.0158105
.0145610
.0134257
.0123919
.0114487
.0105864
.0097969
.0090729
.0084081
.0077967
.0072340
.0067153
.0062368
.0057951
.0053868
.0050091
.0046596
.0043359
.0040359
.0037577
.0034996
.0032600
.0030374
.0028307
.0026385
.0024598
8
1.0000000
.4807692
.3080335
.2219208
.1704565
.1363154
.1120724
.0940148
.0800797
.0690295
.0600763
.0526950
.0465218
.0412969
.0368295
.0329769
.0296294
.0267021
.0241276
.0218522
.0198323
.0180321
.0164222
.0149780
.0136788
.0125071
.0114481
.0104889
.0096185
.0088274
.0081073
.0074508
.0068516
.0063041
.0058033
.0053447
.0049244
.0045389
.0041851
.0038602
.0035615
.0032868
.0030341
.0028015
.0025873
.0023899
.0022080
.0020403
.0018856
.0017429
Extracts from Parrys Valuation and Investment Tables, A W Davidson (1989), (11th Edition) (Estates
Gazette) reproduced by permission of the College of Estate Management which owns the copyright.
Page 47
At the end of the life of a building, the component/building and the land will
have a residual value.
A2
There will be one of two situations. Either the building will have reached the
end of its life, with no alternative use, or the building will have reached the
end of the life for its planned purpose, but does have an alternative use.
A3
In either situation the residual value of the building and/or the land may be
significant and will need to be carefully assessed as it may have a substantial
effect on life cycle costing calculations. Residual values will be of particular
significance if the time horizon used for life cycle costing calculations is
relatively short.
A4
A5
Owners also need to be cognisant of taxation issues and whether these affect
their property/building decisions.
A6
There are strict guidelines for taxation adjustments that arise at disposal. If the
plant and machinery is scrapped the remaining value is written off and a
balancing allowance brought into account. Alternatively if the building (and
the plant and machinery contained therein) is sold, the vendor should declare
whether allowances have been claimed. An adjustment to their after tax cost
will arise depending upon whether the disposal value is greater or less than the
written down value remaining on the vendors accounts.
A7
This area of tax advice is experiencing increased scrutiny from the Inland
Revenue and the District Valuers Department, as parties to property
transactions sometimes select/contract disposal values of tax relievable
components with specific tax planning objectives.
Part 2, Section 2,
Appendix A (4/99)
Page 1
Appendix B: Obsolescence
B1
physical
economic
functional
technological
social
legal.
B2
Buildings usually end their life before the end of their physical life. The most
common reasons for buildings becoming obsolete are probably economic and
functional considerations. Buildings designed for a specific specialised use,
with little or no flexibility for changing their use, are therefore likely to have
shorter lives than buildings offering flexibility for the change of function of
the building.
B3
The table below gives definitions and examples of each form of obsolescence:
Types of
obsolescence
Definition of type
of obsolescence
Basis for
assessment of
building life
Examples of factors
leading to
obsolescence
Physical
Deterioration of
external brick walls
affecting their structural
stability.
Deterioration of
suspended concrete
floors, containing high
alumina cement, in
multi-storey buildings,
affecting structural
stability.
Economic
Part 2, Section 2,
Appendix B (4/99)
Page 1
Types of
obsolescence
Definition of type
of obsolescence
Basis for
assessment of
building life
Examples of
factors leading to
obsolescence
Functional
Technological
Social and
Legal
Page 2
The life of a
building until the
time when human
desire or legal
requirement
dictates
replacement for
reasons other than
economic
considerations.
B4
B5
Part 2, Section 2,
Appendix B (4/99)
CAPITAL COSTS
Land
Fees on acquisition
Design team professional fees
Demolition and site clearance
Construction price for building work
Cost of statutory consents
Development Land Tax
Capital Gains Tax
Value Added Tax
Furnishings
Other capital costs
Commissioning expenses
Decanting charges
C2
C2.1
C2.2
C2.3
FINANCING COSTS
Finance for land purchase and during construction
Finance during period of intended occupation
Loan charges (public sector)
C3
C3.1
C3.2
C3.3
C3.4
C3.5
C3.6
C3.7
C3.8
C3.9
C3.10
C3.11
OPERATION COSTS
Energy
Cleaning
Rates
Insurances
Security and Health
Staff (related to the building)
Management and administration of the building
Land charges
Energy conservation measures
Internal planting
Equipment associated with occupiers occupation
C4
C4.1
C4.2
C4.3
C4.4
C4.5
C4.6
Part 2, Section 2,
Appendix C (4/99)
AND
Page 1
Page 2
C4.7
C4.8
C4.9
C4.10
C4.11
C4.12
C4.13
C4.14
C4.15
C5
C5.1
OCCUPANCY COSTS
Clients occupancy costs
C6
C6.1
C6.2
C6.3
RESIDUAL VALUES
Resale value building, land and plant and equipment
Related costs demolition and site clearance and disposal of fees and charges
Capital Gains Tax and balancing charges
Part 2, Section 2,
Appendix C (4/99)
CAPITAL EXPENDITURE
Money expended in acquiring long life assets which includes land, buildings,
permanent improvements or additions/extensions to existing assets including
associated professional fees, furniture and equipment thereto, which are
intended for use in the carrying out of business operations. These assets
should have a useful life of more than one year.
D2
REVENUE EXPENDITURE
Expenditure incurred as a trading expense e.g. salaries, consumables,
occupancy and regular maintenance costs.
D3
D4
INDUSTRIAL BUILDING
Industrial buildings or structures which qualify for capital allowances are
defined in the statutes CAA 1968 S7 and CAA 1990 S18. These include
factories, manufacturing, storage, docks, tunnels and mines. There are specific
rules which apply where part of the building is used for a non-qualifying
purpose.
D5
D6
Part 2, Section 2,
Appendix D (4/99)
Page 1
D8
BALANCING ALLOWANCE
Upon disposal of an asset a comparison between its value and the written
down amount remaining on the owners accounts is required.
If the asset is sold for a sum in excess of the vendors after tax relief cost, then
a profit has arisen which is subject to an adjustment to the depreciation
allowance (i.e. reduction of tax relief), termed a balancing charge.
Alternatively, if the asset is scrapped or disposed of at low value (compared
with the residual amount) then an additional tax relief is awarded, termed a
balancing allowance.
Page 2
Part 2, Section 2,
Appendix D (4/99)
5.
6.
7.
8.
Wall finishes where they can be removed from the building, e.g.
curtains, curtain track, battens for fixing
Floor finishes such as carpets and any floor finishing that can be
removed from the building
Door mats and matwell frames
Suspended ceilings which are airtight and can be used as an
extract system or any ceiling which is an integral part of the
heating, ventilating or air conditioning system
Any movable fixtures and fittings
Demountable partitions
Curtains, blinds and furnishing
Cupboards, lockers, shelves, display counters, chalkboards,
dustbins, cloakroom fittings, telephone booths
Plumbing and
sanitary services
1.
2.
3.
4.
5.
6.
7.
8.
9.
Heat source
1.
Boilers and equipment, fuel pumps, water pumps, flue, etc. (not
the pipework from the boiler)
Boiler bases and foundations
Oil storage tanks and foundations
Fuel hoppers, ash removal plant
Control equipment to the heating system
Builders work in connection with the heat source
Part cost of boiler room
2.
3.
4.
5.
6.
7.
Space heating and air
treatment
1.
2.
3.
4.
5.
6.
Ventilation systems
1.
2.
3.
4.
Electrical installations
1.
2.
3.
4.
5.
6.
7.
Gas installations
1.
Part 2, Section 2,
Appendix E (4/99)
Page 1
Item
Lift and conveyor
installations
Communications
installations
Special installations/
protective installations
1.
2.
3.
4.
5.
6.
Clocks
Sound distribution, bells, signals and the like
Fire alarms
Burglar alarms
Telephone installation
Builders work in connection with communication installations
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
Page 2
Sprinkler system
Dry riser system
Hosereel system
CO2 system
Fire extinguishers
Refrigeration equipment
Kitchen equipment
Laundry equipment
Health equipment
Laboratory equipment
Manufacturing equipment
Incinerators and flues
Water heaters
Hand dryers
Window cleaning hoists and equipment including track, motors
and ancillary builders work
Refuse disposal equipment including ancillary builders work
Lighting conductors and earthing systems
Occupational equipment associated with the building user
Computer equipment and all ancillary work
Crane gantries
All builders work in connection with items 1 to 20 above
1.
2.
3.
4.
5.
6.
7.
8.
External works
1.
2.
3.
4.
External signs
Traffic signs, crash barriers
Drainage where it is specifically required for plant and equipment
Cycle racks
Part 2, Section 2,
Appendix E (4/99)
Part 2, Section 2,
Appendix F (4/99)
Page 1
HAPM Component Life Manual. E & FN Spon. Tel: 0171 204 2481, 1985.
Comprehensive life-span assessment for over 500 housing components based on
insured life assessments.
ISO Guide to Service Life Planning of Buildings (under preparation at the time of
writing but it will include a method of estimating the durability of individual building
components).
Jones Lang Wootton. Office Service Charges Analysis 1995, Jones Lang Wootton,
London, 1995. A review of 300 buildings including unit costs.
Kirk, Stephen J., Dellisola, Alphonse J., Life Cycle Costing For Design Professionals,
(2nd Edition), McGraw-Hill Inc, New York, 1995. Includes 45 pages of maintenance
and replacement data (in dollars) covering all elements.
NBA Construction Consultants. Maintenance Cycles and Life Expectancies of Building
Components and Elements: a guide to data and sources. NBA Construction Consultants
PSA Cost in Use Tables, 3rd Edition, London HMSO 1991. Includes elemental analysis
of cleaning, maintenance and repair costs.
RICS. Life Expectancies of Building Components. RICS Research Paper Series No 11,
1992. Preliminary results from a survey of Building Surveyors views.
Page 2
Part 2, Section 2,
Appendix F (4/99)
PART 2, SECTION 3
2.3.1 Elements
2.3.1.1
2.3.1.2
2.3.2.2
The tender cost is broken down into the standard BCIS elements (see
Appendix A) using the definitions to determine which items should be
included in any particular element.
2.3.2.3
The elemental cost analysis can then be used to estimate future projects of a
similar type.
2.3.2.4
Page 1
PART 2, S ECTION 3
Page 2
PART 2, S ECTION 3
Page 3
PART 2, S ECTION 3
ACTIVITY SCHEDULES
The JCT Standard Form of Building Contract 1998 (JCT98) contains an
option for the contractor to include an activity schedule for use in interim
payments. The activity schedule is defined as the schedule of activities as
attached to the Appendix with each activity priced and with the sum of those
prices being the contract sum excluding provisional sums, prime cost sums
and any contractors profit thereon. If the contractor does include an activity
schedule, it must be by agreement with the employer.
There is no standard format stipulated for the activity schedule. However,
using a BCIS standard list of elements (Appendix A) to provide an activity
schedule eliminates any problems with definitions. Furthermore, an elemental
breakdown makes valuation for interim payments simple (see Section 2.3.3.1
(e)) and overcomes some of the problems that may arise if activity schedules
have been broken down into trades.
The use of an activity schedule broken down into BCIS standard elements
would also allow an elemental cost analysis to be completed relatively easily
and would be particularly useful if projects have been procured without bills
of quantities.
Page 4
SUBSTRUCTURE
All work below underside of screed or where no screed exists to underside of
lowest floor finish including damp-proof membrane, together with relevant
excavations and foundations.
SUPERSTRUCTURE
2A
Frame
Loadbearing framework of concrete, steel or timber. Main floor and roof
beams, ties and roof trusses of framed buildings. Casing to stanchions and
beams for structural or protective purposes.
2B
Upper floors
Upper floors, balconies and structural screeds, suspended floors over or in
basements.
2C
Roof
2C1 Roof structure
Construction, including eaves and verges, plates and ceiling joists,
trusses, gable ends, internal walls and chimneys above plate level,
parapet walls and balustrades.
2C2 Roof coverings
Roof screeds and finishings. Battening, felt, slating, tiling and the like.
Flashings and trims. Insulation. Eaves and verge treatment.
2C3 Roof drainage
Gutters where not integral with roof structure, rainwater heads and roof
outlets. (Rainwater downpipes to be included in Internal drainage
(5C1).)
2C4 Roof lights
Roof lights, opening gear, frame, kerb and glazing. Pavement lights.
Part 2, Section 3
Appendix A (10/99)
Page 1
2D
Stairs
2D1 Stair structure
Construction of ramps, stairs and landings other than at floor levels.
Ladders. Escape staircases.
2D2 Stair finishes
Finishes to treads, risers, landings (other than at floor levels), ramp
surfaces, strings and soffits.
2D3 Stair balustrades and handrails
Balustrades and handrails to stairs, landings and stairwells.
2E
External walls
External enclosing walls including that to basements but excluding items
included with Roof structure (2C1). Chimneys forming part of external
walls up to plate level. Curtain walling, sheeting rails and cladding. Vertical
tanking. Insulation. Applied external finishes.
2F
2G
2H
Internal doors
Doors, fanlights and sidelights. Sliding and folding doors. Hatches. Frames,
linings and trims. Ironmongery and glazing. Lintels, thresholds and work to
reveals of openings.
Page 2
Part 2, Section 3
Appendix A (10/99)
INTERNAL FINISHES
3A
Wall finishes
Preparatory work and finishes to surfaces of walls internally. Picture, dado
and similar rails.
3B
Floor finishes
Preparatory work, screeds, skirtings and finishes to floor surfaces excluding
items included with Stair finishes (2D2) and structural screeds included
with Upper floors (2B)
3C
Ceiling finishes
3C1 Finishes to ceilings
Preparatory work and finishes to surfaces of soffits excluding items
included with Stair finishes (2D2) but including sides and soffits of
beams not forming part of a wall surface. Cornices, coves.
3C2 Suspended ceilings
Construction and finishes of suspended ceilings.
4A
Part 2, Section 3
Appendix A (10/99)
Page 3
SERVICES
5A
Sanitary appliances
Baths, basins, sinks, etc. WCs, slop sinks, urinals and the like. Toilet-roll
holders, towel rails, etc. Traps, waste fittings, overflows and taps as appropriate.
5B
Services equipment
Kitchen, laundry, hospital and dental equipment and other specialist
mechanical and electrical equipment related to the function of the building.
5C
Disposal installations
5C1 Internal drainage
Waste pipes to Sanitary appliances (5A) and Services equipment (5B).
Soil, anti-syphonage and ventilation pipes. Rainwater downpipes. Floor
channels and gratings and drains in ground within buildings up to external
face of external walls.
5C2 Refuse disposal
Refuse ducts, waste disposal (grinding) units, chutes and bins. Local
incinerators and flues thereto. Paper shredders and incinerators.
5D
Water installations
5D1 Water mains supply
Incoming water main from external face of external wall at point of
entry into building including valves, water meters, rising main to (but
excluding) storage tanks and main taps. Insulation.
5D2 Cold water services
Storage tanks, pumps, pressure boosters, distribution pipework to
sanitary appliances and to services equipment. Valves and taps not
included with Sanitary appliances (5A) and/or Services equipment
(5B). Insulation.
5D3 Hot water services
Hot water and/or mixed water services. Storage cylinders, pumps,
calorifiers, instantaneous water heaters, distribution pipework to
sanitary appliances and services equipment. Valves and taps not
included with Sanitary appliances (5A) and/or Services equipment
(5B). Insulation.
5D4 Steam and condensate
Steam distribution and condensate return pipework to and from services
equipment within the building including all valves, fittings, etc.
Insulation.
Page 4
Part 2, Section 3
Appendix A (10/99)
5E
Heat source
Boilers, mounting, firing equipment, pressurising equipment, instrumentation
and control, ID and FD fans, gantries, flues and chimneys, fuel conveyors and
calorifiers. Cold and treated water supplies and tanks, fuel oil and/or gas
supplies, storage tanks, etc., pipework, (water or steam mains) pumps, valves and
other equipment. Insulation.
5F
Part 2, Section 3
Appendix A (10/99)
Page 5
5G
Ventilating systems
Mechanical ventilating system not incorporating heating or cooling
installations including dust and fume extraction and fresh air injection, unit
extract fans, rotating ventilators and instrumentation and controls.
5H
Electrical installations
5H1 Electric source and mains
All work from external face of building up to and including local
distribution boards including main switchgear, main and sub-main
cables, control gear, power factor correction equipment, stand-by
equipment, earthing, etc.
5H2 Electric power supplies
All wiring, cables, conduits, switches from local distribution boards,
etc., to and including outlet points for individual installations.
5H3 Electric lighting
All wiring, cables, conduits, switches, etc. from local distribution
boards and fittings to and including outlet points.
5H4 Electric lighting fittings
Lighting fittings including fixing.
5I
Gas installations
Town and natural gas services from meter or from point of entry where there
is no individual meter: distribution pipework to appliances and equipment.
5J
5K
Protective installations
5K1 Sprinkler installations
The complete sprinkler, installation and CO 2 extinguishing system.
Including tanks, control mechanism, etc.
Page 6
Part 2, Section 3
Appendix A (10/99)
Communication installation
Warning installations (fire and theft)
Burglar and security alarms
Fire alarms
Visual and audio installations
Door signals
Timed signals
Call signals
Clocks
Telephones
Public address
Radio
Television
Pneumatic message systems
5M
Special installations
All other mechanical and/or electrical installations (separately identifiable) which
have not been included elsewhere, e.g. chemical gases; medical gases; vacuum
cleaning; window cleaning equipment and cradles; compressed air; treated water;
refrigerated stores.
5N
5O
Part 2, Section 3
Appendix A (10/99)
Page 7
EXTERNAL WORKS
6A
Site works
6A1 Site preparations
Clearance and demolitions. Preparatory earth works to form new
contours.
6A2 Surface treatments
Roads and associated footways
Vehicle parks
Paths and paved areas
Playing fields
Playgrounds
Games courts
Retaining walls
Land drainage
Landscape work
6A3 Site enclosure and division
Gates and entrances. Fencing, walling and hedges.
6A4 Fittings and furniture
Notice boards, flag poles, seats, signs.
6B
Drainage
Surface water drainage. Foul drainage. Sewage treatment.
6C
External services
6C1 Water mains
Main from existing supply up to external face of building.
6C2 Fire mains
Main from existing supply up to external face of building; fire
hydrants.
6C3 Heating mains
Main from existing supply or heat source up to external face of
building.
6C4 Gas mains
Main from existing supply up to external face of building.
6C5 Electric mains
Main from existing supply up to external face of building.
6C6 Site lighting
Distribution, fittings and equipment.
Page 8
Part 2, Section 3
Appendix A (10/99)
PRELIMINARIES
Priced items in preliminaries bill and summary but excluding contractors
price adjustments. This is not classed as an element but is included for
allocation of costs.
EMPLOYERS CONTINGENCIES
This is not classed as an element but is included for allocation of costs.
Notes
1
Substructure
(a) Where lowest floor construction does not otherwise provide a platform, the
flooring surface shall be included with this element (e.g. if joisted floor, floor
boarding would be included here).
(b) Stanchions and columns (with relevant castings) shall be included with
Frame (2A).
(c) External enclosing walls to basements shall be included with External
walls (2E).
2A
Frame
(a) Structural walls which form an integral part of the loadbearing framework
shall be included either with External walls (2E) or Internal walls and
partitions (2G) as appropriate.
(b) Beams which form an integral part of a floor or roof which cannot be
segregated therefrom shall be included in the appropriate element.
Part 2, Section 3
Appendix A (10/99)
Page 9
(c) In unframed buildings roof beams and trusses and floor beams shall be
included with Upper floors (2B) or Roof structure (2C1) as appropriate.
(d) If the Stair structure (2D1) has had to be included in this element it
should be noted.
Page 10
2B
Upper floors
(a) Where floor construction does not otherwise provide a platform the
flooring surface shall be included with this element (e.g. if joisted floor, floor
boardings would be included here).
(b) Beams which form an integral part of a floor slab shall be included with
this element.
(c) If the Stair structure (2D1) has had to be included in this element it
should be noted.
2C1
Roof structure
(a) Trusses which form part of a whole building framework shall be included
in Frame (2A).
(b) Beams which form an integral part of a roof shall be included with this
element.
(c) Roof housings (e.g. lift motor and plant rooms) shall be broken down into
the appropriate constituent elements.
2D1
Stair structure
(a) The cost of external escape staircases shall be shown separately.
(b) If the stair structure has had to be included in the elements Frame (2A)
or Upper floors (2B) this should be stated.
2E
External walls
(a) If walls are self-finished on internal face, this shall be stated.
3A
Wall finishes
(a) Surfaces which are self-finished (e.g. self-finished partitions, fair-faced
work) shall be included in the appropriate element.
(b) Insulation which is a wall finishing shall be included here.
3B
Floor finishes
(a) Where the floor construction does not otherwise provide a platform the
flooring surface will be included either in Substructure (1A) or Upper
floors (2B) as appropriate. Access floors.
3C
Ceiling finishes
(a) Where ceilings principally provide a source of heat, artificial lighting or
ventilation, they shall be included with the appropriate Services element.
4A1
Part 2, Section 3
Appendix A (10/99)
4A3
Works of art
(a) Where items in this element have a significant effect on other elements a
note should be included in the appropriate element.
5B
Services equipment
(a) Local incinerators shall be included with Refuse disposal (5C2).
5C1
Internal drainage
(a) Rainwater gutters are included in Roof drainage (2C3).
5D2
5D4
5E
Heat source
(a) Chimneys and flues which are an integral part of the structure shall be
included with the appropriate structural element.
(b) Local heat source shall be included with Local heating (5F4).
5F
5F3
5H1
5J1
Part 2, Section 3
Appendix A (10/99)
Page 11
Page 12
5K1
Sprinkler installations
(a) Electrical work shall be included with Electrical power supplies (5H2).
5L
Communication installations
(a) Each installation shall be stated separately where appropriate.
(b) The cost of the work in connection with electrical supply shall be included
with Electrical power supplies (5H2).
5M
Special installations
(a) The cost of each installation shall, where appropriate, be shown separately.
(b) Items deemed to be included under Refrigerated stores comprises all
plant required to provide refrigerated conditions (i.e. cooling towers,
compressors, instrumentation and controls, cold room thermal insulation and
vapour sealing, cold room doors, etc.) for cold rooms, refrigerated stores and
the like other than that required for Space heating and air treatment (5F8 and
5F9).
5N
5O
6B
Drainage
(a) To include all drainage works (other than land drainage included with
Surface treatment (6A2)) outside the building, to and including disposal
point, connection to sewer or to treatment plants.
6C8
6C9
Part 2, Section 3
Appendix A (10/99)
PART 2, SECTION 4
Page 1
PART 2, SECTION 4
2.4.1 Background
2.4.1.1
Design and build is not a new concept. Many historic buildings have been
procured in this way and the technique has been used for simple industrial
shell buildings. However, in recent years the use of design and build has
extended to cover a significant number of building projects of all types.
2.4.1.2
It is thought that design and build has become more popular because clients
believed that in some circumstances the traditional route failed to deliver their
projects on time and to budget.
2.4.1.3
Proponents of design and build claim that it can deliver coordinated planning,
reduced professional fees, improved lead-in times, shorter construction
programmes and cost savings, as well as providing greater cost certainty for
clients through a single point of contact.
2.4.1.4
2.4.1.5
Proponents of design and build also claim that it can allow tenderers to bring
their skills to the design which, through the competitive process, can deliver
benefits to the client in terms of buildability. Furthermore, tenderers can take
account of current availability of labour, materials and plant in their design
and pricing considerations.
Page 2
The JCT Standard Form of Building Contract With Contractors Design was
first introduced in response to demand for a form of contract which allowed
the contractor to carry out a complete contract (including design development)
for a lump sum.
PART 2, SECTION 4
2.4.2.2
Throughout its life the JCT Standard Form of Building Contract With
Contractors Design has been subject to many amendments to account for
changes in the law, regulations affecting building development and increasing
expectations and involvement of clients.
2.4.2.3
In England and Wales the contract documents under this form are:
the employers requirements;
the contractors proposals;
the contract sum analysis; and
the articles and conditions set out in the form including optional
supplementary provisions and appendices.
2.4.3.2
The employers agent will normally be involved from the outset and will be
instrumental in producing the contract documentation, including the
employers requirements based on the brief developed with the client.
Thereafter, the agent can arrange or assist with the selection of tenderers and
arrange the formal tendering process. Subsequently he or she can review the
contractors proposals (including the developed design and the contract sum
analysis) to ensure that all aspects of the employers requirements have been
met with particular reference to quality, time and cost issues.
2.4.3.3
Where the employers agent has been delegated the authority by the client, he
or she is responsible for ensuring that the project is carried out in accordance
with the conditions of contract, employers requirements, contractors
proposals and contract sum analysis. The role will usually include monitoring
the construction process to ensure best practice, controlling expenditure and
overseeing contractor compliance with all current regulations. Typically, it
will also involve the administration of the project in terms of design and cost
by sanctioning all design issues and by instructing any changes. The
employers agent will be responsible for checking the contractors valuations
and confirming interim and final payment amounts to the client in accordance
with the contract conditions.
2.4.3.4
Page 3
PART 2, SECTION 4
Page 4
2.4.3.5
The role of employers agent is not just one of monitoring the contractors
performance; good practice requires an active approach to ensure that the
contractor undertakes all of his or her responsibilities under the contract.
However, the employers agent should not hinder or prevent the contractor
from fulfilling his or her duties.
2.4.3.6
The employers agent should advise the employer on those roles that are
within his or her competency, which attract a duty of care similar to that under
traditional procurement methods and advise the employer on the appointment
of any other consultants required to fulfil any additional roles.
2.4.3.7
It has been held that an employers agent was responsible for failure to
comment on high risk design elements of the contractors proposals and an
ongoing failure to approve the contractors design development proposals. It
would be an unusual project arrangement if these essential tasks were not
delegated by the client to the employers agent. On the other hand, the duty to
approve the contractors design development and drawing should be included
expressly or by implication in the contract between the client and the
employers agent.
2.4.3.8
The contractors proposals and the employers requirements taken together set
out the scope of the works, so it is important that the proposals are examined
in detail and that they match the requirements. Any areas of conflict should be
resolved since the contract assumes they are compatible when it is signed. If
the employers requirements and the contractors proposals are long and/or
complicated, concern about the possibility of a conflict between the two
documents may well remain, even after thorough checks have been carried
out. In this case it may be worth consdering inserting an additional clause as
to how conflicts between the two are to be resolved.
2.4.4.2
The appointed employers agent has an obligation to guide the client, provide
technical and professional advice and draft the employers requirements in
order to protect the client and to ensure the project is completed.
2.4.4.3
PART 2, SECTION 4
2.4.4.4
The employers agent and the employer should agree between them the
standard of performance and the requirements of the building. The employers
agent should offer guidance on the effect that this might have on the
contractors flexibility in design and construction. Some clients may require a
detailed level of specification. However, if the employers requirements
become unnecessarily prescriptive as to the contractors basic construction
methods, the contractor may lose sight of the clients real requirements. The
requirements should always be sufficiently detailed to ensure the client
obtains the building he or she needs. Therefore, great care should be exercised
by the employers agent in advising the client on the appropriate level of detail
to be provided in the employers requirements and that requested in the
contractors proposal.
2.4.4.5
The employers agent should try to encourage the client to concentrate on the
purpose, performance and desired end requirements of the project and to avoid
involvement in the construction method.
2.4.4.6
It is, however, most important that the clients input is sufficiently detailed to
enable the production of clear and concise employers requirements to
achieve the clients objectives. The requirements should also be
comprehensive enough to avoid amendments during the construction process
as these can be very costly.
2.4.4.7
All relevant parts of the clients brief should be given in the employers
requirements. Additional requirements arising from meetings during the
tender process should be incorporated into the requirements by amendment.
There should be no misunderstanding as to what comprises the employers
requirements. Similarly, any amendments to the contractors proposals after
they have been submitted should be incorporated. Any ambiguity between
these two documents could give rise to conflict at a later date.
2.4.4.8
Contractors are only responsible for that which they design or specify; in turn
employers or their consultants are responsible for all that they design and/or
specify, unless there has been a pre-agreed limitation to the contract. Thus, in
order for the employer to maximise the benefit from design and build, the
extent of any designing and specifying by prescription in the employers
requirements should be limited to those elements in which the employer
requires such control.
2.4.4.9
Page 5
PART 2, SECTION 4
Note should also be made of the Code of Procedure for Selective Tendering
for Design and Build published by the National Joint Consultative Committee
for Building (NJCC) in 1995 and as amended from time to time.
Appendix B is a checklist of matters which surveyors are advised to consider
when compiling employers requirements and checking contractors
proposals. The list covers the major matters and the elements that relate to
buildings in general. It cannot be exhaustive when applied to any particular
buildings. Any chartered surveyors acting as employers agents are advised to
make themselves aware of all matters which are relevant to the client and the
clients business so as to ensure that the employers requirements/contractors
proposal reflects the clients needs.
The forms of design and build contract allow for the production of variation to
the conventional design and build contract, for example:
2.4.5.2
package deal;
turnkey;
develop and construct;
two-stage tender;
joint venture/negotiated; and
design build fund and operate.
2.4.5.3
Page 6
PART 2, SECTION 4
2.4.5.4
TWO-STAGE TENDER
Two-stage tender requests seek to obtain proposals from a number of
tenderers from which one is selected. That tenderer then works up the
preferred submission in greater detail.
2.4.5.5
JOINT VENTURE/NEGOTIATED
Joint venture/negotiated projects arise when a client is approached by a
contractor or developer with a proposal which broadly aligns with the clients
needs. Many successful projects have been carried out using this route with
considerable benefit to the client. Clearly, the earlier the employers agent can
be introduced the better, since his or her involvement should help limit any
abortive design.
2.4.5.6
2.4.6 Novation
2.4.6.1
Novation can be employed on any of the design and build variants and
involves the transfer of the clients contract with his or her designer (or
designers) to the successful contractor, this arrangement having been included
in the tender documents. The contractor assumes the responsibility for the
payment of fees and associated value added tax (VAT), and receives the
benefit of continuity of design. Often when novation is implemented, it is not
applied to the quantity surveyor who remains with the client acting as the
employers agent during the design development and construction phase.
Novation is not defined in CD 98, although it is widely practised.
Page 7
PART 2, SECTION 4
2.4.6.2
Page 8
Where designers are novated it is important for clients to understand that their
designers allegiance transfers from the client to the contractor. This transfer
of allegiance should be properly explained to the client prior to a decision to
implement novation. It is also important that the employers agent advises on
selecting appropriate designers and contractors and that the transfer of roles
occurs and is maintained.
Part 2, Section 4
Appendix A (09/03)
Page 1
A2
PRE-CONTRACT
Part 2, Section 4
Appendix A (09/03)
CONTRACT DURATION
Part 2, Section 4
Appendix A (09/03)
Page 3
Page 4
Part 2, Section 4
Appendix A (09/03)
Ensuring that all snagging items are rectified before inviting client to
receive handover.
Ensuring the provision of as built information compiled in manual
form and supplied to the client at completion of construction process
users manual and/or computer disk.
Ensuring that all service installations are completed in accordance with
original approved design, attending final commissioning and procuring
test certificates.
Arranging and attending handover sessions.
A4
POST-CONTRACT
Receiving health and safety file from planning supervisor and delivering
to client.
On partial possession and/or sectional completion, agreeing value
thereof.
Ensuring compliance with any insurance requirements.
Advising on values for building insurance purposes.
Reviewing means of escape as built and ensuring procurement of fire
certificate by the contractor.
Issuing notices of practical completion on client satisfaction or
beneficial occupation, if appropriate.
Obtaining final clearance certificates from local authority in connection
with compliance with building regulations.
Preparing post-contract schedules of defects after occupation and
arranging for rectification by contractor and on completion notifying
client.
Issuing notices on making good defects at end of defects liability period,
examining the rectified works and certifying completion of making
good defects, where applicable.
A5
Part 2, Section 4
Appendix A (09/03)
Page 5
CONTRACT DOCUMENTATION
The contract documentation will include:
the employers requirements
the contractors proposal
the contract sum analysis
the article conditions, optional supplementary provisions and
appendices set out in the form of contract.
The employers requirements can be a brief statement of the clients
accommodation requirements, an outline design or a fully worked up
design. The contractors proposals should be in sufficient detail to allow
the client to judge between the tenders on design as well as price.
The required level of detail will vary from client to client and contract to
contract but it is suggested that information on this checklist would be the
minimum requirement.
Where little design work has been carried out before tenders and proposals
are invited, a performance specification would be normally required.
However, where a great deal of design work has taken place a prescriptive
specification would be needed.
B2
CHECKLIST
(Note that this list is not intended to be exhaustive in total or in any section)
B2.1
General Information
Project title
Employer
Employers agent
List of drawings and other information accompanying documents
Location, including a narrative on the proposed use/user of the building.
