BTEC HND in QS & CE LOC01

Post Contract Management

Post Contract Duties of a Quantity Surveyor

(a) (b) (c) (d) (e) (f) (g) (h) Preparation of contract documents for signatures of both parties. Preparation of schedules of Rate of Spend during the construction period & advising on payments to the contractors giving dates and amounts. Preparation of interim valuations and recommending for payments. (In Sri valuations submitted by contractors and recommending for payments.) #aluing variations and advising on the financial effect on them. $dvising on the financial and contractual aspects of contractor%s claims. Preparation of cost analyses and giving cost information at all stages of the contract. &'ercise control during the construction so that the cost is not e'ceeded (ithout authority. $ct (ith the $rchitect or &ngineer to ensure that the financial provisions of the contract are properly interpreted and applied so that the )lient%s financial interest is safeguarded and that the builder is paid a proper price for the (or!. an!a" chec!ing

The contract
*nder the general la( of contract" (hen a party ma!es an offer to provide goods or services for some certain consideration and the party to (hom the offer is made accepts it" then" provided it does not involve any illegal act" a contract (hich is enforceable at la( e'ists. In the construction industry" the offer is made by the contractor (ho tenders to carry out specified construction (or!s in return for a money payment and upon the acceptance of that offer by the client and promoting the pro+ect" a binding contract comes in to being.

The contract documents

,he number and nature of contract documents (ill normally correspond (ith those of the tender documents. ,hey may be some or all of the follo(ing.

1)

Form of contract

,his is the principle document" a printed Standard -orm" such as one of the variants of the .), -orms. ,he .), /0 &dition consists of three main parts1 i) ii) iii) ,he $rticles of $greement" (hich is the actual contract (hich the parties sign" ,he )onditions (sub2divided into five parts)" (hich sets out the obligations and rights of the parties and details of the conditions under (hich the contract is to be carried out" Supplemental provisions (hich sets out the rights and liabilities of the parties in regard to #alue $dded ,a' (#$,).

2)

Bills of quantity

$ny errors in the bills must be corrected in accordance (ith the selected option in the )ode of Single Stage Selective ,endering document and necessary ad+ustments to rates and prices must be clearly and neatly made.

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S ecification
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*nder the 4ith 5uantities variant of the .), -orm" the Specification is not a contract document" but it is under the 4ithout 5uantities variant. In the latter case" the specification is to be prepared in the form for detailed pricing and have been priced by the contractor (hen tendering. In this case" the contractor may have been as!ed to submit (ith the tender" the contract sum analysis (hich sho(s the brea!do(n of the tender sum in sufficient details to enable the variations and provisional sums to be valued" the price ad+ustment formula to be applied and the preparation of interim certificates to be facilitated.

!)

Schedule of "or#

4here the 3ills of 5uantity do no form part of the contract" the contractor may send a Schedule of 4or!s for pricing (hen tendering" instead of a Specification.

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Schedule of %ates

4hen the bills of 6uantities are not provided" a Schedule of Rates is usually necessary as a basis for pricing the (or! in 7easured )ontracts and for pricing variations in the case of ump Sum contracts.

&)

Dra'in(

,he )ontract 8ra(ings are not limited to those issued (ith the tender but are all those (hich have been used in the preparation of the bills of 6uantities or specification.

Pre arations for e)ecutin( the contract

,he 6uantity surveyor is regarded by the architect as the e'pert in matters relating to the interpretation and application of the contract conditions. $ccordingly" it is not uncommon for the preparation for the signing of the contract to be the tas! of the 6uantity surveyor. &ach of the contract documents is important from a legal point of vie(. 3oth parties are bound by (hat is said in them. 4hen a contract proceeds satisfactory to completion and settlement" many of the details in those documents are not referred to. ,hey become all important (hen a contract runs into difficulties and particular statements in the documents may then come under close scrutiny. If there are ambiguities" discrepancies or contradictions in them" it may lead to delays" arbitration proceedings or even actions in the )ourts" all of (hich are e'pensive as (ell as frustrating. If such faults in the contract documents are due to the carelessness of the persons responsible for their preparation" their principals (ill be liable for a claim for damages for negligence" (hich might prove very costly. ,herefore" great care must be e'ercised in carrying out the tas! of preparing the documents for the e'ecution of the contract.

