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Unlocking life
cycle costing
NRM3 one year on

Structural strategy

Managing risks

Sky high prices

Transforming the
UK construction

How health and safety

is creating positive
company cultures

Solving Hong Kongs

upward spiral of
construction costs






April/May 2015




Unlocking life
cycle costing
NRM3 one year on

Structural strategy

Managing risks

Sky high prices

Transforming the
UK construction

How health and safety

is creating positive
company cultures

Solving Hong Kongs

upward spiral of
construction costs





April/May 2015



Front cover:

Chairmans column



Editor: Robert Mallett

T +44 (0)20 7695 1533 E rmallett@rics.org

Unlocking the 2025 vision

The Construction Journal is the journal of the Project

Management and Quantity Surveying & Construction
Professional Groups
Advisory group:
Emma-Kate Ryan (Faithful and Gould), Helen Brydson (Faithful
and Gould), Martin Stubbington (RICS)., Gerard Clohessy (EC
Harris), Christopher Green (Capita Property and Infrastructure),
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Andrew McSmythurs (Sweett Group), David Reynolds, Justin
Sullivan (Adair Associates), Tim Fry (Project Management
Professional Group Chairman), Alan Muse (RICS)
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Published by: Royal Institution of Chartered Surveyors,

Parliament Square, London SW1P 3AD
T +44 (0)24 7686 8555 W www.rics.org
ISSN: ISSN 1752-8720 (Print) ISSN 1759-3360 (Online)
Editorial and production manager: Toni Gill
Sub editor: Gill Rastall

Application of NRM3 during key

stages of a project life cycle
can realise major reductions in
construction and whole life costs,
explains Andy Green

Structures for the future

No need to panic

Jim Percival gives his top

tips for successfully
completing the Assessment of
Professional Competence

View from the chair

With nearly 10 years under his

belt as an assessor, APC
chairman Gary Blackman
describes a typical interview day

Sky high prices

Robert Mallett assesses how

the RICS Property in Politics
campaign and the Armitt
Review aim to transform the
UK construction landscape

Roy Ying explains the reasons

behind the continuing rise in
construction costs in Hong Kong

From red tape to risk

In his final article on stress in the

construction industry, Matthew
Maslen makes the case for a more
effective reporting framework

Martin Cook looks at how placing

health and safety centre stage
is contributing to a more positive
company culture

Change of focus

William Hall examines the benefits

of both lag and lead metrics in
managing health and safety risks

Scope for argument

Michael Sergeant looks at why

contract variations can create
disputes and how UK courts
resolve them

Reading the signs

Bending to the rules

With the right to request flexible

working now extended to all,
Helen Crossland considers best
practice for employers

Comparing notes

Aaron Wright introduces the

new BCIS Benchmark Report
tool being offered in return for
construction cost data

Legal helpline

Legal experts answer

common queries

Senior designer: Wasim Akande

Creative director: Mark Parry
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Design by: Redactive Media Group Printed by: Page Bros

While every reasonable effort has been made to ensure the

accuracy of all content in the journal, RICS will have no
responsibility for any errors or omissions in the content. The
views expressed in the journal are not necessarily those of RICS.
RICS cannot accept any liability for any loss or damage suffered
by any person as a result of the content and the opinions
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act as a result of the material included in the journal. All rights in
the journal, including full copyright or publishing right, content
and design, are owned by RICS, except where otherwise
described. Any dispute arising out of the journal is subject to the
law and jurisdiction of England and Wales. Crown copyright
material is reproduced under the Open Government Licence
v1.0 for public sector information: www.nationalarchives.gov.uk/

A P R I L / M AY 2 0 1 5 3




David Bucknall examines the chartered quantity surveyors contribution to
delivering the governments Construction 2025 industry strategy

Taking a lead in the

cost revolution

It is vital that chartered
quantity surveyors (QSs)
become actively involved in
Construction 2025 both
through RICS, their practices
or as individuals.
I am delighted that this
edition of the Construction
Journal emphasises the
opportunity to embrace and
deliver whole life costing.
This is the key to delivering
the strategy targets.
Having been around in the
late 1950s and early 1960s
when the profession rapidly
emerged from backroom
technician to front end
cost planner, I can see the
governments strategy as an
opportunity for us to make
another quantum leap as a
first phone call profession in
the creation and management
of all built assets.
Back then, elemental cost
planning was the tipping point
that took us from being a
4 A P R I L / M AY 2 0 1 5

measurer (i.e. historian)

to fortune teller, by the
adoption of elemental cost
plans to replace trade bills
of quantities.
Likewise, the creation of
the NRM suite gives QSs the
opportunity to make a direct
link between capital project
costs and operational whole
life costs.

Reviving core skills

Our core skills on
measurement and valuing
give us a unique opportunity
to be at the heart of the
whole life cost revolution.
Remember that many of our
major projects (initially mainly
in infrastructure i.e. HS2,
Crossrail) are funded solely
on a whole life basis.
The 2025 strategy
demands the delivery of
significant improvements in
whole life performance in
built assets. Therefore, it is
worth repeating that our
core skill is the measurement
and valuation of all labour
and material components
in any construction project,
however dormant these skills
currently lie.
Through this we create
cost data that is at the heart
of elemental cost plans,
which, driven by BCIS, create
the crucial quality, time

and cost benchmarks for all

construction and infrastructure
projects. Improving these
benchmarks for the whole
project life is at the heart of
the 2025 strategy.

Asset data
Historically, the chartered
quantity surveyors systematic
elemental analysis of the
capital costs of projects is
the bedrock of our current
profession but, as we all
know, it is only a small part
of the real cost. This is now
augmented by our ability to
create equivalent data for
every element of the whole life
operation and maintenance of
any construction-related asset.
RICS development of NRM 1,
2 and 3 gives, for the first time,
an international platform for
creating hard data that enables
chartered surveyors to bench
mark improvements in whole
life asset performance.
This, together with
technical developments
such as building information
modelling, gives a unique
opportunity for the QS to lead
the Industry in delivering whole
life cost management and
value management.
It is exactly 10 years to
the 2025 industry strategy
targets. Surely we cannot
just wait for others to get

on with it and expect that

the challenging targets will
suddenly be achievable.
Armed with the above
tools and techniques, our
profession can lead the
industry on the road to
whole life performance
improvement for built assets.
This journey should start
now by defining some interim
milestone targets for, say,
2018 and 2022.
Experience from other
industries indicates that
such ambitious targets
will be achieved by a
series of incremental
improvements across all the
complex aspects of design,
construction and operation.
The Quantity Surveying
and Construction
Professional Group Board
aims to play a leading part
in the delivery of the 2025
targets. We believe this will
enhance the perception and
reputation of QSs as a vital
component of the industry
hopefully halting the race to
the bottom on fees. b

David J Bucknall FRICS is

Chairman of the RICS Quantity
Surveying and Construction
Professional Group Board



Builders Finance Fund
bids to unlock projects
The Builders Finance Fund provides a
525m pot to accelerate or unlock viable
developments that have slowed down
or stalled. Access to the fund is on a
recoverable capital investment basis.
The Homes and Communities Agency
initiative aims to address difficulties in
accessing development finance faced
by some small and medium-sized
housebuilders and developers. For bids
between five and 14 units in size, the fund
will be exclusive available to SMEs.
The scheme focuses on unlocking
deliverable projects that can start or
restart quickly. The fund will make


investments over two years from 2015-16

to 2016-17 and total funds must be drawn
down by 31 March 2017.
To be eligible, schemes must be
delivering between five and 250 new
homes. Bids must be submitted by a
private sector developer, which must have
control of the site.
A minimum investment of 200,000
is required and the site must have local
authority support. Schemes must have
planning consent and be capable of
implementing by 30 June 2015.
n Read more details, visit

Membership survey
while overall
satisfaction and
pride in membership
remained high at
68% and 89%



More than
members responded to
RICS December 2014
membership online survey.