An indication of the employers business and overall objectives (to
provide a feel for the eventual product)
Access to site
Site boundary defined
Form of contract
Permissible modification to standard form of contract
Details of appendices to the conditions of contract
Form of contract sum analysis
B2.2
Part 2, Section 4
Appendix B (10/99)
Page 1
Basis of design
Conceptual design statement and drawings
site layout
plans
elevations
sections
relevant working details
site works and landscaping layouts
sketch perspectives
structural design
services design
Design standards
legislation or standards
details of standards which apply (for example codes of practice)
statement of workmanship
tolerances
CDM regulations
Aesthetics
specific aesthetic needs (other than planning requirements)
Integration of components
relationship with each other
methods of dealing with interfaces
method of dealing with services installations. For example, level of
concealment of services and architectural treatments to exposed
surfaces
B2.3
Page 2
Part 2, Section 4
Appendix B (10/99)
B2.4
Part 2, Section 4
Appendix B (10/99)
Page 3
Page 4
Part 2, Section 4
Appendix B (10/99)
3A Wall finishes
3B Floor finishes
3C Ceiling finishes
3C1 Finishes to ceilings
3C2 Suspended ceilings
4 Fittings and furnishings
4A Fittings and furnishings
4A1 Fittings, fixtures and furniture
4A2 Soft furnishings
4A3 Works of art
4A4 Equipment
5 Services
5A Sanitary appliances
5B Services equipment
5C Disposal installations
5C1 Internal drainage
5C2 Refuse disposal
5D Water installations
5D1 Water mains supply
5D2 Cold water service
5D3 Hot water service
5D4 Steam and condensate
5E Heat source
5F Space heating and air treatment
5F1 Water and/or steam (heating only)
5F2 Ducted warm air (heating only)
5F3 Electricity (heating only)
5F4 Local heating (heating only)
5F5 Other heating systems (heating only)
5F6 Heating with ventilation (air heated locally)
5F7 Heating with ventilation (air heated centrally)
5F8 Heating with cooling (air heated locally)
5F9 Heating with cooling (air heated centrally)
5G Ventilating systems
5H Electrical installations
5H1 Electric source and mains
5H2 Electric power supplies
5H3 Electric lighting
5H4 Electric lighting fittings
5I Gas installation
5J Lift and conveyor installations
5J1 Lifts and hoists
5J2 Escalators
5J3 Conveyors
5K Protective installations
5K1 Sprinkler installation
5K2 Fire-fighting installations
Part 2, Section 4
Appendix B (10/99)
Page 5
Particular Requirements
Additional Responsibilities
The employers requirements should state who is responsible for all matters
that affect the construction of the building including such matters as:
Site investigations
soil survey
ground conditions
topographical surveys
existing services
hazardous waste
archaeological features
Development controls or other controls
planning permission (including reserved matters)
building regulations
Water Authority
Licensing Authority (liqour)
Licensing Authority (entertainments)
fire officer requirements
Page 6
Part 2, Section 4
Appendix B (10/99)
factory inspector
environmental health officer
employers building insurers (if appropriate)
Traffic Planning Authority
utilities
National Rivers Authority
Any other authority or statutory undertaker which has jurisdiction
with regard to the works
Page 7
PART 2, SECTION 5
The role of project manager is to directly manage and coordinate all other
consultants involved with a project on behalf of the client. Ultimately the
delivery of the project is the direct responsibility of the project manager. On
some projects consultants are appointed by the project manager as
subconsultants, or are managed and paid by the project manager (although the
client directly appoints them). This arrangement is most beneficial to clients
who, through desire or inexperience, do not wish to have a pro-active
involvement with the project.
Page 1
PART 2, S ECTION 5
Client
Managing &
coordination
Project Manager
Arch.
2.5.1.2
Eng.
QS
Plann. Sup.
etc..
Client
Clients Representative
Advising &
coordination
Lead Consultant
Arch.
QS
Plann. Sup.
etc..
Page 2
Eng.
PART 2, SECTION 5
2.5.2.2
As well as simply the design of the buildings, many other skills are required
to provide a functional space for a client and the chartered surveyor is often
more conversant with these additional activities.
2.5.2.3
2.5.2.4
Other benefits to a client can be derived where the project requires a distinct
specialism and the design process is only part of a more specialised activity,
for example farms management.
2.5.3.2
Fees for these additional activities must be at the discretion of the provider.
They should take into account the level of additional time and resources
required in excess of the core professional services provided. It may be that
some of the lead consultant duties overlap with existing duties and that
economies may be obtained. However, the converse may equally apply and it
is essential that the chartered surveyor thoroughly reviews the actual
additional duties required before providing fee quotations.
2.5.3.3
With the constant changes in the way that buildings are procured and
designed, the chartered surveyor is in a prime position for providing real
added value to the process. For those individuals or practices who do not wish
to undertake the more encompassing role of project manager, but feel that
they can make a positive contribution by directing a particular project, then
the role of lead consultant fits the bill. However, care must be taken to ensure
that the necessary additional skills exist to be certain that the increased
responsibility can be taken on comfortably and to the ultimate benefit to the
client.
Page 3
PART 2, S ECTION 5
PURPOSE
During a construction project many issues can arise on which the client may
require professional advice from his or her consultants. The lead consultants
role is to provide the client with comprehensive professional support to ensure
that the clients requirements are met with regard to legislation, standards,
cost and programme.
The client nominates a lead consultant for each capital project undertaken.
The lead consultant, who may or may not be an active design member of the
project team, will liaise with the client representative and will be responsible
for the following activities.
2.5.4.3
2.5.4.4
GENERALLY
(a)
Establish the clients brief and ensure that it is agreed with the client
and communicated to all designers.
(b)
Monitor the service provided by all consultants to ensure that they are
carrying out their duties to the standard required at each work stage.
Submit all reports, plans and proposals to the client with the request for
approval to proceed to the next work stage.
(c)
Deal with all queries and solve problems as they arise. Seek advice
from the client where necessary, but be aware that professional
responsibility for the proper management of all aspects of the project
lies solely with the lead consultant and project team members.
(d)
(e)
Regularly review the design with the client and designers and formally
minute any agreed amendments. Inform the client of the impact of
these amendments on time, cost and design.
Page 4
PART 2, S ECTION 5
AB/4 Direct the activities of any supporting consultants such that the option
appraisal/feasibility study is fully investigated. Collate and prepare a
report for submission to the client. Attend presentation meetings as
required.
AB/5 Assist the client with the preparation of detailed briefing documents
with special input on technical, legal, statutory, financial and
programming requirements.
AB/6 Advise on procurement methods.
AB/7 Advise the client with regard to the general application of the CDM
Regulations and comply with Regulation 13(1).
AB/8 Agree fee with the client.
AB/9 Obtain further instructions from the client.
2.5.4.5
2.5.4.6
Arrange dates and venues. Chair and minute all regular design team
meetings (at least monthly up to tender stage).
C2
C3
Arrange dates and venues with the architect and client representative
for brief development and presentation meetings.
C4
C5
C6
C7
Arrange for any site investigations and consultations which are still
necessary.
D2
Review progress, brief and the clients decisions. With the project
teams assistance prepare and agree a detailed design programme of
work and flow of information.
Page 5
PART 2, S ECTION 5
2.5.4.7
2.5.4.8
Page 6
D3
Prepare the initial health and safety plan (if acting as the planning
supervisor).
D4
D5
D6
D7
D8
E2
E3
Compile and submit the Stage E report to the client which, in addition
to the usual reports and cost plans, should comprise:
furniture and layout drawings;
sample boards and recommendations for selection of materials and
finishes;
reports from advising authorities;
phasing and site management drawing showing the effects of
disruption on the operation of the establishment; and
schedule of areas showing the direct relation to the areas in the
brief.
E4
E5
E6
F2
PART 2, S ECTION 5
2.5.4.9
F3
F4
F5
F6
G2
Ensure that planning and building regulation approval has been achieved.
G3
G4
Ensure that all arrangements for temporary works and client site
preparation have been undertaken. Liaise with the property
manager/client for all temporary site management and services issues.
H2
H3
H4
Page 7
PART 2, S ECTION 5
J2
J3
J4
Page 8
K1
K2
Visit the site as appropriate to inspect the progress and quality of work.
K3
Liaise and coordinate the work of all design consultants during the postcontract period ensuring solutions are found to issues that may arise and
that the schedules for issue of later design information are met.
K4
Hold regular meetings on site with the head of establishment, client and
clerk of works to appraise them of progress and to establish and resolve
any concerns that may be arising.
K5
Attend regular site meetings with the contractor, other consultants and
clerk of works.
K6
K7
Ensure that certificates are issued for interim payments on the RIBA
standard form to the client. Produce short financial reports on a
cumulative basis (cash flow predictions are required to be attached to
each valuation certificate). Produce a detailed financial report showing
the value of all actual and expected variations to be issued at three
monthly intervals throughout the construction process.
K8
Ensure that all the clients handover procedures have been followed
before accepting the building from the contractor.
K9
Notify the clients insurers that work is complete and arrange for
release of bonds.
PART 2, S ECTION 5
L2
L3
L4
L5
Ensure that the issue of final certificate is made and that all consultants
complete construction certificate.
L6
L7
Resolve any issues relating to emergency latent defects after the patent
defects period.
L8
L9
Ensure that the health and safety file is completed and handed to the
client.
L10 Ensure that all fire safety certificates, building control certificates,
licenses, etc. are obtained and handed to the client.
L11 Review the project from start to finish and report findings to the client,
complete with observations on successes and failures. Ensure that all
parties involved are sent a copy of the report.
Page 9
PART 2, SECTION 6
Page 1
PART 2, S ECTION 6
The mineral resources that are used are therefore not sustainable in
themselves, and in order to demonstrate a sustainable, or at least a more
sustainable construction industry it is the industrys responsibility, under the
definition, to ensure that the buildings being constructed from the finite raw
material resources are capable of inter-generation usage.
To summarize, the construction industry cannot be considered to be
sustainable in terms of resource usage because raw materials, which are only
available in finite quantities, are being extracted and processed into building
products for incorporation into a building where the building itself is only
designed for a finite life. For the industry to be seen to act in a sustainable
manner it needs to provide a building stock that demonstrates appropriate
investment of these raw materials such that the swap is an equitable one. To
ensure that this takes place, the industry has a responsibility to consider the
design, detailing and construction methods as well as the cost in use to show
that a valuable legacy has been left to future generations.
Page 2
PART 2, SECTION 6
This resource, which is available for their use, can either be in the form of raw
materials, capital wealth or alternative technologies. The important factor is
that the overall equity stock must not be diminished.
Page 3
PART 2, SECTION 6
MATERIALS
Most construction materials are a finite resource and will eventually be
exhausted. Many already are. Local British sources of Portland stone, which
has been used as a cladding material for many years, have been exhausted or
the quarries closed and it now has to be obtained from the Continent. Certain
colours of terrazzo marble, once popular in the 1960s, are no longer available
as entire mountains in Italy have been levelled. The use of terrazzo has now
been superseded by the increased use in solid marble and granite although it
will only be a matter of time before these sources are similarly exhausted.
Even organic materials are not immune. Brazilian Rio Rosewood, which was
very popular for making high-quality furniture in the 1960s, is now so
endangered that it appears on the Control in Trade of Endangered Species
(CITES) list as being illegal for fear of extinction. Mahogany is also on the
fringes of being listed and it is widely reported that there are no longer any
legal sources for the supply of the true Swietenia mahogany.
An example closer to home is the UKs reliance upon imported timber having
used up its own supply. The history of timber production in the UK is an
interesting one which has seen the rapid depletion of forests from
approximately 90 per cent forest coverage at the time the Romans arrived to a
low point of less than 5 per cent of land coverage at the early part of this
century. Timber was first imported after the Great Fire of London and in 1668
it became necessary for Acts of Parliament to be passed to create forest
reserves like the New Forest in Hampshire to try to arrest the situation. World
War I saw timber in short supply again and resulted in the birth of the Forestry
Commission as a Government Agency in 1919. World War II resulted in
timber shortages again and the emergency created the major post-war
plantation of quick-growing conifers.
Humankind has a history of failing to adequately consider the impact that its
activities are having on the resource base and examples are easy to find.
2.6.3.2
Page 4
PART 2, SECTION 6
is now possible, via the software package, to calculate the total Ecopoints
score for building types, building operations, refurbishment and custom use.
From this data one form of construction can be analysed against another. It is
also possible to quantify the decision-making process using environmental
criteria, not only by building type and the method of construction that should
be used but also the decision whether to build new or to refurbish.
Environmental Impacts
In undertaking the assessment of environmental impacts and attributing
Ecopoints values to various activities and products, the following must be
considered carefully:
climate change;
fossil fuel depletion;
ozone depletion;
human toxicity to air and water;
waste disposal;
water extraction;
acid deposition;
eutrophication (or over enrichment of water courses);
ecotoxicity;
low-level ozone creation (summer smog); and
mineral extraction.
All these factors have been considered, quantified, compared and weighted in
relation to the impact associated with a typical UK citizen and are shown in
table 1.
Table 1: Environmental Impact of UK Citizens
Issue
% weighting
Characterized impact
associated with a typical
UK citizen
Climate change
37.8
12.0
Ozone depletion
8.2
7.0
90.7 kg toxicity
Waste disposal
6.1
7.19 tonnes
Water extraction
5.4
418000 litres
Acid deposition
5.1
Eutrophication
4.3
8.01 kg PO4 eq
Ecotoxicity
4.3
178000 m3 toxicity
3.8
Mineral extraction
3.5
5.04 tonnes
2.6
0.0275 kg toxicity
Page 5
PART 2, SECTION 6
EMBODIED ENERGY
As materials can be extracted in any part of the world and either processed into
building components locally or transported as raw materials, it is virtually
impossible to examine all of the possible environmental impacts that the
various activities are likely to have because the variables are just so great.
Perhaps the only constant method there may be in the winning and working of
materials, their transportation and processing into building components up to
the point when they are assembled into completed buildings is the energy
requirements of the various processes. The actual monetary value of energy
can also be different from country to country, therefore it is not possible to use
monetary value of energy as a unit of measure. However, the unit of energy
input itself can be used.
As energy is required to be consumed at every stage of the production process,
from extraction of the raw material to its incorporation into a construction, and
eventually to demolition and possible reprocessing, the sum total of these
energy inputs can be termed as the embodied energy of that product. It should
therefore be scientifically possible to establish a method of calculating the
quantity of embodied energy that is required to make a building component,
be it a cubic metre of concrete, a single brick, a square metre of glass or a sheet
of plasterboard.
Appendix A shows a comparison of embodied energy values for some
common materials. From this it can be appreciated just how energy intensive
some processes are and therefore how relatively good and bad some
components are. If materials have to be imported or are chosen to be imported
on the grounds of economic cost these will, by definition, carry a larger
embodied energy by virtue of the cost of global transportation. Conversely,
economies may be derived by local energy consumption and waste disposal
which can also be incorporated into the equation.
Embodied energy impacts associated with materials have also been assessed
quantitively by the BRE using Envest (see 2.6.3.2) which can also take
account of the building form and fabric typical replacement intervals and
other data held by the Centre for Sustainable Construction. The results
generated are quoted in Ecopoints per m of element and factors such as
replacement intervals can also be factored in as part of a full cost and use
study.
A fundamental difference in environmental terms between refurbishment and
redevelopment is the saving of embodied environmental impact and energy if
refurbishment is undertaken in preference to demolition and redevelopment.
Page 6
PART 2, SECTION 6
2.6.3.4
LEGISLATIVE CHANGES
Armed with bench-marking data it would be possible for systems of
regulation to be built into the existing regulations. With the increasing
emphasis on energy conservation within the building regulations (which
currently concentrate on energy consumed in use) it would be a simple
extension of these regulations to lay down embodied energy maxima per
square metre for various building types.
A major criticism that could be levelled at such a system is that it would starve
the construction industry of design flexibility. However, this could be
overcome by introducing a scale of energy taxation. This would enable those
that wish to exceed the design criteria of the regulations to do so, but they
would have to pay for the privilege. Conversely, those who produce buildings
and achieve significant savings beneath the bench mark could receive aid in
the form of grants as recognition for their efforts and ingenuity.
Page 7
PART 2, SECTION 6
Page 8
PART 2, SECTION 6
The methods of funding and, in particular, the timescale over which a building
is considered a viable proposition would need to be reviewed and an
alternative method of valuing the asset would need to be established. This
would reflect not just the economic value, but also the environmental resource
value invested in the construction, and the social impact and benefits that the
construction is likely to have for future generations.
The planning process could be slightly extended such that alternative uses are
identified and documented and form an integral part of the planning process.
This would require the procurers and designers of the building to demonstrate
how it could be used for identified alternative purposes and to ensure that the
design, as proposed, is sufficiently flexible for the alternative uses to be
achieved with minimal additional input.
The other components to ensure that a building is suitable for inter-generation
use is to get the detailing, product selection and construction quality right such
that the building does not wear out before the inter-generation uses can be
realised.
Whilst some technologies have changed very significantly the base skills have
not and nor have the materials. It may be necessary for us to re-learn some old
skills in order to produce buildings of a long life expectancy but it is now
necessary for us to change from being a disposal society to a considerate and
conserving one.
Page 9
PART 2, SECTION 6
PART 2, SECTION 6
Page 11
Material
Part 2, Section 6
Appendix A (10/00)
kWh/m3
10000
15000
195000
Aluminium
5000
63000
9300
Steel
1806
15000
1222
Glass
Plastic
Plaster
Bricks
833
694
Timber
Lightweight
concrete
625
417
Concrete
Lightweight
blocks
Page 1
Part 2, Section 6
Appendix B (revised 10/01)
Page 1
PART 3, SECTION 1
Page 1
PART 3, SECTION 1
Page 2
3.1.1.1
INTRODUCTION
3.1.1.1
PART 3, SECTION 1
consultants, project managers and other advisers, whose roles are also
explained in this section. It is advisable, wherever possible, that clients obtain
advice from an objective and independent adviser who will then not be
involved as a consultant on the project.
This subsection aims to assist both current and future clients in setting policy
and formulating strategy. It outlines their task and explains how it should be
carried out. It has been written with the lay client in mind, but will also assist
experienced clients and their advisers.
The success of any project will depend on the motivation given by the client.
Experienced clients may take a leading role in the procurement process; less
experienced clients will need to seek advice or to appoint an adviser to assist
them. Where projects are of a large or complex nature it may be advisable to
consider the appointment of a project manager, who will manage the whole
project on behalf of the client.
G
3.1.1.2
A building project represents a discrete piece of work with clear start and
finish dates, providing specified benefits at accepted cost. It is unlike any
other manufactured product because it has:
3.1.1.3
3.1.1.4
the final product, although itself unique, is built up of many standard parts
assembled in accordance with a series of standard rules and practices;
its construction involves major expenditure over a comparatively short
period of time; and
the construction of a new building requires a large team of individuals and
firms with particular expertise to work together to complete the project
satisfactorily. This team will normally only be formed for this unique
project and then be disassembled. It is unlikely that the same team will
work together again, and if it does, the project is likely to be different.
Each project is, therefore, a prototype and involves a learning curve.
Project testing is rare.
Page 3
PART 3, SECTION 1
(c) The client can have substantial influence on the design of the project in
respect of both functional efficiency and of overall appearance, and, therefore,
has to take particular care to:
develop a business case for the project identifying primary needs and
analysing costs and benefits
understand fully the purpose of the building; ensure that the
requirements of the users are accommodated; and communicate those
requirements to the designers;
appoint architects and engineers with the proven ability of designing
buildings which satisfy users requirements and harmonise with and
contribute to the quality of the built environment. The selection of the
right people is emphasised as a key to success.
(d) This subsection sets out the role and responsibilities of the client through
all stages of the project.
(e) The diagram on the next page indicates the primary activities in the
procurement process and when activities are performed. As can be seen the
clients role is significant with a wide range of activities to perform and
implement before both the design and the construction processes. In the
performance of these activities clients can expect to be supported and advised
by their advisers or (if appointed) the project manager.
Page 4
Commissioning (3.1.1.17)
Occupation and takeover
(3.1.1.18)
Contractual arrangements
(3.1.4.10)
Systems and controls (3.1.4.11)
Post-construction
Construction
Pre-construction phase
Implementation
Procurement strategy
development (3.1.2)
Procurement
strategy
Pre-design phase
3.1.1.5
Clients role
PART 3, SECTION 1
Page 5
PART 3, SECTION 1
3.1.1.6
3.1.1.7
CLIENTS RESPONSIBILITIES
(a) The client should set policy and outline strategy including:
setting and prioritising the project objectives;
clarifying client attitude to project risk;
establishing procurement strategy;
arbitrating between conflicting demands; and
evaluating the completed project against the objectives.
Page 6
Construction Industry Board, Briefing the Team, Thomas Telford Publishing, London, 1997.
PART 3, SECTION 1
Page 7
PART 3, SECTION 1
(e) The client is responsible for ensuring that all necessary decisions are made
on time. Timely decisions are necessary to avoid delays and increased costs;
the decision-making process requires as much planning and management as
any other activity. This will include:
scheduling the key decisions to be made;
identifying the decision makers and their required procedures;
ascertaining the time required for making decisions;
establishing a formal programme for decisions;
pre-warning decision makers of forthcoming submissions making
sure items are on the agenda;
preparing on time fully detailed submissions and/or presentations in
full compliance with procedural requirements;
following up submissions throughout the decision making process; and
promptly communicating decisions made to the parties affected by
them.
G
3.1.1.8
3.1.1.9
Page 8
PART 3, SECTION 1
3.1.1.10
PROJECT DEFINITION
The importance of a clear project definition to the successful completion of the
project and in ensuring appropriate performance of the project cannot be over
emphasised. The inexperienced client will need professional help from the
advisers or design team in the preparation of the definition. The project definition
is a comprehensive statement of the clients objectives and parameters for the
project based on close consultation between the client and users covering:
3.1.1.11
project description;
function of building;
equipment and special services/requirements;
target programme; and
site.
%
50
20
30
100
(e) This is the initial control document for the early planning of the project;
without it little constructive work can be done. If all the information required
for the project definition is not readily available, it is better to issue it in an
incomplete form and progressively update it.
G
3.1.1.12
BRIEFING
(a) Once the project definition has been completed the briefing process will be
carried out. This is when the design team and cost consultants are able to flesh out
Page 9
PART 3, SECTION 1
the project prior to extensive design work. The process commences with concept
design building upon project definition and progresses through to a project brief
which should encompass the clients aesthetic, spatial and service requirements.
(b) While it may be difficult for inexperienced construction clients to
visualise the descriptions outlined during the briefing process it is worth
spending time seeking consensus on its content to avoid waste in the later
design process.
(c) The Construction Industry Board (1997) have produced an excellent guide
called Briefing the Team which summarises the processes involved.1
(d) Following the development of the brief for the project the design process
will commence (see 3.1.4 Implementation).
G
3.1.1.13
Page 10
3.1.1.14
PART 3, SECTION 1
3.1.1.15
(a) The extent of collaboration possible between those who design the project
and those responsible for delivery will vary with the strategy adopted.
(b) Selection strategies may include selection by competition for price; on the
basis of the quality of the bid as well as price alone; or by negotiation. In some
cases a high level of collaboration is possible enabling those responsible for
delivery to adopt a Partnering approach to project delivery.
(c) Partnering is not so much a contract strategy as a way by which the project
team can be drawn together for their mutual benefit. Partnering is usually most
advantageous where the client has a range of projects to procure but can be
adopted for single projects.
(d) The principles associated with Partnering are based on inclusiveness and
depend upon a trust being established within the team. There is also a focus on
achieving the best outcome for the client as well as a satisfactory outcome for
each participant. The primary principles include developing mutual
objectives, simple approaches to dealing with disputes and a focus on
continuous improvement which can be measured.
(e) This approach represents a change in the culture traditionally adopted by
the UK construction industry which has previously been based on price-bid
approaches and will need to be carefully managed. However, evidence is
beginning to emerge of real all-round benefits being achieved particularly by
regular and experienced construction clients.
(f) The Construction Industry Board have published a most useful guide to
partnering1.
(g) The number and style of contract documents will depend on the contract
strategy selected.
3.1.1.16
(a) Where direct consultant appointments are made each will be subject to a
separate form of contract, but where a design and build strategy is selected,
designers may be appointed by the contractor. In the case of construction
management, the client will be required to enter into many individual trade
contracts.
(b) Contract implementation can be complex and may encompass the
additional appointment of consultant advisers or the novation of designers
from the client to the contractor. In addition, forms of warranty and collateral
contracts may be involved. The consultant advisers can assist the client in the
selection of appropriate contracts and the documentation associated with
them.
Construction Industry Board, Partnering in the Team, Thomas Telford Publishing, London, 1997.
Page 11
PART 3, SECTION 1
(c) The responsibility for contract administration will depend upon the
procurement strategy selected, and may fall upon the design team, the project
manager, a contract administrator, or the client him/herself. The client should
seek advice to ensure that the administration process is appropriately planned
and delegated.
(d) Guidance on the appointment of consultants and contractors is included in
3.1.4 (Implementation).
G
3.1.1.17
COMMISSIONING
(a) Once the building work is complete the systems which will support comfort
must be commissioned to ensure they are working effectively and reliably.
(b) In relatively simple buildings the client can insist that this is a function
which the contractor must perform. Where buildings have sophisticated
systems controlling the internal environment or facilitating staff movement or
safety, commissioning can be established as an independent activity carried
out by specialists.
(c) However commissioning is facilitated, it must be achieved before any
building can function effectively.
3.1.1.18
Page 12
3.1.2.1
PART 3, SECTION 1
into between the project participants and the client. The procurement strategy
should be consistent with the objectives of the project and should enable the
risks to be controlled to achieve a successful outcome.
G
3.1.2.2
3.1.2.3
3.1.2.4
Where the development of design does not maintain the pace anticipated, or
the programme is otherwise affected by unexpected occurrences, the selected
strategy must be reviewed. It is most important that the strategy is
reconsidered at key times in the progress of the project such as when planning
approval is given, before contract strategy is decided and before construction
contracts are let.
3.1.2.5
DEFINITION OF TERMS
Different procurement strategies provide different ways of allocating risk and
responsibility to the organisation contributing to the project. They can either
integrate the design and construction processes or segregate them.
Approaches to the selection of processes enabling collaboration are referred to
in 3.1.4 (Implementation).
The main types of procurement strategy are summarised below (they are
covered in more detail in Appendix A).
Page 13
PART 3, SECTION 1
3.1.2.6
On some projects it may be necessary to use more than one strategy to meet
the projects objectives. For example, a traditional approach may be used for
completing the building structurally with main services installed. This is
known as a shell and core contract. A separate strategy, for example,
construction management, may be used to fit out the building with ceilings,
raised floors, carpets, partitions and electrical fittings. The use of two
strategies allows the client more time to finalise the users detailed
requirements, without delaying the start of construction.
3.1.2.7
When the choice of procurement strategy has been made, the resultant
contract strategy and forms of contract should be chosen (i.e. the terms and
conditions of the contract). To avoid the need for fresh legal drafting each
time, various standard forms of contract are available, both for the
appointment of consultants and contractors. Construction professionals re
usually experienced in understanding these contracts and can advise on the
implications of their adoption. The range of contracts available is referred to
in 3.1.4 (Implementation).
3.1.2.8
PROJECT OBJECTIVES
(a) Construction (and refurbishment) projects are often complex with potential
for cost and time overruns or the finished building performing less well than
planned. To minimise such risks the client should select the procurement
strategy which matches the objectives of the project. These must be clearly
established and prioritised before any design or other work begins (see
3.1.1.1011 Project Definition, Establishing Primary Objectives).
(b) The client must decide the relative importance of the three main types of
criteria time, cost and performance:
time: earlier completion can be achieved if construction is started
before design is finished. The greater the overlap between the two, the
less time will be required to complete the project;
cost: with the exception of simple standard buildings and certain
design and build strategies, a final construction contract sum cannot
be established until the design is complete. Any overlap between design
and construction means that construction starts before the cost is fixed.
This increases the importance of accurate cost forecasting and the risk
to the client; and
Page 14
PART 3, SECTION 1
FIGURE 1
THE RELATIONSHIP BE TWEEN P RIMARY CRITERIA
Cost Issues
(level of price, certainty of price)
Performance Issues
(quality, functionality, design)
Page 15
PART 3, SECTION 1
3.1.2.9
Page 16
PART 3, SECTION 1
to the party with the greatest ability to own the risk and to manage its effects.
If, for example, the client considers it critical that the price for the building is
fixed before construction commences, the risk of meeting that objective could
be passed to contractors, making them contractually responsible for
completion to an agreed design and specification for a lump sum price.
G
3.1.2.10
PASSING ON RISK
(a) Responsibility for risk and the ability to control a project interact. The
more the client chooses to allocate risk to other parties, the less control the
client has over the way in which the project is executed. In the example above,
if the contractor has to meet the agreed specification within the budget and
time, the client has little influence over the way in which these objectives are
met. In practice, risk allocation is determined by the chosen strategy and
allocated by means of contracts between the client and those responsible for
managing, designing or constructing the project. The way in which risk and
responsibility are allocated by different contract strategies is indicated below
and shown in Appendix A.
(b) In all cases where risks are transferred in contractual terms, it is necessary
to ensure the ability of the transferee to own the risk. In the case of design
failure, for example, this is usually passed to the design team including the
architect and engineering consultants. Because of the nature of their
professions they should have insurances of sufficient capacity to meet the
maximum possible cost of correcting the design failure. The client should
ensure that such insurances are in place, adequate and paid for; where a project
manager or consultant adviser has been appointed, this is a role that may be
performed by him/her.
(c) Some design work may be carried out by subcontractors who may or may
not continue to pay design liability insurance premiums and usually will have
limited liability status. Liability for their design work is commonly passed by
warranties but these are less secure.
Equally, where time risks are passed to contractors their attempts to transfer
them to small subcontractors may fail where the capacity to own or accept the
risk is limited.
In situations such as these it may be possible to pass risks contractually but the
lack of security associated with the transfer may result in the risk being borne
by the party attempting to pass it. It is difficult to allocate blame in team
situations. The client should be aware of this weakness in terms of risk
allocation.
(d) While the transfer of risk provides an incentive for the receiving party to
minimise its impact, the client should avoid transferring risks when the
receiving party has no control over them or no capacity to absorb them.
Generally, the more the risk of cost and time slippage is allocated to other
Page 17
PART 3, SECTION 1
parties, the higher the tendered cost. In pricing the project, tenderers may
over-estimate the size of the risk or add a high safety margin to an accurate
estimate and thereby increase the projects costs unnecessarily.
G
3.1.2.11
Since the latter will have a cost the client should also be advised of the
expense of managing risk.
(b) Appendix A refers to the characteristics of each procurement strategy and
indicates the levels of risk associated with time, cost and performance in each
case on the assumption that the procurement strategy is properly utilised and
in no way abused. (Thus, for example, in relation to the traditional system it
has been assumed that design completion is achieved before measurement and
documentation is carried out.)
These primary risks are summarised (by simple examples in Figure 2) by
procurement method in the categories time, cost and performance.
Where design is by the clients consultant, design risk is placed by the
appointment agreement. Where design is by the contractor, design risk is
placed by the building contract agreement.
Where lump sum price is fixed by the contract the responsibility rests with the
contractor. Where a contract sets standards of specification, meeting these
standards is the contractors responsibility (risk).
Thus by contractual agreement primary risks can be distributed between
client, designer and constructor. It is impossible to dispose of all risk inherent
in construction projects and some will inevitably remain with the client. For
example, the risks listed here tend to be client risks and although they may be
of varying likelihood they should be understood.
Page 18
PART 3, SECTION 1
FIGURE 2
S U M M A R I S I N G T H E P R I M A RY R I S K S , B Y E X A M P L E
Time
Cost
Performance
Traditional
Designed by clients
consultant. Quality
set by contract
documents
As traditional
As traditional
Design by contractor
but with varying
levels of input by
client quality set in
same way
Separate
management
function
As traditional
(c) This short list segregates residual risk by procurement method. The extent
to which risk remains with the client can be established by a detailed analysis
of contractual agreements.
3.1.2.12
Traditional
building suitability
risk of contractor insolvency
risk of delay by consultant or the causes allowed by contract
Design and Build
building suitability
design functionality and usability
design insurance if contractor moves away from this type of business,
goes out of business or fails to pay premium
Management Contracting/Construction Management
as traditional procurement plus:
risk of cost overrun
risk of time overrun
SUMMARY (RISK)
Risk can be reduced, retained, transferred or distributed. To transfer risk
successfully the risk taker should have the capacity to take the full extent of the
risk or the risk placer will have failed. Where there are so many relatively small
firms, as in the UK construction industry, this can be problematic because many
contracts place risks with risk takers without sufficient capacity. They may be
limited liability companies or may be unable or unwilling to insure.
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PART 3, SECTION 1
Thus, for example, attempting to enforce large scale liquidated damages for
late completion on a small-sized domestic subcontractor may fail for lack of
financial capacity within the small company.
Procurement strategy should therefore reflect the ability to place risk, and
where possible risk should be managed out.
G
3.1.2.13
analysis assessing and setting the priorities of the project objectives and
requirements;
choice considering possible options, evaluating them and selecting the
most appropriate; and
implementation putting the chosen strategy into effect.
3.1.2.14
IMPORTANT CONSIDERATIONS
The factors listed below should be considered in analysing project objectives,
requirements and their relative priorities (each is then considered in detail)
and may have an effect on the choice of procurement strategy:
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PART 3, SECTION 1
interest rates;
inflation;
changes in output of construction industry affecting tender price levels and
the availability of skilled labour; and
legislation, particularly legislation affecting the design and construction of
projects. In many cases the client will have responsibility for legal
compliance, particularly in relation to health and safety matters and should
seek the advice of his/her advisers (including the design team) on such
issues as a matter of importance.
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PART 3, SECTION 1
series of freezes as it develops but the client should set a final design freeze
date after which no significant changes to requirements or design are allowed.
Some procurement strategies such as construction management are better than
others at handling the introduction of changes later in the project without
having to pay some form of specific premium.
(e) Cost issues
Price certainty influences the project timing and the procurement strategy
which should be used. Generally, design should be complete if price certainty
is required before construction commences.
Cost of changes if cost certainty is to be maintained during the course of
construction changes should be avoided. Changes often have cost and time
implications on the project well in excess of the change itself. It is therefore
important for the client to fix a date after which no significant changes should
be introduced.
(f) Timing
The programme of the project is influenced by many of the above factors. A
particularly large and/or complex project is likely to require more time for
design, specification and construction than would be required for a simple
small building.
It is of vital importance to allow for adequate design time in terms of the total
project. If design is required to be complete before construction commences
(where perhaps cost certainty is required) this is particularly the case.