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Form of contract
The Articles of Agreement ,he blan! spaces must be filled in" (ith the date and names and addresses of the &mployer and the )ontractor" a brief statement of the nature and location of the 4or!s" the architect%s name" the numbers of the contract dra(ings" the contract sum (in (ords and in figures) and the names and addresses respectively of the $rchitect 9 )ontract $dministrator and 5uantity Surveyor. 4here bills of 6uantities are not used and if in conse6uence" a 6uantity surveyor is not appointed" an alternative $rticle is provided for the name to be given of the person e'ercising the 6uantity surveying function. Conditions: Some clauses of the conditions in the .), -orm contain alternative (ording. $ttention is dra(n to these alternatives in footnotes and to the need for appropriate deletions. Such deletions should be clearly and neatly made. ,he blan! spaces in the appendi' to the conditions should also be filled in" in accordance (ith a further list in the bills or specification. It should be noted that if nothing is stated against certain of the clause numbers" then specified time period (ill apply. ,he parties should initial each amendment to the printed document in the ad+acent margin. ,his serves to confirm that all amendments (ere made before the contract (as e'ecuted and that no amendment (as made subse6uent to that event.

Bills of quantities
,he priced bills submitted by the contractor should sho( clearly all the amended and corrected rates and prices etc. (hich have been agreed bet(een the contractor and the 6uantity surveyor. If an ad+usting amount" e6ual to the amount of the errors has been entered in the :eneral Summary" then an endorsement should be added indicating the percentage effect on the measured rates and prices.

S ecification
4here the specification is a contract document" all (hich is necessary is to endorse on the reverse of the last page the (ords ,his is the Specification referred to in the contact (ith spaces for the signatures as in the case of bills. ,he schedule of rate should sho( clearly all corrections and amendments (hich have been agreed bet(een the 6uantity surveyor and contractor. If" alternatively" a )ontract Sum $nalysis has been submitted" this should be signed by the parties and attached to the specification or to the )ontract )onditions.

Schedule of 'or#s
Instead of a specification" if a priced Schedule of 4or!s has been submitted by the contractor (hen tendering that (ill be a contract document and a similar endorsement" as that described for specification" (ill be made and signed by the parties.

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Dra'in(s
It is desirable that each of the dra(ings should be endorsed either ,his is a contract dra(ing or ,his dra(ing (as used in the preparation of the bills of 6uantities or some similar statement.

Co ies of contract document

Immediately after the e'ecution of the contract" the contractor should be given a certified copy of the $rticles of $greement" the )onditions of the )ontract" the contract dra(ings" and the contract bills. In practice" the t(o copies of these documents are prepared at the same time so that they are identical" including all the initiating and the signatures. 4here the contract is sealed only one copy needs to bear the seals. In addition the contractor should be given t(o copies of the un2priced bills or the specification and t(o copies of the dra(ings plus t(o copies of any descriptive schedule or similar document.

The contract sum

In the case of lump sum contracts" a specified sum of money is stated in the contract as to be paid by the &mployer to the contractor for the carrying out of the construction (or!s. ,his is a fi'ed sum but is sub+ect to additions and deductions in respect of various maters. ,he main causes for ad+ustment of contract sum for (hich the )onditions ma!e provisions are1 ;) $d+ustments of prime cost sums and provisional sums" <) #ariations to the design or specification of the (or!s" =) $dditions or reductions to the scope of the (or!s" >) oss and9or e'pense incurred by the contractor for specified reasons"

?) Increases or decreases in the costs of labour and materials or in ta'es" levies and contributions imposed by :overnment. ,he scope for ad+ustment of the contract sum is not unlimited. )lause ;>.< of the .), -orm limits ad+ustments to the e'press provisions of the contract. It specifically e'cludes the corrections of errors made in the contractor%s computation of the contract sum.

%eferences ;. R$7*S" .ac! and 3IR)@$ a'ton%s ;//0)" pp. A< B A/. " Simon" Contract Practice for surveyors, 3rd Edition,( ondon1

<. .)," Practice Note 23, A Contract Sum Analysis ( ondon1 RI3$ Publications" ;/0A).