23 April, web class

Construction project
management: variations

27 April, London
Open book contract
management for construction

29 April, online
Certificate in building
information modelling
project management


The percentage
likely to renew their
membership increased
to its highest level yet,

22 April, Manchester
Development appraisals:
features and analysis



7 May, web class

Construction project
management: delay
and disruption

13 May, London
Working with target
cost contracts

14 May, London
JCT design and build contract:
practical training

and events

RICS European Smart Cities Conference

12 May, British Library, London
n www.rics.org/smartcities

RICS spring CPD series 2015

April-July, various locations, UK
n www.rics.org/cpdseries

RICS QS and Construction Conference

20 May , Victoria, London
n www.rics.org/qsconference

RICS Infrastructure Conference

22 April, The Grange Hotel, London
n www.rics.org/

RICS Property Leaders Summit

10 June, Queen Elizabeth II Conference
Centre, London
n www.rics.org/plsummit

Online, distance learning

Certificate in construction
project management

21 May, web class

Construction project
management: loss and expense

10 June, distance learning

Diploma in adjudication

A P R I L / M AY 2 0 1 5 5




Applying the New Rules of Measurement (NRM3) during key stages of a

project can bring major reductions in whole life costs, explains Andy Green

Unlocking the 2025 vision

he ground-breaking
New rules of
measurement for
building maintenance
(NRM3) became
effective from 1
January. The volume
is timely because the UK governments
Construction 2025 strategy has
challenged the industry to find a way of
reducing the total whole life costs by up to
33%. This means all public sector project
teams must now get a grip of how to do
life cycle costing.
Following extensive collaboration
with BCIS, the Chartered Institution
of Building Services Engineers (CIBSE)
and the Building & Engineering Services
Association (B&ES) have agreed to
adopt the NRM3 expanded cost
structure, backing the 2025 vision.
This means that the NRM3 elemental
cost structure is now fully aligned with
industry standard planned preventative
maintenance task schedules (the SFG20
specifications), and the economic
reference life expectancy data structure
published by CIBSE Guide M and the
BCIS cost analysis.
This alignment standardises
cost estimating, cost planning and
cost reporting and can unlock the
robust benchmarking of total capital
construction costs and renewals,
operations and the maintenance costs.
This effectively bridges the capital and
revenue divide and will also enable
building information modelling (BIM) life
cycle costs.
Together with NRM1 and 2, NRM3
provides a basis for economic
and financial whole life cycle cost
management. This will have huge benefits
for UK construction and the maintenance
industry, because it will enable all
stakeholders to compare costs on a
like-for-like basis throughout the
key stages of the buildings life cycle
(inception, feasibility, design, construct,
handover and in use, to end of life.

Efficiency agenda
Construction 2025 focuses on
procurement, based on greater cost
6 A P R I L / M AY 2 0 1 5

certainty and transparency to minimise

whole life costs. Its BIM strategy requires
whole life cost information to be supplied
at stages during the project life cycle.
Clear rules and methods are therefore
pivotal in both the public and private
sectors (see figure 1).
Comparative cost analysis and
benchmarking are also key pillars of
the governments efficiency and reform
group agenda, making a cross-industry
Image Alamy

common cost data structure and NRM

fundamental to success (see figure 2).
RICS is mapping the classification for the
emerging free online government digital
tool relating to the Digital Plan of Work/
Construction Classification, project to
NRM1 and 3 (led by Innovate UK). This
should allow even more seamless use of
cost planning and whole life cost data.
To realise the full benefits, the quantity
surveying profession needs help to


Figure 1: Key levers




Integrate the construction
costs with maintain and
renewal costs, energy/carbon
reductions, etc.
Cost In use (Function models)
Unit costs for specific
Projects data drops (life cycle


Sector initiatives - Railways,
aviation, custodial, education,
health, retail, defence offices
and more

Efficiencies over whole life

cost savings <33%
Lower emissions -50%
Sustainable development

Figure 2: Optimising












1 Selecting the lowest whole life

cost scheme
2 Informing the design detailing option study
6 Handover to operate and
maintain (post build)
7 Control and managing life cycle
cost in use







So NRM3 can have a massive impact on

how buildings are designed, constructed,

Bridging the capital and

revenue divide by BIM cost

unlock life cycle costing in biteable

sections; i.e. at each stage of the process.
The NRM suite provides the
methodology and measurement rules
for cost estimating, cost planning, cost
reporting/analysis, thereby standardising
the cost data structure and levels for
key applications:
Application 1: Feasibility
bbTo inform the shortlisting of suitable
schemes, based on whole life costs.
bbUsing gross internal floor area functional
unit costs (e.g. cost per workplace/ per
bed space/ per pupil) and elemental
cost information where applicable, to
improve whole life cost (WLC) certainty.
Application 2: Options appraisals
bbComparing a base case (i.e. do nothing)
with alternative scenarios.
bbComparing options using elemental
or amplified WLC cost estimates and
benchmarks (e.g. inform the selection
of the specification of a boiler/heating
system; cladding etc).
Application 3: Sustainable solutions
(also include stages 4 and 5)
bbOptimising design detailing,
procurement, construction of
sustainable development solutions, using
unit rates for elemental cost planning,
procurement, cost reporting and BIM for
projects, BIM4FM life cycle cost in use
(pre/post handover and in use).
Application 6: Handover to operate
and maintain
bbThe NRM3 cost data structure and
classification coding now provides the
means for standardising the handover
to operation and maintenance, and
for setting up asset registers and
undertaking asset condition surveys, for
maintain and renewal plans.
Application 7: In use phases to end of
life or end of interest
bbAdopting and embedding NRM3 into
the project and in use phases will
provide the means to bridge the capital
and revenue divide, and unlock inter
operable cost data from the life cycle
in use, to use for inputting into projects
and BIM cost modelling.

Floor area (GIFA/NIA) and

Functional uit costs
Level 2 BIM costs for project
planning /delivery
Level 3 and 4/5 AIM for maintain
and renewal costs


Standards for life cycle costing





End of life








In use

A P R I L / M AY 2 0 1 5 7





Heathrow has driven whole life value thinking into its asset renewal programme

procured and handed over to be

operated and maintained. This includes
the setting and defending of budgets,
and the prioritising of programmes of
maintenance and renewal works over the
short, medium and long term (25 years+).
By taking a proactive lead, RICS/BCIS,
B&ES and CIBSE aim collectively to help
the construction industry to simplify and
standardise the application of life cycle
cost in practice specifically for each
As more and more evidence of
the benefits of WLC costing become
available, this will help to overcome the
historical barriers to life cycle costing (i.e.
lack of standards, robust data, knowhow.