In the process of the appointment of the design team assurances should be
obtained about resource levels and the ability to meet key dates or
programmes. It is not usual to impose contractual dates upon designers,
although their progress is probably the key to the overall completion date.
Decisions to progress with a project may be influenced by the gaining of
planning approval, by the successful operation of compulsory purchase order,
by land purchase or by some other non-specific but critical factor (such as
obtaining funding approval). Depending on whether these factors occur earlier
or later, they may be an influence upon the planned or desired time available
for design.
Procurement strategies such as management contracting, construction
management, and design and build provide an overlap between the design and
construction stages, so construction can start earlier than sequential strategies
and offer the potential for earlier completion.
It may be necessary to review planned procurement strategy in the light of
design progress at the point where restraints to constructions are removed,
bearing in mind the stage of design and the consequence in terms of risk.
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PART 3, SECTION 1
F IGURE 3
CON STRUCT ION T IME S
The following times are based upon historical data and are only a guide. Projects of
relatively simple design may be constructed more quickly and more complex
designs may take longer.
New purpose built
cost (millions)
Retail facilities
weeks
New speculative
cost (millions)
Retail facilities
weeks
30
90
30
100
25
80
25
95
20
75
20
90
15
70
15
85
10
65
10
80
55
70
Office facilities
weeks
New speculative
cost (millions)
Office facilities
weeks
30
120
30
135
25
110
25
130
20
100
20
120
15
90
15
110
10
85
10
100
70
85
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PART 3, SECTION 1
3.1.2.15
PROCUREMENT OPTIONS
When all the factors influencing the project have been identified and the
project requirements analysed, the final strategy for the project must be
developed.
It is likely that there will be more than one way to achieve the requirements of
the project. It is important to consider carefully each option, as each will
address the various influencing factors to a different extent. In developing
strategies, a potential danger is that only the most obvious course of action
may be considered this is not necessarily the best in the longer term.
3.1.2.16
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PART 3, SECTION 1
3.1.2.17
3.1.3.1
suitable in the light of the clients needs, the project type and the clients
exposure to risk; and
feasible in the light of the clients expertise, internal management
structure, resource and funding facility.
3.1.3.2
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PART 3, SECTION 1
3.1.3.3
METHOD
Checklists 1, 2 and 3 should be carefully completed in consultation with the
client.
The resultant information should then be transferred to Checklist 4 which will
enable the information to be analysed and evaluated. The analysis can then be
compared with the characteristics of each procurement method, and the
associated risk so that an informed decision can finally be made.
CHECKLIST 1: TIME
The following should be considered:
1.1 Is completion needed by a specific date?
1.2 Is completion needed in the shortest possible time?
1.3 Is the client prepared to pay more for earlier completion?
2. Does the answer to question 1.1 suggest a faster than normal total project
time in the judgement of the adviser?
3. How long is it in months from the date of completion of this protocol until
the desired move in date?
4. Define the reason for the identified completion or move in date:
4.1 end of lease
4.2 sale of premises
4.3 new business opportunities
4.4 unsuitability of present premises
4.5 company restructuring
4.6 other.
5.1 Is the need for completion by a specific date or within a specific time more
important than certainty of construction cost before work starts?
5.2 Is the need for completion by a specific date or within a specific time more
important than spending an extended time on design?
6. What is the approximate value, in sterling, to the client of the building or
facility in terms of contribution, rental or cost savings per month?
7. If the building is completed later than the specified or desired time will the
client:
7.1 stay in existing premises?
7.2 find temporary accommodation?
7.3 close down?
7.4 dont know.
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PART 3, SECTION 1
Upon the completion of this part, the following information should have been
established and should be transferred to Checklist 4:
1(a) specified completion time;
1(b) reason for completion time;
1(c) whether required completion time is relatively fast;
1(d) whether time is seen as the predominant client need;
1(e) the potential financial implication of earlier or later completion; and
1(f) what action the client may take if the dates are not achieved.
CHECKLIST 2: DESIGN/PERFORMANCE
1. Has the client clear ideas about building functionality and its desired
design?
2. Does the site (if selected) pose any particular problems for the designer in
respect of:
2.1 shape or topography?
2.2 access?
2.3 storage space?
3. Does the building type suggest relative design complexity?
4. Does the building type suggest emphasis upon functionality?
5. Does the building type suggest highly complex mechanical, electrical or
engineering installations?
6. Is it anticipated that extensive changes to design may be required during the
construction phase?
7. Does the client wish to particularly emphasise low running costs?
8. Does the client wish to particularly emphasise low maintenance costs?
9. Does the client wish to particularly emphasise product quality at a higher
potential cost?
Upon the completion of this part of the process, the following information
should have been established and should be transferred to Checklist 4:
2(a) whether the client has clear ideas about his/her needs;
2(b) whether the site poses complex design problems;
2(c) whether the building design is complex;
2(d) whether functionality is particularly important; and
2(e) whether the client has a long-term view about the cost of the building.
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PART 3, SECTION 1
CHECKLIST 3: COST
1. What is the clients maximum budget?
2. Can the budget be allocated as below?
2.1 land purchase and fees
2.2 construction, including fees
2.3 fittings and plant
2.4 contingencies
2.5 other (define).
3. Will the client need to have a fixed contract price for the construction
element of his budget or will a reasonably accurate budget be adequate?
Upon the completion of this part of the process, the following information
should have been established and should be transferred to Checklist 4:
3(a) total maximum spending capacity;
3(b) total construction spending capacity; and
3(c) need for pre-construction cost certainty.
CHECKLIST 4: ANALYSIS
If relative speed is required can the client accept less cost certainty?
See 1c, 3c.
If yes, this may mean that fast-track approaches may be suitable.
If no, a method of achieving cost certainty relatively quickly may be
through negotiation.
Does the information provided indicate that the project is complex in
terms of design or in terms of site-related problems?
See 2b, 2c, 2d.
If so, adequate time should be allowed for a design process to occur
which will provide the client with an acceptable design solution.
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PART 3, SECTION 1
3.1.3.4
CHECKLIST SUMMARY
Having established whether the project is both feasible and viable, the
importance of time, cost and design has now been reviewed.
There is always an interrelationship between these three primary criteria and
procurement systems selected should reflect this.
Projects can probably be broadly categorised into those which will be
design-led and those which will be production-led. Design-led projects
usually reflect the characteristics of procurement systems where the client
appoints his/her own design team; whereas production-led projects enable the
constructor to take on some or all of the design function.
Design-led projects have the greater capacity for cost and time overrun,
whereas the potential capacity for design shortcomings may rest with
production-led systems.
System selection should consider whether the project is design or
production-led but should also consider the clients need to manage and/or
distribute risk.
3.1.4 Implementation
G
3.1.4.1
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PART 3, SECTION 1
3.1.4.2
IMPLEMENTATION POLICY
Implementation of procurement strategy is a key role for the team and
warrants sufficient thought and review. The policy developed to ensure
appropriate implementation should be clearly communicated to all the key
players. By ensuring that implementation policy is maintained, the client has
a greater chance of obtaining the right project at the right time at the right cost
with the minimum of conflict.
3.1.4.3
FINANCIAL RESOURCES
(a) In this section, the funding function has been assumed to be a matter for the
client. It is a vital function and by the time the procurement strategy is set,
sufficient funding should be available at appropriate times in the
pre-construction and construction process.
(b) Funding requirements are usually a consequence of contractual
agreements, whether they be agreements to purchase land, to design or to
construct. It is possible to take account of each contractual agreement and to
plan expenditure in the form of a cash flow. Useful advice in this context can
be provided by the project manager or the project cost consultant. Both of
these team members should be in place at an appropriate time to ensure that
funding arrangements are appropriate.
3.1.4.4
HUMAN RESOURCES
In terms of client organisation, the client should be prepared to allocate
appropriate in-house personnel to the project or should be prepared to appoint
consultants for this purpose. In most cases, consultants are appointed to design
and cost a project, but a client will have his/her own staff member who will
provide liaison and a focus for decisions. Where this is not possible the
appointment of a project manager is desirable. Only one individual should
have the authority to instruct those carrying out the design or construction on
behalf of the client.
3.1.4.5
PHYSICAL RESOURCES
(a) Where physical resources such as land, plant and machinery have to be
provided by the client, it is self-evident that the client should ensure their
availability in a suitable form at the right time. Where alternative
accommodation is required, or where specific arrangements for decanting are
necessary, this is a matter for the client and/or the clients organisation
although these are matters which can be handled by a project manager.
(b) Design and construction resources must also be appropriately selected and
in place at the right time.
(c) The criteria for the selection of the design team are outlined below and are
based upon the factors of capability, competence, staff and cost, with value for
money, rather than cost being the major influence in selection.
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PART 3, SECTION 1
(d) The criteria for the selection of contractors are referred to below and are
broadly the same, but this tends to be a much more complex process and the
criteria are dependent upon the procurement strategy selected.
The basis for selection of constructors can be price competition, based upon a
fixed design and specification or can, in the case of design and build options,
be based upon competition for design solutions too. Selection can also be by
negotiation with one or two constructors, or can be based upon a two-stage
process. Suitable documentation for the selection process must be prepared
and the client should seek the advice of consultants or the project manager
who may also be required to manage the process.
(e) A number of Codes of Procedure for the selection process are available and
are referred to in sections 3.1.4.8 and 3.1.4.9.
G
3.1.4.6
ORGANISATIONAL STRUCTURE
(a) The client has a dual management role, part of which is to manage the
client input; to co-ordinate functional and administrative needs; to resolve
conflicts; as well as to act as the formal point of contact for the project.
(b) This will require the creation of an organisational structure for the life of
the project to enable communication to occur and to facilitate effective
decision-making.
(c) The organisational structure created may be headed by a key member of
the client organisation or may be headed by an imported project manager.
Whichever choice is made, the designated member must have sole authority
to communicate decisions to the project design and/or construction team.
Where more than one individual is empowered to instruct, or to require
changes, extreme confusion can take place.
(d) Building users, specialists, facilities managers, maintenance staff, finance
and accounts personnel, legal advisers and security personnel can all have
input to the project through the created organisational structure by invitation,
or right, and, as appropriate, can meet with designers or constructors to ensure
effective communication; but decisions are reserved to the in-house executive
or the project manager.
3.1.4.7
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PART 3, SECTION 1
should be based upon resources, reputation and price, and duties should be
clearly identified.
(b) It should be emphasised that the role of the project manager should be to
act as part of the client organisation.
(c) The clients role upon the appointment of a project manager should
include:
explaining the project objectives and their priorities, defining the
project and outlining parameters associated with time, cost,
performance and risk;
defining the criteria for control and management of the project;
managing the project managers performance of delegated
responsibilities;
monitoring the implementation by the project manager of control and
management systems;
ensuring that the project manager receives decisions on time;
assisting the project manager in the resolution of problems;
receiving and reviewing detailed reports on the project from the project
manager;
establishing with the project manager a common approach to major
issues which arise; and
maintaining with the project manager at all times an overview of the
project status in relation to the established objectives.
(d) The clients relationship with a project manager will be crucial to the
success of the project and will require careful development and nurturing
within the following guidelines:
the client, though taking the project managers advice should lead, not
follow;
no matter how much responsibility is delegated to the project manager,
the client will retain ultimate authority and therefore must have
adequate knowledge and information about the project to be able to
exercise the authority properly;
the client should agree with the project manager the precise extent of
any delegated authority together with those decisions reserved for the
client;
where a project manager has been appointed the client should not
formally communicate directly with consultants and contractors
employed on the project such communications will always be routed
through the project manager, although the contracts will be direct with
the client;
no matter what may be said in private, the client should publicly
support the project manager and avoid any actions which could
undermine that managers authority over the consultants and
contractors.
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PART 3, SECTION 1
3.1.4.8
APPOINTMENT OF CONSULTANTS
(a) The process of selecting and appointing the design team and the cost
consultant is carried out by the client but he/she may seek the advice of his/her
adviser. The terms and conditions of these appointments are governed by the
procurement strategy adopted for the project. (The client is also required
under the Construction (Design and Management) Regulations 1994 to
appoint a competent planning supervisor to ensure that the design team have
met their responsibilities under these regulations and to advise the client and
the constructors how they can comply.)
(b) The following alternatives exist in selecting the design team:
single appointment either of a multi-discipline firm which can itself
provide the full range of architectural and engineering design services
required, or of a lead consultant, normally the architect on building
projects, who will subcontract design of other disciplines to
independent professional firms and be responsible for their work and its
co-ordination; or
separate appointments for each of the design disciplines required,
one firm being appointed design team leader with the responsibility for
co-ordinating the work carried out by the others.
The former has the benefit of administrative simplicity and of single source
responsibility for design. The latter offers the chance of selecting the best firm
in each discipline but makes communication more difficult. The final
selection will depend on the particular features of the project.
(c) The selection of the design team and the cost consultant (and other
consultants as appropriate) will require the client to make a balanced
judgement on the following factors:
capability the experience of the firm in projects of similar size and
function and the availability within the firm of sufficient uncommitted
resources for it to meet the demands of the project; the demands of the
project programme may be particularly important;
competence the performance of the firm on past projects, to be
ascertained by detailed, confidential references from past clients;
efficient performance by design consultants cannot be taken for
granted;
staff the personal capability and experience of the key staff whom the
firm proposes to employ on the project; and
the cost quoted by the firm, unless large differences exist between
offers from competing firms this should not be critical.
(d) Value for money, not lowest price, should be the aim in the selection of
design team members.
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PART 3, SECTION 1
3.1.4.9
APPOINTMENT OF CONSTRUCTORS
(a) The client is responsible under the Construction (Design and
Management) Regulations 1994 to be reasonably satisfied that the
constructors appointed are competent and have adequate resources.
(b) The timing of the need to appoint constructors (whether contractors or
trade contractors) will be dependent upon the procurement strategy which is
selected, but the client will have a formal role in this process. The clients role
will include selecting those constructors with whom he will negotiate or who
will be invited to tender. In the case of the latter, it will be the client who
formally selects the constructor(s) to carry out the work and then contracts
with this company.
(c) Assistance with the selection, documentation for tender and advice in
relation to contract issues can be obtained by the client from professional
advisers and particularly the principal adviser. There are a number of codes of
procedure to assist in this process, of particular assistance is the Code of
Practice for the Selection of Main Contractors2 which has been approved by
the National Audit Office. In broad terms, the factors which affect the
Construction Industry Board, Selecting Consultants for the Team: balancing quality and price, Thomas Telford
Publishing, London, 1996.
2 Construction Industry Board, Code of Practice for the Selection of Main Contractors, Thomas Telford Publishing,
London, 1997.
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PART 3, SECTION 1
3.1.4.10
CONTRACTUAL ARRANGEMENTS
(a) Having selected an appropriate procurement strategy and methods of
consultant and constructor selection, this strategy should be implemented by a
range of contractual arrangements.
Many of these arrangements will be based upon standard forms of agreement
in common use in the construction industry. The distribution of major project
risks results from the wording of the contract selected. Most clients will need
specialist advice on contract selection. This is outside the remit of this
handbook.
3.1.4.11
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PART 3, SECTION 1
(c) Controls are also important to ensure that cost is controlled within budget,
pace is controlled within programme, quality is controlled within standards
set, and systems are properly employed.
(d) Cost control can be achieved by ensuring appropriate pre-construction cost
planning and an adequate system of regular cost reporting. These services can
be provided by the cost consultant.
(e) Pace can be monitored against a programme or time plan and can be
controlled by the imposition of contract completion dates. Programming can
be provided by a project manager or developed with the advice of the principal
adviser.
(f) Quality can be controlled through the provision of a sound contractual
specification. It may be appropriate to appoint a clerk of works to inspect the
works during progress and to ensure that work is satisfactory and matches the
specification.
(g) Controlling the client systems to ensure that they are appropriately applied
and not abused is a matter for the clients management team perhaps this is
the key management input from the client.
G
3.1.4.12
DESIGN OVERVIEW
(a) While responsibility for achieving a successful design solution to the
clients requirements lies chiefly with the designer, the responsibility rests
with the client both for ensuring that his/her needs are met and for the impact
of such development on the local environment. The blame for a poor building
is likely to be ascribed to the client as well as to the designer. Equally, a
well-designed building reflects credit on those who commissioned it as well as
on the designers who conceived it.
(b) Design is an important factor in ensuring good working conditions for staff
and convenience for members of the public who need to visit the building. A
well-designed building is a good investment. Good design can contribute to
economy and efficiency by efficient layout and economical use of space, by
energy efficiency (in heating, insulation, mechanical services, etc.) by low
maintenance costs, and by ensuring flexibility to meet changing requirements.
(c) No one person has all the design skills for any but the very simplest project
and therefore the collaboration of many designers will be necessary. This is
particularly the case in specialist buildings or buildings which have
sophisticated mechanical and/or electrical installations.
(d) The formulation of an accurate design brief and the development of design
in strict accordance with that brief are key processes for the client (or the
project manager) to oversee. In practical terms, the client will require:
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PART 3, SECTION 1
3.1.4.13
Page 37
PART 3, SECTION 1
(d) The amount included in estimates to cover the uncertain cost of risks based
on the analyses described above is known as the contingency. It is important
that contingencies are sufficient to cover risks and are not eroded to facilitate
any lack of cost control.
(e) A primary concern may be the cost of running and maintaining the
building. The term cost-in-use is used to describe how these costs can be
estimated, enabling the client to take these matters into account when
considering total project costs and building design. In some cases higher
initial costs will result in lower running or maintenance costs during the life of
the building.
(f) The earlier cost control procedures are instituted, the more effective they
will be. By way of simplistic illustration:
cost varies with (but not in direct proportion to) size: once the size of a
building is fixed, so is the general level of cost;
the selection of the most economical design for basic elements such as
foundations, structural frame, external cladding and roofing, is of far
greater cost significance than the types of finishings; and
the overall cost of mechanical and electrical systems and the
effectiveness of the cost control procedures which can be applied to
them is largely governed by early decisions as to the type of system
selected.
(g) The methods used for cost control differ radically between the
pre-construction and construction stages of a project. Cost control during the
former depends partly on formulating an appropriate procurement strategy but
more on controlling the design process within that strategy; during the latter it
is a function of effective management and avoidance of change after
commitment.
(h) Pre-construction cost control, in simple terms, comprises:
preparing a cost plan an allocation of the control budget into cost
centres which match readily identifiable elements of expenditure, with
allowances for contingencies, reserves for changes in market prices and
the like; and
cost checking each element as it is designed against its allowance in the
cost plan.
If the cost of an element as designed exceeds its allowance in the cost plan, the
excess can only be corrected by:
redesigning the element to reduce its cost; or
transferring money into that element from contingencies or from
another element yet to be designed.
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PART 3, SECTION 1
Page 39
PART 3, SECTION 1
3.1.4.14
Page 40
PART 3, SECTION 1
If neither is done, the overall time budget will be exceeded and the project will
finish late.
(f) The client should recognise that time control is as important during the
design stages of the project as the construction stage. Designers should work
to a series of deadlines at which different elements of the design should be
agreed (i.e. frozen) if costs and the overall programme are to be kept under
control.
(g) The client should consider developing (with the help of the project
manager if appointed) a time contingency (reserve), with strict procedures for
allocating the reserve to specific events. This concept is essential on projects
which are subject to external time constraints, for example, where a building
has to be available for occupation before the lease on another building expires.
(h) The client should take account at all times of fundamental relationships
between time, quality and cost:
any extension of the overall timescale for a project always generates
additional costs to either constructor or client; every project contains
time-related costs whether these are openly stated or not. Who carries
such additional costs depends on the detailed contractual arrangements
between the parties; it is likely that some of them will be borne by the
client; and
making up lost time by re-sequencing later activities may be achievable
but often only at the risk of compromising quality or cost control.
G
3.1.4.15
WHOLE-LIFE COSTS
(a) In addition to considering project cost purely in terms of initial capital
costs the client may wish to consider costs over the projected life of the
building. Such considerations may review higher initial costs against lower
running costs or longer life to replacement or maintenance. This may be of
particular impact where shorter-life inherent assets, such as mechanical or
electrical equipment, or where planned maintenance or energy consumption,
are being considered.
(b) The techniques associated with whole-life costing are often complex and
predictive. The project manager or project cost consultant will be able to
advise the client of the availability of their application in each case.
3.1.4.16
VALUE MANAGEMENT
(a) Value management is usually reserved for relatively complex projects
where value for money is important and concerned with defining what value
means to the client in meeting a particular need. In general, any project seeks
to satisfy the differing requirements of several parties. Value management
provides a structured framework for the examination and discussion of these
requirements to reach a consensus before the project brief is finalised. It is
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PART 3, SECTION 1
used to ensure that the need for and scope of any construction is thoroughly
analysed before any further commitment to proceed is made. The aim is to
establish a clear statement of a projects objectives matched to their relative
values.
(b) Value management is usually carried out at the concept and feasibility
stages of a project. The aim is to ensure that:
a project is commissioned in response to a careful analysis of balance
of needs;
a wide range of options and alternatives to meet that need is considered;
and
the project objectives are made explicit and are commonly understood
by all parties.
(c) The client may wish to appoint a professional adviser experienced in these
techniques and who will provide support in writing the objectives and
subsequent brief.
G
3.1.4.17
VALUE ENGINEERING
(a) This occurs later in the development of the project and is concerned with
how value is achieved rather than what the relative values are as defined in the
project brief and objectives.
(b) Value engineering studies are pre-planned, formal reviews of the design
philosophy and the detailed solutions at one or more stages of the design
development. They are sometimes carried out by firms or individuals not
connected with or employed on the project and are short exercises intended to
review the detailed design solutions against the objectives and to establish
whether they can be achieved in a more cost effective manner.
3.1.4.18
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PART 3, SECTION 1
3.1.4.19
Page 43
PART 3, SECTION 1
Page 44
Stock Condition Surveys, RICS Guidance Note, RICS Books, Coventry, 1997.
TRADITIONAL (SEQUENTIAL)
(a) Under a traditional procurement strategy, design should be completed
before tenders are invited and before the main construction contract is let.
As a result, and assuming no changes are introduced, construction costs can be
determined with reasonable certainty before construction starts and a
completion date can be fixed. In most cases the price is established on the
basis of tender documentation, often including a bill of quantities which
describes the extent of work to be done.
(b) The contractor assumes responsibility and financial risks for the building
works as described whilst the client takes the responsibility and risk for design
team performance. Therefore, if the contractors works are delayed by the
failure of the design team to meet their obligations, the contractor may claim
against the client for additional costs and/or time to complete the project. In
turn, the client could possibly seek to recover these costs from the design team
members responsible, if negligence can be proven.
(c) Clients are able to influence the development of the design to meet their
requirements because they have direct contractual relationships with the
design team. When construction begins, they usually have a single contractual
relationship with a main contractor and are therefore able to influence (but not
control) the construction process through a single point of contact.
(d) The strategy is unfortunately open to a level of abuse if any attempt is
made to let the work before the design is complete. Such action may result in
many post-contract changes which could delay the progress of the works and
increase the costs. Where a traditional strategy is chosen because of its
particular advantages, the temptation to let the work begin before the design is
complete should be strongly resisted.
(e) It is possible to have an accelerated traditional procurement strategy where
some design overlaps construction. This can be achieved by letting a separate,
advance works contract, for example, by allowing ground works (site clearance,
piling and foundations) to proceed to construction whilst the design for the rest
of the building is completed, and the construction tendered separately. This
reduces the total time to complete the project at the risk of losing certainty of
cost before construction starts. More importantly, a substantial risk is created in
that the contractor who builds the superstructure will take no responsibility for
the foundation works carried out by another contractor.
(f) Another alternative is to let the work by a two-stage process or by
negotiation thus reducing the pre-construction time involved and enabling the
contractor to have some (limited) involvement in the design and planning
stage.
Part 3, Section 1
Appendix A (01/03)
Page 1
FIGURE A1
PROCUREMENT ARRANGE MENT TRADITIONAL
CONTRACTUAL RELATIONSHIP
CLIENT
CONSULTANTS
(fee contracts)
MAIN CONTRACTOR
(standard lump sum contract)
ARCHITECT
(fee contract)
SUPPLIERS
(various contracts)
SUBCONTRACTORS
(standard lump sum)
ADVANTAGES
DISADVANTAGES
competitive fairness
and valued
adversarial potential
SEQUENCE
brief
design
competition
construction
Risk
Low cost risk due to lump sum contract
Medium time risk due to fixed contract date (but contractor has right to claim extensions)
Low quality/design risk where the majority of the work is designed by insured consultants
working directly for the client
Page 2
Part 3, Section 1
Appendix A (01/03)
MEASUREMENT CONTRACTS
Measurement contracts are used when the work required cannot be accurately
measured for the tender bill of quantities. The contract sum is only established
with certainty on completion of construction, when re-measurement of the
quantities of work actually carried out takes place and is then valued on an
agreed basis. Measurement contracts are sometimes referred to as
re-measurement contracts and are based upon the prices tendered by the
contractor. The most effective use of a measurement contract is where the
work has been substantially designed but final detail has not been completed.
Here, a tender based on drawings and a bill of approximate quantities will be
satisfactory. Measurement contracts allow a client to shorten the overall
programme for design, tendering and construction but usually with the result
of some lack of price certainty at contract stage because the approximate
quantities reflect the lack of information on exactly what is to be built at
tender stage. The scope of the work, the approximate price and a programme
should be clear at contract stage. Measurement contracts provide more risk
than lump sum contracts for the client but probably with programme
advantages. They are typically used with civil engineering works where there
can be significant uncertainty about ground conditions.
(b) The organisational structure of a measurement contract strategy is shown
in Figure A2. Standard forms of contract are available for this strategy.
(c) The main advantages of the measurement contract strategy include:
pre-construction time-saving potential;
competitive prices;
average public accountability;
the procedure is well known;
the strategy enables changes to be made easily; and
there is some parallel working possible.
(d) The main disadvantages of the strategy are:
the strategy offers poor certainty of price;
there is no contractor involvement in the planning or design stage; and
there is a potential for adversarial relationships to develop.
Part 3, Section 1
Appendix A (01/03)
Page 3
FIGURE A2
PROCUREMENT ARRANGE MENT ME ASUREME NT
CONTRACTUAL ARRANGEMENT
CLIENT
CONSULTANTS
(fee contracts)
MAIN CONTRACTOR
(standard measurement contract)
ARCHITECT
SUPPLIERS
(various contracts)
SUBCONTRACTORS
(standard contracts)
DISADVANTAGES
SEQUENCE
brief
design
competition
construction
Risk
Variable cost risk as the final figure will be uncertain until the design and often construction is complete
Medium time risk as the extent of work will vary and contractors can claim extensions to the period for construction
Medium quality/design risk in the sense that design may not be complete at the outset
A3
CONSTRUCTION MANAGEMENT
(a) Under a construction management strategy, the client does not allocate risk
and responsibility to a single main contractor. Instead, the client employs the
design team and a construction manager is engaged as a fee-earning
professional to programme and co-ordinate the design and construction
activities and to improve the buildability of the design. Construction work is
carried out by trade contractors through direct contracts with the client for
distinct trade or work packages. The construction manager supervises the
construction management process and co-ordinates the design team on behalf
of the client. The construction manager, who has no contractual links with the
Page 4
Part 3, Section 1
Appendix A (01/03)
Latham, M., Sir, Constructing the Team: Joint Review of Procurement and Contractual Arrangements in the United
Kingdom Construction Industry: Final Report, HMSO, London, 1994.
Part 3, Section 1
Appendix A (01/03)
Page 5
FIGURE A3
PROCUREMENT ARR ANGEMENT CON STRUC TION MAN AGEM EN T
CONTRACTUAL ARRANGEMENT
CLIENT
Fee contracts
CONSULTANTS
including
Lump sum contracts
CONSTRUCTION MANAGER
WORK or TRADE
CONTRACTORS
ADVANTAGES
DISADVANTAGES
buildability potential
active part
all participants
late changes easily accommodated
SEQUENCE
brief
design
construction
Risk
Medium cost risk since the actual cost is unknown until the last package is let
Medium time risk since no one organisation carries the risk for timed completion
Low quality/design risk because there is a close link between client, designers and constructors
Page 6
Part 3, Section 1
Appendix A (01/03)
MANAGEMENT CONTRACTING
(a) With this contract strategy, a management contractor is engaged by the
client to manage the building process and is paid a fee. The management
contractor is responsible for all the construction works and has direct
contractual links with all the works contractors. The management contractor
therefore bears the responsibility for the construction works without actually
carrying out any of that work. The management contractor may provide some
of the common services on site, such as office accommodation, tower cranes,
hoists and security, which are shared by the works contractors. The client
employs the design team and therefore bears the risk of the design team
delaying construction for reasons other than negligence.
(b) Management contracting is a fast track strategy. All design work will not
be complete before the first works contractors start work although the design
necessary for those packages must be complete. As design is completed
subsequent packages of work are tendered and let. Cost certainty is thus not
achieved until all works contractors have been appointed. A high level of cost
management is therefore required.
(c) With the agreement of the client, the management contractor selects works
contractors by competitive tender to undertake sections of the construction
work. The client reimburses the cost of these work packages to the
management contractor who, in turn, pays the works contractors. The
management contractor co-ordinates the release of information from the
design team to the works contractors.
(d) Where the management construction team is not of the highest quality, or
where this fee is inadequate, the management contractor can be less than
proactive and the system can become a reactive postbox approach. It is
therefore vital to select the management contractor carefully and to ensure that
the fee is appropriate bearing in mind market conditions. Similarly, resistance
to works contractors claims can be affected by the same circumstances.
(e) The organisational structure of a management contract is shown in
Figure A4.
(f) The main advantages of a management contracting strategy are:
time-saving potential for overall project time;
buildability potential;
Part 3, Section 1
Appendix A (01/03)
Page 7
FIGURE A4
PROCUREMENT ARR ANGEMEN T MA NAGEMENT C ON TRAC TING
CONTRACTUAL ARRANGEMENT
CLIENT
MAIN CONTRACTOR
(standard fee contract)
CONSULTANTS
(fee contracts)
WORKS CONTRACTORS
(standard lump sum contracts)
ADVANTAGES
DISADVANTAGES
buildability potential
SEQUENCE
brief
design
construction
Risk
Medium cost risk since the actual cost is unknown until the last package is let
Medium time risk since total construction time is a consequence of package selection
Low quality/design risk because there is a close link between client, designers and constructors
Part 3, Section 1
Appendix A (01/03)
A6
Part 3, Section 1
Appendix A (01/03)
Page 9
Part 3, Section 1
Appendix A (01/03)
money to impose a lesser, yet insurable, liability, which will be the subject
of an insurance payout in the event of a design fault, rather than an
insurance fitness for purpose requirement on a contractor of limited
financial assets.
Most importantly the client should ensure that adequate design liability
insurance is in place and maintained for the period of liability.
(n) Increasingly, collateral warranties are being used to place additional
responsibility on designers or subcontractors. In addition, the client may take
out insurance to cover post-construction liability, but this will be at a cost.
This is a matter for specialist advice.
(o) A range of options is available as illustrated in Figure A5. These range
from a package deal or turnkey where the client has little involvement in the
design development or building procurement process (effectively, a
complete hands off approach), to develop and construct where the client
appoints designers to develop the brief to a level of sophistication which will
leave the design and build contractor to develop detail or specialist design
elements.
FIGURE A5
P ROCUREMENT ARRANGEMENT DESIGN AND BUILD
Some options available, showing proportional involvement in the design proces by client and
contractor between package deal, and develop and construct.
Turnkey
Package deal
Design and build
(competitive)
Design and build
(negotiated)
Develop and construct
The range of options enables the procurement arrangement to be used for a wide range of
client types, and for clients to be involved to a greater or lesser extent.
Client involvement
Contractor involvement
Part 3, Section 1
Appendix A (01/03)
Page 11
(p) The project organisation structure for design and build is shown in
Figure A6. Contractors may use their own firms resources for undertaking
the design (in-house design and build), or may more usually subcontract
these to one or more professional firms whilst retaining control.
(q) The main advantages of a design and build strategy are:
the client has only to deal with one firm;
inherent buildability is achievable;
FIGU RE A6
PROC UREMENT ARRA NGEMEN T D ESIGN A ND BU ILD
CONTRACTUAL ARRANGEMENT
CLIENT
SUBCONTRACTORS
(standard lump sum contracts)
ADVANTAGES
DISADVANTAGES
inherent buildability
early firm price possible
SEQUENCE
brief
competition
design
construction
Risk
Low cost risk since most contracts will be let on a lump sum basis
Low time risk since the contractor will usually fix the time and be committed to it
High design/quality risk where the contractor controls design there are risks related to
both design suitability and to the capacity of the design-build firm to own such risks
Page 12
Part 3, Section 1
Appendix A (01/03)
Part 3, Section 1
Appendix A (01/03)
Page 13
PART 3, SECTION 2
Highly-serviced
factories
Air
conditioned
offices
General
hospitals
1. Substructure
19
2. Superstructure
62
44
33
3. Finishes
11
4. Fittings
5. Services
15
35
49
Total
100
100
100
This guide should be read in conjunction with The Procurement Guide (see
Section 3.1). The Procurement Guide provides both clients and their
advisers with a code of procedure to assist them in the selection of an
appropriate procurement strategy for a building project.
The Surveyors Construction Handbook
Page 1
PART 3, SECTION 2
PART 3, SECTION 2
INTRODUCTION
Most construction projects contain building services. In order to incorporate
these services successfully, design advice is required. The process of
designing the building services elements within a construction project is
complex, with detailed design often being undertaken by specialist
manufacturers and/or installers. This process usually begins with the
appointment of a building services engineer or a building services
designer/contractor. The question surrounding this appointment is, who is
best placed to provide design advice and at what stage should it be sought?
Before answering this question the meaning of the word design needs to be
explored.
