Cost Management of Construction Projects

The cost manager/quantity surveyor plays a pivotal role in the financial and contract management of construction projects, although the exact nature of the service they provide depends on the project employer’s terms of engagement. This can mean acting as consultant in a range of roles including cost and advisory services for budget setting to initiate a project, cost management through the design and construction phases, contract administration and acting as the client side project manager to oversee the entire building process.

Cost Management of Construction Projects focusses on the cost manager/quantity surveyor engaged by the project client, and discusses key elements that help drive project success including measurement (based on the New Rules of Measurement published by RICS), procurement, cost planning, contract administration and project cost management. With examples, it provides a thorough guide to the role in the workplace and in the field, directly addressing the day to day situations faced by the cost manager/quantity surveyor.

Donald Towey MRICS has extensive experience of the construction industry. His experience began as an estimator with a glass/glazing contractor in Manchester. Following a number of positions with UK contractors he relocated to Australia and has worked with a number of developers and main contractors, as well as doing freelance work. He is currently working in contracts management in Sydney.  

Donald Towey MRICS has extensive experience of the construction industry. His experience began as an estimator with a glass/glazing contractor in Manchester. Following a number of positions with UK contractors he relocated to Australia and has worked with a number of developers and main contractors, as well as doing freelance work. He is currently working in contracts management in Sydney.  

Preface

Chapter 1 Practice procedures

1.1 Organisation and structure

1.1.2 Royal Institution of Chartered Surveyors (RICS)

1.2 Methods of appointment

1.2.1 Client engagement

1.2.2 Contracts of services

1.2.3 Contracts of service  

1.3 Business development

1.3.1 New business and cold calling

Chapter 2 RICS new rules of measurement (nrm)

2.1 What is nrm?

2.1.1 Status of nrm

2.2 RICS nrm2 - Detailed measurement for building works

2.2.1 Usage

2.2.2 Structure

2.2.3 Information required for BQ preparation

2.2.4 Tabulated works sections and rules

2.2.5 Measurement rules for building components/items

2.3 Taking off

2.3.1 Measurement example - Substructure

2.3.2 Measurement example - Superstructure walls

2.4 Bill of quantities (BQ)

2.4.1 Composition

2.4.2 Breakdown structure

2.4.3 Cost centres

2.4.4 Bills of addendum and reduction

2.4.5 Software and BQ production

Chapter 3 Pre contract cost management

3.1 Cost planning

3.2 Plans of work

3.3 Development

3.4 Design influence on cost

3.4.1 Time, cost and quality relationships

3.4.2 Redundant performance and circulation areas

3.4.3 Building height

3.4.4 Modulation

3.4.5 Building shape

3.4.6 Buildability

3.4.7 Environmentally friendly buildings

3.4.8 Life cycle costs

3.5 Setting a budget

3.5.1 Client preparation

3.5.2 Estimating techniques for the feasibility study

3.5.3 Estimating techniques for setting the budget

3.6 Early design development

3.6.1 Creating cost targets

3.6.2 Element measuring

3.6.3 Element rate costing

3.7 Ongoing design development

3.8. Self checking of design development

3.9 Action on variances

3.9.1 Value management

3.10 Final design proposals and product information

3.11 Cost planning accuracy

Chapter 4 Procurement systems

4.1 Procurement definition

4.2 Meeting the client’s objectives

4.3 Influencing reports and the need for change

4.3.1 The Banwell Report

4.3.2 Constructing the Team (Latham)

4.3.3 Rethinking Construction (Egan)

4.3.4 Achieving Excellence in Construction (OGC)

4.3.5 Modernising Construction (NAO)

4.3.6 Strategies for Sustainable Construction (Government)

4.3.7 Never Waste a Good Crisis (Wolstenholme)  

4.4 Procurement routes

4.4.1 The client’s brief and influence on procurement routes

4.4.2 Traditional pathways

4.4.3 Design and build

4.4.4 Construction management schemes

4.4.5 Private Finance Initiative (PFI)

4.4.6 Public Private Partnership (PPP)

4.4.7 Prime Contracting

4.4.8 Partnering and Strategic Alliances

4.4.9 Project Alliances

4.4.10 Framework arrangements

4.4.11 Public procurement and European legislation

4.5 Appropriate procurement selection

4.5.1 Risk analysis

4.5.2 Risk management

4.5.3 Health and safety management

4.5.4 Consultant selection 

4.5.5 Contractor selection

4.5.6 Pre Qualification Questionnaire (PQQ)

4.5.7 Invitation to Tender (ITT) and the tender period

4.5.8 Tender assessment

4.5.9 Due Diligence

Chapter 5 Construction contracts

5.0 Freedom of contract and contract Law

5.1 Formation of a contract

5.2 Construction contracts

5.2.1 Contract characteristics

5.2.2 Selection of suitable forms

5.2.3 Remedies for breach of contract

5.3 Industrial standard forms of contract

5.3.1 The Joint Contracts Tribunal (JCT) 

5.3.2 New Engineering Contract (NEC)

5.3.3 GC/Works Contracts

5.2.4 Association of Consultant Architects (ACA)

5.3.5 Institution of Civil Engineering (ICE)

5.3.6 Institution of Engineering and Technology (IET)

5.3.7 Institution of Chemical Engineers (IChemE)

5.3.8 Fédération Internationale Des Ingénieurs-Conseils (FIDIC)

5.3.9 Be Collaborative Contract

5.3.10 Orgalime

5.4 Form recommendation

5.5 Pre contract signing audit report

5.6 Commitment to commence

5.7 Project insurance

5.7.1 Contract works insurance

5.7.2 Injury to persons

5.7.3 Damage to surrounding property

5.7.4 Joint Fire Code

5.7.5 Public and products liability insurance

5.7.6 Off site materials insurance

5.7.7 Professional indemnity insurance

5.8 Project securities

5.8.1 Cash retention

5.8.2 Bank guarantees

5.8.3 Bonds

5.9 Contract administration

Chapter 6 Post contract cost management

6.1 Professional appointment

6.1.1 Project initiation

6.1.2 Project identification and document control

6.2 Conflict management

6.2.1 Conflict avoidance

6.2.2 Dealing with conflict

6.3 Cost management

6.3.1 Cash flow 

6.3.2 Breakdown of the contract sum

6.3.3 Variations to the contract sum

6.3.4 Contractor’s claims

6.3.5 Third party variations and claims

6.3.6 Spurious, contentious or vague variations and claims

6.3.7 Fluctuations

6.3.8 Valuation of works in progress

6.3.9 Final account

6.3.10 Project Bank Accounts (PBA)

6.4 Insolvency

6.4.1 Contractor insolvency

6.4.2 Client insolvency

6.5 Client progress reports

6.5.1 Works in progress reports

6.5.2 Defects liability period reports

6.6 Performance feedback

Further Reading

Index

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