Unlocking the benefits

In response to Construction 2025
Strategy, by unlocking how to life cycle
cost, NRM3 will realise:
bb better informed decision making (at
each of the key stage gates)
bb efficiencies and life cycle cost savings
bb stimulating customers to procure and
manage better solutions
bb improving the whole life performance
of buildings
bb evidence of whole life performance,
risk and cost benefits
bb robust cost analysis and benchmarks +
BIM cost data drops.
PFI/PPP projects are design, build,
operate and maintain and/or finance
contracts and are procured based on
lowest life cycle costs and risks that
fulfil the contractual and performance
requirements. However, the traditional
construction market is still struggling
to get to grips with life cycle costing,
despite now having new operational
standards (i.e. NRM suite, PAS 1192 part 1,
8 A P R I L / M AY 2 0 1 5

2, 3 and 4; BS 8544 and ISO 55001 asset

management). Many see it as a black art
and quantity surveyors leave it to the so
called specialists.
One key learning point from the world
of PFI was the development of WLC
templates for the assessment of projects
(developed for schools, defence and
other sectors). This provided effective
control and transparency on how to
present cost information in order to
inform better decision making and
compare benefits, risks and uncertainty
associated with whole life costs at key
decision points (i.e. project stage gates).
Learning from the PFI market and
from the more recent BIM initiatives,
it is clear that the industry urgently
needs standardised approaches to
predicting, assessing and reporting
whole life costings. To help tool QS
practitioners and cost managers,
currently developing life cycle cost
templates for each of the key applications
1, 2, 3, 6 and 7.

Client champions
Network Rail has mandated that whole
life costing is undertaken on all projects
from 1 April 2014. To make this happen in
practice, they developed a manual setting
out how to apply whole life and life cycle
costing at each stage of the process,
along with guidance task charts.
Various case studies provide the
evidence of how whole life cycle costing
is making a real difference.
Heathrow airport has driven whole
life value thinking into its Q6 asset
renewal programme. This has resulted,
according to Steve Chambers, Director
of Engineering and Asset Management,
in great creative and lateral thinking, and
Image Shutterstock

consideration of business requirements.

Clearly, Heathrow has taken the
challenge very constructively. I am
impressed with the extent to which
the team worked closely with the
engineering and asset managers in the
business units to develop and hone the
options to ensure it was focused in the
right areas. All this and a potential saving
of 10% to 20% identified against budget,
provides confidence that we can meet
the capital challenge we face with this
kind of thinking.
Many other clients who have adopted
the NRM suite are realising the benefits
of life cycle costing in use, during project
early design stages and also post
construction in use phases (on existing
buildings). NRM provides:
bb consistency: enables key decisions to
compare costs on a like-for-like basis
bb greater confidence and cost
certainty: throughout the life cycle
period set
bb transparency and control: over what,
where and when money is spent
bb bridging the capital/ revenue divide:
unlocking life cycle cost analysis and
benchmark data
bb target: efficiency and cost savings, as
well as future investment and prioritisation
of the capital, maintenance and renewal
programmes of work.
As the body of tangible evidence
continues to grow, more and more clients
will demand that whole life cycle costing
is undertaken on their projects. This
presents the QS profession with a golden
opportunity to realise more for the same
or less, through thinking whole life. b

More information
Future editions will provide worked
examples to demonstrate how clients
and project teams have put whole life
cycle costing into practice

Andy Green is Technical Author of

NRM3, Vice Chairman of B&ES
Technical Standards Committee and a
Director at Faithful + Gould

Related competencies include

Commercial management of
construction, Sustainability



Robert Mallett assesses how the RICS Property

in Politics campaign and the Armitt Review aim to
transform the UK construction landscape

Structures for
the future

As the UK prepares for
what is likely to be one of
the most closely contested
general elections in British
political history in May, the
debates about the future
prospects of the national and
global economies are, not
surprisingly, at the forefront.
Although the worst of the
fallout from the financial
crisis appears to be behind
us, the international economy

is still beset by problems,

ranging from tumbling oil
prices to a slow-down in
growth among the emerging
economies. Indeed,
annual survey, unveiled at this
years Davos World Economic
Forum, shows that only 39%
of chief executives foresee
economic improvement in
2015, down from 44% last
year (http://bit.ly/1vqbfiA).
The UK construction sector
plays a significant part in
the current governments
economic vision of the future,
identified as capable of
driving ahead future economic
growth in these times of
continued uncertainty. If
Construction 2025s forecasts
are accurate, the global

construction market is set

to grow by 70% by 2025,
which means that demand
for Britains international
expertise in this sector could
expand markedly if it is primed
and ready to do so.

Industry issues
Last year, RICS launched
the largest consultation
of its membership ever
undertaken. The Property
in Politics influencing report
that emerged from these
conversations with individual
members, member firms,
industry representatives and
other professional bodies is
designed to help facilitate the
governments drive toward a
leaner industry able to reduce
public sector project whole
Image iStock

life costs by 33%, improve

delivery times and stimulate
construction exports (both
by 50%).
On 16 January, in the
historic surroundings of the
Churchill Room at the House
of Commons, the findings of
the survey were announced
and subsequently digested
and discussed by panels
of industry experts. The
construction panel, chaired
by Construction News
consultant editor Denise
Chevin, concluded that there
were plenty of opportunities
for UK expertise given that
we were currently living
through the most exciting
times in terms of technology,
opportunity and new methods
since the 1960s.
Nevertheless, problems
continue to bedevil the
industry, and particularly skills
shortages, which effectively
placed a barrier on output.
The panel felt that RICS was
in an excellent position to
help address such issues, and
fully supported its calls for a
Construction Skills Investment
Charter making use of grants
and tax incentives to recruit
and train new talent.
Building magazine editor
Sarah Richardsons panel
agreed with the RICS
surveys main findings, which
overwhelmingly concluded
that the public and private
sector should cooperate in
the delivery of infrastructure
investment. The problem
was that private investors
were often put off owing to
a lack of understanding, and
subsequently investment as a
whole remained inadequate.
Principally, the panel
concluded, the difficulties
were political, or rather
structural in nature. The
governments National
Infrastructure Plan amounted
to more of a vision than
A P R I L / M AY 2 0 1 5 9



n a detailed plan of action.

Perhaps what was really

needed was a set of
national infrastructure goals,
overseen by an independent
infrastructure commission, it
was suggested.