3.2.1.2
3.2.1.3
Page 3
PART 3, SECTION 2
Page 4
Manufacturers drawings
Record drawings
Plant selection:
4.6
4.7
5.0
5.1
Installation drawings
4.3
4.5
Schematics
4.2
Specification
Sketch drawings
4.1
4.4
Design:
Feasibility report
2.0
4.0
System wide
1.2
Confirmation of client
brief
Existing system
1.1
3.0
Surveys:
1.0
Activity
Employer
Project
manager
Building
services
engineer
Structural
consultant
Contractor
Architect
Other
(stated)
Comments
PART 3, SECTION 2
Page 5
Page 6
Propose procurement
route
Pre-tender plant
(if required)
O&M manuals:
Format
Production
Sign off
Spatial coordination:
Review installation
proposals and amend
schematics
Re-select plant
accordingly, including any
revised calculations
5.2
5.3
5.4
6.0
6.1
6.2
6.3
7.0
7.1
7.2
7.3
Activity
Table 2: Continued
Employer
Project
manager
Building
services
engineer
Structural
consultant
Contractor
QS
QS
Other
(stated)
Comments
PART 3, SECTION 2
Lead designer
12.0
Accept/witness
commissioning
9.3
Design team
coordinator/contract
administrator
9.2
11.0
Commissioning
specification
9.1
9.0
10.0
8.0
Activity
Table 2: Continued
Employer
Project
manager
Building
services
engineer
Structural
consultant
Contractor
QS
Other
(stated)
Comments
PART 3, SECTION 2
Page 7
PART 3, SECTION 2
The tables should be compiled at the outset of a project by the employer or his
or her project manager and should be included as a contract document. In
practice, the completion of the tables in terms of timing will be dependent on
the procurement route chosen. For example, a pre-designed single stage
competitive tender would require the tables to be created as a basis for
appointing the building services engineer, as undoubtedly the level of design
responsibility will affect his or her fee. The tables should then be included as
part of the tender documents and included as a contract document in both the
employers contract with the principal contractor and its contract with the
building services engineer.
Alternatively, under a partnering situation the tables could be compiled
jointly between the parties, with responsibility being allocated to the person
within the team best suited to manage the risk. Again, the completed tables
should be included as a contract document in all contracts between the
employer and his or her design team, which would include the principal
contractor.
3.2.1.5
Page 8
PART 3, SECTION 2
One very important difference between full duties and abridged duties is that
the latter do not require the building services engineer to produce coordination
drawings. His or her duties under abridge duties are intended to harmonize
with those of the architect up to a certain point and this would require some
element of design coordination by the building services engineer. However,
the extent of this is unlikely to be clear.
Abridged duties have been the source of argument and dispute between
building services contractors and design-only consultants for many years.
Therefore, when it comes to engaging a design-only consultant, it is very
important that the extent to which the consultant will produce coordination
documentation is clear, particularly to the building services contractor who
will rely on the information. This is especially important where abridged
duties are used. Although the consultant is not required to produce
coordination drawings (as defined in the 1981 ACE conditions) under
abridged duties, he or she will almost certainly coordinate design to some
extent in conjunction with the other members of the design team. BSRIA
technical note TN21/97 provides practical guidance on deliverables.
(b) 1995 ACE conditions of engagement
The 1995 conditions comprise a range of forms, one of which is called
agreement B(2). The forms are not formatted into full, abridged and
performance duties. Agreement B(2) divides the duties into normal services
and additional services.
The 1995 conditions include the following guidance, In connection with the
duties of building services engineers it should be noted that agreements A(2)
and B(2) list as normal services a level of services which corresponds roughly
to the abridged duties in the 1981 agreements 4A(ii) and 4B(ii). It is open to
the client and building services engineer to agree an equivalent of full duties
by importing some of the additional services into the normal services.
Similarly, an equivalent of performance duties may be agreed by listing in
A19 those services which are not to be included as normal services.
It is important to note that coordination drawings are not part of normal
services. From this point of view, normal services are significantly less than
full duties under the 1981 conditions. If the client or the project manager want
the designer to produce coordination drawings under the 1995 conditions,
they must request the inclusion of these drawings.
Under normal services, the designer is required to prepare detailed design
drawings from which, it should be possible to produce coordination
drawings and installation drawings without a major re-routing of those
services. In practice, the meaning of the words major re-routing should be
discussed with the designer so that the implications of what they might mean
could be risk assessed at an early stage and clearly communicated through the
contract documentation.
Additional services is a list of services from which the client must choose and
add on to the normal services.
The Surveyors Construction Handbook
Page 9
PART 3, SECTION 2
The main differences between the 1981 and 1995 ACE conditions of
engagement are outlined in table 3.
Table 3: Main Differences Between Appointments in the 1981 and 1995 ACE
Conditions of Engagement
1981 ACE Conditions
Performance duties
As agreements A(2) and B(2)
Least detailed design services
Abridged duties
No requirement to produce coordination
drawings
Less detailed design duties
(How is coordination of design to be
achieved?)
Normal duties
Roughly equivalent
(Coordination to be addressed
separately)
Full duties
Includes coordination drawings
Most detailed design duties
Additional services
List of additional services to be agreed
with the consulting engineer
Should facilitate coordination drawing
without major re-routing
SUMMARY
The designer is the party who is required to make the choice. Complete
design expertise rarely lies with a single party.
If allocation of design responsibility between the parties is not clearly
described in tender documentation, this can lead to disputes.
The use of abridged duties from the 1981 ACE conditions agreement 4A
or their current equivalent needs very careful consideration. When
engaging a design-only building services engineer under abridged
duties, it is very important to have a clear definition of deliverables
expected from him or her.
It is important to appoint the building services engineer at the same time
as the architect and the structural engineer.
Page 10
PART 3, SECTION 2
Having established where the responsibility for design can lie, the next part of
this section deals more specifically with the coordination of design, its
potential impact on a project and the importance of recognizing appropriate
procurement strategies to deal with this impact.
INTRODUCTION
This section deals with design coordination. It is important to recognize the
distinction between design coordination and coordination of the
installation. Whilst coordination of the installation (which is concerned with
the planning and sequencing of the works on site) is extremely important, it is
generally considered to be the principal contractors responsibility and is
therefore not covered here.
3.2.2.2
Page 11
PART 3, SECTION 2
Page 12
PART 3, SECTION 2
Page 13
PART 3, SECTION 2
coordination drawings during the design and construction stage of the project
(see 3.2.1).
Whatever form of agreement is used, design responsibilities should be clear
and unambiguous. An express definition of the quality and quantity of
information to be provided by the designer should be included.
(b) Building services contractors contract
It should be clear if the building services contractor has a duty to coordinate
its work and/or the work of others into the overall design. Also, it should be
clear if the building services contractor is the lead coordinator. Ambiguity can
lead to a dispute. The contract should state whether the building services
contractor has any design responsibility (see 3.2.1).
If the building services engineer has design coordination liability and he or she
intends to delegate to the building services contractor(s), the following factors
need to be clear:
(c) Delegation under the contract
The designer needs to be sure that the terms of appointment allow this or that
the client is in agreement with them.
(d) Tender/contract documentation
Documents need to be clear on the extent of coordination to be undertaken by
the building services contractor and sufficient time must be allowed in the
programme to perform the task.
Page 14
PART 3, SECTION 2
(e) Ability
Checks should be made to ensure that the building services contractor has
sufficient experience and resources to undertake coordination duties. A
method statement should also be obtained, detailing how the building services
contractor will undertake the process of design coordination.
(f) Computer Aided Design (CAD)
Where the scheme is designed on a CAD system, the building services
contractor should have a compatible system.
(g) Programme
There should be sufficient time within the overall programme of the works for
the building services contractor to properly undertake coordination of the
design.
(h) Establishment of the lead coordination contractor
Where possible, a lead coordination contractor should be appointed. It is
unwise to have a fragmented contractual arrangement with several contractors
undertaking design coordination work, none of whom are liable for the overall
design coordination.
3.2.2.5
Page 15
PART 3, SECTION 2
Page 16
PART 3, SECTION 2
should be responsible for the design and coordination associated with the
change. The client should be advised that the disadvantage with this option is
that there is no independent check that the equipment complies with the
specification. If the building services contractor suddenly takes on this design
responsibility it must be reflected in its terms of contract. The associated
changes to warranty agreements must also be made. However, the cost of
these changes may prohibit the proposed change of equipment.
(b) Appointment of specialist installers
Depending on the type of project, a large element of the building services
works may consist of many specialist installations. Examples of such
installations include medical gases, lifts, BMS, refrigeration and sprinklers. It
is usual for the specialist companies to provide design information and this
information must be incorporated into the works to ensure a properly
coordinated design is achieved. One of the problems with this, however, is
that the amount of coordination required may vary substantially from
specialist to specialist.
Ideally, where the specialist companys input is significant to the project, they
should be appointed at a stage which avoids assumptions being made
regarding the specialists requirements. Such assumptions can often turn out
to be incorrect.
If a specialist cannot be appointed at an early stage, allowance should be made
within the programme for the specialist to develop its design, and for this to be
coordinated with the overall design.
(c) Variations/changes to the works
Variations and changes to the works can have a significant impact on the
design coordination depending on their scope and timing. Such alterations
should be carefully considered.
3.2.2.7
LEGAL POSITION
The legal position with regard to design coordination cannot be considered in
any depth within this section. However, the law related to coordination is
considered briefly below.
(a) Express terms of the contract
The appointment of the building services engineer should clearly establish
whether there is a responsibility for design coordination. It is recommended
that the appointment of the building services engineer should be under the
appropriate ACE form of agreement.
Many of the standard forms of building contract deal adequately with
materials and workmanship requirements but fail to address, in sufficient
Page 17
PART 3, SECTION 2
SUMMARY
Recognize the importance of design coordination within the
procurement strategy.
Documentation
responsibilities.
Page 18
should
clearly
identify
design
coordination
PART 3, SECTION 2
INTRODUCTION
There are many criteria to be considered in the appointment of a building
services contractor, and different clients will put different emphasis on each
criterion. The lowest tenderer may not always provide the client with the best
value for money and there may be more important priorities to consider than
simply the initial build cost. The client may prefer to appoint a building
services contractor who can:
build to the quality and standard required;
provide the resources to condense the contract programme;
take the lead in design coordination;
provide a design service; or
provide a lower whole-life cost.
The prioritization of the criteria to suit the clients overall objectives
ultimately influences how the appointment of the building services contractor
is conducted.
3.2.3.2
Page 19
PART 3, SECTION 2
PART 3, SECTION 2
PROCUREMENT OPTIONS
This section reviews how the building services contractors appointment fits
within the various project procurement strategies. A comprehensive review of
the overall project procurement options can be found in section 3.1 (The
Procurement Guide).
The timing and contractual basis of the building services contractors
appointment largely depends on the overall project procurement route. The
clients and teams view on the benefits of the various appointments discussed
earlier will also influence this.
The building services contractor is generally appointed under a domestic
sub-contract or package arrangement under a principal contractor. The project
team should try to ensure that the terms of the appointment are no more
onerous than those of the main contract. The appointment of the building
services contractor under the main contract procurement routes is considered
below.
(a) Traditional procurement: where the building design is complete before
the principal contractor is appointed
The most commonly used procurement route is the traditional route of complete
design prior to tender with either bill of quantities or pricing schedules tendered
Page 21
PART 3, SECTION 2
Design stage
Inception and
feasibility
stage
Outline and
scheme
design stage
Full design
stage
Advantage
The client would have complete access to the building
services contractors specialist knowledge.
Page 22
PART 3, SECTION 2
Design stage
Inception and
feasibility
stage
Outline and
scheme
design stage
The client and the clients design team have less control
over final design
Full design
stage
Disadvantage
Page 23
PART 3, SECTION 2
PART 3, SECTION 2
At stage one a schedule of rates and preliminary costs is agreed. These are
then used at stage two to build up the contract sum. However, problems
occur when a sum at stage two cannot be agreed. This method usually
results in a higher contract sum than other methods. The building services
contractor is then required to enter into a domestic sub-contract with the
principal contractor.
To summarize, the choice depends on the amount of control the employer
wishes to maintain, balanced with the cost. The employers choice usually
depends on the amount of input and the size of the building services contract.
Personal preference for a particular building services contractor may also be a
factor.
If the building services element is very large, it may be more appropriate to
appoint the building services contractor as the principal contractor where it
has the necessary management skills to undertake this role.
If the employer wants to retain control over the tendering process and selects
the building services contractor, a number of options should be considered in
relation to the number of sub-contracts required and the timing of the
appointment, in relation to the principal contractors appointment.
(i) Number of sub-contracts: tender mechanical and electrical works as
separate sub-contracts
In order to tender the mechanical and electrical sub-contracts (or even
sub-divisions of these) the contract must be of sufficient size to negate the
efficiencies that would be gained by having a single sub-contract.
(ii) Timing in relation to the principal contractor appointment
Pre-tender the building services sub-contract(s)
This allows selection to be made prior to the appointment of the principal
contractor. It is particularly useful when the building services contractor
is required to take on design liabilities and its early input is required.
Tender the building services packages after the principal/main contract
This allows the principal contractor to comment and, if necessary, object
to the design teams proposed tender list prior to the works being
tendered. However, the principal contractor must be prepared to enter
into a domestic sub-contract arrangement with the successful building
services tenderer. A prime-cost sum could be included in the contract
documents for the building services installer at tender stage to provide the
principal contractor with the opportunity to price its overheads and profit
and preliminaries.
This method allows the principal contractor to be appointed ahead of the
building services element. It is particularly useful to allow time for the
building services engineer to complete work on the building services
design prior to tendering where this is not as advanced as the main works
design.
Page 25
PART 3, SECTION 2
PART 3, SECTION 2
Page 27
PART 3, SECTION 2
experience and input to ensure that the installations are properly controlled,
coordinated and programmed.
3.2.3.5
TENDERING
The main objective of any tendering process is quite simply to employ a
contractor. However, this is not the only objective. If it were, the client would
only have to invite the first contractor professing to have the required skills to
start work as and when it was convenient to proceed.
The aims of the tendering procedure can therefore be summarized as follows:
to assess the skills of the contractor;
to translate to the contractor through the tender documentation all the
project information, including the clients objectives, required to form
the contract; and
to obtain a competitive quote.
The selection of building services contractors for interview, tender or
negotiation is often made by committee. The ability of the quantity surveyor
to have a positive input into this process so that an appropriate selection is
made is very important. It is also important to ensure that the contractors
considered at an early stage are financially sound; are of appropriate size and
status; have the work capacity to undertake the project; and are sufficiently
committed to offer a competitive price.
(a) Short listing building services contractors
The following options can be considered when drawing up the short list of
tenderers:
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PART 3, SECTION 2
Page 29
PART 3, SECTION 2
quality of work;
previous experience;
size of company (a companys turnover should be scrutinized in relation
to the proposed contract value and programme);
insurance cover;
health and safety experience/record;
previous record of performance preferably supported with a client
recommendation;
financial stability;
size of previous projects and the outcomes;
CVs of the key personnel;
company location;
necessary specialist skills e.g. planning, commissioning; and
what trades the building services contractor has in-house and which will
be sublet.
(e) Preliminary enquiry
Once a preliminary list has been collated, the individual tenderers should be
issued with a scope of work and project programme. They should then be
asked if they are willing to tender. This should establish the current workload,
who is likely to carry out the work and the likely enthusiasm of the qualified
tenderers. It is wise to have a pre-tender meeting with the selected tenderers at
this stage. This gives the whole team a final chance to assess the building
services contractors prior to the tender documents being sent out.
(f ) Length of tender list
The number of building services contractors finally asked to submit a tender
should relate to the type of project, the complexity of the project and the
contractors responsibilities under the proposed contract. Guidance on
selecting a building services contractor can be found in the Code of Practice
for the Selection of Sub-Contractors. Generally, the more complex the
contract, the fewer tenderers are required. The complexity does not cover just
the construction work but also any design and/or design coordination
responsibilities which are devolved to the building services contractor.
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PART 3, SECTION 2
Page 31
PART 3, SECTION 2
Tender documentation which does not fulfil these criteria can lead to
confusion and to a proliferation of claims once the contract is awarded.
Section 3.2.4 explores tender documentation more fully.
(c) Coordination brief
A coordination brief, including a definition of terms from the project team to
the building services contractor, must be included in the building services
contractors contract. An example of a method of identifying and allocating
design and coordination responsibilities is illustrated in table 2 (see section
3.2.1.4). This type of table should be included as part of the contract
documents and professional appointments.
The design team must plan the interface of the building services contractor
with the other building trades, starting at the initial design stage. The earlier
the building services contractor is introduced into the design process, the more
likely it is that problems related to coordination of services and the physical
limitations of the structure can be avoided.
It is far cheaper to resolve these problems during the design period than run
the risk of escalating variations and claims for delay and disruption. In
addition, if the building services contractor is appointed early, it can advise on
services loadings, space planning, alternative schemes, coordination, interface
with the building trades, programming and value engineering (for guidance on
early appointment see section 3.2.3.2).
(d) Duties and responsibilities
The building services contractors responsibility for design, coordination,
commissioning, drawing requirements, etc. should be clearly defined in order
to avoid disputes occurring later in the contract.
The production of working drawings should not be confused with completing
the design (see 3.2.2).
It is also important that an appropriate response is obtained from the building
services contractor to ensure that it fully understands its role and
responsibilities.
The use of detailed method statements and a signed-off coordination brief at
tender stage on a service-by-service basis can often avoid many problems.
Those managing the project require an understanding of coordination. They
need to know which elements of which particular services are critical to the
other building trades.
In more complex installations, where the use of building management systems
form a major element of the services, it should be understood at the outset as
to how the building services contractor is intending to install/commission and
demonstrate its work.
Page 32
PART 3, SECTION 2
Page 33
PART 3, SECTION 2
3.2.3.7
SUMMARY
Assess the principal contractors ability to manage the building services
installation.
Ensure selection is made in a methodical way and that the building
services contractor is of an appropriate size and ability in relation to the
project requirements.
Only allow appropriate number of building services contractors to
tender.
All tenderers should confirm their willingness to tender.
The chosen procurement route should reflect the complexity of the
project.
Determine at a very early stage the timing of the contractor appointment
to suit the clients procurement objectives.
Decide at an early stage who will control the appointment of the
building services contractor.
Ensure adequate consideration is given to the scope of the building
services contractors appointment, including the design and
coordination role. The importance of design responsibility, size,
complexity and the degree of control required by the design team should
be recognized.
Consider the elements of risk and consider who is best suited to take
these (using recognized risk-management techniques). It may be
desirable to keep the decision-making process with the design team.
INTRODUCTION
The aim of this section is to identify the problems associated with the
production of tender documents for the procurement of building services and
to develop potential solutions. When inadequate tender documents are
produced it is evident that the tender submissions will be of an equivalent,
poor standard. As a result, the tender returns are likely to be heavily quantified
technically, commercially and contractually. Poor tender documentation will
also give rise to inconsistencies between individual tender returns which
makes initial comparison of the bids on a like-for-like basis virtually
impossible. The ability to retain control over post-tender variations will also
be lost if the provision for such control is not adequately covered in the tender
process and defined within the contract.
Page 34
PART 3, SECTION 2
Page 35
PART 3, SECTION 2
coordinate the building services works with other trades is central to achieving
a trouble-free contract.
The design teams responsibilities must be clearly identified within the tender
documents. If the project is fully designed, the building services contractor
may have no design responsibility. However, detailed design is generally still
required. This switch in design lead usually occurs with specialist
sub-packages such as the BMS, fire alarms, and so on which require further
design input. The other extreme occurs when only a performance specification
is produced by the client-appointed building services engineer and the
building services contractor is responsible for the design.
As the building services packages can provide the main arena for
confrontation throughout the projects life, it is important that the tenders are
analyzed in a professional manner. Once all technical queries are satisfactorily
resolved by the design team, the quantity surveyor is the most suited team
member to undertake a complete commercial appraisal of the submitted
tenders and provide a clear recommendation to the client as to the successful
tenderer. The pros and cons of this approach are discussed in section 3.2.4.5.
3.2.4.3
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PART 3, SECTION 2
Conditions of contract
The type of contract, for example JCT 98, incorporating any required
amendments. Where the sub-contract conditions are to be negotiated
between the principal contractor and sub-contractor these can have a
significant effect on price. This is difficult for the employer to control.
Precedence of documents
Somewhere within the tender documents the hierarchy of the documents
should be stated. This will help relieve some contractual conflict.
Warranties
The wording of the preferred warranty should be provided within the
contract documents. If a standard wording is to be used, this should be
stated, e.g. COWA/F, COWA/P&T, MCWA/F or MCWA/P&T. A
design warranty may be required between the client and the
sub-contractor.
COWA/F, P&T = Collateral warranty for funder, purchaser and tenant
MCWA/F, P&T = Main contractors collateral warranty/funder,
purchaser and tenant
Bond/parent company guarantee (PCG)
The preferred wording of any bonds/PCGs should be contained within
the contract documents.
Form of tender
The form of tender.
PI insurance requirements
PI insurance is only required if design responsibility lies with the
building services contractor. With packages such as lifts, product
liability insurance may be acceptable.
Programme
The overall project programme should be included within the tender
documents to provide the building services contractor with an idea of
how its works will be integrated with the other trades. Along with the
programme a key date schedule should be included. The tenderer should
be asked to produce an outline programme to be submitted with the
tender.
Attendances
If the building services contractor is to provide any attendances on other
trades this should be quantified and described within the tender
documents. Likewise, it should be checked that any attendances
required by the building services contractors from other trades are
detailed in the appropriate documentation.
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PART 3, SECTION 2
3.2.4.4
PRICING DOCUMENTS
(a) Pricing schedules
Historically, the building services contractor has a close relationship with the
building services engineer, with the building services engineer producing all
the tender documents inclusive of a pricing document. This can still occur and
so each consultants scope must be analyzed to assess who is to provide the
pricing documents. This avoids the risk that two different pricing documents
(or worse none) could be contained within the tender documents. It is good
practice for the quantity surveyor to get an early draft of the specification and
edit out the contradictions between the building services engineers
specification and the pricing documents/project preliminaries. Once this has
happened, a draft pricing document can be produced and agreed with the
building services engineer. By discussing the format of the pricing document
openly with the building services engineer confidence is generated between
the parties that everything will be covered.
The pricing schedule splits the specification into various headings under
trades or elements. The tenderers should, therefore, submit a fully completed
pricing schedule which breaks down their lump sum tender into various
headings that should correspond to the sections of the specification. By
creating the pricing schedule in this format everyone knows and agrees the
scope of work which is included within each heading. The pricing schedule
should also contain a statement of the contractors rates used within the tender
inclusive of overheads and profit. If this is not clear, a breakdown should be
requested. This breakdown must show the build up to the contract price
including all tender adjustments.
When the analysis of the submitted pricing schedules has identified the
tenderers who are likely to be considered further, a fully quantified schedule
of rates should be requested from each of the tenderers under consideration. It
should be detailed within the pricing document how long the tenderer will
have to provide the fully quantified schedule of rates. This will depend on the
programme available and is usually two to seven days from a request being
made by the quantity surveyor.
It is critical that any recommendation takes proper recognition of the tenderers
schedule of rates (see section 3.2.4.9).
Mechanical contractors usually sub-contract a larger proportion of their
works than electrical contractors and therefore more lump sums can be
expected within the pricing schedule. If the project is packaged, a fully
quantified schedule should be available since the number of sub-contractors
will be minimal. The schedule of rates should always add up to the headings
in the pricing document in order to avoid doubt at a later date if disputes
arise.
It is imperative that each contractor being considered achieves parity of tender
to enable a clear and unambiguous recommendation to be made to the client.
This occurs when all engineering aspects have been verified by the building
Page 38
PART 3, SECTION 2
services engineer and the quantity surveyor is satisfied with the pricing and all
other commercial aspects of the tender. If, through the negotiations, anything
has changed from the tender documents, each tenderer must be made aware of
this change to maintain parity of tender. Once all this has occurred, the client
can be made aware of the final decision through a combined report from the
full design team. If this procedure is not followed there is the potential for
post-tender problems regarding supply and performance under the contract.
A section dealing with the tenderers overheads and profit and daywork rates is
required in the schedule. There are so many different rates that could be used
within the building services trades that it is recommended the quantity
surveyor asks the contractor to submit the latest trade rates that will be
employed on the contract.
In situations where there are complex interfaces in existing structures it is
beneficial to request a schedule that only identifies quantified material costs,
with labour rates and a labour histogram provided separately. This enables
post-contract costs to be controlled in an alternative manner while also
providing a management tool to monitor on-site resources.
An example of a typical pricing document is given in appendix A.
(b) Bills of quantities
Bills of quantities should only be used when a fully coordinated design and
specification has been prepared by the designers and a fixed lump sum cost for
the works is required. Bills of quantities are the traditional method of
procuring construction work within the UK where time permits. The specific
problems associated with the procurement of building services does not
exclude the use of bills of quantities, but the following are some of the issues
that should be reviewed to ascertain the benefit of producing bills:
The package may only be partially designed to allow the building
services contractors to be responsible for the detailed design. In this case
bills of quantities should not be considered.
Design development may still be in progress when the bills are started,
necessitating variations as soon as the tender process starts. The cost
certainty intended by the use of bills is immediately lost when variations
start. If the design varies greatly during the contract period the building
services contractor could have a case for a re-rate or claim.
The production of bills introduces the need for detailed design
coordination between the various consultants and, consequently, the
potential for errors and omissions. Assumptions may often be forced on
a quantity surveyor producing the bills to a deadline where this is not
clear. This would again require variations to be issued.
It should be considered whether the building services contractor actually
benefits from the production of bills. A bill description can contain so
much detail that the price is developed separately in the contractors
The Surveyors Construction Handbook
Page 39
PART 3, SECTION 2
PRICING OPTIONS
When dealing with pricing options there are two basic possibilities that can
occur:
(i) Options that are included in the tender
This often takes the form of a different finish to an exposed part of the
services installation. In the body of the pricing document the diffusers
could be priced as powder-coated steel but as an option, the extra
over-costs for a stainless steel finish can be provided.
(ii) Options that the tenderer may put forward
Directions should be given at tender stage as to whether or not contractors
options are required. If so, the tenderer can identify these options within
Page 40
PART 3, SECTION 2
Disadvantages
Time consuming
the document which may take the form of alternative suppliers, reduced
programme or variations on the contract clauses. This can be a cheaper
supply or where the after-sales support services in an area is better
provided for by an alternative supplier. It is for the building services
engineer to ascertain if the alternative achieves the specification. Any
option must include the full cost of ensuring design compliance. This
could be in the form of additional fees or additional coordination costs.
Both of these must be catered for in any tender document while still
maintaining a like-for-like comparison for tender analysis purposes. The
easiest method of obtaining this is by assuring that each tenderer prices what
will be called the base option. Each alternative can then be given as an
adjustment to the base scheme.
Clear direction should be provided within the tender document on how and
where options should be priced.
3.2.4.6
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PART 3, SECTION 2
If the design changes occur during the tendering period, addendums to the
documents should be sent out to each tenderer. The addendum should state if
the tender period is extended and each tenderer must acknowledge receipt of
the addendum. If mid-tender interviews have been arranged, the addendum
can be handed over and explained at this time. The addendum must still be a
precise document, clearly identifying the changes and scope, as it will form
part of the contract.
Each addendum should be individually referenced, regardless of when they
are issued, so an audit trail is apparent. If the quantity surveyor believes that
addendums provide non-essential design changes, these should be priced
separately. By providing a separate price for non-essential alterations, the
client and design team have the option of whether to accept the addendum.
3.2.4.7
TENDER CLARIFICATIONS
Tender clarifications can result in additional information being supplied to the
building services contractor. Each question from the building services
contractor should be sent to the quantity surveyor for distribution to the design
team. The response from the relevant consultant should be returned to the
quantity surveyor who distributes to the tendering companies. All tenderers
should receive all the tender questions so that each is tendering on the same
information. A single point for receiving, answering and managing the queries
is advisable. As the manager of the tender documentation, the quantity
surveyor is best placed to manage queries.
On receipt of a query, the name of the organization asking the query should be
removed and the question given a reference. Queries can then be forwarded on
to the appropriate consultant for comment. The quantity surveyor should read
each query and assess if another tenderer has asked it previously. A master
record of whom asked what question should be kept in order to provide an
audit trail for later reference.
3.2.4.8
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PART 3, SECTION 2
EVALUATION OF TENDERS
To ensure parity of tender, the specification should be priced in its original
form, with alternatives given separately. A comparison of the pricing
schedules supplied by each tenderer must be completed in conjunction with
the tenders technical information, including all addendums and clarifications.
The building services engineer should check each submission to establish the
tenderers compliance with the specification while the quantity surveyor
should establish their compliance from a commercial viewpoint.
Evaluation should not be completed without reference to the building services
contractors schedules of rates. The quantity surveyor must take a view on the
competitiveness (or otherwise) of the submitted schedules as they may not
bear comparison with the competitiveness of the tenderers lump sum. This is
particularly relevant if there are large value provisional sums that will be
measured and valued using the schedules. Detailed analysis prior to award is
also essential if the schedules are to be bound into the contract as a contract
document.
During the review process it will probably be necessary to clarify points with
the tenderers. This should be done through the quantity surveyor, as before.
Page 43
PART 3, SECTION 2
SUMMARY
Make sure there is only one pricing document which directly relates to
the specification.
Ensure the pricing schedule covers all the information required such as:
overheads and profit;
an all-in man hour rate;
daywork rates inclusive of percentage uplifts;
a fully quantified schedule of rates; and
opportunity to price for alternatives.
Ensure documentation is clear as to the method for managing tender
queries, identifying a single point of responsibility.
A clear procedure for managing addendums should be agreed by the
design team.
Careful analysis of the return tenders to obtain a clean unqualified bid on
which a clear recommendation can be made.
Page 44
PART 3, SECTION 2
Notes
1) Department of Environment, Transport and the Regions (1998).
Rethinking Construction. London: DETR.
2) Clinton, M. (1995). Legal Liabilities. (Paper for seminar: The Answer to
your Problems Design & Build).
3) Construction Industry Board (1999). Code of Practice for the Selection of
Sub-Contractors. London: Thomas Telford Publishing.
Page 45
General Items
a)
It is a pre-requisite that the following pricing summary is completed in full with every
item priced. Failure to do so will invalidate the tender submission.
b)
The following descriptions are not necessarily complete. The building services
contractor is referred to the tender drawings, specification and accompanying
documents for a full scope of work.
c)
The building services contractor is to include in its rates for any temporary works
considered necessary.
d)
The building services contractor is to include in its rates for all necessary fixings,
connections, fittings, bolts, etc. unless otherwise stated in this document.
e)
The building services contractor is deemed to have included in its tender for all items
of materials, plant, equipment and labour whether or not specifically mentioned or
shown in order to carry out the necessary works in accordance with good practice and
procedures.
f)
g)
The building services contractor is to take into account all the requirements of the
contract documents and should price accordingly within the relevant section of the
tender summary.
h)
Calculations of Preliminaries
j)
The contractor shall detail below, or provide a separate document, detailing the build
up to all the preliminaries items priced in the pricing document.
k)
The calculations shall show weekly rates, areas, periods of time, quotations and all
other details.
Part 3, Section 2
Appendix A ( 07/01)
Page 1
Schedule of Rates
a)
The contractor shall within 3 days of being requested, submit a fully priced schedule
of all items and quantities involved in the make-up of its tender. The sum total of the
schedule shall equal the price of the form of tender.
b)
All prices included in respect of equipment and building services contractors must be
supported by the appropriate quotations.
c)
The contractor is to detail its rates and percentages required for the following:
Percentage for overheads and profit on building services contractors _____ %
Percentage for overheads and profit on plant and equipment
if different from a) above _____ %
Percentage for overheads and profit on general materials,
if different from b) above _____ %
All-in man-hour rates inclusive of overheads, and profit ___
(Expand to include all trades)
Extra over the above rate for any non-productive overtime work _____
(Expand to include all trades)
Page 2
d)
The percentages and labour rates entered above will be deemed to include for all
contractors overheads, expenses, establishment costs, administration, off-site
services and all items of expenditure related to off-site management and profit.
e)
The percentages and labour rates above will be the same as used in the preparation of
the tender sum and schedule of rates.
f)
The schedule of rates shall be used for the purposes of pricing any future variations
and assisting in the calculation of interim valuation payments.
g)
If the contractor does not complete any of the above percentages or rates, they will be
deemed to be priced at NIL.
Part 3, Section 2
Appendix A (07/01)
Pricing Schedule
The following is a typical example of a pricing summary for a commercial office
development. It is intended to depict the detail required in the pricing summary and will
require amendment so as to be project particular.