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Ty es of Contracts
*+), C-.T%+CTS B+S/D -. B011S -F F0%2 Q3+.T0T0/S, *nder this variant" the building o(ner commissions an architect to prepare a design and upon virtual completion of the design" the 6uantity surveyor prepares bills of 6uantities based upon the architect%s dra(ings and specification information. )ontractors are invited to price the bills & submit tenders in competition to carry out the (or!s. 4ere the main characteristics are5 (a). (b). 3oth the 6uantities and the unit rates in the bills of 6uantities form part of the contract" and ,he design should be completed before signing the contract.

3eing the 6uantities are firm" no need of re2measuring the (or!s completed" (hen preparing the interim valuations. ,he contractor is paid for the 6uantities given in the bills of 6uantities" unless there is a variation order" (hich (ill be dealt separately under variations. ,hese types of contracts areC called ump Sum contracts" (sometimes a fi'ed price contract) as a specific amount is stated in the contract as payment for the (or!s. +dvanta(es5 ;. 3oth parties to the contract have a clear picture of the e'tent of their respective commitments. <. ,he unit rates in the bills provide a sound basis for valuation of variations to the design. =. $ detailed brea!do(n of the tender sum is readily available. Disadvanta(es5 ;. ,he length of time ta!en in the design of the pro+ect and in the preparation of bills of 6uantities is greater. <. Problems may arise due to change in the character of the balance (or! or the conditions as a result of the variations ordered by the architect. *B), C-.T%+CTS B+S/D -. D%+"0.6S +.D SP/C0F0C+T0-.S, ,his type of contracts resembles (ith the above 7+89 the difference being a specifications replaces bills of 6uantities. 4ere the essential characteristics are5 (a). (b). ,hat the tenderers are supplied only (ith a complete set of dra(ings and a full specification" ,he design should be completed before signing the contract.

,his type of contract is normally used for small (or!s such as renovations and for sub2contract (or!s. ,his is also a ump Sum contract and in calculation of the tender sum" the contractor%s 6uantity surveyor has to prepare appro'imate bills of 6uantities from the dra(ings provided.

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+dvanta(es5 ;. 3oth parties to the contract have a clear picture of the e'tent of their respective commitments. <. esser time to prepare tender documents as the time consuming item of preparing bills of 6uantities is eliminated.

Disadvanta(es5 ;. Do detailed brea!do(n of the tender sum is readily available. <. Problems arise (hen valuing variations" as no unit rates are available.

*C), C-.T%+CTS B+S/D -. B011S -F +PP%-:02+T/ Q3+.T0T0/S, ,his is also similar to type 7+8 above" difference being the 6uantities are appro'imate and sub+ect to re2 measurement. 4ere the main characteristics are5 (a). (b). Enly the unit rates form part of the contract" and ,he signing of the contract and commencing of (or! on site can proceed before completion of the design.

,his is the type of contract mainly used in Sri 1an#a and sometimes called a ump Sum contract although it is not so" as the contract sum is sub+ect to ad+ustment at every interim valuation. +dvanta(es5 ;. )onstruction on site may begin earlier. <. ,he e'tra e'pense of preparing bills of firm 6uantities is avoided.

Disadvanta(es5
;. Re2measurement should be carried out at every valuation" (hich may prove more costly than preparing bills of firm 6uantities. <. 8oes not give a realistic total cost at tender stage and in conse6uence" the parties to the contract are less certain of the e'tent of their commitments.

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*D), C-.T%+CTS B+S/D -. SC4/D31/ -F %+T/S,