Armitt commission
The idea for an independent
commission to oversee the
UKs infrastructure needs
was first recommended in
September 2013s The Armitt
Review (http://bit.ly/1unfwTJ)
by distinguished industry
figure Sir John Armitt, who,
among many other things,
chaired the very successful
Olympic Delivery Authority.
Now that the setting up
of such a commission with
statutory independence
forms part of official Labour
Party policy for the coming
election campaign, Armitt
discussed its merits with
a specially invited panel of
guests at RICS Parliament
Square offices on 17 January.
Certainly, few could doubt
that the UKs infrastructure
is in need of renewal and/or
further development. In recent
years, independent reports
by bodies such as the World


Economic Forum have ranked

Britains infrastructure as low
as 24th among the 30 major
industrialised nations, with
its delivery competiveness
faring only slightly better
Fewer still could doubt the
vital importance of this sector
in generating industrial growth,
better communications and
better trade links. Therefore,
UK plc certainly does have
a discernible need for an
evidence-based, national
infrastructure strategy with
the key objective of prioritising
needs and improving delivery.
Armitts recommendations
that a politically independent
infrastructure commission be
set up, charged with assessing
Britains infrastructure needs
over a 25-30 year timeframe,
make sense. During the
discussions at Parliament
Square it was clear that there
was a broad approval for
a body that would assess
national requirements across
energy, transport, water, waste
and telecommunications every
10 years.
That assessment could be
presented to the Chancellor
who would have a statutory

A commission could facilitate

a better organised and
intellectually more thorough
basis for major project planning
obligation to present its
findings (the National
Infrastructure Assessment)
to Parliament for approval.
Once approved and amended
by both Houses, the relevant
government departments
would produce their own
Sector Infrastructure Plans
within 12 months.
Should the Labour Party
win an outright victory, or at
least form part of a governing
coalition in May, the new
commission will almost
definitely be established
and effectively expand the
inward investment task
of Infrastructure UK. The
new structure will act as
an independent source
of opinion and analysis
designed to advise the
political sphere on the UKs
infrastructure priorities.
Its assessment process is

designed to be removed from

political interference, and
to encourage cross-party
consensus on the long term
infrastructure issues affecting
this country.
Although the commission
cannot take the politics out
of infrastructure it could
facilitate a better organised
and intellectually more
thorough basis for major
project planning. No doubt
there will be dissenting
voices who will view it as
simply another quango.
Nevertheless, if the UK is
to improve its infrastructure
ranking and delivery
performance and reap the
undoubted economic benefits
of successfully doing so a
well-prepared, long-term
strategic view established
by a body of leading industry
experts must be a step in the
right direction.
The commission would be
supported by RICS, noted
Alan Muse, Global Director for
Built Environment, while Armitt
emphasised that its eventual
success relied on its continued
political independence and
constant focus on its core,
assessment-based purpose.
Such structures have
worked well in Australia and
New Zealand, and there is
every incentive for our industry
to support such an initiative
in the UK. We must now wait
the turn of political events
to see whether it becomes a
reality, or whether a different
configuration of political
forces chooses to pursue a
different mechanism. b
Robert Mallett is Editor of the
RICS Construction Journal

1 0 A P R I L / M AY 2 0 1 5

Image Shutterstock



From red tape to

risk management
Martin Cook looks at how placing health and safety centre
stage is contributing to a more positive company culture

Health and safety

professionals invariably
develop a thick skin. The
discipline has long been the
butt of jokes among the wider
public, and even within the
construction sector there are
some that see it as little more
than a tick box exercise to
satisfy legal obligations. While
it is well known that severe
penalties can be imposed if
rules are not followed and an
accident results, health and
safety is viewed as having
an associated cost but no
immediately obvious benefit.
Yet this attitude is changing.
As clients increasingly base

their investment decisions

on the whole life cycle of
an asset and not just the
early stage costs more are
coming to see health and
safety as an essential risk
management tool.
Organisations are
increasingly using it to
quantify both the likely cost of
infringing the rules in terms
of possible sanctions and
reputational damage and
the benefits of running a safe,
secure working environment
for their employees.

Reactive vs
Central to this reassessment
of health and safety is the
move from it being regarded
as a purely reactive process
to it being used proactively
to manage risk, during
construction and throughout
the life of an asset.
At its best, a proactive
approach to health and safety
Image Shutterstock

can mitigate a huge variety of

risks from accidents to lost
working days and deliver
several desirable outcomes,
such as better performance,
improved morale and greater
staff retention.
Employees who feel safe
in their working environment,
and are assured that their
employer is looking after
them, are likely to be more
engaged, more productive and
better ambassadors for the
company brand. The wider
benefit to an organisations
corporate reputation from
having a sophisticated
approach to health and safety
is incalculable.

Positive models
High hazard industries, such
as oil and gas, have long seen
the value of a rigorous health
and safety regime. Although
originally imposed on them
for obvious reasons through
legislation, they quickly

realised that the benefits

and positive behaviours
that resulted went far
beyond the reduction of
operational hazards.
Their approach focuses
on the companys moral
obligation to its employees
with financial gain and
legal compliance becoming
the welcome byproducts of
their efforts.
Such is the success of
this proactive approach
that some organisations
have embedded health and
safety into their corporate
culture through Operational
Excellence or Fit for the
Future programmes.
Safety and success are
seen as indivisible, and all
staff and contractors
are taught to apply two
fundamental principles in
everything they do:
bb do it safely or not at all
bb there is always time to
do it right.
A P R I L / M AY 2 0 1 5 1 1



Such organisational maturity

need not be limited to high
hazard industries. Clients in
other sectors are now aspiring
to the same levels of proactive
risk management.

Step by step
The key point to remember
when seeking to integrate
health and safety into the
construction of a new building,
or even the management of an
existing one, is that it is not a
separate discipline from either
cost or project management.
Rather, it is a powerful means
of achieving better outcomes
in both.
Health and safety can be
implemented as part of a
suite of risk management
processes. These include:
bb Risk profiling: identify and
assess all potential risks from
the likely to the remote, and
devise mitigation strategies
for each.
bb Assurance: undertake
accurate monitoring, rigorous
analysis of performance data
and take prompt action to
control any areas which are
not up to standard.
bb Improvement: where
performance is consistently
below par, identify the
underlying causes and
recommend new working
1 2 A P R I L / M AY 2 0 1 5


Health and
safety is not
a separate
discipline from
either cost
or project
practices to ensure the
problem is not repeated.
On a recent capital works
programme a proactive risk
management approach was
applied, and a robust risk
profiling exercise determined
where best to focus efforts
for the highest levels of
mitigation. Performance
metrics were then designed
to accurately assess the
efforts made to manage these
risks, which subsequently
delivered positive efficiency
and cost outcomes.