Item
Item
Item
Item
Item
Item
Item
Switchboard reference
Item
Standby Power
Life safety generator installation incorporating skid
mounted heat exchanger installation and fuel
system, including all necessary hoisting/craneage
Item
Item
_________
To Collection
Part 3, Section 2
Appendix A (7/01)
Page 3
Item
Item
LV Distribution
Sub-mains power distribution cables
Item
Item
Item
Item
Item
Item
Lighting Installation
Lighting installations, including luminaires, lamps,
louvres, final circuit wiring and cable containment
system as necessary to the following:
Office area lighting
Item
Lift lobbies
Item
Item
Item
Staircase lighting
Item
Item
Item
External lighting
Item
Item
_________
To Collection
Page 4
Part 3, Section 2
Appendix A (07/01)
Item
Item
Item
Protection
Fully automatic addressable analogue fire detection
and alarm system
Item
Item
Item
Alarm system
Item
Item
Item
Item
Item
Item
Shaver outlets
Item
_________
To Collection
Part 3, Section 2
Appendix A (7/01)
Page 5
Item
Utility switchroom
Item
Item
Data Installation
Telecommunications and data communications incoming
ducts and cable tray systems
Item
General:
Buildings work drawing
Item
Item
Item
Item
Item
Item
Item
Item
_________
To Collection
Page 6
Part 3, Section 2
Appendix A (07/01)
MECHANICAL INSTALLATION
Item
Item
Item
Item
Item
Item
Item
Item
Item
Item
Item
Item
Item
Electric showers
Item
Item
Overflow systems
Item
Item
Item
Item
Item
_______
To Collection
Part 3, Section 2
Appendix A (7/01)
Page 7
MECHANICAL INSTALLATION
(Continued)
Item
Item
Item
Filter system
Item
Item
Item
Item
Item
Item
Item
Item
Item
Item
Item
Item
Item
Item
__________
To Collection
Page 8
Part 3, Section 2
Appendix A (07/01)
MECHANICAL INSTALLATION
(Continued)
Item
Item
Item
Item
Item
Item
Item
External louvres
Item
Item
Item
Item
Flexible connections
Item
Item
Item
Humidifiers
Item
Acoustic connections/attenuation
Item
Item
Item
_________
To Collection
Part 3, Section 2
Appendix A (7/01)
Page 9
MECHANICAL INSTALLATION
(Continued)
Item
Item
Item
Gas meters
Item
Item
Sprinkler installation
Item
Item
Item
Hosereel system
Item
Condensate system:
Condensate drains from various equipment
Item
Item
Item
Item
Item
Item
Item
_________
To Collection
Page 10
Part 3, Section 2
Appendix A (07/01)
MECHANICAL INSTALLATION
(Continued)
Item
Item
Item
Item
Item
Item
Item
General:
Trace heating to pipework system as necessary
Item
Item
Item
Item
_________
To Collection
Mechanical and public health contractors design
and installation drawings including
manufacturers/suppliers shop drawings as necessary Item
Builders work drawings
Part 3, Section 2
Appendix A (7/01)
Item
Page 11
MECHANICAL INSTALLATION
(Continued)
General (Continued):
As installed documents, drawings and O&M
manuals in the required format as specified by
the document production manager
Item
Item
Item
Item
__________
To Collection
Page 12
Part 3, Section 2
Appendix A (07/01)
Rainwater installation
Item
Item
Item
_________
To Collection
Part 3, Section 2
Appendix A (7/01)
Page 13
PART 4, SECTION 1
Page 1
PART 4, SECTION 1
Page 2
PART 4, SECTION 1
4.1.2.2
Page 3
PART 4, SECTION 1
4.1.2.4
Page 4
PART 4, SECTION 1
4.1.2.5
4.1.2.6
Page 5
PART 4, SECTION 1
4.1.2.7
4.1.2.8
4.1.2.9
4.1.2.10A
Page 6
PART 4, SECTION 1
4.1.2.10B
4.1.2.11
Page 7
PART 4, SECTION 1
PART 4, SECTION 1
the Contractors request and upon the issue of such certificate the Contractor
shall be deemed to have undertaken to complete any outstanding work in that
part of the Works during the Defects Correction Period.
Note: The ICE Design and Construct Clause 48(3) provisions in respect of
operation and maintenance instructions are not present in the 7th edition.
4.1.2.12
4.1.2.13
4.1.2.14
4.1.2.15
Page 9
PART 4, SECTION 1
Under this form, the sub-contractor must complete within the period for
completion specified in the Third Schedule (clause 6.1). The schedule could
provide that such a period is to end prior to substantial completion of the
main contract works. However, the sub-contract does not provide an
effective means to establish when completion of the sub-contract works has
been achieved. Therefore, unless the parties otherwise agree, it is probable
that completion of the sub-contract works may not be acknowledged until
substantial completion of the main contract works and only then by the
implication that the main works have completed. If the sub-contract works
are completed prior to main contract works completion, clause 13(1) of the
FCEC blue form places the sub-contractor with an absolute obligation to
maintain the sub-contract works until substantial completion of the main
works.
4.1.2.16
Page 10
PART 4, SECTION 1
Page 11
PART 4, SECTION 1
PART 4, SECTION 1
Page 13
PART 4, SECTION 1
(d) the period for final review of extensions of time expires 12 weeks from this
date (clause 25.3.3).
These factors also impact upon sub-contractors. For example, the
sub-contractors protection under the main contract all-risks policy ends.
In addition to mechanisms under the construction contract, the issue of a
certificate of completion may have direct impact upon third parties, such as
for example, to bring an end to obligations of a surety in respect of a guarantee
or performance bond.
Page 14
PART 4, SECTION 1
4.1.4.2
PERFECT COMPLETION
(a) Here completion would not be granted until all outstanding works are
completed and defects rectified.
(b) This is not a favoured option in the UK, and the Courts have given
credence to the view that it is a difficult, if not impossible, yardstick to apply.
Nonetheless it is closer to the model applied in other European countries, and
an increase in the use of latent defects or build insurance (such as the
mandatory decennial type liability in France) may bring a move towards fault
free buildings at completion.
4.1.4.3
TWO-STAGE COMPLETION
(a) Various models have been suggested for a two-stage process for the
certification of completion.
(b) Clearly, the intent is to divide into two the numerous benefits and obligations
which fall upon the contractor and employer at completion (see 4.1.3).
(c) The first stage may be denoted by the issue of a provisional certificate and,
by example, may be due when beneficial occupation is achieved or achievable.
Page 15
PART 4, SECTION 1
(d) At this point, the employer would re-take possession and insurance risks
are transferred.
(e) The second stage would be perfect completion of the works. Only at this
point would the contractor be released from liability for liquidated and
ascertained damages. This would also mark the commencement of the defects
liability period. It is thought that the first release of retention would also not
occur until this point.
4.1.5 Definitions
Generally, as can be seen in 4.1.2, the standard forms of contract do not
provide definitions of what constitutes practical completion, although the ICE
Minor Works form contains a useful development of the term by stating it is
contingent upon the works being fit to be taken into use or possession.
(a) Fault Free Completion
Various definitions are available from decided cases and the principal
textbooks on construction law. Some definitions lean towards perfect, fault
free completion:
One would normally say that a task was practically completed when it
was almost, but not entirely finished; but Practical Completion suggests
that is not the intended meaning and what is meant is the completion of
all the construction work that has to be done.4
And in the same case:
The defects liability period is provided in order to enable objects not
apparent at the date of practical completion to be remedied. If they had
been apparent, no such certificate would have been issued.5
(b) Completion for All Practical Purposes
The above quotations need to be compared with the opinion expressed by
Salmon LJ when the same case had earlier been heard by the Court of
Appeal:
The obligation on the contractors under clause 21 to complete the
works by the date fixed for completion must, in my view, be an
obligation to complete the works in the sense in which the words
practically completed and practical completion are used in clause 15
and clause 16 of the contract. I take these words to mean completion for
all practical purposes, i.e. for the purpose of allowing the council to
take possession of the works and use them as intended. If completion in
clause 21 meant completion down to the last detail, however trivial and
unimportant, then clause 22 would be a penalty clause and as such
unenforceable.6
Page 16
PART 4, SECTION 1
Page 17
PART 4, SECTION 1
In the same case, the key element for defining a failure to achieve substantial
performance was emphasized to be:
the general ineffectiveness of (the work) for its primary purpose 11
Substantial performance has been held to have occurred even though the
works were in part defective. The defendants were held liable for the sum
claimed less a deduction based upon the cost of making good the defects:
The question here is whether in a contract for work and labour for a lump
sum payable on completion the defendant can repudiate liability under
the contract on the ground that the work though finished or done is in
some respects not in accordance with the contract I think on the facts
of this case the work was finished in the ordinary sense, though in part
defective 12
It has recently been held by the Court of Appeal in Hong Kong that practical
completion should be interpreted in a similar manner to the doctrine of
substantial performance.
We return to the issue of practical completion which we cannot
distinguish from substantial performance.13
The judge reached his conclusion that practical completion had not been
achieved in circumstances where, by reason of the failure to modify the
sprinkler system, the work contracted for was, in the words of Somervell LJ in
Hoenig v. Isaacs, neither finished nor done in the ordinary sense.14
The direct connection between cases dealing with substantial performance and
the definition of practical completion is, however, to be treated cautiously.
It may be doubted whether cases concerned with substantial performance
are relevant to the determination of practical completion as the term is
used in the standard form contracts where the event is not directly related
to payment obligation (as in the contract considered by the Hong Kong
court) but rather with consequences such as liability for liquidated
damages, repossession and the release of retention.15
(f) Substantial Completion
Definitions of the term substantial completion appearing in the ICE forms
have been similar to those applied to practical completion.
This term (or equivalent words) used in clause 48(1) of the ICE 7th Edition
form substantially completed now appears consistently throughout the
Conditions, inter alia, in clauses 43 and 47. The term is not defined, but the
expressed reference to outstanding work to be completed within the Defects
Correction Period indicates a state plainly falling short of literal completion.
Neither is there any definition of outstanding work. There is no reason to
limit it to work that has not been carried out. It may include work which is
Page 18
PART 4, SECTION 1
KEATINGS ANALYSIS
Practical Completion is perhaps easier to recognize than to define. No clear
answer emerges from the authorities as to the meaning of the term. It is
submitted that the following is the correct analysis:
(1) The Works can be practically complete notwithstanding that there are
latent defects;
(2) A Certificate of Practical Completion may not be issued if there are
patent defects. The Defects Liability Period is provided in order to
enable defects not apparent at the date of Practical Completion to be
remedied;
(3) Practical Completion means the completion of all the construction
work that has to be done;
(4) However, the Architect is given a discretion under clause 17.1 to
certify Practical Completion where there are very minor items of work
left incomplete, on de minimis principles.18
4.1.5.2
HUDSONS APPROACH
It is desirable to be clear as to the precise meaning of completion in a time
obligation. There is surprisingly little English authority on the point, but it is
clear that the requirement will be less rigorous than in other contractual
contexts. Usually it will mean bona fide completion free of known or patent
defects so as to enable the owner to enter into occupation. The words
practical or substantial in the English standard forms probably do no more
than indicate that trivial defects not affecting beneficial occupancy will not
Page 19
PART 4, SECTION 1
prevent completion (the more so, of course, if the contract provides for a
maintenance or defects liability period).19
In the last resort the degree of required completion needed to discharge the
contractors obligation to complete to time will be a matter of interpretation,
but can be expected to differ from other aspects of the contractors obligations
to complete. In English standard forms of contract employing liquidated
damages clauses for delay, this is often expressly described as practical or
substantial completion, but there is no reason to suppose that these
expressions mean anything very different from the word completion
simpliciter when used or implied in the context of completion to time. It is
submitted that this will, in the absence of contrary indication, mean when the
work reaches a state of readiness for use or occupation by the owner, and free
from any known omissions or defects which are not merely trivial.20
4.1.5.3
REMEDYING DEFECTS
Another ingredient which it is suggested affects practical completion is the
extent of disruption an employer would incur in allowing access to a
contractor to remedy defects or complete works outstanding after the issue of
a practical completion certificate.
Furthermore, an employer must wish to reduce to the very minimum the
disruption that is caused by the presence of works going through a
snagging list and an architect should not issue a certificate of practical
completion until all such work has been completed unless the employer
waives the right to insist upon it being done, and the contractor is willing
to continue to work in an occupied building and suitable arrangements
have been made for the insurance.21
Page 20
PART 4, SECTION 1
Page 21
PART 4, SECTION 1
4.1.6.3
4.1.6.4
Page 22
PART 4, SECTION 1
If any substantial part of the works has been occupied or used by the
Employer other than as provided in the Contract, the Contractor may
request in writing and the Engineer shall issue a Certificate of Substantial
Completion in respect thereof
(d) The New Engineering Contract (NEC) is also clear on this point, clause
35.3:
The Employer may use any part of the works before Completion has been
certified. If he does so, he takes over the part of the works when he begins
to use it
(e) It has been argued that since some standard forms expressly deal with this
subject as above, then those forms of contract which do not include similar
express provisions should be interpreted to the effect that no assumption of
deemed practical completion may be made upon occupation or use of part or
all of the works. In other words, the express requirements of the contract
should be considered to be exhaustive of the circumstances whereby practical
completion can be established.
(f) The JCT forms of contract, including JCT 98, do not expressly provide for
automatic practical completion upon use or occupation by the employer of a
part or whole of the works. On the contrary, clause 23.3.2 of JCT 98 provides
for use or occupation in circumstances where practical completion or partial
possession will not occur (see 4.1.6.5(a)).
(g) A number of cases have looked at this question. In Big Island Contracting
v. Skink,26 although the owners occupation of the building was not argued as
key to the determination of the issues, the Court held that it could not
distinguish practical completion from substantial performance. On the facts
of this case, the Court held that practical completion had not been achieved,
despite the fact that the defendants had been in occupation of the building.
(h) A somewhat different view was held in Hoenig v. Isaacs,27 where Lord
Denning said:
It is always open to a party to waive a condition which is inserted for his
benefit.
There, by entering into possession and using the fitted furniture, the employer
was held to have waived a condition precedent of entire performance and
could no longer rely on it.
(i) In English Industrial Estates v. George Wimpey28, the Court held that
occupation did not amount to completion.
(j) In spite of the employers tenant installing and using machinery and storing
large quantities of paper in parts of the works, the court of first instance and
The Surveyors Construction Handbook
Page 23
PART 4, SECTION 1
the Court of Appeal found that partial possession had not occurred and held
the contractor and his insurers liable for damage caused by a fire occurring
during the employers occupation.
(k) In an Australian case29, the contract allowed the employer to have access
before practical completion for the purpose of fitting out the building. The
contractor argued that as the liquidated and ascertained damages provision
gave no credit for this benefit, it could not be a genuine pre-estimate of loss,
and would fail as being an unenforceable penalty.
(l) The Court summarily rejected this argument. The contract contemplated
staged completion, and any occupation of the premises prior to practical
completion for fitting-out was a contractual right and not a benefit conferred
on the employer by delayed completion.
4.1.6.5
Page 24
PART 4, SECTION 1
Page 25
PART 4, SECTION 1
Notes
1. Clause 18.1.1 refers to partial possession.
2. William Tomkinson & Sons Ltd v. The Parochial Church Council of St Michael and
Others (1990) 8-CLD-08-01.
3. Matthew Hall Ortech Ltd v. Tarmac Roadstone Ltd (1997) 87 BLR 96.
4. City of Westminster v.. J. Jarvis & Sons Ltd (1970) HL, 7 BLR 64.
5. Ibid, at page 75.
6. Ibid, CA [1969] 1 WLR 1448, at page 1458.
7. H W Neville (Sunblest) Ltd v. William Press & Sons Ltd (1982) 20 BLR 78.
8. Emson Eastern Ltd v. EME Developments Ltd (1991) QBD, 55 BLR 114.
9. Ibid, at page 122.
10. Bolton v. Madheva (1972) 1 WLR 1009, at page 1013.
11. Ibid, at page 1015.
12. Hoenig v. Issacs (1952) 2 All ER 176, at page 179.
13. Big Island Contracting (HK) Ltd v. Skink Ltd (1990) CA of Hong Kong,
52 BLR 110.
14. Ibid, at page 115.
15. Commentary by Editor of Building Law Reports, 52 BLR, at page 112.
16. Engineering Law and the ICE Conditions, 4th edition, Max W Abrahamson,
at page 160.
17. Keatings Building Contracts, 6th edition, at page 590.
18. Hudsons Building and Engineering Contracts, 11th edition, at page 1109.
19. Ibid, at page 1130.
20. Commentary by Editors of Building Law Reports, 52 BLR, at page 111.
21. Rees & Kirby Ltd. v. Swansea City Council (1985) CA 30 BLR.
22. Chartered Quantity Surveyor June 1990 (ref Q/89/136).
23. George Fischer Holding Ltd v. Multi Design Consultants Ltd and Davis Langdon
& Everest & others (1998) CILL 1362.
24. Environment Agency v. Hilson Moran [2000] CA (unreported to date).
25. Big Island Contracting (HK) Ltd v. Skink Ltd (1990) CA of Hong Kong,
52 BLR 110.
26. Hoenig v. Issacs (1952) 2 All ER 176.
27. English Industrial Estates Corporation v. George Wimpey & Co Ltd (1973) CA 7
BLR 122.
28. Multiplex Construction Pty Ltd v. Abgarus Pty Ltd (1992) APCLR.
Page 26
A2
A2.1
A2.2
A2.3
Where appropriate (e.g. under design and build arrangements) the contractor
shall have satisfied all local authority requirements with regard to, for
example, refuse collection and postal address confirmation.
A3
A3.1
THE SITE
External works should be substantially complete so that the occupier has
unfettered access. Normally, all building impediments such as skips and site
huts should have been removed from the site, such that no potential safety
hazard remains present. (Note: Particular attention should be paid to this
when considering sectional completion for any part of the works.)
A4
A4.1
ENTRANCES
It is normally expected that the entrance to the premises and access way
would be clear and complete, sufficient for the client to operate for all intents
and purposes in a normal fashion.
A5
A5.1
STRUCTURE
Structural works should be complete and no part of the structure should be
unsafe.
A6
A6.1
CLADDING
The building should be wind and watertight and the cladding should be
properly secured. Under normal circumstances, roofs and claddings would
be tested by the elements. If, for some reason this has not taken place, then
the specification should include for water testing or, alternatively, an
instruction should be given to so test these elements.
Part 4, Section 1
Appendix A (4/98)
Page 1
Page 2
A7
A7.1
FINISHES
This is the area of works where most reasons for delay in the issue of a
certificate of practical completion tend to arise.
A7.2
A7.3
All the decoration works should be complete. For example, the reception
area and staircases should be finished, as should in general terms, the internal
areas. However, decorations incomplete to a store room in the depths of the
basement would not necessarily be considered as important.
A7.4
A8
A8.1
PLANTING
If, in the specification, external planting is included and it is acknowledged
that practical completion may take place during a period when undertaking
planting may be impractical, then the documentation should state this to
enable such works to be undertaken without detriment to the parties.
A9
A9.1
A10
A10.1
MANUALS
The requirement for the provision of operating and maintenance manuals and
as-installed drawings should be considered closely. Manufacturers
warranties may well be nullified if mechanical plant is not maintained in
accordance with their instructions during the warranty period. Particular
attention will be required to be paid to the CDM regulations which call for
the Safety File to be produced prior to practical completion.
Part 4, Section 1
Appendix A (4/98)
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Part 4, Section 1
Appendix B (revised 10/00)
Page 1
Part 4, Section 1
Appendix C (revised 10/00)
Page 1
PART 4, SECTION 2
Under common law, if one party to a contract is in breach then that party is
liable to the other for damages. The level of such damages has been
established by a number of Court cases.
Page 1
PART 4, SECTION 2
G 4.2.1.2
However, the level of damages payable at common law has never intended to
act as a penalty or deterrent but simply to ensure that, in respect of the
aggrieved party, he is, so far as money can do it, to be placed in the same
situation with regard to damages, as if the contract had been performed.1
G 4.2.1.3
Nor are such damages intended to recompense the aggrieved party for all
losses whatever their nature. In the case of Hadley v. Baxendale2 it was
established that damages ought to be of a kind which should be such as may
fairly and reasonably be considered either arising naturally, that is,
according to the usual course of things, from such a breach of contract itself,
or such as may reasonably be supposed to have been in the contemplation of
both parties, at the time they made the contract, as the probable result of the
breach of it.
G 4.2.1.4
Where building contracts contain clauses dealing with the entitlement of the
contractor to recover direct loss and/or expense for any delay or disruption to
the regular progress of the Works caused by the client or his team or other
designated causes, such clauses have been developed against this general
background.
G 4.2.1.5
G 4.2.1.6
The provisions of the loss and/or expense clauses are generally without
prejudice to any other rights and remedies which the contractor may possess,
and which he may wish to pursue through arbitration or the Courts. This
consideration is, however, outside the scope of this Section of the Handbook.
G 4.2.1.7
G 4.2.1.8
1
2
Page 2
PART 4, SECTION 2
work that was carried out it does not follow necessarily that all such costs were
properly incurred.
G 4.2.1.9
Thus, even if the form of contract refers to ascertaining the loss as does the
JCT form (see G 4.2.1.13) complete proof in the way of invoices or
verified cost records is unlikely to be available. Indeed, as outlined elsewhere
in this Section, the surveyor is not required to establish complete proof but
is instead required to use professional judgement. This should not, however,
detract from the critical importance of ensuring that proper and reasonable
records are maintained by the contractor and contract administrator.
G 4.2.1.10
The primary purpose of this guidance is not to provide a legal treatise on the
matter of claims but to provide practical comment on how to go about
determining, as reliably as possible, the contractors monetary entitlement.
G 4.2.1.11
The correct ascertainment of the amount of any direct loss and/or expense to
be reimbursed to the contractor requires sound knowledge and experience of
building practice, careful study of the conditions of the relevant contract and
an understanding of their legal application, together with knowledge of the
relevant and up-to-date case law. In addition, the person undertaking the
evaluation requires access to the best records and other information that is
available on that particular contract.
G 4.2.1.12
G 4.2.1.13
This guidance is based predominantly upon the provisions of the 1998 edition
of the Standard Form of Building Contract, published by the Joint Contracts
Tribunal referred to as JCT 98. The wording used in the form is either
identical, or very similar, to that adopted in many of the other forms published
by the JCT, for example the Works Contracts used in association with the JCT
Standard Form of Management Contract and the JCT Standard Form of
Building Contract with Contractor Design.
G 4.2.1.14
It should be noted that in this text extracts from printed forms are frequently
paraphrased. Readers therefore should in all cases check the precise wording
used in the particular form with which they are involved in practice,
particularly where the form is not one of those promulgated by the JCT. It may
even be that, although a JCT Standard Form has been used, particular clauses
have been amended.
G 4.2.1.15
Following the terminology used in the JCT forms, an event or failure which
gives the contractor grounds for seeking reimbursement of any resultant loss
and/or expense is referred to as a matter; whereas an event or failure which
Page 3
PART 4, SECTION 2
gives the contractor grounds for seeking an extension of time for the
completion of the works is referred to in this Section as an event (also
see G 4.2.3.2).
4.2.2 Definitions
G 4.2.2.1
G 4.2.2.2
DIRECT
The direct consequence of the act giving rise to the claim,1 or that which
flows naturally from the breach, without other intervening cause.2 Clearly
this word direct, when used in conjunction with the words loss and/or
expense, is a very restricting one and disqualifies all costs and/or expenses
that do not arise as a direct result of the matter under complaint. Thus, any
costs due, for example, to mismanagement, to other causes not recognized as
matters by the wording of the contract or to other concurrent delays should be
excluded from those reimbursable to the contractor as they are not the direct
result of the matter under consideration.
G 4.2.2.3
ASCERTAINMENT
The definition of this word should be seen in the context of the subject of the
ascertainment. Given that judgement is almost always called for (see G
4.2.1.5 and G 4.2.1.6) it follows that to ascertain can rarely mean to prove
comprehensively with invoices and records but rather to establish by the use
of such facts as are available and by the use of expert judgement.
4.2.3 Entitlement
G 4.2.3.1
LIMITATIONS
Appendix D provides a checklist of items on which entitlement is allowed
under JCT 98.
The contractors entitlement to reimbursement under the terms of the contract
should be determined as set out below:
(a) The loss and/or expense must arise directly as a result of one of the matters
referred to under the terms of the contract. Such matters do not usually extend
to the contractor underpricing the rates to be used in valuing variations. Thus,
losses arising from any such underpricing are not usually reimbursable.
1
2
Page 4
A & B Taxis Ltd v. The Secretary of State for Air (1922) 2KB 328
Saint Line Ltd v. Richardson Westgarth & Co (1940) 25 BLR 140 refers to the case only in passing
PART 4, SECTION 2
(b) Indirect costs i.e. costs not arising directly as a result of the matter under
consideration should be excluded. In this respect the link between cause and
effect is a vital factor.
(c) Costs incurred in respect of which the contractor has not compelled with
the conditions laid down in the contract in relation thereto cannot be dealt with
under the terms of the contract (but see G 4.2.1.6). For example, JCT 98
requires the contractor to make an application in writing to the contract
administrator as soon as it is reasonably apparent that disruption will occur as
a result of a matter referred to in clause 26 of that contract (or under clause 34
in the case of loss and/or expense arising from the discovery of antiquities).
For the contractor to be able to obtain reimbursement in accordance with the
contract he must first have complied with that provision (see G 4.2.3.3 for
more detailed advice on the validity of written applications).
(d) Reimbursement is restricted to loss and/or expense which the contractor is
not entitled to recover under any other provision of the contract. For example,
the payments made to the contractor may include allowances for working
under changed conditions, fluctuations in prices, or preliminaries associated
with variations. None of these costs should therefore be duplicated in an
ascertainment of loss and/or expense under clause 26.
(e) It is important to consider the mitigation of loss and/or expense. To the
extent that any part of the loss and/or expense incurred could reasonably have
been avoided by the contractor taking reasonable steps, that amount would not
be reimbursable. This requirement to mitigate requires the contractor to act
reasonably in all the circumstances. It may be reasonable, for example, for a
contractor to bring additional plant or labour to a site in order to reduce the
overall effect of a matter on the project as a whole. Even where such an act
was not entirely successful the contractor would be entitled to the
reimbursement of the costs incurred provided that he acted reasonably in so
doing. It is important, therefore, that in reviewing with hindsight what was
reasonable, the quantity surveyor may have good cause to reject certain costs
put forward by the contractor. The contractor has to make day-to-day
decisions in developing situations that may, in retrospect, be shown to be
wrong. The test must be: Was the action reasonable in the circumstances
prevailing at the time?
(f) On the other hand, a contractor who through good management is destined
to increase the profit he anticipated making at tender stage cannot be denied
this prospect by the incidence of a matter giving rise to a loss and/or expense
claim. For example, at tender stage the contractor might have anticipated
removing some element of plant by, say, the twentieth week. In the event he
may be beating this target and be destined to be able to remove it by, say, the
fifteenth week. If a delay caused by a matter recognized by the contract occurs
which requires that plant to be retained for a further four weeks, i.e. until the
nineteenth week, he is entitled to additional reimbursement for those four
weeks.
The Surveyors Construction Handbook
Page 5
PART 4, SECTION 2
G 4.2.3.2
EXTENSIONS OF TIME
Under JCT 98 and other forms of contract in the same series, the expression
extension of time is replaced by the words fixing a new completion date
but the more traditional extension of time is used in this Section. Extension
of time does not necessarily mean that the contractor has an entitlement to
reimbursement of loss and/or expense. On the other hand, the contractor may
have an entitlement to such reimbursement even when there is no extension of
time. Each matter needs to be treated on its merits whether or not an extension
of time is due or granted. Nevertheless, under JCT 98 there is a requirement
that the contract administrator declares the amount of any extension of time
granted for any event which also constitutes a matter under clause 26 where
such a declaration is necessary for the ascertainment of loss and/or expense.
Thus, in ascertaining the contractors entitlement to reimbursement of loss
and/or expense, the existence and amount of any attendant extension of time
must be revealed where this is relevant to that ascertainment.
G 4.2.3.3
WRITTEN APPLICATION
Before the contractor is entitled to any reimbursement in respect of loss and/or
expense he should first have made an application, at the appropriate time, to
the appropriate party named in the conditions of contract. The purpose of this
written application is to enable the contract administrator to form his opinion
on whether or not there has been, or will be, loss and/or expense incurred
which would not be reimbursed under any other provision in the conditions of
the contract. In addition, it should be noted that, with reference to the matter
of applications:
(a) Applications must be made by the contractor as soon as it reasonably
becomes apparent to him that the regular progress of the Works is likely to be
materially affected by any of the relevant matters listed in the conditions of
contract.
(b) Applications to the quantity surveyor, in contrast to those made to the
contract administrator, are not valid unless specific authority has been given
by the employer.1
(c) Reference to loss and/or expense in site meetings or the like, or references
to delays which do not mention loss and/or expense, do not constitute valid
written applications to recover loss and/or expense.
G 4.2.3.4
1 John
Page 6
Laing Construction Ltd v. County and District Properties Ltd (1982) 23 BLR 1
PART 4, SECTION 2
In practice, what is going to be adequate data will depend upon the nature of
the disruption or delay. Thus, the request for the contractor to keep such
details should not only be timely but should also be as specific as possible as
to the data required.
G 4.2.3.6
NOMINATED SUB-CONTRACTORS
In general the same principles apply to ascertaining the loss and/or expense to
be reimbursed to a nominated sub-contractor as apply to the main contractor.
It must be recognized, however, that a nominated sub-contractor may have an
entitlement under the terms of the sub-contract to reimbursement by the main
contractor (due, for example, to the latters mismanagement) which should be
passed on to the employer.
4.2.4 Ascertainment
G 4.2.4.1
G 4.2.4.2
The quantity surveyor should be careful to ensure that the contract administrator
undertakes this task of forming an opinion before embarking upon any
ascertainment. The quantity surveyor should also ask the contract administrator
for all the data he has upon which he formed that opinion; for the quantity
surveyors task is always one of determining quantum in respect of the items
which in the opinion of the contract administrator are admissible in principle. It
is not for the quantity surveyor to usurp the role of the contract administrator in
matters which the contract conditions specifically reserve for him.1
John Laing Construction Ltd v. County and District Properties Ltd (1982) 23 BLR 1
Page 7
PART 4, SECTION 2
G 4.2.4.3
However, once the quantity surveyor has been properly instructed to ascertain
the amount due he should proceed with this task without delay. It is for the
contract administrator or quantity surveyor, as the case may be, to ascertain
the amount and not to await a detailed submission from the contractor.
G 4.2.4.4
In general the surveyor should ensure that the basis, calculations and
evidential records used in the ascertainment are recorded in writing. This may
be a mandatory requirement on public sector contracts.
G 4.2.4.5
G 4.2.4.6
Clause 26.1 of JCT 98 requires that ascertainment is made from time to time.
This means that ascertainment should be an ongoing process where the facts
are sufficiently established to make a proper and finite calculation. Moreover,
clause 30.2.2.2 of JCT 98 states that any amount ascertained under clause 26
should be included in interim certificates.
G 4.2.4.7
G 4.2.4.8
COSTS VERSUS
When ascertaining a contractors entitlement it is the actual loss or actual
expense which is relevant. The prices in the contract bills or schedule of rates
should not be used as the actual costs may be more or less than these.
Additionally, the general rule of damages is that the type or kind of loss
payable is that as may reasonably be supposed to have been in the
contemplation of both parties, at the time they made the contract, as the
probable result of the breach of it (see G 4.2.1.3).
G 4.2.4.9
Page 8
PART 4, SECTION 2
G 4.2.4.10
GENERAL
A list of possible items admissible as part of an ascertainment of loss and/or
expense (which is to be read as including those attributable to sub-contractors)
is as follows:
extended and/or increased use of preliminaries, for example more
supervision, more plant etc.;
reduced labour outputs;
extra waste or abortive purchase of materials;
increase in the price of resources, i.e. inflation;
increased cost of head office overheads;
loss of profit; and
finance charges.
More often than not the dominant items will be the first two from the above
list.
G 4.2.5.2
PRELIMINARIES
A representative list of the items normally comprising the preliminaries is
given at Appendix A.
Page 9
PART 4, SECTION 2
G 4.2.5.3
When ascertaining the extra cost of preliminary items (but see G 4.2.4.8)
it is important to break each item down into the following components:
(a) Setting-up costs would be admissible where additional plant is properly
brought onto the site. If plant is already on site, setting-up costs would rarely
be admissible unless setting up has been delayed by a relevant matter and
inflation has occurred which is not reimbursable under the fluctuations
clauses.
(b) Removal costs are admissible in the same way as setting-up costs.
(c) Extra hire charges would be reimbursable if the particular item is required
to be kept on site longer than otherwise would have been the case due to the
relevant matter. The comparison is between the period that the item would
have been on site had the matter not occurred and the period that it was
reasonable to have been on site given that the matter did occur
(see G 4.2.1.7). Where the plant in question is owned by the contractor the
measure of his loss is the amount (if any) that he could have earned by using
the plant elsewhere had it not been tied up on the site for longer than would
have been the case if the matter in question had not occurred.
(d) Extra running charges would be reimbursable if, due to a relevant matter,
the particular item is required for a longer period than otherwise would have
been the case. Again the comparison is between the period that the item would
have been in use had the matter not occurred and the period that it was
reasonable to have been in use given that the matter did occur
(see G 4.2.1.7).
G 4.2.5.4
DISRUPTION OF LABOUR
The ascertainment of the cost of disruption to labour is invariably a difficult
process. It is impossible to give precise and definitive advice as all will depend
upon the circumstances in each case. However, the following general pointers
should be of some assistance:
(a) In all circumstances avoid the application of an overall percentage to
global labour costs; rarely if ever are the whole labour costs on a project
disrupted.
(b) Wherever possible request that contemporary records be kept, noting the
output achieved in practice by the particular workmen who are disrupted.
Clerk of works records and diaries can be invaluable evidence of this.
(c) Have regard to whether any delay comprises a series of small recurrent
delays or one large one. In the former case the proportional loss of output can
be very high, whereas in the latter case the loss can be mitigated by
redeploying resources elsewhere.
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PART 4, SECTION 2
(d) Recognize that there is a learning curve in all activities. The advantage of
this can be lost if a new gang of men is brought in to undertake work which
has become familiar to others; the resultant extra cost will be reimbursable.
Moreover, if additional labour has to be recruited at short notice it may be
necessary to pay premium rates which would in principle be reimbursable.
(e) Whatever the level of variation orders, late instructions and so on, much of
the work of labour will not actually be significantly affected. For example,
bricklaying or fixing pipework once under way may suffer little or no delay.
The delay may be associated with becoming familiar with an unexpected or
unplanned task. The coal face operation may not be affected at all.
(f) Recognize that great economies can flow from a repetitive task, for
example fixing partitions in a series of identical dwellings, the interruption of
which can result in far-reaching losses.