,hese types of contracts operate similar (ay to that described in above 7C8. ,he big advantage of using a schedule is" that the (or! on site can start (hen the design is only on outline form and due to thisC the pre2contract period is reduced considerably. There are three ty es of schedules5 1, Standard Schedule5 ,his is a schedule prepared under relevant trade headings" all the items li!ely to arise in any type of construction pro+ect" (ith a unit rate against each item. ,he trade headings and items are arranged in accordance (ith the trade headings and items of a Standard 7ethod of 7easurement. ,he consultant%s 6uantity surveyor inserts the unit rates and the tenderers are as!ed to tender percentage additions or deductions to the listed rates allo(ing for variations in construction costs since the date of the preparation of the tender. +dvanta(es5 ;. ,enderers using a particular schedule often soon become familiar (ith the item description and unit rates and able to assess percentage additions or deductions relatively easily. Disadvanta(es5 ;. It is very difficulty to assess the favourable tender to the 6uantity surveyor at the evaluation stage. <. Parties to the contract are unable to have a precise indication of their respective commitments. 2, ;+d hoc< Schedule5 ,his is a schedule prepared for a particular pro+ect and lists only those items relevant to that pro+ect (ith special or unusual items. ,his schedule may be pre2priced by the consultant%s 6uantity surveyor allo(ing tenderers to insert percentage additions or deductions as in standard schedules or the rate column may be left blan! for the tenderer to insert unit rates against each item. +dvanta(es5 ;. ,enderers have to consider the items relevant to that pro+ect only" enabling them to assess rates or percentages more accurately. <. ,enderers are able to obtain a clearer picture of the pro+ect from the items listed in the schedule. Disadvanta(es5 ;. ,hese are similar to those applying to standard schedule. 3, Bills of Quantities from Previous Contracts5 ,he bill of 6uantity used here (ill be one prepared for a similar pro+ect earlier and being a pre2priced Fad hoc% schedule and it (ill be used in the same (ay. ,his method is used for serial tendering. Serial tendering is" to carry out (or!s of a large pro+ect in successive phases.

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+dvanta(es5 ;. ,he time re6uired to prepare tender documents is reduced to the minimum. <. ,enderers have to consider only restricted range of items. Disadvanta(es5 ;. ,he parties to the contract are unable to have a precise indication of their respective commitments. <. ,here may be a large difference bet(een the successful tender and the real cost of the pro+ect due to appro'imate nature of the 6uantities.

*/), C-.T%+CTS B+S/D -. C-ST %/02B3%S/2/.T, ,hese types of contracts are also !no(n as Prime )ost or )ost Plus contracts. @ere" the contractor is reimbursed the prime costs of labour" materials and plants and a fee is paid for managing the contract. Prime )osts mean" the total cost to the contractor of buying materials and goods" of using his o(n or hiring plants and employing labour to carry out construction (or!s. ,his is the most uneconomical type of contract and it should be used in the circumstances (here none of the other types can be used. ,he process of calculating and verifying the total Prime )ost is tedious and time consuming as it involves chec!ing on the 6uantities of materials" chec!ing of invoices" time sheets" sub2contractor%s accounts etc." other than re2measuring the (or!s completed. +dvanta(es5 ;. ,he time re6uired for the preparation of tender documents is minimised. <. 4or! on site may proceed before the detailed design is completed. Disadvanta(es5 ;. ,he parties to the contract are unable to have a precise indication of their respective commitments. <. ,he cost of construction to the client is li!e to be greater" than if any other type of contract is to be used. =. ,he computation and verification of the total Prime )ost is a long and tedious procedure.

,here are three variants of )ost Reimbursement contracts" (hich differ in the (ay in (hich the fee for the contractors% services are calculated.

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They are as follo's5 1, Cost Plus Percenta(e Fee5 *nder this variant" the contractor is paid a fee e6ual to an agreed percentage of the prime costs of labour" materials and plant used in carrying out the (or!s. ,he biggest disadvantage to the client" of this type of contract is" the greater the (aste of resources and more inefficient the contractor%s operations are" the higher the fee paid to the contractor (ill be.

/)am le5 ,he Prime )osts (costs of labour" materials and plants) of a contract" assumed to be Rs. ?"GGG"GGG.GG and the overheads as <?H and the profit as ;GH. ,he contractor therefore" tenders at =?H overall addition to the prime costs as his fee (hich (as accepted by the client. ,herefore the final costs to the client (ill be1 ,otal prime cost <?H overheads ;GH profit ,otal cost of contract Rs. ?"GGG"GGG.GG Rs. ;"<?G"GGG.GG Rs. ?GG"GGG.GG