Measuring success
Behind some business
leaders view of health and
safety as a necessary evil is
the misguided assumption that
while its costs are immediately
Image iStock

felt and clearly measurable

its benefits are not.
This is often the result
of following the wrong
metrics. Organisations that
analyse the wrong data risk
making the wrong decisions,
and failing to meet their
performance expectations.
Measuring the right data not
only shows the benefit of the
proactive health and safety
approach, persuading even
the most cynical to embrace
the process, but it is also a
catalyst to a continuous cycle
of performance improvement.
For example, the
construction industry often
uses accident and incident
data as the primary health and
safety performance measure.
This, however, is a health and
safety management output;
and as a measure of failure its
overuse often breeds a culture
of non-reporting to avoid the
stigma associated with high
accident frequency rates.
While accident data has
its place and should be
measured, this negative
response can diminish the
ability of organisations to
collect raw data and introduce
positive interventions that will
make a difference.
Instead, the construction
industry should focus on

collecting performance
data that drives positive
behaviours. It should also
seek to create measures that
identify the effectiveness
of health and safety
management inputs.
This could involve examining
the detail of the feedback
provided by employee safety
observations, rather than just
the number of observations
submitted. This level of
scrutiny should drive better
quality and higher levels of
feedback in future, and bring
about greater engagement
on health and safety matters
across the workforce.
The threat of sanctions
for those who break the
rules forces all but the most
reckless to meet their basic
health and safety obligations.
But the most mature and
sophisticated clients go much
further and use health and
safety as an effective way to
manage risk. Thereby, they
make their employees happier
and more productive, and
add value throughout their
projects entire life cycle.
The example of the
high hazard industries is
an instructive one. Many
of its leading players
began by regarding their
statutory health and safety
requirements as a duty, but
with time came to regard them
as an opportunity. Given that
all construction projects and
existing buildings must meet
health and safety standards,
why would their owners not
seek to embrace the process
and derive maximum benefit
from it? b

Martin Cook is a Director at

Turner and Townsend

include Health
and safety



William Hall examines the benefits of both lag and

lead metrics in managing health and safety risks

Change of focus

The UK Health and Safety

at Work Act 1974 brought
with it a goal-based, less
prescriptive set of regulations,
supported by guidance
and codes of practice. This
marked the first noticeable
shift towards a more riskbased approach, where, for
the first time there was more
emphasis on organisations
tailoring safety solutions to
their specific operations.
Since then, this approach
has been adopted to a greater
or lesser degree across most
of the developed world, and
generally speaking injury and
incident rates have trended
downwards, particularly in
jurisdictions where regulations
have been actively enforced.
While this has undoubtedly
had a positive impact, the
philosophy can become
constrained by bureaucracy
and red tape. Today, some
regulators and industries
have become fixated on injury
rates, and the need to manage
lost-time injuries and the
numbers at the expense of
driving lasting cultural change.

Lost-time injuries or indeed
any form of lag metric, are
now almost the exclusive
means by which health
and safety performance is
measured. These kinds of
metrics have validity as a
complementary role alongside
lead indicators. However,

as part of a broader and

more holistic enterprise
risk approach it is useful to
address their limitations in
managing health and safety
Lag metrics highlight
the number of negative
occurrences, not the physical
and/or mental impact or cost
of a given incident. While
useful, this arguably provides
a less reliable measure

Incidents are
caused by a
range of factors,
which are not
captured using
one single
of injury severity. This is
because it could include
a disproportionately large
number of low consequence
incidents, may not include
others and could fail to
recognise as impairments
those incidents that result
in long-term or permanent
damage but no lost work time.
In short, incidents are
caused by a diverse range
of factors, which are not
necessarily captured using
one single measure and
aggregated approach.
High consequence
incidents can also be
rendered less significant,
e.g. a major explosion with the
potential for multiple fatalities
but results in one person
being seriously burned can
in some cases be recorded
and treated the same way

statistically as someone who

slips on a step and fractures
their ankle.
It could be argued that
organisations today have
greater control over their
risks, and are less exposed
to low frequency, high
consequence incidents.
However, emerging research
suggests that while a
simple system or activity in
isolation may not give rise to
a significant or catastrophic
failure, todays highly
interdependent world means
that external factors have the
potential to make the most
simple risk extremely volatile
and complex.
Sidney Dekker in his book
Drift into failure provides an
interesting hypothesis, that
the growth of complexity
in society has outpaced
our understanding of how
systems work and fail. While
we are able to do things that
previously would have seemed
impossible e.g. deep-sea oil
rigs and complex financial
transactions, we do these
based on an understanding
of these things in isolation.
It is, therefore, incumbent
on all organisations to factor
in potential internal and
external factors that, on the
face of it, seem unlikely to
materialise but, if they did,
could lead to a significant or
catastrophic failure.

Common language
As we become a safer
industry we should begin
to challenge whether a
retrospective, reactive and
process heavy approach
alone is good enough.
Perhaps, as we have been
practising for some time, there
exists a whole other possibility
in terms of combining this
focus with a common culture

and language that promotes

awareness of the potential
exposures, opportunities
and consequences created
by risks, be they minor or
significant. There is no
one-size-fits-all approach, but
by bringing current enterprise
risk management practices
into health and safety it
can enable us to streamline
processes and procedures
and become more effective
and risk-event focused.
Simply put, a focus on both
lag and lead indicators will
provide the best information
on which continuous and
relevant learning opportunities
in the management of health
and safety risks can be based.
Tools such as bow-tie
analysis, a simple and
effective tool for analysing
and communicating risks,
or other similarly effective
risk evaluation tools and
techniques are becoming
more prominent as companies
look to better understand
risk. This approach also has
the potential to produce
rich leading indicator
based information on which
technological solutions and
predictive analytics can be
based. This will ultimately
deliver more predictable,
safer and value-driven
outcomes for all. b

William Hall is Group

Environment Health and Safety
Manager at Lend Lease

include Health
and safety

A P R I L / M AY 2 0 1 5 1 3




Michael Sergeant looks at

why contract variations can
create disputes and how UK
courts resolve them

Scope for

At the heart of most disputes on

construction projects lies a very simple
question. Is a particular piece of work
within the original contract scope or is it
a variation? This is essentially a debate
about exactly what the contractor has
promised to provide and what can arise
on major international infrastructure
projects as well as small domestic
refurbishment jobs.
But ultimately the problem is always
the same the parties contract does not
clearly identify what work the contractor
was going to carry out for the price. For
smaller jobs, this may be because there
was no written contract and the builder
did not make it clear that painting the
newly plastered walls would be extra. For
major infrastructure work, the problem
1 4 A P R I L / M AY 2 0 1 5

will often stem from the contradictions

and ambiguities in the mountain of
technical schedules and specifications
that accompany the contract. In the first
case there was not enough paperwork
and in the second there was too much.
When such uncertainties arise,
the parties will normally be able to
work out their differences and reach
a compromise. But if the dispute is
significant, and especially if a sizeable
sum of money is at stake, then the case
may end up in front of an adjudicator
or even in the courts. The way that an
adjudicator or judge tries to resolve
ambiguities, gaps or errors in the contract
documents can, therefore, be crucial.
The rules that the legal tribunal will
apply in such circumstances can usefully
be looked at under two headings.

Principles of interpretation
The overriding principle is to ascertain
the common intention of the parties as
reflected by the contract. The courts
emphasise that this must be done
objectively by determining the natural
meaning of the words in the document.
The courts, therefore, take into account
whether a document forming part of
the contract was prepared specifically
for the project in question. If there is

contradiction between a standard printed

specification and a description of the
works produced as a one-off for the
project in question, then the latter
will be favoured.
It will also be important to take
account of the reason the document
has been produced in trying to resolve
contradictions. For example, the same
works may be described differently on a
programme and on a specification. But
the primary purpose of the programme
is to plan the works, rather than describe
them, and so the specification is likely to
be given priority. Equally, a drawing may
have been produced to show a particular
detail, but perhaps cannot be relied on
to accurately reflect other aspects of the
parties agreed scope.
Where there are gaps in the scope,
it may be possible to imply that the
missing work was part of the parties
deal, on the basis that it is implicitly
necessary. This can often be unclear in
practice because the contractor may,
with some justification, argue that the
item was believed to be missing because
the employer did not require the work.
Suppose a builder is undertaking a house
refurbishment and a contract drawing
shows a door, but the documents do not
refer to the hinge and fittings to hang it.