G 4.2.5.5
G 4.2.5.6
G 4.2.5.7
INFLATION
If work is executed later than otherwise would have been possible as a result
of a relevant matter and if inflation has caused the cost to rise then, provided
that such costs are not reimbursable under the fluctuations clause, they will
form part of the ascertainment. Even where the contract contains a
fluctuations clause, if it contains a non-adjustable element, a delay in the
execution of work might well increase the non-recoverable element, which
would be reimbursable.
G 4.2.5.8
G 4.2.5.9
Wherever possible, proof should be sought of such items as extra site visits by
head office staff or the greater involvement of head office staff in managing
Tate & Lyle Food and Distribution Co. Ltd & Another v. Greater London Council & Another (1982)
1WLR 149
Page 11
PART 4, SECTION 2
the project as a result of the matters giving rise to a claim. Appendix C gives
further guidance on the components and methods of such an ascertainment.
G 4.2.5.10
Account should be taken of the extent to which extra costs are already being
reimbursed through the pricing of the variation account.
G 4.2.5.11
Where there has been a delay as a result of a relevant matter but no consequent
increase in value (thereby excluding some contribution to extra head office
costs) some extra recovery is an entitlement provided that this does not extend
to include costs that should have been mitigated. It should also be shown that,
but for this delay and the consequent tying-up of head office resources for a
longer period than would otherwise have been the case, those resources could
have been productively used elsewhere. The Courts have increasingly
recognized that, providing all the pre-conditions are met, a formula approach
to calculating this element maybe permissible.1
G 4.2.5.12
G 4.2.5.13
LOSS OF PROFIT
If, as a direct result of a matter referred to in the conditions of contract, loss of
profit is suffered which could have been earned in the normal course of
business elsewhere, there is an entitlement to reimbursement of that profit.2
This amount should be calculated by reference to the level of profit to have
been made by the use of the resources on other projects during the period of
retention on site as a direct result of the cause of delay. The level should be
that prevailing in the market during the period immediately following the
original date for completion or such earlier date at which the resources would
have been released from the contract. It might, therefore, be higher or lower
than that contemplated in the contract sum. Moreover, where loss of profit is
being calculated as a result of a delay caused by the execution of variations it
is important that a deduction be made for any other profit reimbursed to the
contractor for those variations priced at contract rates.
G 4.2.5.14
FINANCE CHARGES
Clause 30.1.1.1 of JCT 98 now provides for the payment of interest, at 5%
over the base rate of the Bank of England, for any payments which are
overdue. This is in line with the statutory right now available to certain
classes of businesses under the Late Payment of Commercial Debts
(Interest) Act 1998. The JCT form expressly notes that the payment of
contractual interest may not be construed as a waiver by the contractor of his
or her rights to proper and timely payments. However, finance charges are
not an interest on a debt, but a debt which has interest charges as one of its
component parts which have been paid by a contractor on money which was
1 St Modwen Developments Ltd v. Bowmer & Kirkland Ltd (1996) 1996 CILL 1203
2 Peak Construction (Liverpool) Ltd v. McKinney Foundations Ltd (1970) 1 BLR 114
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PART 4, SECTION 2
borrowed (or interest that could not be earned on capital) in order to finance
the prime cost of the loss and/or expense. Such finance charges are
reimbursable.1
G 4.2.5.15
Finance charges are recoverable from the date that the primary loss and/or
expense was incurred up to the time that the certificate, which included the
payment of that loss and/or expense, was issued, provided, as always, that the
conditions in the contract in that respect have been met (see G 4.2.3.3 (c)).
G 4.2.5.16
The rates and manner of interest payable should be those actually incurred (or
being earned on capital).
GENERALLY
It is not possible to list all the items which are inadmissible. However, it might
be helpful to comment upon certain items which are occasionally claimed as
being reimbursable when they are not. Among these the most usual are:
(a) The costs of acceleration, unless specifically approved by the employer
beforehand (see G 4.2.6.2).
(b) The cost of preparing a submission for the reimbursement of loss and/or
expense.
G 4.2.6.2
G 4.2.6.3
G 4.2.6.4
G 4.2.6.5
1F
Where, however, he provides the data which might be required by the quantity
surveyor under clause 26.1.3 the cost of so doing may be reimbursable.
Page 13
A2
TEMPORARY ACCOMMODATION
Consider:
Part 4, Section 2
Appendix A (4/99)
Page 1
A3
PLANT
This covers plant owned by the contractor or hired from a subsidiary or
specialist company. It is advised that the conditions of hire are examined.
There is often a guaranteed minimum period of hire which would have been
paid for in any case. When long delays have occurred, loss must be mitigated
by use elsewhere or the termination of the hire contract.
Consider:
A4
tower cranes;
mobile cranes;
banksmen and slingers;
weighbridge;
wheel washing facilities;
compressors;
mixers;
pumps;
hoists;
site surveying equipment;
site/crane radio system;
concrete testing;
general site equipment;
small plant and tools; and
rubbish removal (skips).
TEMPORARY WORKS/ACCESS
Consider:
temporary roads maintenance; and
clean access and site roads.
A5
A6
DISTRIBUTION
Consider:
Page 2
Part 4, Section 2
Appendix A (4/99)
A7
SCAFFOLDING
Consider:
extra hire;
adaptations; and
additional work for example safety rails where scaffolding removed.
A8
TEMPORARY ELECTRICS
Consider:
A9
TEMPORARY WATER
Consider:
water and sewerage rates/metered consumption; and
maintenance.
A10
INSURANCE
Consider:
A11
Page 3
Part 4, Section 2
Appendix A (4/99)
Appendix B: Disruption
B1
B1.1
B1.2
Plant
Refer to invoices to indicate additional costs due to:
B1.3
Materials
Extra costs can be incurred due to the:
B2
B2.1
B2.2
B3
B3.1
Part 4, Section 2
Appendix B (4/99)
Page 1
Page 2
B3.2
There may be further items not covered above which the contractor could
bring to the notice of the quantity surveyor. In making an assessment of
disruption, the quantity surveyor may require the tender progress intentions
of the contractor, and to examine data on which projections of progress were
based in order to indicate the effect that changes have had upon the planning.
The information may include critical path analyses and similar information.
B3.3
Part 4, Section 2
Appendix B (4/99
C2
C2.1
C3
C3.1
C3.2
Part 4, Section 2
Appendix C (10/02)
Page 1
Page 2
C4
C4.1
C4.2
What were the relevant events giving rise to delays under the
conditions of contract? Were head office costs applicable to those
events?
C4.3
To what extent was the head office involved in, for example, site visits,
meetings etc.?
C4.4
Was there a need to employ additional head office staff whether or not
a delay had occurred?
C4.5
How effectively did the firm employ staff on this contract as against
other contracts that they were undertaking?
C4.6
What was the size of the contract in relation to the size of the firm and,
therefore, the impact of the delay to progress on the business of the
firm?
Part 4, Section 2
Appendix C (10/02)
Item
26.2.1
26.2.2
26.2.3
26.2.4
26.2.5
26.2.6
26.2.7
26.2.8
Part 4, Section 2
Appendix D (revised 07/01)
Tick
Page 1
Item
26.1
Comments from
the quantity
surveyor
Tick
26.1.2
26.1.3
25.3.4
Part 4, Section 2
Appendix E (revised 07/01)
Page 1
Part 4, Section 2
Appendix F (revised 07/01)
Page 1
PART 4, SECTION 3
Page 1
PART 4, SECTION 3
4.3.1 Definitions
In the context of this section of the handbook, risk management is considered
to be a process for identifying, assessing and responding to risks associated
with delivering an objective, for example, a construction project, and the focus
is on commercial type risks. Health and safety related risks are likely to need
separate consideration and the Health and Safety Executive (HSE) provide
specialist guidance in this area.
Definitions for key terms used in this section are:
4.3.1.1
Risk: An uncertain event which, should it occur, will have an effect on the
achievement of the projects objectives. A risk can be measured in terms of
likelihood (probability) and consequence (impact).
4.3.1.2
Risk management: A structured and auditable process for the benefit of all
members of the project team which is dedicated to the sole purpose of
controlling and mitigating uncertainty in a project.
4.3.1.3
4.3.1.4
4.3.1.5
Risk response: An action to reduce either the probability of risk arising or the
significance of its detrimental impact if it should arise.
4.3.1.6
4.3.1.7
Risk register: A document listing all the risks identified for the project,
explaining the nature of each risk and recording information relevant to its
assessment and management.
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PART 4, SECTION 3
4.3.2.3
Risk management is not a panacea and there are likely to be times when it may
not be effective to practise all its facets. However, the delivery of any
objective can be made more effective if the risks are fully appreciated. There
is a need for appreciation of risk not just its analysis. The extent of analysis
necessary is related to the extent to which the cumulative effects of risks can
be appreciated.
4.3.2.4
4.3.2.5
4.3.2.6
Page 3
PART 4, SECTION 3
4.3.2.8
TEAM DEVELOPMENT
During risk management workshops a snapshot of what might happen to the
delivery of a project is taken. During the workshops the project team discusses
its concerns and agrees a common way forward. As with other types of
facilitated workshops, such as value management, this benefit alone can
justify undertaking risk management. The advantages are:
it facilitates team development;
it is a communication tool;
it opens up discussion on what could go wrong without fear of penalty;
it acknowledges but transcends contractual restrictions;
it challenges preconceptions; and
it affirms the project procedures.
4.3.2.9
Page 4
PART 4, SECTION 3
4.3.3.1
4.3.3.2
The risk management process also needs to be integrated into the project
management process. Since any risk management workshop or assessment is
a snapshot in time, the process has to be undertaken on a repetitive basis.
Essentially, the risk management process should be commenced as early as
possible in a project life cycle and each of the three stages repeated as
necessary to effectively manage the risks associated with that project. At the
start of the process a risk management plan should be developed. The risk
management plan is similar in nature to the project execution plan and may
form part of that document.
4.3.3.3
RISK IDENTIFICATION
The identification stage should commence as early as possible, preferably as
part of any feasibility study for the project. One of the key principles is that the
identification of risks should be undertaken at various stages of the project life
cycle. Identification is not just undertaken at the start of the project and then
simply monitored during construction. The construction phase itself will
generate new risks and the project team is expanded by new members in the
form of trade contractors who can bring additional information to the risk
identification process.
(a) Methodology
(i) Structured identification of all sources of risk to the project
The risk management process is based on the concept of providing a
structured approach to dealing with risk. It may seem obvious that ground
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PART 4, SECTION 3
conditions are one source of risk, but how would this impact on other risks that
might be identified on the project? It is this inter-relationship between risks
that can only be drawn out through the use of a structured workshop and
identification methods where the whole project team have the ability to
contribute.
(ii) Preliminary analysis to establish probable major risks for further
investigation
The identification stage is designed to prompt team thinking and to bring out
all possible risks that might impact on the project. Several hundred risks could
be identified and the team may not have time to analyse and develop responses
to them all. It is normal during the identification stage to begin by sifting and
removing those risks which the team feel are not worth investigating further.
(iii) The true risk needs to be identified. Risks are caused by background
conditions which are essentially givens e.g. location of site. If the risk does
occur it will affect the project. This is shown diagrammatically below.
PART 4, SECTION 3
Page 7
PART 4, SECTION 3
Page 8
PART 4, SECTION 3
RISK ANALYSIS
The analysis stage is concerned with trying to achieve a better understanding
of the nature of the risks identified during the previous stage.
(a) Methodology
(i) Analysis of risks to assess the severity of impact and the probability of
occurrence
Risks have two dimensions:
probability this is the likelihood of the risk occurring and is generally
expressed as a percentage; and
impact if the risk did occur what impact would it have on meeting the
projects objectives.
For each of the risks identified, its probability and impact should be assessed,
normally in a workshop environment with key stakeholders present.
Before the risks can be entered onto the risk register, a scale should be set for
the probability and impact dimensions. Setting a common scale will ensure a
consistent approach to placing newly-identified risks on the matrix at a later
stage in the project life cycle. An indicative layout for defining scales is shown
in figure 2.
While the probability scale shown in figure 2 may be utilised for any project,
the impact scale should be set for each project. In figure 2 the cost and time
impacts are shown as a percentage of the original cost and time. Hence a very
high impact would mean the cost of the project would increase by more than
50% of the original budget.
Page 9
PART 4, SECTION 3
PROBABILITY
IMPACT
Cost
Time
Very high
70% 95%
> 50%
> 50%
High
50% 70%
20 50%
20 50%
Medium
30% 50%
10 20%
10 20%
Low
10% 30%
5 10%
5 10%
Very Low
5% 10%
< 5%
< 5%
Although time and cost impacts have been shown separately it is possible to
combine them, or to use other criteria such as performance. Again, the scale
should be set according to the needs of a project. Once set the scales should
not be changed during the life of a project. This allows risks to be compared
on a common scale throughout a project and for the risk profile of a project to
be accurately monitored.
A higher level of sophistication can be applied to the ranking of the risks on
the probability/impact matrix. By assigning generic units to a matrix, the
relative importance of each cell can be seen, as shown in figure 3.
Figure 3: Example of weighting of probability and impact scales
The method of having the probability scale linear and the impact scale
non-linear emphasises the significance of low probability/high impact risks.
The matrix allows each risk to be ranked and compared on an even basis.
Where resources are scarce it also allows attention to be focused on those risks
which sit in the high-risk category of the matrix.
Once assessed, plotting risks on to a matrix, as shown in figure 4, indicates
very quickly those risks which require detailed consideration and those which
only need a cursory glance. So, a risk with a high probability of occurring,
which does occur, would have a very high impact on the project and would
require detailed consideration. This allows the right amount of resource to be
Page 10
PART 4, SECTION 3
used in managing risk. The risk ID numbers from the risk register in figure 1
have been plotted in figure 4 to demonstrate the principle more thoroughly.
Figure 4: Mapping risks onto the probability/impact matrix
Page 11
PART 4, SECTION 3
RISK RESPONSE
The analysis stage provides the team with a better understanding of the risks.
The next stage is to develop a response to those risks.
(a) Methodology
(i) Choose the appropriate course of action
The principle is to choose the right response based on available information.
It might be that the response changes with time as more information becomes
available. The response will generally fall into one of the following
categories:
avoid;
transfer;
mitigate; and
control.
PART 4, SECTION 3
insurances/bonds/warranties;
contingency plans;
forms of contracts;
contingency drawdown models;
special cost schedule allowance;
earned value analysis;
resource levelling; and
training.
All responses to risks that are put in place should be managed. This should
form part of the project management system. Unless responses are effectively
managed, the whole risk process fails. Until a response is actioned, the risk
may still occur, regardless of how well it has been identified and analysed.
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PART 4, SECTION 3
4.3.4 Summary
In conclusion, the key components of a risk management strategy are:
identify staff and resources assigned to the risk management process;
define lines of reporting and responsibility for the risk management
process;
link the risk management plan to other project tools such as safety
(including CDM), quality and environmental management, and
planning and reporting systems;
consolidate all risks identified into an appropriate and digestible
response strategy in order that cumulative effects can be perceived;
state risk audit intervals and key milestones;
include risk milestones in project plan;
identify possible response strategies and programmes for each risk
category including contingency plans and how to handle new or
unresolved risks;
assess cost involved; and
monitor success of responses strategies and produce feedback for
reporting into future projects.
Page 14
Part 4, Section 3
Appendix A (5/03)
Page 1
PART 4, S ECTION 4
4.4.1 Valuations
An interim valuation involves a revaluation of the whole work, not the work
done since the last certificate was issued. The valuations should be treated
almost as mini final accounts as they generally reflect all the matters and
items which appear in a final account. Interim valuations may now be
subjected to the same scrutiny as final accounts as they may be the subject of
adjudication provisions in contracts and per se are required to be compiled
with care.
The valuation must be a realistic assessment. A low valuation creates
unreasonable financial problems for a contractor whereas a high valuation
creates a risk to the employer of paying sums for which he or she obtains no
benefit.
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PART 4, S ECTION 4
4.4.2 Assumptions
It has been assumed throughout this section of the handbook that the interim
valuation by the quantity surveyor is provided for the benefit of an architect:
the person who certifies the amount of the valuation to the employer. Under
JCT contracts that person is normally the architect but could be referred to as
the contract administrator.
This section has been prepared from the standpoint of a quantity surveyor
acting for an employer, assuming normal terms of appointment.
A basic checklist of actions necessary for practicing quantity surveyors is
provided below. However, it should be noted that any specific directives
within the quantity surveyors own organisation (such as those within quality
assurance schemes) should supplement this advice.
4.4.2.1
4.4.2.2
IN
FOR INTERIM
This section of the handbook assumes that the quantity surveyor has normal
terms of appointment and the relative roles of the quantity surveyor carrying
out a valuation for an employer under a normal JCT contract.
The guidance in this section is equally relevant to a quantity surveyor acting
for a contractor who will be required to produce valuations in similar
circumstances to that of a quantity surveyor acting for an employer.
Page 2
PART 4, S ECTION 4
4.4.2.3
4.4.2.4
DEFINITIONS
Quantity Surveyor
Architect
Employer
Contractor
LEGISLATION
The requirement to provide stage or interim payments is now contained in the
Housing Grants and Reconstruction Act 1996 where it is stated in Section 109
that, A party to a construction contract is entitled to payment by installments,
stage payments or other periodic payments for any work
Parties to the contract are free to agree the amounts of the payments and the
intervals at which, or circumstances in which, they become due.
Section 110 of the Act states that every construction contract shall provide an
adequate mechanism for determining what payments become due under the
contract and provide for a final date for payment in relation to any sum which
becomes due.
Section 111 states that a party to a construction contract may not withhold
payment after the final date for payment of a sum due under the contract
unless an effective notice of intention to withhold payment has been given.
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PART 4, S ECTION 4
stating the amount due to the Contractor from the Employer specifying to
what the amount relates and the basis on which that amount was calculated.
Clause 30.1 also sets out a timescale for payment and the right of the
contractor to interest if the timescale is not adhered to by the employer.
The employer has to advise the contractor of the amount which he or she is
due to be paid and the amount of, and reason for, any deduction to that
payment.
Clause 30.1.2.1 states, Interim valuations shall be made by the Quantity
Surveyor whenever the Architect considers them to be necessary for the
purpose of ascertaining the amount to be stated as due in an Interim
Certificate. Clause 30.1.2.1 allows the contractor to submit an application for
payment to the quantity surveyor which should set out what the contractor
considers to be the amount of the gross valuation. The quantity surveyor, in
response to the contractors submission, shall make an interim valuation. It
is essential that the quantity surveyor makes and issues a valuation even if the
interim payment calculation is zero.
Under clause 30.1.3 the dates for the first and subsequent interim certificates
are set out in the Abstract of the conditions.
Clause 30.2 states how the amounts due in an interim certificate are to be
ascertained. It follows that any interim valuation prepared by the quantity
surveyor should follow the same method as that for an interim certificate.
In clause 35.13 it is stated that the architect shall direct the contractor as to
interim payments to nominated sub-contractors. The ascertainment of
amounts due to nominated sub-contractors are calculated in accordance with
clause 4.17 of the JCT 1998 Nominated Sub-Contract Conditions (NSC/C).
Clause 4.17 contains step-down provisions similar to clause 30.2 of JCT 1998
With Quantities and the works of nominated sub-contractors are assessed in
the same manner as that of the main contractor.
Page 4
CONTRACT REQUIREMENTS
(i)
(ii)
Note whether there are any ad hoc amendments made to the standard
form of contract that have a bearing on interim certificates; and
(iii)
Prepare a job progress chart and cash flow forecast ready for checking
against the value of work completed at successive valuations.
PART 4, S ECTION 4
4.4.4.2
EMPLOYERS REQUIREMENTS
(i)
(ii)
(iii)
(i)
(ii)
Note any adjustments to the contract price made in the summary of the
bills of quantities or elsewhere;
(iii)
(iv)
(v)
4.4.5 Communications
4.4.5.1
(ii)
(iii)
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PART 4, S ECTION 4
4.4.5.2
4.4.5.3
(ii)
4.4.5.4
Impress on the clerk of works (or site engineer or any person to whom
the responsibility has been given to record contractors resources, time,
materials, plant, etc.) that diligence and accuracy in checking on
resources used is crucial and that, therefore, he or she must keep a
reliable daily record. Inform him or her that you will be visiting the site
to make spot checks unannounced;
(ii)
(iii)
Arrange with the clerk of works to receive his or her labour record
(which is required for checking wages fluctuations).
4.4.6 Approach
4.4.6.1
Page 6
METHOD
(i)
(ii)
The format for the valuations will be suited to the particular project,
and for measured works, the format of the bills of quantities (for
example, separate buildings, elements, trades) may well determine the
order of sections that best suits the contract basis (for example,
grouping as that required for fluctuations);
PART 4, S ECTION 4
(iii)
(iv)
(ii)
The format in which the contractor presents his or her valuation should
be agreed in the same manner as detailed earlier in 4.4.5.1 and 4.4.6.1
of this section.
Whilst the format which the contractor uses will, in normal
circumstances, be pre-agreed, there is no requirement for the contractor
to use an agreed format. However, it is necessary for the quantity
surveyor to respond to the contractors submission in the same detail as
that used by the contractor; and
(iii)
4.4.6.3
SITE VISIT
(i)
4.4.6.4
DETAIL OF VALUATION
(i)
(ii)
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PART 4, S ECTION 4
(iii)
(iv)
4.4.7.2
WORK EXECUTED
(a) Measured Work
Work under this category relates to work included in the tender documents
and, subsequently, the contract as measured either in bills of quantity format
or schedules, or descriptions of work items.
Include an assessment of the work properly executed using rates within the
bills of quantities. Consider whether an adjustment shall be made to the rates
where the item is partially executed, allowing for the location of the work and
for inflation if it is a fixed price contract.
This assessment will normally be carried out using rates within the bills of
quantities. However, where the item is only partially executed, adjustment to
the rates will be necessary having due regard to the location and
circumstances of the work.
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PART 4, S ECTION 4
Page 9
PART 4, S ECTION 4
(f) Suppliers
The value of goods on site supplied by nominated suppliers should be
included at the rates stated in the nomination. Invoices confirming the values
should be obtained and the relevant discounts checked.
4.4.7.3 VARIATIONS
It is not possible to cover all the required information on variations within this
section. However, the following simple rules should be followed:
(i)
(ii)
(iii)
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PART 4, S ECTION 4
4.4.7.4
DAYWORKS
Include dayworks only if they are prepared in accordance with clause 13.5.4
of the contract and verified by the architect.
If dayworks are to be included, check that the percentage additions to prime
costs are in accordance with those quoted in the contract documents.
4.4.7.5
MATERIALS ON SITE
Include materials on site in accordance with the provisions of clause 30.2.1.2
of the contract.
Value materials at current rates where it is a fixed price contract under
clause 38.
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PART 4, S ECTION 4
4.4.7.7
FLUCTUATIONS
Where there are to be fluctuations these should be added as described in
4.4.7.3 of this section of the handbook (or deducted, if appropriate (see
4.4.7.10 (e)).
4.4.7.8
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PART 4, S ECTION 4
4.4.7.9
SPECIAL PAYMENTS
Within the terms of the contract there may be other costs which are required
to be added into the valuation.
Examples of special payments include:
Clause 6.2: Statutory fees and charges fees and charges detailed
in this clause shall be added to the contract sum only under the
conditions outlined in clause 6.2.
Clause 8.3: Inspection and tests the cost for this work, together
with making good, is to be added to the contract sum if the tests
show that the works or materials being tested are in accordance
with the contract.
Clause 9.2: Royalties where, in compliance with the architects
instructions, the contractor is liable to pay royalties or other monies
for patent rights, these royalties are added to the contract sum.
Clause 21.2.1: Insurance the premiums incurred by the contractor
to affect 21.2.1 insurance (which is a joint insurance indemnifying
against injury or damage to adjoining buildings which are not the
property of the employer) are included in interim valuations.
4.4.7.10 DEDUCATIONS
(a)
Retention
Retention should be deducted from the gross valuation at the rate stated
in the contract. The gross valuation is calculated in the total derived in the
categories referred to above (Work Executed to Special Payments).
Retention is applied in terms of the contract. Clause 30.4 sets out the
rules for ascertainment of retention and clause 30.2.1 clarifies the items.
The items described in the categories Work Executed to Materials Off
Site are subject to retention; Fluctuations is generally subject to
retention; Loss and Expense is excluded from the retention calculation;
and the items detailed in Special Payments (statutory fees and charges)
are not subject to retention.
For retention at practical completion or partial possession see
4.4.7.10(c) below.
(b)
Page 13
PART 4, S ECTION 4
The quantity surveyor should compile a list of the work and values
deducted and include the list with the notes passed to the contractor.
The previous two paragraphs assume that, in deducting for work which
is not in accordance with the contract, the work will require to be
redone or amended in accordance with the contract. However, under
clause 8.4.2 the work not in accordance with the contract may be
accepted by the architect and a reduction in value allowed for it. This
reduction will be shown as a deduction to the valuation.
In a similar manner, if defects, shrinkages, etc. are not made good, a
deduction may be made under clauses 17.2 and 17.3.
(c)
(d)
Advance payments
(This item does not occur in the local authority version of JCT 1998
With Quantities)
If an advance payment has been made to the contractor, the amount of
the advance will be stated in the appendix to the contract. The amount
of the advance will be reimbursed to the employer in the amounts and
at the times stated (this is also stated in the appendix).
(e)
Fluctuations
Where the operation of the fluctuations clauses and the subsequent
calculation indicates a reduction, a deduction will have to be made to
the valuation.
For additional information please see 4.4.9 below.
Page 14
PART 4, S ECTION 4
(f)
(g)
4.4.8 Administration
4.4.8.1
GENERAL
The quantity surveyor should ascertain the way in which the architect requires
the valuation and whether any additional explanation and information is to be
provided at the time of valuation.
The use of a standard form, such as that issued by the Royal Institution of
Chartered Surveyors (RICS) for interim valuations is recommended.
As indicated in 4.4.3 above, under clause 30.1.1.1 of the contract, the
architect, when issuing the certificate to the employer, must specify to what
the amount of the certificate relates and the basis on which that amount was
calculated.
Whilst the same wording is not used in the contract in the context of the
quantity surveyor issuing a valuation to the architect, it is prudent for the
quantity surveyor to provide additional detail of the valuation to the architect
than is required by the contract terms. The architect may well require this
additional detail when explaining the content of the certificate to the
employer.
One way for the quantity surveyor to achieve this additional detail is for the
quantity surveyor to use in his or her advice, a similar format that is used in
the example in Appendix C of this guidance.
4.4.8.2
COVERING LETTER
When making his or her recommendation for payment, the quantity surveyor
should state the basis of his or her calculations in a covering letter to the
architect, if not detailed separately (as described in 4.4.6.1 above) or on the
valuation form. This covering letter would need to include a statement on the
authority for part release of retention and details of defective works not
included in the valuation.
Page 15
PART 4, S ECTION 4
In a letter advise the architect whether all the work executed is included in the
valuation (the quantity surveyor may have been instructed to exclude specific
items). It is prudent to remind the architect that he or she is to adjust the
recommended figure if there are further works or unfixed materials that are
not acceptable to him or her. The wording of the RICS standard form at note
(iii)(a) refers to this point, but it is advisable to mention the matter in the
letter.
Where appropriate, advise the architect in respect of matters regarding
previous valuations, for example, whether nominated sub-contractors have all
received their payments under previous certificates.
DETERMINATION OF
SUB-CONTRACTOR
THE
EMPLOYMENT
OF A
CONTRACTOR
OR
NOMINATED
LIQUIDATED DAMAGES
The application of liquidated damages affects payments to the contractor, but
it is generally not an element of a valuation which should be included (or
amounts deducted) by the quantity surveyor.
Advice to the employer and the architect should include:
In a contract, where there is a provision for liquidated damages to be
applied at the rate included in the contract, the quantity surveyor may
be required to advise of the amount of liquidated damages for which
the contractor is liable.
On there being an appropriate certificate issued under clause 24 of
the contract, when issuing valuations the quantity surveyor should
advise the employer and/or the architect of the amount of liquidated
damages for which the contractor is liable and continue to advise
thereafter, each time stating the amount.
4.4.9.3
FLUCTUATIONS
The contract will state the basis of adjustment: whether there is to be detailed
cost recovery (clause 38 or 39) or the use of price adjustment formulae (clause
40). Where detailed cost recovery is to be the basis, check that basic prices of
materials goods, electricity and fuels have been agreed. Note any imported
Page 16
PART 4, S ECTION 4
Page 17
PART 4, S ECTION 4
Page 18
Part 4, Section 4
Appendix A (05/00)
Page 1
Clause 30.3.1 makes it one of the conditions of the inclusion, in the amount
stated as due in an Interim Certificate, of the value of what clause 30.3
defines as listed items' before their delivery to or adjacent to the Works, that
the Contractor has provided the Architect with 'reasonable proof ' that the
property (ownership) in the listed items is vested in the Contractor.
2.
3.
Where the listed items are purchased from a supplier by the Contractor, the
Contractor should give the Architect a copy of the written contract of sale
applicable to the listed items; and a written statement from the supplier that
any conditions in that sale contract that must be fulfilled before the property
passes to the Contractor have been fulfilled. The statement of the supplier
should also say that the supplier's property in the listed items is not subject to
any charge or encumbrance which would prevent the passing of the property
unconditionally to the Contractor after fulfilment of all the relevant terms of
the sale contract with the Contractor.
4.
Where the listed items have been purchased from a supplier by a sub-contractor
the Contractor should give the Architect a copy of the written sub-contract with
the sub-contractor which should expressly state the conditions that have to be
fulfilled before the property in these listed items passes from the sub-contractor
to the Contractor; and a written statement from the sub-contractor that any
conditions in that sub-contract that must be fulfilled before the property passes
to the Contractor have been fulfilled.
5.
Part 4, Section 4
Appendix B (05/00)
Page 1
170,000.00
40,000.00
178,000.00
265,000.00
112,000.00
58,000.00
203,000.00
102,000.00
75,000.00
45,000.00
21,000.00
33,000.00
53,000.00
16,000.00
11,000.00
64,000.00
30,000.00
35,000.00
12,000.00
48,000.00
8,500.00
297,000.00
222,000.00
16,500.00
75,000.00
___________
2,190,000.00
___________
Note that the above excludes the prime cost sums and profit thereon,
provisional sums and provisional quantities.
Part 4, Section 4
Appendix C (05/00)
Page 1
Preliminaries breakdown
A
16,000.00
11,000.00
Mechanical plant
8,500.00
5,000.00
122,500.00
7,000.00
___________
170,000.00
___________
Page 2
Part 4, Section 4
Appendix C(05/00)
Heating installation
235,000.00
6,000.00
14,000.00
Gas installation
2,500.00
Mechanical ventilation
9,000.00
3,000.00
1,500.00
25,000.00
1,000.00
___________
297,000.00
___________
Part 4, Section 4
Appendix C (05/00)
Page 3
28,000.00
Power installation
72,000.00
92,000.00
14,500.00
Security system
6,000.00
5,000.00
2,500.00
1,250.00
750.00
___________
222,000.00
___________
Page 4
Part 4, Section 4
Appendix C(05/00)
PART 4, SECTION 5
Page 1
PART 4, SECTION 5
4.5.2 Assumptions
This section has been prepared from the standpoint of the surveyor who has to
assess extension of time entitlement under a construction contract by virtue of
appointment under the contract as contract administrator.
4.5.2.1
4.5.2.2
DEFINITIONS
Contract administrator This refers to the person undertaking the functions of
the architect on behalf of the employer under a JCT
1998 With Quantities contract.
Page 2
Employer
Contractor
PART 4, SECTION 5
Page 3
PART 4, SECTION 5
Page 4
PART 4, SECTION 5
4.5.5 The Award of an Extension of Time during the Contract Period and
Before the Completion Date
Clause 25.3.1 requires the contract administrator to give extensions of time if
he or she is of the opinion that the completion of the Works is likely to be
delayed beyond the completion date by one or more of the relevant events
notified by the contractor. The contract administrator has 12 weeks (subject
always to a cut-off point of the completion date in place at that time) from
receipt of the contractors notice and reasonably sufficient particulars and
estimates.
Sufficient particulars and estimates are thought to be those that comply with
clauses 25.2.2.1 and 25.2.2.2. Therefore it follows that, provided a contractor
gives the best particulars and estimates it can in the circumstances that exist at
the time of the notice, the contract administrator will not be able to delay
granting an extension of time beyond the 12 weeks (or such shorter period if
notice is given within 12 weeks of the completion date), on grounds that he or
she cannot yet judge the effect that the cause of delay will have on the
progress.
Whilst the granting of an extension of time is subject to the opinion of the
contract administrator, ultimately the opinion may be subject to review by an
arbitrator or judge. Therefore, it important that the principles adopted by a
contract administrator in assessing an extension of time entitlement are sound.
When assessing an extension of time during the contract period and before
practical completion, the contract administrator, by virtue of clause 25.3.1.2,
can only take into account relevant events that occur before the original or
previously fixed (in the event of further extension of time assessments)
completion date. Relevant events that occur after the completion date are dealt
with when the contract administrator reconsiders extensions of time after
either the completion date or practical completion under clause 25.3.3.
The contract administrator is required to award an extension of time that he or
she estimates to be fair and reasonable. This reflects that the assessment of
the extension of time entitlement will not be an exact science, but will have to
be the result of a consideration of various factors such as:
the exact terms and application of the facts of the relevant event in
question;
the amount of the immediate delay in the progress of the Works;
the effect of any delay caused by the contractors default;
the effect of concurrent causes of delay and whether one of them is an
effective dominant cause; and
the extent to which the contractor has used its best endeavours to prevent
delay in accordance with clause 25.3.4.