Rs. ;"A?G"GGG.GG Rs. I"A?G"GGG.GG JJJJJJJJJJJJJ If the prime costs (ere increased to Rs. ?"IGG"GGG.GG due to e'cessive (aste and uneconomic organiKation of the contract" the total cost of the +ob at the completion (ould be1 Rs. ?"IGG"GGG.GG Rs. ;"/IG"GGG.GG Rs. A"?IG"GGG.GG JJJJJJJJJJJJJ $s the contractor%s overheads for this +ob is still Rs. ;"<?G"GGG.GG" his real profit (ould be Rs. A;G"GGG.GG" (hich is an increase of ><H of the e'pected profit. ,his sho(s" that higher the inefficiency of the contractor is" higher he get paid. 2, Costs Plus Fi)ed Fee5 *nder this variant" the fee paid to the contractor is a fi'ed sum based on an estimate of the li!ely total cost and does not vary (ith the total prime costs. *sing the same e'ample above" but assuming the contractor tendered a fi'ed fee of Rs. ;"A?G"GGG.GG made up of Rs. ;"<?G"GGG.GG for overheads and Rs. ?GG"GGG.GG for profit" the sum paid to the contractor as fee" e6ual to =?H of the total prime cost of Rs. ?"GGG"GGG.GG. $s in the above e'ample if the total prime cost (ere increased to Rs. ?"IGG"GGG.GG due to the same reasons" the total cost of the contract (ould be1 ,otal prime cost <?H overheads ;GH profit ,otal cost of contract Rs. ?"IGG"GGG.GG Rs. ;"<?G"GGG.GG Rs. ?GG"GGG.GG Rs. ;"A?G"GGG.GG Rs. A"=?G"GGG.GG JJJJJJJJJJJJJ ,otal prime cost =?H overheads & profit ,otal cost of contract

@ere the fee is no( e6ual to =;.<?H of the prime costs and the profit portion is only 0./=H. If the prime costs increased to Rs. I"GGG"GGG.GG" then the fee (ould be e6ual only to </.;AH and the profit portion is 0.==H.

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3, Tar(et Cost5 ,his variant is one other of the t(o variants described above (ith another factor added. ,he factor is the tar(et" (hich means the agreed li!ely contract sum at the beginning. $ bonus is paid to the contractor as an intensive for reducing the target cost and a penalty to be paid by the contractor to the client" if the construction cost e'ceeds the target cost. ,he bonus or penalty being normally ?GH of the difference bet(een the total amounts but may be any agreed percentages. ,a!ing the same e'ample and assuming payment method to be fi'ed fee" the agreed sum based on an estimate of li!ely total cost is Rs. I"A?G"GGG.GG" the final payment to the contractor" at the end of the +ob" could be calculate as follo(s1 Rs. ?"IGG"GGG.GG Rs. ;"A?G"GGG.GG Rs. A"=?G"GGG.GG Rs. =GG"GGG.GG Rs. A"G?G"GGG.GG JJJJJJJJJJJJJ @ere the fee has been reduced to Rs. ;">?G"GGG.GG leaving a profit of Rs. <GG"GGG.GG" (hich is only >GH of e'pected profit. @o(ever if the contractor (as able to reduce the total prime costs" say to Rs. >"0GG"GGG.GG" the final payment to the contractor (ill be as follo(s1 Rs. >"0GG"GGG.GG Rs. ;"A?G"GGG.GG Rs. I"??G"GGG.GG Rs. ;GG"GGG.GG Rs. I"I?G"GGG.GG JJJJJJJJJJJJJ ,he fee no( increased to Rs. ;"0?G"GGG.GG" (hich includes Rs. IGG"GGG.GG profit" thus the overheads remaining at Rs. ;"<?G"GGG.GG. $s a percentage the profit is no( ;<H of the total prime costs" (hich has been increased by <H. ,otal prime cost -i'ed fee (=?H overheads & profit) ,otal cost of contract +dd5 3onus being ?GH of saving over Rs. I"A?G.GGG.GG $mount of final payment ,otal prime cost -i'ed fee (=?H overheads & profit) ,otal cost of contract Deduct5 Penalty being ?GH of e'cess over Rs. I"A?G.GGG.GG $mount of final payment

The Com osite .ature of Contracts5

$lthough for convenience" contracts are classified and labelled as above" in practice often combine the characteristics of t(o or more types. -or e'ample" ump Sum contracts based on bills of firm 6uantities contain items (ith provisional 6uantities re6uiring re2measurement and therefore such items bear the characteristics of bills of appro'imate 6uantities contract. $lso the provisional sums included in the bill for 8ay(or!s and e'pended on (or!" (hich is not readily measurable or reasonably priced as measured (or!" form prime costs plus percentage fee contract (ithin the main ump Sum contract. ,herefore many contracts" regarded as ump Sum type" are combination of several types.