The legal principles of

contract interpretation
must be applied
to determine the
common intention
of the parties

It will almost certainly be the case that

a court would find that such work was
implicitly necessary and therefore part
of the scope. However, if the drawings
showed a doorway between two rooms
but with no fitted door, it would be
perfectly reasonable for the builder to
suppose that its client wanted an open
walkway. The missing door is not implicitly
necessary. If the client wanted it, then
they should have specified it.
Ultimately, the tribunal is trying to make
sense of a jumble of documents with the
aim of reading them together.

Rules in the contract

The contract itself will also often contain
clauses that help a tribunal in the
process of resolving contradictions.
The most obvious is the priority
clause, which sets out the comparative
importance of the contract documents.
For example, it may say that the signed
conditions are most important and the
drawings are the least.
Such clauses in many ways help
the process of contract interpretation
rather than overriding the principles
summarised above. For example,
when a tribunal applies the priority
clause, it is doing no more than seeking
to apply the terms of the parties

agreement in order to determine their

common intention.
Parties can, however, fall into the
trap of applying the priority clause in
too black-and-white a fashion. Just
because a document has a higher priority
does not mean that it simply trumps
everything in the lower document. The
courts will use such clauses as a means
of ascertaining the parties intention,
but they will still try to ensure that the
documents are read together.
Where certain works are referred to in
a number of documents the courts will
try to take account of all the references
in seeking to decide what the parties
had agreed. Sometimes this will not be
possible. If one document refers to brass
taps and the other gold, then only one
can be right. But in many cases, two
different descriptions can be read in a
way that gives both meaning. A court will
always try to read a written specification
for a feature of the works in conjunction
with the drawing so that both are
recognised as recording the intention of
the parties, irrespective of the fact that
one has a higher priority.
Many contracts include clauses stating
that the contract administrator, be it the
architect or engineer, has the power to
determine and resolve inconsistencies.
Image Getty

Such clauses need to be treated

with care. They do not mean that the
architect has the free rein to decide
what must be built wherever an apparent
contradiction in the scope is spotted.
The legal principles of contract
interpretation must be applied to
determine from the scope documents
the common intention of the parties. If
the architect directs that something else
is required, and does not follow those
principles, then their decision will amount
to a variation. An apparent ambiguity
does not give the architect unfettered
discretion to rewrite the scope.

It is not surprising that contract
documents regularly contain gaps and
inconsistencies in the way they describe
the works. They are often produced
by a range of individuals, with different
documents produced to fulfil a different
purpose. Contradictions are inevitable,
but those involved in the process need
to be familiar with the rules that a court
or adjudicator will apply when resolving
such conflicts. b
Michael Sergeant is a Partner at Holman
Fenwick Willan and the author of
Construction contract variations

Related competencies include

Contract practice

A P R I L / M AY 2 0 1 5 1 5




No need to panic

Jim Percival gives his top tips for successfully

completing the Assessment of Professional Competence

he APC is a crucial part of a chartered

surveyors career and can be a daunting
undertaking. I would advise anyone thinking
about a career in surveying to research
the APC process as early as possible. Not
only does this make it less worrying, but
also shows any potential employers that
you are savvy and proactive enough to be thinking about your
professional accreditation at an early stage.
The best starting point is the RICS website, where you can
find information on the stages of the APC, pathways, and the
purpose of regulation (www.rics.org/uk/apc/).

APC submissions differ from academic writing. There is no
need to use long, complex sentences to convey your ideas. You
are constrained by character and word counts so use short,
simple sentences to demonstrate experience of the many skills
required for each competency.
With the exception of ethics and other mandatory
competencies, you effectively write the syllabus from your
own experience so you have an enormous influence on the
questions you are asked.
Do not necessarily write about the biggest or most
glamorous project you worked on. Keep it simple and write
instead about those that clearly demonstrate you have covered
all competencies, even if you feel the project was unimpressive.
Omit anything that could lead to awkward questions.
When writing the Critical Analysis or Summary of Experience,
do not write a torrent of everything you know. Leave
deliberately under-developed points as hooks that invite the
assessors to ask questions that you then know are coming
and can prepare for. Assessors simply do not have the time to
scrutinise everything.

Once the submission has been sent, revision begins amid
rising panic. Private study is an important part of preparing
for the APC, but I would suggest that by itself it does not
develop the skills required. It is an oral exam in which you
have to defend decisions and demonstrate points, and you
need to practise.
Do as many proper mock exams with experienced surveyors,
(preferably assessors themselves) as you can. Often, firms
will assess each others graduates so you can experience
being assessed by unfamiliar people. A revision method less
dependent on the goodwill of others is to set up a study group
1 6 A P R I L / M AY 2 0 1 5

of other candidates on your pathway. Examine each others

submissions and do as much Q&A as you can. This will develop
your communication skills and will expose your weaknesses.
Practise your presentation as many times as you can. Get the
timings right; 10 minutes is not long. You need to be entirely
comfortable with the topic and your delivery.

Final assessment
Finally you come to the daunting prospect of the final
assessment. Honestly, in my experience, the hour-long
assessment just flies by. The presentation is the most
important part, because you are fully in control. Making
a good impression at this stage stands you in good
stead. If you are unhappy with your presentation, you
will find it hard to recover your confidence for the rest of
the assessment.
The rest of the interview should flow from your templates.
By this point you should know these inside out, and with
your hooks, you should have a fair idea of what is coming.
There will of course be a few questions that nobody asked in
a mock, and there will probably be some that trip you up. Dont
panic. You are not expected to know everything.
An oft-used expression is that they are looking for a
safe pair of hands. Not knowing the answer to a few questions
is acceptable as long as you react appropriately. Do not
guess the answer, instead, treat the situation as if a client
was asking you a question. Explain that you are not sure and
would need to research the subject and suggest where you
would look. Knowing where to find information is a good second
best if you dont have the information to hand.
Contrastingly, ethics, RICS rules and health and safety
do require perfect recall and a wrong answer here can be
disastrous. Luckily, this can simply be learned by rote and is
easily tested in mocks.
One final recommendation: after the APC try not to expect
too much from yourself. Continue to ask questions, be aware of
the limits of your experience and competence and be prepared
to ask for help when you need it. b
Jim Percival is a Chartered Building Surveyor at Savills

Visit isurv.com/APC for information

to help you pass your APC


View from
the chair
With nearly 10 years under his belt as an
assessor, APC chairman, Gary Blackman
describes a typical interview day

round six weeks

before the APC
assessments take
place; the panel of
two assessors and
the chairman are
sent details of all of
the candidates. Assuming there are no
conflicts of interest, a couple of weeks
later the panel members are given the
candidates submissions, which they must
read thoroughly (i.e. more than once).
Depending on the assessors areas of
expertise, the chairman will split the
various competencies between them to
allow them to compile questions.
All of the assessments I have been
involved with are held in hotels. It can
be a bit of a surreal experience, but it is
a system that works very well. It is not
uncommon for panel members to bump
into the days candidates in the waiting
areas and while we all take great care not
to react at all, it is actually quite difficult
given we know exactly who they are from
their submission photograph.
Each panel interviews four candidates
in a typical assessment day and it
is the chairmans responsibility to
ensure that they are made as welcome
and comfortable as possible. After
introducing the panel, the chairman
gives a brief outline of the interview


Referral report
If a candidate is referred, the chairman
must compile a report to give general
feedback and guidance, detailing the
areas in which they did not meet the
required level of competence so that
they can seek to learn from any mistakes
and address any areas of weakness
before resitting. With six core and three
optional competencies to cover in
addition to the mandatory competencies,
there is a great deal to cover (hence the
note taking during the assessment), so
compiling a referral report can take quite
some time.
With so much resting on it, the
APC is perhaps the most daunting
experience of any candidates
professional life to date. But they should
take comfort from the fact that everyone
in the assessment room knows exactly
what they are going through.