Page 5
PART 4, SECTION 5
Page 6
PART 4, SECTION 5
principle does not apply to the JCT 1980 form and, by virtue of the same
wording being adopted, its successor the JCT 1998 form. The correct position
now is that if instructions for additional work are issued at a time when the
contractor is in culpable delay, that is, the Works being incomplete after the
latest extended completion date, the contractor is only entitled to a fair and
reasonable net addition (sometimes referred to as the dot on principle) to
the previously fixed completion date and not by fixing as the completion date
the calendar date upon which the work would reasonably be expected to be
completed having regard to the calendar date upon which the variations were
instructed5.
Page 7
PART 4, SECTION 5
does not cover the issue of information that is required, then the contract
administrator is required to provide any other drawings and details to explain
and amplify the contract drawings when they are reasonably necessary.
It has been held that a contractors programme or document presented at the
commencement of the Works could constitute a specific application for
instructions or information provided that the date specified for delivery for
each set of instructions met the requirement of not being unreasonably distant
from nor unreasonably close to the relevant date7, subject to it being modified
if the Works did not progress to plan.
It has also been held (by analogy to a House of Lords decision in relation to a
similar clause in JCT 1963) that whilst the withdrawal of a nominated
sub-contractor may not come within this clause, delay by the employer in
making a timeous re-nomination was covered8.
Clauses 25.4.8.1 and 25.4.8.2:
The execution of work not forming part of this Contract by the Employer
himself or by persons employed or otherwise engaged by the Employer as
referred to in Clause 29 or the failure to execute such work [or] the supply
by the Employer of materials and goods which the Employer as referred
to in clause 29 or the failure so to supply.
This clause is also known as the artists and tradesmen clause. Its scope
includes work by a local authority or statutory undertaker under a contract
with the employer.
Clause 25.4.12:
Failure of the Employer to give in due time ingress to and egress from the
site of the Works or any part thereof through or over any land, buildings,
way or passage adjoining or connected with the site and in the possession
and control of the Employer, in accordance with the Contract Bills and/or
Contract Drawings, after receipt by the [contract administrator] of such
notice, if any, as the Contractor may be required to give, or failure of the
Employer to give such ingress or egress as otherwise agreed between the
[contract administrator] and the Contractor.
This clause is not concerned with possession of the site itself, but with access
to it over other land in the possession and control of the employer as stated in
the contract documents.
Clause 25.4.14:
By reason of the execution of work for which an Approximate Quantity
is included in the Contract Bills which is not a reasonably accurate
forecast of the quantity of work required.
What constitutes a reasonably accurate forecast will be a matter of fact.
However, it is suggested that empirical studies of the accuracy of quantity
surveyors estimates may give guidance, that is, +/ 5 per cent accuracy.
Page 8
PART 4, SECTION 5
Clause 25.4.17:
Compliance or non-compliance by the Employer with clause 6A.1.
Clause 6A.1 relates to the employer ensuring that the planning supervisor (and
the principle contractor, where the contractor is not the principle contractor)
carries out his or her duties under the CDM regulations.
Clause 25.4.18:
Delay arising from a suspension by the Contractor of the performance of
his obligations under the Contract to the Employer pursuant to clause
30.1.4.
Clause 30.1.4 relates to the contractors rights to suspend the Works as a result
of failure by the employer to pay the contractor in accordance with the
contract payment terms and procedure in compliance with the Housing
Grants, Construction and Regeneration Act 1996. Therefore, if the contractor
is entitled to suspend the Works under clause 30.1.4 it will be entitled to an
extension of time in the event that the Works are delayed as a result. It is
interesting to note that the corresponding matter clause (26.2.10) is more
restrictive in that it only entitles the contractor to recover any direct loss and
expense if the suspension was not frivolous or vexatious.
4.5.7.2
NEUTRAL EVENTS
Clause 25.4.1:
force majeure
This term is used in reference to all circumstances independent of the will of
humankind which is not in our power to control, such as war, inundations and
epidemics. It is wider than Acts of God, but it is generally thought that in
relation to standard forms of construction contracts it has a restricted meaning.
This is because matters such as war, strikes, fire, weather and government
action are expressly dealt with in the contract.
Clause 25.4.2:
exceptionally adverse weather conditions
The correct test to be applied by the contract administrator is whether the
weather itself was exceptionally adverse9 so as to give rise to delay. This
should be decided in light of the historic norm for the area and the status of the
Works when the delay occurred. Therefore, the contract administrator should
examine local meteorological and site records, looking at details and timing of
rainfall, high wind speed, temperature and assess the effect on the labour,
plant and work operations on site for the relevant periods.
Page 9
PART 4, SECTION 5
Clause 25.4.3:
loss or damage occasioned by any one or more of the Specified Perils
These are defined by clause 1.3 and include:
fire;
lightning;
explosion;
storm;
tempest;
flood;
bursting or overflowing of water tanks;
apparatus or pipes;
earthquake;
aircraft and other aerial devices or articles dropped therefrom; and
riot and civil commotion.
However, they exclude:
ionizing radiations or contamination by radioactivity from any nuclear
fuel or nuclear waste from the combustion of nuclear fuel;
radioactive toxic explosive or other hazardous properties of any
explosive nuclear assembly or nuclear component thereof; and
pressure waves caused by aircraft or other aerial devices travelling at
sonic or supersonic speeds.
The scope of the specified perils is very wide and could stem from acts of
negligence by the contractor.
Clause 25.4.4:
Civil commotion, local combination of workmen, strike or lock-out
affecting any of the trades employed upon the Works or any of the trades
engaged in the preparation, manufacture or transportation of any of the
goods or materials required for the Works.
The terms strike and lock-out should be given their ordinary meaning. The
courts have given guidance on the meaning of civil commotion in relation to
insurance contracts to include a stage between riot and civil war10.
Page 10
PART 4, SECTION 5
Clause 25.4.5.1:
Compliance with [contract administrators] instructions under clauses ...
34, 35 or 36...
Clause 34 instructions relate to fossils, antiquities and other objects of
interest or value found on site during excavation. Clauses 35 and 36 relate to
instructions connected with nomination. Whilst the contractor is seemingly
not protected for recovering loss and expense monies by virtue of there not
being a corresponding matter listed under clause 26, with regard to a late
nomination it would appear that a contractor could seek to rely on clause
26.2.1 for late instruction of the expenditure of a provisional sum relating to a
nominated sub-contractor or supplier.
Clause 25.4.6:
Delay on the part of nominated sub-contractors or nominated suppliers
which the contractor has taken all practicable steps to avoid or reduce.
The effect of this clause is that if such a delay causes an extension of time,
even if the delay is due to the default of the nominated sub-contractor, the
employer is deprived of the right to deduct liquidated damages. However, it
should be noted that if a nominated sub-contractor has completed its work and
has to return to site to remedy defective workmanship which in turn causes a
delay to the Works, then this clause does not apply11. In this scenario an
extension of time would not be granted. Whilst the employer is not liable to
the contractor for losses caused by nominated sub-contractors and nominated
suppliers, the contractor may be able to recover its losses directly through its
nominated sub-contract or supplier contract.
Clause 25.4.9:
The exercise after the Base Date by the United Kingdom Government of
any statutory power which directly affects the execution of the Works by
restricting the availability or use of labour which is essential to the proper
carrying out of the Works or preventing the Contractor from, or delaying
the Contractor in, securing such goods or materials or such fuel or energy
as are essential to the proper carrying out of the Works.
The effect of this sub-clause is to reduce the scope of the force majeure
sub-clause (clause 25.4.1) to those events not contained within this wording.
Clauses 25.4.10.1 and 25.4.10.2:
The contractors inability for reasons beyond his control and which he
could not reasonably have foreseen at the Base Date to secure such labour
[goods or materials] as is [are] essential to the proper carrying out of the
Works.
These words limit the effect of the sub-clause in respect of shortage of labour,
materials or goods that the contractor could have foreseen by reasonable
enquiry were likely to continue or arise at all.
The Surveyors Construction Handbook
Page 11
PART 4, SECTION 5
Clause 25.4.11:
The carrying out by a local authority or statutory undertaker of work in
pursuance of its statutory obligations in relation to the Works, or the
failure to carry out such work.
This sub-clause is limited to situations where the relevant authority or
undertaker carries out work using its statutory powers, as opposed to under a
contract with either the employer or contractor, and such work hinders the
Works and causes delay.
Clause 25.4.13:
Where clause 23.1.2 is stated in the appendix to apply, the deferment by
the Employer of giving possession of the site under clause 23.1.2.
Clause 23.1.2 enables the employer to defer possession of the site by six
weeks without being in breach of contract. This clause enables the completion
date to be extended accordingly without the employer losing his or her right to
deduct liquidated damages for any delay for which the contractor is culpable.
Clause 25.4.15:
Delay which the Contractor has taken all practicable steps to avoid or
reduce consequent upon a change in the Statutory Requirements after the
Base Date which necessitates some alteration or modification to any
Performance Specified Work.
The effect of this clause is limited to legislative changes that affect
performance specified work, the effects of which the contractor has made
attempts to mitigate. There is no requirement for the contractor to have made
reasonable enquiry at or before the base date.
Clause 25.4.16
The use or threat of terrorism and/or the activity of the relevant
authorities in dealing with such use or threat.
The effect of this sub-clause is to reduce the scope of the force majeure
sub-clause (clause 25.4.1) to those events not contained within this wording.
Page 12
PART 4, SECTION 5
The contract administrator may be faced with a scenario where there are
concurrent causes of delay, each of which could have an equal delaying effect,
or alternatively could have significantly unequal effect. The law is unclear on
the correct approach. However, the generally accepted approach is that it is the
dominant delaying event that should govern the award of an extension of time.
Therefore, if a contractor seeks to rely on late instructions as entitlement for
an extension of time and at the same relevant time the contractor is also
delayed by events for which it is culpable, the contract administrator will need
to satisfy him or herself that the delay caused by the late instructions was the
dominant delay in order to award an extension of time. Which cause is
dominant is a question of fact. This is not solved by the mere point of order of
time but is to be decided by applying common sense standards12.
The court had to consider the question of concurrent delays in 1999 and held
that a contract administrator is entitled to consider the contractor responsible
for concurrent delays when establishing whether or not a relevant event has in
fact caused a delay13. Therefore, the question for consideration by the contract
administrator when there are competing causes of delay, one of which is a
relevant event and one which is not, is which cause was the dominant cause of
delay. The courts also commented that where those competing causes were of
equal causes, then if the contract administrator considers it fair and reasonable
to do so, he or she is required to grant an extension of time14.
4.5.10 Administration
A notification granting an extension of time must be taken with great care. Use
of the RIBA and/or RICS Notification of Extension of Time form is
recommended. The notification should include:
the job title and number (if any);
the contractors name;
the date of issue;
the completion date;
a list of the relevant events for which an extension of time has been
given;
Page 13
PART 4, SECTION 5
the extent to which the omission of work has been taken into
consideration;
the date of the contractors written notice of delay (if any); and
the revised completion date.
Page 14
PART 4, SECTION 5
Notes
1. Fairweather v. Wandsworth (1987) 39 BLR 106
2. London Borough of Merton v. Leech (1985) 32 BLR at pp.89 et seq.
3. Bremer Handelgesellschaft MBH v. Vanden Avenne-Izegem [1978] 2
LLR 109
4. John Barker Construction Limited v. London Portman Hotel Limited
(1996) BLR 83
5. Balfour Beatty v. Chestermount Properties (1993) 62 BLR 1
6. Instructions under clauses 34 (antiquities), 35 and 36 (nomination of
sub-contractors and suppliers) are non-paying
7. London Borough of Merton v. Leach [1985] 32 BLR 51 at pp.85-89 issue 5
8. Percy Bilton v. GLC [1982] 1 WLR 794 (HL)
9. Walter Lawrence v. Commercial Union Properties (1984) 4 ConLR 37
10. Levy v. Assicurazioni Generali [1940] 3 All ER 427 at p.437
11. Jarvis J. & Sons v. Westminster Corporation [1970] 1 WLR 637 (HL)
12. Leyland Shipping v. Norwich Union [1918] AC 350, Yorkshire Dale
Steamship v. Minister of Ware Transport [1942] AC 691
13. Henry Book Construction (UK) Limited
(Manchester) Limited 1999) TCC 18.10.99
Malmaison
Hotel
Hotel
v.
Page 15
Part 4, Section 5
Appendix A (12/01)
Page 1
Surveying safely
Your guide to personal safety at work
Why is
health and
safety
important?
Because it affects you! We take significant risks in our jobs
regularly, be it driving in connection with our work, being at a
premises or on site.
Serious accidents at work destroy and disrupt family and personal lives. The loss of a parent,
breadwinner, partner, friend is devastating and trying to rebuild a life after an accident can be
equally traumatic, especially if it could have been avoided.
You have a critical role, whatever part you play in the industry. Decisions taken in the
boardroom can have as much influence on health and safety as working practices in the
office, travelling on business or being at a property or on site. Adequate planning,
innovation and best practice, good design, sufficient resources and effective training will
provide a better product more safely and more economically.
This guide has been produced by the new RICS Health and Safety Forum to help you to put
health and safety first when carrying out your duties and responsibilities. It will also
remind you of the many aspects of our industry that can be hazardous.
Using effective health and safety procedures will:
Provide a safer environment for those involved in managing property and construction
Result in higher productivity, and
Lessen the chance of having accidents or suffering illness.
If we are to make a difference, and make our industry a safer place to work, we have to
take personal responsibility to make it happen by eliminating or reducing risks, and
planning and controlling the risks that remain for ourselves, to our colleagues and the
public at large.
You can make a difference by putting health and safety first.
Contents
General statement of employers and employees duties
Safety of employees
Your workplace
11
12
Case studies
14
15
Safety of employees
Make sure you comply with the provisions of the Health and Safety at Work etc Act 1974.
Other regulations that are important to know and adopt include:
Employers must:
Provide information on health and safety
Have emergency procedures
Carry out risk assessments
Eliminate and control risks
Have insurance
Carry out health surveillance
Provide Personal Protective Equipment (PPE)
Provide for those with special needs
Control working hours
Provide regular health and safety training.
Employers with five or more employees must:
Have written health and safety documents. The HSE document Successful Health and
Safety Management (HS(G) 65) provides guidance on how to satisfy the legal
requirements of the regulations
Have a policy statement by the chief executive/managing director/senior partner
outlining the organisations commitment to health and safety, and that it will be
reviewed on a regular basis
Detail the organisations health and safety structure, with roles and responsibilities for
managing health and safety
Make sure arrangements are in place that show the organisations approach to health
and safety, and how the management system is planned and implemented (including
hazard identification, risk assessments and control measures)
Measure, audit and review the organisations health and safety performance on a
regular basis.
Employers actions
You have a special responsibility for people in your charge, particularly those in training or
who are inexperienced.
Make sure employees in your charge take the right equipment with them on visits.
Check they know how to use it
Make sure scrupulous records are kept of employees movements
Keep available, records of hazards on particular sites. Make sure all relevant
people are notified
Make sure a supply of the right equipment is available. Helmets, steel capped shoes, ear
defenders, face masks, overalls, torches and batteries these should be in your office as
appropriate and in good condition
Make sure your offices are safe:
Are there fire precautions and means of escape?
Washing facilities?
Is electrical equipment up to date and safe?
Do you prepare and store food and drink safely?
Have you carried out Display Screen Equipment Assessments?
Are you aware of the stress that some employees may be suffering?
Assess the risks of manual handling in the office or look at the materials being used or
stored and whether COSHH assessments are needed
Provide guidance on driving on your organisations business or the use of hand held
devices while driving.
Finally, the best way to make sure safe practice by people in your charge is to set a
good example.
Your workplace
The Workplace Health Safety and Welfare Regulations 1992 provide information on what
assessments you should be making and the facilities you should provide, depending on the
size and nature of your organisation:
Welfare
Smokers
Rest room
First aid
Pregnant mothers
Fire The Fire Regulations Act 1991 and Fire Regulations 1997 need you to maintain
adequate fire safety equipment. Your employees need to have training on how to use it.
Occupiers of premises must also carry out fire risk assessments.
First aid accident books you should have the correct form of accident book, which
allows personal details to be extracted from the book and placed in a secure location to
comply with the Data Protection Act 1998.
Signage in addition to helpful Health & Safety signs on first aid, fire or manual handling,
you should have safety signs displayed for any other significant risks, whether it be very
hot water or fragile roofs.
Portable Appliance Testing (PAT) around 25% of reportable electrical accidents involve
portable appliances. Make sure you have them tested regularly (recommended annually)
by an approved tester.
Contractors to protect yourselves, you should have procedures to make sure no one
comes into your building to work without you knowing they are competent, a risk
assessment has been carried out and a safe system of work has been established.
Asbestos everyone in control of premises must proactively locate and manage any
asbestos that exists.
Disability Discrimination Act 1995 (DDA) the DDA and the Disability Rights Commission
Act 1999 requires anyone providing a service from their building and receiving visitors, to
suitably provide for people with disabilities.
Legionnaires disease depending on the use of the building with which you may be
involved, you should make sure you are not at risk, by employing a WTC (Water Treatment
Company) to carry out an assessment. And get advice on how to reduce any risks and how
to carry out your own checks.
Managing risk
Having identified a hazard and assessed the risk involved, consider how the risk might be
reduced to a level as low as reasonably practicable by looking at:
Either option will involve a consideration of the method of working and if necessary
documenting a Safe system of work or Method statement for the activity.
Activity
If a building/site is occupied, what is the nature of that occupation, i.e. residential,
manufacturing, warehousing, etc, and what might you encounter, e.g. noise, fumes,
vehicle movements, electronic equipment etc?
Site rules and welfare
Does the client/premises manager have house rules?
Are there Permit to work/enter procedures to be followed?
If a site, is there a Construction phase health and safety plan including induction
procedures to be followed?
Might toilet, wash and first aid facilities be needed and how will these facilities
be provided?
High structures
If a scaffold exists, it is safe to use? When it was last inspected by a competent person?
Are any towers, masts or tall chimneys involved?
Are they to be inspected, and if so how will they be accessed?
Is a cherry picker or other special access equipment needed and who is to
provide/manage it?
Dangerous substances
Is the inspection likely to bring you into contact with hazardous substances such as
chemicals, radiation, asbestos, gas or other noxious atmosphere, explosives etc?
Are records such as a Register of Asbestos Containing Materials or environmental
reports available? What do they reveal and what special precautions need to be taken?
Diseases
Is the nature of the site such that it could be contaminated with any form of
clinical waste?
Are you likely to encounter used syringes/needles, condoms, razor blades etc?
Could the site be a source of anthrax which, for example, could be present in
haired plaster?
Could legionella be present in disused water storage systems?
What hazards might arise from vermin (eg Weils disease)?
Special access
Will special access arrangements be required (eg underground) and who will provide
it and manage it?
Is special training needed?
Special risks
Is the nature of the building or site such that it presents special hazards, eg railway
premises, security establishments, confined spaces, plant rooms, etc?
Special equipment
In certain circumstances any of the following equipment may be necessary:
Gloves
Respirator or face mask
Safety helmet
Ear defenders
Eye protection
Boots
Temporary lighting
Having considered the physical hazards that might exist, you need to consider these in the
light of personal and environmental issues:
Environmental
Will weather conditions and/or light levels increase risk?
(eg windy conditions and high structures)
Will temperature extremes present a hazard?
Personal
Does gender or level of fitness have any bearing on the hazards which have been
identified? Pregnant or nursing mothers need special consideration. Would lack of
fitness present a hazard in itself?
Are special skills needed and do you have those skills?
Do you have any phobias or suffer from vertigo or claustrophobia that would impair
judgement with regard to personal safety?
The above lists are by no means exhaustive and the extent to which any of the items
might be relevant in a particular circumstance will vary.
Roofs
Fragile asbestos cement and plastic coverings
Fragile rooflights (often obscured by dirt or temporary coverings)
Low parapets or unguarded roof edges, loose copings
Rusted, rotten or moss covered fire escapes, access ladders and guard rails
Rotten roof decking and joists
Slippery roof coverings (slates, moss or algae covered slopes)
Broken access hatches
Mineral wool dust, mortar droppings and birds nesting material and excrement in
roof voids. Cornered birds and vermin
Insects, including bee and wasp colonies
Water cooling plant may harbour legionella
Unguarded flat roofs
Broken, loose, rotten and slippery crawling boards and escape ladders
Weak flat roofs and dust covered rooflights
Slippery roof surfaces
High winds during roof inspection
Ill-secured or flimsy, collapsible, sectional or fixed loft ladders
Concealed ceiling joists and low purlins
Ill-lit roof voids.
Unsafe atmospheres
Confined spaces with insufficient oxygen including manholes, roof voids, cellars, vaults,
ducts and sealed rooms
Rotting vegetation which may consume oxygen and give off poisonous fumes
Accumulation of poisonous of flammable gases in buildings on contaminated land
Stores containing flammable materials such as paint, adhesives, fuel and cleaning fluids
Hazardous substances, including toxic insecticides and fungicides
Gas build-up in subfloor voids.
Danger from live and unsecured services
Electricity, gas, water and steam supplies
Awkward entrances into sub-stations and fuel stores
Temporary lighting installations: mains connections and generators
Buried cables and pipes
Overhead electrical cables.
Hidden traps, ducts and openings
Lift and services shafts, stairwells and other unguarded openings
Manholes, including those obscured by flimsy coverings. Cesspools, wells and
septic tanks.
Intruders and others
Physical dangers from squatters, vagrants or guard dogs
Disease risks from discarded syringes and condoms
Structures weakened by vandalism or arson
Aggressive tenants or property owners.
10
Contamination
Asbestos, lead and other substances hazardous to health
Chemicals in storage or leaked
Contaminated water supplies
Contaminated air conditioning systems (legionella)
Rural Environments
Hazardous operations such as tree felling or tractor work
Shafts, holes, pits, ditches, etc
Farm animals
Chemicals in storage or in use.
11
Make sure you are aware of any hazards which may exist, together with any safe
working instructions, which have been issued by clients prior to carrying work at
their premises
If you are working alone, make sure you follow your organisations lone working procedures.
Make sure anyone in your charge takes the right equipment with them on visits. Check
that they know how to use it and that it is safe to use
Make sure a suitable and sufficient risk assessment has been carried out of the tasks to
be performed, and a safe working method is in place that has been communicated to
and understood before any field work taking place
Make sure everyone has suitable and sufficient information, training and instruction on
health and safety matters for the task in hand
Check available records of hazards on particular sites and make sure that all relevant
people are notified
Make sure, wherever necessary that precautions are put in place to safeguard anyone
who may be in the vicinity of works and unaware of the possible hazards
Make sure the right equipment is used. Helmets, safety shoes, ear defenders, face masks,
overalls, torches and batteries. Do not use any equipment that is defective report it to
your employer.
Finally, the best way to ensure safe practice by people in your charge is to set a good example.
Employers may develop generic sets of safe working practices for each activity carried out.
However, individual managers/team leaders also have a further responsibility for making
sure any generic safe working practices are either sufficient or expanded as necessary for
any particular activity taking place within their area of responsibility (Armour v Skeen, see
case studies).
Equally employees must be given sufficient training in hazard identification and reduction/
control techniques to ensure that any non-foreseeable hazards arising during the course of
their work do not give rise to otherwise avoidable accidents occurring.
Civil liability
Employers and employees owe a duty of care to anyone who may be affected by their
actions, where effects of their actions are reasonably foreseeable.
The duty to provide safe systems of work is illustrated by the judgement in General
Cleaning Contractors v Christmas which stated: It is the duty of the employer to consider the
situation, to devise a suitable system, to instruct his/her men what they must do, and supply
any implements which may be required.
An increasing area of liability in negligence is that of stress through work overload,
particularly in cases where the result is reasonably foreseeable (Barber v Somerset County
Council see case studies).
Key regulations
This publication sets down the background to health and safety legislation as it affects the
work of surveyors. Bearing in mind the wide ranging nature of the profession it is not
intended to specify every piece of health and safety legislation, code of practice or
guidance notes published by the HSE.
The employer or employee must seek out the relevant information themselves. Where in
doubt get specialist advice.
13
Case studies
Criminal offence caused by neglect of director, manager or secretary of an organisation
Armour v Skeen Strathclyde Regional Council and its director of highways were both
prosecuted following the death of one of its employees due to lack of a safe system of
work and failure to make notification of certain works taking place. While it was held that
it was SRC (as the body corporate ) that had committed the offence, its director of roads
(being a manager or similar officer within the meaning of the Health and Safety at Work
etc Act 1974) was found to have been negligent in not having a sound safety policy,
developed from the authoritys overall policy, in place for his department, failing to provide
information to his subordinates, and failing to provide training and instructions in safe
working practices.
Criminal offence caused by failure to ensure persons not in an organisations employment
were not exposed to safety risks
A heating engineer was working on a development in Fitzroy Square, London. He climbed
an unguarded ladder to a half platform from which he fell some 2.5metres and suffered
fatal injuries. The principal contractor on site had not carried out a risk assessment in the
area in the engineer was working, the half platform had no edge protection, nor had the
area been declared an exclusion zone. The principal contractor was found guilty of failing
to make sure people not in their employ were not exposed to health and safety risks under
S3(1) of the Health and Safety at Work etc Act 1974.
Criminal offence caused by employers failure to manage asbestos
High street retailer Poundstretcher Ltd was ordered to pay 15 000 in fines and costs after
exposing employees to asbestos fibres. A routine inspection by environment health officers
found damaged asbestos insulation boarding and asbestos debris on the floor. Employees
had been exposed to asbestos fibres over a period of time during routine work activities.
Civil liability for safe systems of work
General Cleaning Contractors v Christmas A person was employed by a contractor to clean
the outside windows of a club. To carry out this work he stood on the sill on the outside of
the window, using one hand on the window sash to steady himself. The second sash fell on
to his fingers, causing him to let go, fall and injure himself. It was decided, in the House of
Lords, that his employers were negligent in failing to devise a safe system for carrying out
such operations on the properties their employees had to visit. And they ought to have
instructed their employees how to avoid accidents and supply any implements that may
be needed.
Civil liability relating to stress at work
Barber v Somerset County Council The House of Lords decision published in April 2004 is
the leading case relating to stress at work. Mr Barber was a teacher who was forced to take
three weeks off work due to stress, which was known to his employers. When he returned
to work, his employers took no action to help, monitor his situation or reduce his workload.
This resulted in his being forced to retire through work related stress and the court
awarding him 100 000 damages.
14
15
www.rics.org
RICS is the mark of property professionalism worldwide, promoting
best practice, regulation and consumer protection for business and
the community. It is the home of property related knowledge and is
an impartial advisor to governments and global organisations.
PART 5, SECTION 2
Page 1
PART 5, SECTION 2
5.2.1.
Regulations
The Construction (Design and Management) Regulations 1994, HMSO, 1994
[0110438450]
The Construction (Design and Management) (Amendment) Regulations 2000, HMSO,
2000
Managing Construction for Health and Safety Construction (Design and
Management) Regulations 1994. Approved Code of Practice and Guidance, HSC, 2001
[071 7621391]
The Construction (Health, Safety and Welfare) Regulations 1996, HMSO, 1996
[0110359046]
Accident Awareness/Statistics
Blackspot Construction Study of fatal accidents in the building and civil engineering
industries 19811988 (out of print), HSE, 1988 [0118839926]
Not Just an Accident. Video, CIRIA, 1993 [Video SP100V]
Health and Safety Statistics of HSE 2000/01, HSE, 2000/01 [0717621103]
Risk Assessment
5 Steps to Risk Assessment, HSE, 1998 [0717615804]
Clients
Engaging an Architect: Guidance for Clients on Health and Safety, RIBA, 1995
[1859460062]
Clients and The CDM Regulations: What You Need to Do, APS, 2002
Construction Sheet No. 39 Construction (Design and Management) Regulations 1994:
The Role of the Client, HSE, 2000 [CIS 39]
Clerk of Works
The CDM Regulations: Their Implications for Practice. A Guidance Note for Clerk of
Works, ICW GB
Page 2
PART 5, SECTION 2
Designers
Designing for Health and Safety in Construction (The Green Book), CONIAC, 1995
[0717608077]
CDM Regulations Case Study Guidance for Designers: An Interim Report, CIRIA,
1995 [0860174212]
Information on Site Safety for Designers of Smaller Building Projects, by Sylvester
Bone, HSE, 1995 [0717607771]
A Safer Bet: An Introduction to the Principles of the CDM Regulations 1994, CERCI,
1995 [Video 1898671044] Out of Print
Construction Safety Sheet No. 41. Construction (Design and Management) Regulations
1994: The Role of the Designer, HSE, 1995 [CIS 41]
Site Safety Handbook, CIRIA, 2001 3rd edition [08 601 78005]
Building Design: Easibrief. CDM Primer by Henry Haverstock, Building Design, 1997
Out of Print
Planning Supervisor
Construction Sheet No. 40. Construction (Design and Management) Regulations 1994:
The Role of the Planning Supervisor, HSE, 2000 [CIS 40]
CDM Documents
(See also Comprehensive Guidance)
Construction Sheet No. 42: CDM The Pre-Tender Stage Health and Safety Plan, HSE,
1995 [CIS 42]
Construction Sheet No. 43: The Health and Safety Plan During the Construction Phase,
HSE, 1995 [CIS 43]
Page 3
PART 5, SECTION 2
Construction Sheet No. 44: The Health and Safety File, HSE, 1995 [CIS 44]
The Building Centre Maintenance Manual & Health and Safety File, Building Centre
Trust, 1997 [0901919136]
Comprehensive Guidance
CDM Regulations: How Do Regulations Affect You? HSE, 1995 [PML 54] Out of Print
A Guide to Managing Health and Safety in Construction (The Brown Book), HSC, 1995
[0717607550]
CDM Regulations Explained by Raymond Joyce, Thomas Telford 2nd edition 2001
[0727730363]
Croners Management of Construction Safety (includes 2 updates and 12 newsletters
p.a.), Croner, 1997
CDM: The View from Here, CITB, 1995 [GCI]
Health and Safety in Construction, HSE, 1996 [HS G 150] [0717621065]
Construction Health and Safety Manual (includes 2 updates/year), CIP, 1997 [1852630
027]
Specific Hazards
Safety in Excavations, HSE, 1997 [CIS 8 rev]
Tower Scaffolds, HSE, 1997 [CIS 10 rev]
Inspections and Reports, HSE, 1997 [CIS 47]
General Access, Scaffolds and Ladders, HSE, 1997 [CIS 49]
Dust and Noise in the Construction Process, Contract Research Report, HSE, 1995
[CRR73] [0717607682]
Control of Substances Hazardous to Health in Construction by HSC, HMSO, 1990
[M20 6/90] Out of Print
Prevention of Falls to Window Cleaners: Guidance Note, HSE, 1991 [GS 25
0118856820] Out of Print
Contractors
(See also Comprehensive Guidance)
Page 4
PART 5, SECTION 2
Audio Tapes
CONDAM CDM Regulations. RICS and College of Estate Management, Owlion
1995 [ASP 10100]
Construction Radio: Talking Point on the CDM Regulations, CITB, 1995 [AT 1]
Health and Safety in Property. RICS and College of Estate Management, Owlion, 1995
[ASP 17230]
Address
Alliance House
12 Caxton Street
London SW1H 0QL
Telephone
020 7222 6557
Building Design
CMP Information
City Reach
5 Greenwich View Place
Millharbour
London E14 9NN
CIC (Constructio
Industry Council)
26 Store Street
London WC1E 7BT
CITB (Construction
Industry Training Board)
01485 577577
CITB Publications
Bircham Newton
Kings Lynn
Norfolk PE31 6RH
CONIAC (Construction
HSE Books
Industry Advisory Committee) PO Box 1999
Sudbury
Suffolk CO10 2WA
01787 881165
Page 5
PART 5, SECTION 2
Construction Federation
Construction House
5664 Leonard St
London EC2A 4JX
Croner
HSE Books
PO Box 1999
Sudbury
Suffolk CO10 2WA
01787 881165
Bracknells Lane
Garston
Watford WD25 9XX
01923 66 4000
Owlion
66 Portland Place
London W1B 4AD
Page 6
PART 5, SECTION 3
Page 1
PART 5, SECTION 3
BUILDING CONSERVATION
The Building Conservation Forum was founded in 1987 to develop a forum
for chartered surveyors linked by common interest in conservation. Since its
formation the forum has contributed to increasing the profile of building
conservation. It represents the building conservation discipline within RICS
but also has a remit to provide a networking mechanism for all those
interested, involved or affected by building conservation issues. It currently
has around 1000 members.
The forum runs an accreditation scheme for surveyors in conservation. This
highly respected scheme was started to help surveyors win church work and
grant-aided work. Now there is an architects accreditation scheme in
operation and one for engineers in prospect. English Heritage and Historic
Scotland will be making it a requirement that professionals involved in
grant-aided work be accredited by their professional organisation. The forum
publishes a regular series of short guides on matters related to historic
buildings, and has arranged an active programme of events for members. Most
of these are low cost, and are a very pleasant way to achieve CPD. The events
range from an annual seminar to half-day visits to work in progress at historic
buildings.
I
5.3.1
Groups and committees fulfil these roles primarily by providing these types of
outputs:
Page 2
PART 5, SECTION 3
5.3.2
5.3.3
Working groups and committees are not permanent and are subject to
continuous review.
The following working groups are currently in existence and are listed by
faculty:
BUILDING SURVEYING FACULTY
Asbestos management of asbestos regulations, guidance and related
asbestos matters.
Building Insurance and Assessment of Claims
Construction Administration and Management
Building Survey and Maintenance
Dilapidations
DDA
Construction Design and Economics certification of domestic structures
Boundaries and Party Walls
CONSTRUCTION FACULTY
IT working with construction IT
Railways cost planning and cost control of major infrastructure projects and
maintenance contracts
Cost Planning
Taxation capital allowances, etc.