The %is# Factor5

,he ris! that the parties ta!e in implementation of the contract is an important element of construction contracting" as it may be detrimental in some degree to their financial or other interests. ,he &mployer ta!es the ris! that he (ill become liable for a greater total cost that he envisaged (hen initiating the pro+ect & on the other hand the contractor ta!es the ris! that his anticipated profit (ill be reduced or converted into a loss as a result of the out(or!ing of the conditions under (hich the contract is carried out.

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In the contracts based on 8ra(ings and Specifications" the contractor bears a high degree of ris! as he has to ta!e off his o(n 6uantities and any error he ma!es (ill effects his profit margin and also it is a ump Sum contract. ,he &mployer%s ris! is very little in this situation. En the other hand (here a )ost Reimbursement contract is used" the contractor%s ris! is reduced to a minimum as he is paid his full costs and a fee in addition. 3ut the &mployer bears the ris! of prime costs becoming much higher than estimated due to inefficient site organiKation or to (aste of resources. Fi(ure 15 3elo( indicates a ran!ing of contracts according to the allocation of ris! borne by the parties. ) o n t r a c t o r% s R i s
!

L 8ra(ings & Specifications L 3ills of -irm 5uantities L 3ills of $ppro'imate 5uantities L Schedule of Rates L )ost Reimbursement2,arget )ost L )ost Reimbursement2-i'ed -ee L )ost Reimbursement2Percentage -ee &mployer%s Ris! Fi(ure 1
C10/.T

Q3+.T0T= S3%>/=-%

+ %C40T/CT

/.60.//%0.6 C-.S31T+.TS

C-.T%+CT-%

.-20.+T/D S3B C-.T%+CT-%S

D-2/ST0C S3B C-.T%+CT-%S

Indicates ines of )ommunication. Fi(ure 2

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Contractual lin#s e)ist5 ;. 3et(een the &mployer and each of his professional advisors. <. 3et(een the &mployer and the contractor. =. 3et(een each of the professional advisors. >. 3et(een contractor and each sub2contractor. C0%C32ST+.C/S 0. "40C4 T4/ >+%0-3S T=P/S -F C-.T%+CTS +%/ 3S/D ,he circumstances peculiar to a pro+ect (ill indicate the type of contract (hich is most appropriate. Eccasionally" more than one type might be suitable" in (hich case" the one (hich seems to offer the greatest benefits to the client to be chosen. ,he suitability of the types of contract discussed above is related to varying circumstances as follo(s1 Based on Bills of Firm Quantities ;. 4hen there is sufficient time to prepare a complete design enabling to ta!e accurate 6uantities. <. 4hen the client%s total commitment is !no(n beforehand. Based on Bills of + ro)imate Quantities ;. 4hen the design is fairly (ell advanced but there is insufficient time to ta!e off accurate 6uantities or the design is not sufficiently completed to ta!e off accurate 6uantities. <. 4hen it is desired to have the advantages of detailed bills but (ithout the cost in terms of the time and9or money. Based on Dra'in(s and S ecifications ;. 4hen the pro+ect is fairly small. <. 4here time is short and the client considers it to be less important to have the benefits of bills of 6uantities than the early completion of the construction (or!" (hile retaining the advantages of a lump sum contract. Based on a Schedule of %ates ;. 4hen the details of the design have not yet been (or!ed out or there is considerable uncertainty in regard to them. <. 4hen time is pressing. =. 4hen term contracts are envisaged. Based on Prime Cost lus Fee ;. 4hen time is short and cost is not as important as time. <. 4hen the client (ishes to use a contractor (ho has (or!ed satisfactorily for him before and (hom he can trust to operate efficiently. =. In case of emergency" such as repairs to dangerous structure. >. -or maintenance contracts. ?. -or alteration +obs (here there is insufficient time or it is impracticable to produce the necessary documentation. %eferences5 R$7*S" .ac! and 3IR)@$ " Simon" Contract Practice for surveyors, 3rd Edition, ( ondon1 a'ton%s ;//0)" pp. ;A B 00" === B =><. 8$#IS" $D:8ED and &#&R&S," Contracts in Use ( ondon1 RI)S" <GG=). $5*$ :RE*P" Tenders & Contracts for Buildings, 2nd Edition, 3lac!s(ell ;//G. Prime Cost Building Contract ( ondon1 S(eet & 7a'(ell td" <GG?).

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