Fair and open process

The process
is a very fair
and open one
structure and ensures that the candidate
is aware that the members will be taking
notes. Throughout, it is the chairmans
responsibility to ensure that the various
sections of the interview are kept
within time.
Following the candidates critical
analysis presentation and once
questioning has come to an end, the
chairman will round off the assessment
with questions about RICS code of
conduct and professional ethics. The
candidate is then given the final word
on anything else they would like to add
or clarify.
Each hour-long assessment is
followed by a half hour break, during
which the panel discusses the
candidates performance. Very often
the two assessors reach a consensus
over success or referral, but, if not, the
chairman has the casting vote having
listened to both assessors, as regards
their particular areas of specialism, to
reach a balanced and fair decision.
Images iStock

It is worth making the point that the

APC process is a very fair and open
one. There is categorically no quota
system. If a candidate is judged
competent to practise as a chartered
surveyor they will be awarded the
MRICS designation. The assessors
are not trying to catch them out there
are no trick questions. Candidates
will be judged on their submission and
their performance.
Remember too that none of us knows
everything. Even the most seasoned
professional has to admit when
something is outside their sphere of
knowledge or experience. In the APC, if
you dont know something please dont
pretend that you do you will simply dig
yourself into a hole.
The experience of being an APC
panel member is extremely rewarding
and, aside from being a great networking
opportunity, the APC candidates I
supervise at work greatly benefit
from my insight. Crucially, it also
keeps me on my toes because I have
to ensure that I am as up to date as
the candidates I interview, which only
goes to show that none of us should
ever stop learning. b

Gary Blackman is an Associate at

Malcolm Hollis LLP

A P R I L / M AY 2 0 1 5 1 7




Sky high

Roy Ying explains the reasons

behind the continuing rise in
construction costs in Hong Kong

ccording to
the latest
annual survey,
Hong Kong
has the most
housing market in
the world. The medium home price in the
city is currently running about 15 times
the annual household income.
Meanwhile, a recent CBRE survey
of the commercial sector ranked Hong
Kongs Central Banking District as the
second most expensive market, just
behind Londons West End but well
ahead of Beijing and Moscow. In the
past, the shortage of land supply was
considered the main cause, but recently,
the sharp increase of construction costs
is becoming a major contributing factor in
high property prices.
Hong Kong does not appear to have a
shortage of labour in terms of quantity.
According to the Construction Industry
Councils (CIC) labour registration
figure, there were 220,000 construction
workers in 2007 and more than 320,000
in 2014. However, the skilled workforce
1 8 A P R I L / M AY 2 0 1 5

is ageing, with 40% of their number

aged 55 or over. Most are either retiring
or becoming very selective on the type
of work they undertake owing to their
physical fitness. Currently, there is no
pipeline of young workers entering the
construction industry, and only 6% of
registered construction workers are aged
25 or below.
CY Leung, current Hong Kong
Chief Executive, writes in his blog:
Because the general impression of the
construction industry is that it consists of
low-end jobs and its workers are exposed
to unfavorable weather conditions, most
young people are reluctant to join.
The CIC has rolled out a number of
schemes offering training, qualifications
and employment opportunities in an
attempt to inject new blood into the
industry. But a recent survey by the Hong
Kong Construction Association reveals
that the industry is still short of 10,000
construction workers.

Working hours
With a serious shortage of skilled labour,
the wages of construction workers
have gone up significantly over the past
Images Shutterstock

few years. The Census and Statistics

Department shows that the minimum
monthly employment earnings of industry
workers have increased 33% from
HK$9,000 (770) in 2009 to HK$15,000
in 2014 and are expected to climb even
further in the near future.
For trades such as bar benders
and fixers, carpenters (formwork) and
concreters, the average daily wages for
skilled workers can reach HK$1,800, and
monthly wages can be up to HK$35,000
or above. In the private sector,
contractors need to pay even more to
compete with the government for the
same pool of manpower resources.
In addition to rising wages, contractors
are worried about the move toward new
legislation covering standard working
hours. Following a commitment given in
the 2011 chief executive policy address,
the government issued the Report of
the policy study on standard working
hours in 2012, and a committee was
officially formed under the Labour and
Welfare Bureau in 2013 to engage public
discussion on this subject.
Imposing a working hours limit would
affect not only construction workers,


whose earnings comprise roughly 35%

of total project costs, but also put
pressure on the already stretched pool
of qualified professional such as project
managers, engineers, architects and
surveyors. The cost of construction is
likely to rise at a more rapid rate once
the legislation is enacted.

Pipeline of projects
Multiple major infrastructure
projects are currently underway in
Hong Kong. These include the
Hong Kong-Zhuhai-Macau bridge,
the Hong Kong section of the
Guangzhou-Shenzhen-Hong Kong
express rail link, the South Island line
(East), the Sha Tin to central link, advance
works on the Tuen Mun-Chek Lap Kok
link, the Kai Tak development and the
Xiqu Centre of the West Kowloon Cultural
District, among many others.
On top of these public works, the
government also has a very ambitious
public housing target of 470,000
residential units over the next 10 years.
Every project is in one way or another
competing for the same pool of resource.
Many quantity surveying firms believe that
2014 and 2015 will be the busiest time
in Hong Kongs construction industry,
with all public works at their peak of
manpower needs.
Going forward, with major
infrastructure and other projects entering
the construction phase in the next few
years, the estimated annual expenditure
on capital works is expected to exceed
HK$70bn. Although there appears to be
a commitment from the government to
offer a stable pipeline of project and job
opportunities, the Legislative Councils
slow funding approval process when
assessing public works projects is a
genuine concern.
Of the HK$70bn capital works planned,
only 4% have been approved owing to
the differences in policy priority between
the administration and a number of
Legislative Council members. If the
situation does not improve, it is not
difficult to predict that after one or two
years there will be a severe drop in
construction volume, thus affecting the
livelihood of construction workers.
A stable and visible pipeline of
long-term public works will help attract
investment, encourage younger people
to enter the construction workforce and
motivate university graduates to become
professionals in the built environment.
Currently, the growth of demand is driving
up prices, but equally worrying, an abrupt

Every project is
competing for the
same resource pool
decline in public works in the near
future could have an enormous impact
on the sustainable development of
the industry and thus the stability of
construction costs.