Health and Safety
Oil and Gas
M&E
Engineering
JCT
Consultant QS
Procurement
Contractors
Page 3
PART 5, SECTION 3
bs.faculty@rics.org.uk
construction.faculty@rics.org.uk
pm.faculty@rics.org.uk
Page 4
RICS
Surveyor Court
Westwood Way
Coventry
CV4 8JE
United Kingdom
RICS
3 Cadogan Gate
London
SW1X 0AS
United Kingdom
PART 5, SECTION 4
5.4.1
BCIS provides current, accurate building cost and tender price information for
the construction industry and the property market. It is regarded as
authoritative, reliable and useful by subscribers, who include quantity
surveyors, building surveyors, general practice surveyors, architects,
engineers, building contractors, developers, financial analysts and property
owners in both public and private sectors.
5.4.2
5.4.3.1
ANALYSES
Elemental analyses have been at the heart of BCIS since the first printed
service was launched. Using analyses allows the cost of a new building to be
forecast using examples of buildings priced in the market place. BCIS Online
has a search capability which allows you to quickly and easily find the most
appropriate examples to match your current project from the database of over
14,500 projects.
Subscribers can also automatically recalculate the costs to reflect a selected
location and date.
5.4.3.2
INDICES
BCIS compiles a full range of building cost, tender and output indices; a range
of derived regional tender price indices and trade price indices; together with
indices for certain sub-markets in the construction industry. A wide range of
background statistics is available, including consumer prices, construction
output and new order statistics.
5.4.3.3
AVERAGE PRICES
BCIS average prices can be used to give indicative costs prior to producing
elemental estimates and they can also be used as a cost check. Five studies are
available:
/m2 study;
Element cost per m2;
Page 1
PART 5, SECTION 4
5.4.3.4
BRIEFING
BCIS Online Briefing carries the latest news in areas of key importance to the
construction economy, together with the BCIS commentary and background to
the forecasts. This section also includes the annual BCIS Five Year Forecast.
5.4.3.5
STUDIES
Tender price studies report on the effect on tender prices of location; regional
trends; selection of contractor; building function; building height; type of
work; site conditions and contract sum.
Contract percentage studies report on preliminary percentages and percentage
additions to PC sums.
5.4.3.6
DAYWORKS
BCIS interprets the definitions of prime cost of daywork for all the main types
of operative in the industry. Current and historic base rates are provided,
together with the build-up for the latest rates. Details of construction wage
agreements, national insurance and CITB levy supplement this part of the
service.
5.4.4.1
BCIS Review Online provides access to summary level information for the
BCIS Database. It includes the following sections:
Indices
BCIS Cost and Tender Price Indices are available together with Retail Price
Indices.
Average Prices
Two studies are available:
/m2 study
functional unit prices
Briefing
BCIS Review Online Briefing carries the latest news in areas of key
importance to the construction economy. Together with the BCIS
commentary and background to the forecasts. This section also includes the
annual BCIS Five Year Forecast.
Page 2
PART 5, SECTION 4
Studies
Tender price studies report on the effect on tender prices of location; regional
trends; selection of contractor; building function; building height; type of
work; site conditions and contract sum.
I
5.4.4.2
5.4.4.3
BULLETIN SERVICES
BCIS Bulletin Services contain information selected from the BCIS database
published in regular bulletins. They include:
(a)
Elemental Analyses
The key source of price information from accepted tenders available at either
concise or detailed level. Detailed analyses break down tender prices into 34
elements. Published quarterly.
(d)
BCIS publishes details of the principal wage rates in the building and allied
industries. The information shows the rates and operative dates for current and
recent settlements.
(e)
Digests
5.4.4.4
5.4.4.5
Page 3
PART 5, SECTION 4
5.4.4.6
This new guide provides cost per unit area tables for:
modern low-rise and medium-rise flats which will be applicable to many
flats built post 1950; and
flats in converted houses built between 1900 and 1950 which will also
be applicable to low-rise purpose built mansion blocks
Additional cost advice is given to help to adjust the base figures for a range of
specific circumstances.
(c)
Regional Supplement
The Regional Supplement contains separate tables of costs for each of the
Standard Regions. It helps surveyors and valuers take account of differences
in various parts of the country.
(d)
This index assists in the updating of the figures in the guides between the
annual issues. A monthly figure is circulated to all subscribers.
Page 4
PART 5, SECTION 5
Page 1
PART 5, SECTION 5
5.5.6
Annual subscription rates, further details, a full list of BMI special reports,
up-to-date prices and special rates for chartered surveyors are available by
contacting:
BMI
12 Great George Street
Parliament Square
London
SW1P 3AD
Tel: 020 7695 1500
Fax: 020 7695 1501
Email: bmi@bcis.co.uk
Page 2
PART 5, SECTION 6
Introduction
The production and storage of documents and other information on computer
systems has become increasingly common and it is, therefore, inevitable that
these stored documents will be used in their electronic form as a basis for
business transactions, and will be produced, transmitted and stored in
significant numbers.
There is a need to store and retain records for professional and legal purposes.
However, paper storage is a significant problem for many practices. The
quantity of paper produced is increasing year on year and would do so even
without expansion of the business. Two factors have led to the increase in the
amount of documentation being produced by businesses. First, there is far more
regulation being introduced into everyday life, and this is linked directly to a
more litigious population. The need is now to be able to prove what actions
occurred and when. Secondly, the growth in management systems generally, as
previously promulgated in BS EN ISO 9001:1994 and now in BS EN ISO
9001:2000, has led to an increase in documentation. In fact, the processes
involved in compliance with ISO 9001 are designed to provide the documentary
evidence which will satisfy the regulations which are relevant to the particular
business and, it is hoped, provide acceptable evidence in the event of litigation.
The requirement for storage also has implications not least of which is the
cost of dedicated storage areas. Storage conditions must be right to ensure that
storage is effective. Using a local lock-up garage will probably not be
adequate to prevent deterioration of paper copies over a period of time.
Increasingly, businesses are turning to electronic storage. This is a medium
that requires far less floor space and ensures longer term storage, without
deterioration, under the right conditions. However, there are a number of
problems related to electronic storage which have to be addressed. In
particular, legal admissibility has to be considered: there has to be a certainty
that electronically stored documents will have the same weight and validity as
the original versions.
There is no current standard which guarantees legal admissibility (some
countries have made a move towards this), but there is a shift of emphasis away
from admissibility towards evidential value or weight which is in line with the
Civil Evidence Act 1995. Annex G of the Code of Practice (see Part 1) gives
information on relevant national legislation. The purpose of this text is to
provide information on the best practice principles which have thus far been
identified.
Page 1
PART 5, SECTION 6
Page 2
PART 5, SECTION 6
5.6.3 Authenticity
It is important to be able to demonstrate that the computer has been
functioning properly (i.e. according to agreed procedures) in order to
authenticate documents stored on the system. Documents may be rejected if
this cannot be shown. There are three methods for doing this:
(1) A maintenance record should be kept recording regular servicing of the
equipment and any repair work either by the supplier/maintenance contract or
by the in-house IT support where qualified/trained to do this.
(2) By having a control set of documents which have been used, scanned and
reproduced from the scanned version to set a benchmark for the quality of
copy.
(3) By keeping proper records of scanning and scanning difficulties,
especially of any modifications to settings required. This is explained in more
detail below (see 5.6.7).
Page 3
PART 5, SECTION 6
In most cases, arguments are over what a document says rather than the
authenticity of the document. However, the adversarial legal process means
that the other party may try to discredit evidence on the basis of authenticity,
to avoid dealing with the content. Arguments over authenticity of evidence
can lead to an investigation into the system that produced the paper and the
method of storage; operation and access control; and even the computer
programs and source code.
It could be necessary to satisfy the court that the information is stored in a
proper manner. This issue could be used by the opponent to try to discredit the
evidence and to make inadmissible that and any similarly stored documents
that are produced. By questioning hardware reliability, for example, an
opponent could establish, to the satisfaction of the court, that the document
storage system is flawed and cannot be trusted. This would allow the whole
system to be brought into question and any documents stored within it ruled
inadmissible.
Page 4
PART 5, SECTION 6
Page 5
PART 5, SECTION 6
(2) It is immaterial for this purpose how many removes there are
between a copy and the original.
9
GENERAL
Scope
The Code describes the use of electronic management systems to store
information, where the issues of legal admissibility, authenticity and
evidential weight of information contained in these stored documents is
important. It is used with a document management system (DMS)
incorporating write-once optical media as the storage device, covering
Write-Once-Read-Many times (WORM), multi-functional media systems
used in a write-once mode, and compact-disc-recordable (CD-R) systems. It
now incorporates rewriteable media (for example, magnetic storage).
Page 6
PART 5, SECTION 6
The Code covers any type of data file controlled by the DMS. Data files may
be created by the DMS, or may be imported into it. The Code covers all such
data files, either created or imported, directly or through a network system,
from the time at which the system assumes complete control of the data file.
Such networks may be local or wide area.
While the Code covers aspects of document management that impinge upon
the issue of legal admissibility of digitised images, it also covers aspects that
may affect the use of images in a legal context, even where admissibility per
se is not at issue. Such aspects include the legibility and completeness of the
document images, and the transfer of the images to other systems.
The Code covers the capture of digitised images both from the original
documents and from microform versions of the original documents. In the
latter case, users should be aware of the implications of the processes used in
the microfilming of the original documents.
The Code is intended for:
systems integrators and developers whose equipment provides facilities
to meet the requirements of end users; and
end users who wish to ensure that the information created by, entered
into and/or stored within the information management systems can be
used with confidence as evidence in a court of law.
Where users wish to claim adherence to the Code, the paragraphs identified by
text in bold type in the Code are considered essential in so far as they apply to
the specific application concerned. Other paragraphs contain recommendations
in italics that should be followed where practical.
DISC PD 0008 was first published by the BSI in 1996, covering legal
admissibility of information stored on electronic management systems. It has
since been revised and reissued in 1999, and re-titled A Code of Practice for
Legal Admissibility and Evidential Weight of Information Stored
Electronically. Prior to this, BS 7799:1995 was published in 1995 setting out
best practice for information security management. The Code is heavily
reliant on this document, which has now been revised as Information
Technology Code of Practice for Information Security Management.
BS ISO/IEC 17799:2000 (BS 7799-1:2000) specifies eight controls which are
either essential requirements, for example, legislative requirements, or are
considered to be fundamental building blocks for information security. These
are designated key controls and apply to all organisations and environments.
They are intended as a basis for use by organisations setting out to implement
information security controls.
Page 7
PART 5, SECTION 6
5.6.7.2
Page 8
PART 5, SECTION 6
DUTY OF CARE
It is essential that an organisation is aware of the value of information that it
stores and executes its responsibility with regard to that information under the
duty of care principle. Appropriate levels of security for managing
information should be agreed and documented; systems should be adequately
managed; and relevant sections of the Code should be implemented.
Consultation with interested third parties at the planning stage, before the
system is installed, is also critical.
The revised Code contains more details of information security requirements
which would be satisfied by compliance with BS 7799. Where the full weight
of BS 7799 is not applicable, the controls listed in the Code should be
implemented.
In any event, there should be business continuity planning to ensure that all
data can be recovered successfully following major failures of equipment,
environment or personnel.
5.6.7.4
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PART 5, SECTION 6
PART 5, SECTION 6
Factors which may affect the scanning process should be considered and
there must be a procedure to deal with scanning difficulties. There should
also be a method for identifying such things as post-it notes attached to the
original document or physical amendments which might not be visible after
scanning.
Detailed procedures need to be established for general document preparation
and collation.
Document batching
Wherever possible, documents should be grouped in batches. Where
workflow is used, alternative methods of controlling the scanning process
may need to be established.
Photocopying
It may be necessary to photocopy a document prior to scanning and the
procedures used must ensure that there is no loss of quality or of the total
image. It is also advisable to provide some method of distinguishing between
scanned originals and scanned photocopies.
Scanning processes
The Code requires that the procedures manual should include details of the
operational procedures used in the scanning process and that records be kept
of all audit trails. In particular, it requires each document to have a unique
identity that cannot be changed or removed except on deletion and then only
under tightly controlled circumstances.
Information held in the records is expected to include as a minimum:
a unique identifier for each batch;
the date and time of scanning;
the name of the person who performed the scanning;
the type of material scanned;
the number of documents; and
details of post-scanning processes, if any.
In practice, the scanning software will take care of many of the requirements
and a paper record will fill the gaps. (Appendix A shows a specimen form for
recording scanning information.)
The procedures should also describe how it is ensured that all documents in a
batch are scanned.
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PART 5, SECTION 6
Quality control
To be able to assess the validity of any scanned copy, it is necessary to prepare
a benchmark for evaluation. The operator, using normal settings, should make
scanned copies of a range of types and conditions of document. Prints are then
obtained through the normal printing process. All hardware and settings are
recorded and the quality of each reprint is checked against the originals to
ensure it is acceptable by the standards required by the business. (It may be
acceptable, for example, for the copy to be fractionally smaller than the
original, where no scale is needed or where a drawn scale is available.)
This set of prints and originals is retained and periodically rescanned and
checked.
The Code gives a number of criteria which may be appropriate to the user,
including print size and grey scale, which can be used to establish the quality
of the scanned image.
The results of all quality control checks (including audits) should be recorded,
as should any problems or difficulties which are experienced. In addition the
equipment should be properly maintained at all times.
Rescanning
If, following an audit, a document has to be rescanned, the procedures should
ensure that the original image is replaced and that the batch numbering and
audit trail are not compromised.
Image processing
If image processing is used to improve the quality of the image, this could
conceivably lead to image manipulation. The procedures manual should
define how this is managed.
Annex D of the Code describes some of the different documents and
associated image processing facilities that may be used.
Data capture
This is mainly used where the original data is provided by such methods as
Optical Mark Reading (OMR) or manual entry from an existing document.
Procedures need to be established which specify the quality and accuracy
level required and that records of accuracy checking are retained.
There should also be a procedure to deal with data migration from one system
to another.
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PART 5, SECTION 6
Indexing
The procedures manual must describe the indexing technique to be used and
should include a method for checking the accuracy of the records. This is often
built into scanning software and electronic document management systems.
Any changes to the index should be fully explained and audit trails dealing
with the amendment should be available. The Code also advises that in all
cases the index files should be retained for at least as long as the information
to which they relate.
There should be procedures for rebuilding indexes and for
amending/correcting information held in the indexes and ensuring its accuracy
at all times.
Authenticated output procedures
For the prints to be legally admissible, there should be a formal process for
recovery whereby the operator certifies that all equipment is operating
normally and identifying the storage index data and document information
which confirms that the reproduction is a true and complete record. Appendix
B shows a specimen retrieval record for a scanned document/file, which
allows the operator to effectively certify that the document/file has been
correctly retrieved.
The Code also places great stress on the authentication process and for
controls where the output is not an exact reproduction, for example,
monochrome rather than coloured. If some aspect of the layout such as font or
pagination is not maintained, then retrieval characteristics must be agreed and
documented.
Authentication of copies of data files
It may be necessary to be able to identify whether a data file is original or a
copy. In these instances, the Code suggests that an electronic/digital signature
can be stored with a trusted third party and could then be used to demonstrate
whether a file is a true copy of the original.
File transmission
If the documents are to be transmitted within a system, via a network or
external, wide-area communications system to the storage device, then
procedures should be defined to ensure that changes cannot occur during the
transmission either accidentally or deliberately.
When a data file is transmitted to another party, the original should be stored
on the system. Equally, a data file received from an external source must be
saved on the system and the time and date of any data file should be stored as
part of the audit trail.
Page 13
PART 5, SECTION 6
Page 14
PART 5, SECTION 6
Page 15
PART 5, SECTION 6
Workflow
This process allows a number of individuals to review a document at various
stages. This record of review needs to be stored in conjunction with the
original document as a complete record.
Some workflow applications link documents by virtue of changes to the index
information. The creation and destruction of these links should be recorded in
the audit trail of each document affected.
The Code requires operational details such as flow diagrams to be
documented, as well as the process definition classification and the process
definition life cycle.
Self-modifying files
In some cases, document files contain automatic functions such as date entries
which change to the current date when the file is opened. This means that the
file cannot be frozen in the sense required by the Code. Either the automatic
functions need to be disabled before storing or there need to be procedures
which define how the files are to be stored and retrieved to ensure that
authenticated copies of the original can be produced.
Date and time stamps
Of key importance is an accurate record of the date and time and, to this end,
it is essential that the system is maintained with the correct information.
Regular checking of system clocks and changes to reflect seasonal changes,
i.e. summer time must be incorporated into the procedures. Only authorised
personnel should be able to change the system clocks.
Voice, audio and video data
The procedures should define how voice, audio and video data are to be dealt
with. Where the recording is not under the control of the information
management system, the recording system must be up to the same standard as
that required by the Code for the information management system. There also
needs to be a procedure dealing with authentication of the source data.
Version control
If changes are allowed to stored data files, then this must be in accordance
with a documented procedure which includes any requirement to keep
previous versions.
The information management system should include version control and
superseded versions should be kept for at least as long as the final version.
The Code then makes the point that all changes to procedures and processes
should be implemented in accordance with an approved change control
procedure.
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PART 5, SECTION 6
Maintenance of documentation
Procedures and records should be maintained and stored in the same way as
information generally.
5.6.7.5
ENABLING TECHNOLOGIES
General
For a new system, the user should ensure that the system has been designed in
accordance with the requirements of the Code. For systems already in
operation, documents stored on the system prior to the introduction of the
Code cannot be considered as conforming to it unless controls which meet the
requirements of the Code were in place from the time of storing the
documents.
This section of the Code describes technologies and how they should be
utilised and controlled. The following elements need to be addressed to
achieve compliance with the Code.
Systems description manual
A list of hardware and software should be compiled, with information on how
they interact, including system configuration and details of changes to the
system.
Storage media and sub-system considerations
Access to information must be controlled with read only access or read
write access where appropriate and it should be possible to identify any
changes to the document or data by those with write access. It is also
important to prevent modifications being made without detection.
Access levels
The systems description manual must define the levels of access available, as
follows:
system manager;
system administrator;
system maintenance;
authors or originators;
information storage and indexing; and
information retrieval.
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PART 5, SECTION 6
Only authorised members of staff may have access and such authority may
only be given after suitable training.
System integrity checks
The system should ensure that the integrity of data files is maintained
throughout the system, including during the transfer of this data to and from
the storage media.
An additional element in the Code deals with digital and electronic signatures
and the ability to verify the true identity of a person prior to their being
enrolled as document signatory.
Compound documents
Where an image such as a CAD (computer-aided design) drawing or a linked
spreadsheet is stored, the parts may be separated electronically. The system
should ensure that they are stored in the same location and can be retrieved as
a complete facsimile of the image.
Image processing
There are a number of ways in which an image may be processed to improve
its appearance. These may include the following:
deskew;
despeckle;
black border removal;
background clean up;
noise removal; and
forms removal.
These should only be used with extreme care and should be fully documented.
It is safer not to allow image processing, as any interference could invalidate
not only that document but any other which may possibly have been adjusted.
Compression techniques
Two type of compression technique are recognised:
(1) lossy; and
(2) lossless.
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PART 5, SECTION 6
Lossy should not be used on primarily text files, as the compressed image will
lose certain details which may be replaced by artificially generated data when
it is reproduced.
In general, it is safest not to use lossy compression at all, but the Code sets out
the requirements should this method be used.
Form overlays and form removal
Where the system software removes a fixed overlay from the digitized image,
leaving only the variable data, a record should be automatically generated to
record the removal and a copy of the template should also be stored on the
same medium.
Environmental considerations
The hardware manufacturer may well have its own recommendations for the
operational environment. These should be acknowledged and addressed in the
system manual. Handling and storage procedures should also be described, as
well as the procedure for checking the storage media regularly.
Data file migration
With changes in technology, it is almost inevitable that the hardware and/or
software will cease to be supported. The business should have procedures in
place to handle the transfer of files at the appropriate time.
Information deletion and/or expungement
It is essential that the system is able to delete or expunge documents as
described in the Data Protection Act 1998. This deletion can be accomplished
by the removal of index entries to the relevant documents. It is also essential
to be able to amend or remove incorrect or irrelevant data typically held in
contravention of the Data Protection Act. Such correction may be
accomplished by deleting the original document and substituting the corrected
document or by using masks.
In any event, the procedure for doing this must be documented.
Audit trails
To be able to use the stored information as evidence, it may be necessary to
provide supporting information on the history of the document or data,
including date of creation and/or storage, movements from one medium to
another and evidence of the controlled operation of the system.
This information will be the subject of the audit trails and the records kept
should be sufficient to provide a full historical record of all significant events
associated with the stored information, and the information management
system.
The Surveyors Construction Handbook
Page 19
PART 5, SECTION 6
It is important that the audit trail be agreed with all stakeholders who might
need to refer to the information, including the user, audit and legal functions.
The Code recommends that, as far as possible, audit trail data should be
generated automatically and that where this does not occur, there should be
adequate procedures in place and that, in either case, the date and time should
be recorded contemporaneously.
Audit trail data should also be stored as a separate entity on the system. It
should be kept for at least as long as the information to which it refers and
should be accessible. In particular, it may be necessary to make it easily
accessible to third parties who have little or no experience in the use of the
system.
The audit trail information should be treated as having the same level of
security as the information to which it pertains with secure backup copies
being kept. If paper copies are kept then the procedures should define how
frequently they should be removed and stored.
The procedures for data migration should be defined and the audit trail should
include this information.
Part of the audit trail should include the records of information capture, batch
information, indexing, change control, destruction information and workflow.
5.6.8 Conclusion
The Code of Practice provides a sound basis for the use of electronic
document and information management systems which, if followed, should
mean that the information can be used as evidence in the civil courts.
Even without this requirement, it defines the best-practice approach for
electronic storage generally.
With the enactment of the Human Rights Act 1998 and the Data Protection
Act 1998, it is expected that the pressure will continue to increase for a formal
documented statement on legal admissibility. In time, this is likely to feature
in the Civil Evidence Act, either by reference to the Code or to some European
wide standard.
The danger, however, is that technology will continue to outpace any attempt
at legislation.
Page 20
Project
Confirmation of scanning
The above files have been scanned by
................................................................................
DIP Operator/Archivist
Date
Indexing information
Project number
File
Folder reference
Commentary
Confirmation of acceptance
The above scanned files have been checked, the images are true and complete
representations of the documents scanned.
The batch contains ............... (No) images and consists of ................ (No) documents.
Signed ......................... DIP Operator/Archivist Disk refererence.......
Date
........................................................
...................
Confirmation of destruction
The above original documents may now be destroyed
Signed ........................................................................ Managing Partner
Part 5, Section 6
Appendix A (12/03)
Page 1
Project
Documents or drawings
File
Folder reference
Commentary
Certificate of authenticity
I ............................. being the DIP Operator/Archivist/CAD Manager
employed by .............................., certify that the attached
files/documents are a true reproduction of the originals which were archived in
accordance with the procedures set out in our user manual.
Signed ..
Date .............
Part 5, Section 6
Appendix B (12/03)
Page 1
Appendix C: References
Further and more detailed information can be obtained from the British Standards
Institution (BSI). Publications include:
BSI-DISC PD 0005 Information Service Management
BSI-DISC PD 0008:1996 A Code of Practice for Legal Admissibility of Information
Stored on Electronic Document Management Systems (Edition 1)
BSI-DISC PD 0008:1999 A Code of Practice for Legal Admissibility and Evidential
Weight of Information Stored Electronically
BSI-DISC PD 0009 Compliance Workbook
BSI-DISC PD 0010 Principles of Good Practice for Information Management
BSI-DISC PD 3000 Information Security Management: An Introduction
BSI-DISC PD 3001 Preparing for BS 7799 Certification
BSI-DISC PD 3002 Guide to BS 7799 Risk Assessment and Risk Management
BSI-DISC PD 3003 Are you ready for a BS 7799 Audit?
BSI-DISC PD 3004 Guide to BS 7799 Auditing
BS 4783 Parts 1 to 8 Storage, Transportation and Maintenance of Media used in Data
Processing and Information Storage
BS 7083:1996 Guide to the Accommodation and Operating Environment for
Information Technology Equipment
BS 7799-1:2000 Information Technology A Code of Practice for Information
Security Management
BS EN ISO 9000 Quality Management and Quality Assurance Standards
BSI publications are available from Customer Services, Sales Department,
389 Chiswick High Road, London, W4 4AL. Tel: 020 8996 7000 Fax: 020 8996 7001
Web: www.bsi-global.com
The following publications are available from The Stationery Office, 123 Kingsway,
London WC1. Tel: 0870 600 5522 Fax: 0870 600 5533 Web: www.tso.co.uk
Civil Evidence Act 1995
Civil Evidence (Scotland) Act 1968
Police and Criminal Evidence Act 1984
Criminal Justice Act 1988
Part 5, Section 6
Appendix C (12/03)
Page 1
Page 2
Part 5, Section 6
Appendix C (12/03)
INDEX
Note: references are to paragraphs. Figures and tables are not included
A
ACA Standard Form of Contract for Project Partnering PPC
2000 4.1.2.10A
acceleration 4.2.6.1(a); 4.2.6.2; 4.2.6.3
acceptance certificates 4.1.2.18(c)
accidents 5.2.1
ACE see Association of Consulting Engineers
activity schedules 2.3.3.2; 4.4.10.5;
Part 4 Section 4: Appendix C
addendums 3.2.4.6
adjudication 4.1(Intro); 4.4.1
administration cost Part 4 Section 2: Appendix A1
admissible items 4.2.4.2; 4.2.5; Part 4 Section 2:
Appendix C3, D
advance payments 4.4.7.10(d)
agent see employers agent
allrisks insurance 4.1.3; Part 4 Section 2: Appendix A10
all risks yield 2.2.2.3(d)
allowances see tax allowances
alteration costs Part 2 Section 2: Appendix C4
alternative design solutions Part 2 Section 1: Appendix C
amounts previously certified 4.4.7.10(c)
analyses 2.1.7.2(b); 5.4.6
analysis 1.2.7; 3.1.2.11; 5.4.3.1
see also risk analysis
analysis checklist 3.1.3.4
Appendix to the Form of Tender 4.1.2.11(b)
application for reimbursement, written 4.2.3.1(c); 4.2.3.3
appointment documents 2.5(Intro)
approval processes 3.1.4.14(c)
arbitration 4.1.2.5(c); 4.2.1.6
arbitrator 4.1.2.11(c); 4.2.1.5
architect as certifier 4.4(Intro); 4.4.2; 4.4.8.1; 4.4.8.2
architect as contract administrator 4.2(Intro); 4.4.2.3;
4.4.5.2
architects information 2.1.3.3(c); 2.1.7.3(b)
architects instruction 4.4.7.3(iii)(iv)
Architects List 4.1.2.10(c)
ascertained damages 4.1.4.3(e)
ascertainment 4.2
application 4.2.4.10
costs versus prices 4.2.4.8
definition of 4.2(Intro); 4.2.2.3
documentation for 4.2.3.4
global or individual 4.2.4.9
judgement in 4.2.2.3; 4.2.4.5
responsibility for 4.2.4.14.2.4.2
Association of Consulting Engineers 3.2(Intro)
conditions of engagement 3.2.1.5; 3.2.2.6(a); 3.2.2.7(a)
assumptions Part 2 Section 1: Appendix C
attendances 3.2.4.3
audit trail 4.3.2.4; 5.6.7.4; 5.6.7.5
Index (12/03)
Page 1
Page 2
Index (12/03)
Index (12/03)
Page 3
Page 4
Index (12/03)
Index (12/03)
Page 5
Page 6
holidays-with-pay 5.4.7
Hong Kong decision 4.1.5
house rebuilding costs 5.4.4.5
Housing Grants and Reconstruction Act 1996 4.4.2.4
housing sinking fund 2.2.5.4
Hudsons approach 4.1.5.2
human resources 3.1.4.4
Human Rights Act 1998 5.6.8
I
ICE 6th Edition: Substantial Completion 4.1.2.12;
ICE 7th Edition: Substantial Completion 4.1.2.11; 4.1.5;
4.1.6.4 (c)
ICE contracts, extension of time 4.5.11
ICE Design and Construct Clause 48(3) 4.1.2.11(d);
4.1.2.13
ICE Design and Construct Forms 4.1.2.13
ICE Minor Works 4.1.2.14; 4.1.4.1(a); 4.1.5
image processing of documents 5.6.4; 5.6.5; 5.6.7.4; 5.6.7.5
implementation 1.1.2.2; 3.1.2.7; 3.1.2.13; 3.1.4
implementation of contract 3.1.1.16
implementation process 3.1; 3.1.1.13; 3.1.4
inadmissible items 4.2.6
incentives 2.2.3; Part 2 Section 2 Appendix D5, D6
independent client advice 1.1.2; 3.1.1.6
indices Part 2 Section 1: Appendix A2.3; 5.4.3.2
Indices and Forecasts 5.4.4.2
industrial building Part 2 Section 2: Appendix D4
inflation 2.1.3.6; 2.1.4.8; 2.1.5.7; 2.2.2.2; 3.1.4.13(k); 4.2.5.7
information
general, design and build contract Part 2 Section 4:
Appendix B2.1
preparation of 2.1.4.4; 2.1.5.5
production of 2.5.4.8
requirements 2.1.3.3; 2.1.4.3; 2.1.5.3; 2.1.7.3; Part 2
Section 4: Appendix B2
see also cost information; data; documents; records of costs
information management policy 5.6.7.2
information security 5.6.7.1; 5.6.7.4
information services 5.25.5
initial control document 1.1.3.2
initial design input
role of employers agent Part 2 Section 4: Appendix A1
initial/first year allowances Part 2 Section 2: Appendix D6
inspection 2.4.3.4; 3.1.4.18; 4.4.7.9
installations Part 4 Section 1: Appendix A2.2
specialist 3.2.2.6(b)
Institute of Chemical Engineers Forms (I Chem E) 4.1.2.18
instructions
late 4.2.1.7(b); 4.2.4.10(c); 4.2.5.4(e)
post-completion 4.1.6.2
insurance 3.1.2.9(f); Part 3 Section 1: Appendix A6(n);
3.2.4.3; 4.1.6.5(b); Part 4 Section 2: Appendix A10;
4.3.3.5(b); 4.4.7.9
insurance risks 4.1.4.3(d)
interest rates 2.2.2.2; 2.2.2.3; 2.2.5.1; 2.2.5.3; 5.2.5.6
interested parties 1.1.5.4
inter-generational equality 2.6 (Intro); 2.6.1; 2.6.5; 2.6.7
interim certificates 4.2.4.6
see also valuations for interim certificates
Index (12/03)
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time
at large 4.1.6.2(b)
budget 3.1.4.14(d)
checking 3.1.4.14(d)
checklist 3.1.3.14
constraints 3.1.4.14(g)
contingency 3.1.4.14(g)
control overview 3.1.4.14
criterion 3.1.2.8(b)
extension of see extension of time
framework 3.1.4.14(a)
plan 3.1.4.11(e); 3.1.4.14(d)
risk 3.1.2.9; 3.1.2.10
timescale 3.1.2.2
timing 3.1.2.14(f)
tort 3.2.2.7(c)
traditional strategy 3.1.1.14; 3.1.2.5; 3.1.2.11; Part 3
Section 1: Appendix A1
transfer of building 4.1.1
Treasury Bonds 2.2.2.3(b)(c)(d)
turnkey 2.4.5.2
two-stage completion 4.1.4
two-stage tender 2.4.5.4
U
ultimate cost 3.1.2.2
uncertainty 4.3.2.6
see also risk
underpricing 4.2.3.1(a)
uniqueness 3.1; 3.1.1.2; 3.1.1.3
unit quantities see element unit quantities
unit rates Part 2 Section 1: Appendix A2.1; A2.2
updating 3.1.4.12(e)
user functions 1.2.7.5; 1.2.7.6; Part 1 Section 2: Appendix A
user requirements 3.1.4.13
W
wage rates 5.4.4.2
wall to floor ratio Part 2 Section 1: Appendix C
warranty 3.1.2.10(c); 3.2.4.3
warranty contracts 3.1.1.16(b)
waste 4.2.5.6
water testing Part 4 Section 1: Appendix A6
whole-life costs 3.1.4.15
With Contractors Design Form 4.1.2.3(e); 4.1.2.5
work executed 4.4.7.1; 4.4.7.2
work not properly executed 4.4.7.10(b); 4.4.7.10(g)
worked examples
life cycle costing 2.2.5
tax allowances 2.2.3.7
works
outstanding 4.1.1; 4.1.2.10(b); 4.1.2.11(c); 4.1.2.13;
4.1.2.14(c); 4.1.4.1(c); 4.1.4.2(a); 4.1.5
packages 2.4.5.2; 3.1.2.5
workshops
risk management 4.3.2.8; 4.3.3.3(a)(i)(b)(iv); 4.3.3.4(b)
value engineering 1.2(Intro); 1.2.3.1; 1.2.4.4; 1.2.5; 1.2.6;
1.2.911
World Commission on the Environment and Development
2.6 (Intro)
writing down allowance Part 2 Section 2: Appendix D7
written application for reimbursement 4.2.3.3; 4.2.6.1;
4.2.6.4
written down value Part 2 Section 2: Appendix A6
V
valuation and investment tables (Parrys) 2.2.5.7
valuations for interim certificates
administration 4.4.8
checklist 4.4.2.14.4.2.4
communications 4.4.5
content 4.4.7
covering letter 4.4.8.2
further reading Part 4 Section 4: Appendix A
other Forms of Contract 4.4.11
other relevant Contract Terms 4.4.10
preparation method 4.4.6
purpose of 4.4(Intro); 4.4.1
special situations 4.4.9
start of contract 4.4.4
under JCT Contract 4.4.3
value added tax see VAT (Value Added Tax)
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Index (12/03)