Possible solutions
Although the manpower and funding
approval issues are outside outside the
remit of the chartered surveyor, there are
a number of tools and new technologies
to enable projects to be carried out in
a more effective and efficient manner,
with a consequent reduction in overall
construction cost.
New Engineering Contract
For better risk management, employers
and contractors could make more
extensive use of the New Engineering
Contract (NEC) form, which emphasises
mutual trust and cooperation between
the contracting parties. The NEC form
allocates contractual risk to the party
best able to manage it. Moreover, it
provides a collaborative risk management
mechanism to reduce occurrences, as
well as mitigating the consequences
when they arise.
The sharing and management of
risk in the NEC form could help reduce
project costs. Furthermore, the target
cost payment option provides a pain/gain
share mechanism where the employer
and the contractor share the difference
between the actual construction cost and
the final target cost. It encourages the
contracting parties to reach a common
goal of completing the works together
and at a reduced cost and within a
shorter construction period. To limit
financial liability, the employer would only
share the overspending up to a certain
percentage above the final target cost.
Building information modelling
According to a CIC report, projects using
building information modelling (BIM) can
help to:
bb provide multi-dimensional visual
images and timely information related to
construction projects
bb test models and quickly generate
options for better decision-making in


respect of time, cost, process, risk

bb detect design faults (especially
clashes) and minimise the number
of changes
bb improve site safety management
and education
bb enhance financial risk management
and minimise financial claims due to
variations and delays
bb facilitate better project coordination
by bringing together relevant participants
in the construction project to collaborate
and achieve an integrated design at an
early stage
bb facilitate third party and
public engagement by enhancing
communications with a view to soliciting
the support of the community at the
project planning stage.
Although there is no empirical data in
Hong Kong measuring the cost savings
from projects using BIM against those
without, according to a Stanford University
Centre for Integrated Facility Engineering
survey of overseas construction
markets, BIM helped to eliminate 40%
of unbudgeted changes. Currently, the
adoption of BIM is market led.

The cost of construction is not the
only factor affecting property prices.
For a stable and healthy market, the
long-term solution is to engage the
public to develop a vision for Hong
Kongs future. This will enable the
government to take a strategic role
in planning future needs for land,
construction projects, labour, professional
talent and regulatory adjustments.
The government needs to take the
lead in enhancing the delivery capacity
of the construction industry and invest
substantially in manpower resources
to plan and prepare for the projects to
come in five to 10 years time. The ability
to build capacity for the future is crucial
to sustaining the citys economic growth,
and to maintaining Hong Kongs position
as Asias World City. b
Roy Ying is RICS Head of Communications
and External Affairs North Asia

Related competencies include

Project process and procedures

A P R I L / M AY 2 0 1 5 1 9




In his final article on stress in the construction

industry, Matthew Maslen makes the case
for a more effective reporting framework

Reading the signs

roject and
site manager
to my study of
personnel reported
high levels of stress
compared with
site operatives who were, on the whole,
significantly less stressed. Both project
and site managers were more likely to
have a Type A personality (being driven
and competitive) with site operatives
being more Type B (with no drive or
ambition) (see Construction Journal
February/March, p20-21).
The research also showed that
project managers perform on the
whole better under high stress, and
optimally under medium stress. Finally,
the respondents described positive and
negative feelings experienced on the
busiest day of their working life. The
answers showed that feelings such as
fear and nausea were rarely reported,
perhaps because they are perceived as
a sign of weakness.
The majority of respondents in this
study reported being stressed, yet on
construction sites there is no mechanism
for dealing with this. There could be a
number of reasons for this but this study
points to the macho culture that has
been identified in other research.

Health risk comparison

Let us make a comparison between
two construction health issues: stress
and skin cancer. In the height of the
summer would any operative or manager
fail to report a red lump or an odd
looking new mole? Would they look
to their employer to provide sun cream?
Is the risk assessed on site and, as
part of Construction Design and
Management (CDM) regulations, are
there clear recommendations on its
management from the Health and
Safety Executive (HSE)? Are construction
2 0 A P R I L / M AY 2 0 1 5

staff aware that prolonged unprotected

sun exposure can cause skin cancer?
Now apply the same questions
to stress. On a delayed, busy and
complicated scheme would a
construction manager or operative
report stress? Would they look to their
employer to protect them from stress?
Is the risk of stress assessed on
site, as part of CDM, with clear
recommendations on its management
from the HSE? Are staff aware that
prolonged, unprotected exposure to
stress can lead to an inability to function,
depression, anxiety and in extreme
cases suicide?
I would say that the answers on
skin cancer are mostly yes, and on
stress no. This comparison needs to
be qualified by the fact that, according
to the HSE, stress is known to make up
40% of all work-related illness in the
UK, but all cancers (not just skin cancer)
only make up 4%. Therefore, we may
conclude that stress is a far larger
problem. Worryingly, as many as 10
people (9% of the total) questioned in my
study reported stress levels in keeping
with a stress-related illness, which can
cause an inability to function.
In the study, one stress profile did
not necessarily fit all. Some project
managers reported thriving on stress,
while others could not function at all
in stressful situations. Site managers
responses were very interesting, because
it could be argued that they were the
most stressed group and their role is the
least studied. In the project team, the
site manager has two separate roles,
or, rather, two masters to please. First,
they have to manage the operatives
below them with constant direction and
supervision, but also serve the managers
and client above.
This stress from both sides may
explain some of the results in my
investigation. In support of this, another
study has shown project managers
Images iStock

as more stress-resistant if they were

previously a site manager.
This research has left questions
as well as a few answers. There is
an opportunity to investigate both
stress and the accompanying macho
culture, but whatever the form of
investigation, it should be done
anonymously so the respondent is
able to reveal their true feelings. My



Perhaps more worryingly, it shows a lack

of effort and resources allocated to the
problem. For example, there is no legal
case law that relates to a construction
employer ensuring the mental health of
an employee.
The HSE would argue that this
requirement is met by other statutory
instruments, but has any employer
been prosecuted for causing stress
to their employees? This is because,
in construction, mental health is not
considered by many as a real health
issue. Just imagine if the size of the legal
framework for managing asbestos was
applied to stress.
As stress, depression and anxiety are
notoriously difficult to diagnose, a more
subtle approach is required that is fit for
purpose. Managers should be trained in
how to identify the behaviours and signs
using standardised stress tests. Staff at
all levels should be trained in identifying
their own stress factors and proven
ways to manage them. For instance, can
you imagine a CPD event on breathing
techniques in your board room or site
hut? The fact that some people may find
this idea laughable is part of the problem.
To defeat this culture the industry must
recognise that the effects of extreme
stress can be just as debilitating as a
broken leg.
As we accelerate away from
economic uncertainty and the demands
placed on a project team grow, it is
essential that employers and industry
bodies across the construction sector
understand that stress is a very real
health and safety issue. We might then
have a chance of diffusing this ticking
stress time bomb. b

study did not ask for age, gender or

experience details.

HSE approach
While is is known that stress makes up
40% of all work-related illness in the
UK, the problem is not well understood,
and in the construction industry the
issue is woefully under researched.
The HSE has proposed a management

standards approach, which asks

employers to risk assess the effect
of stress on its employees. However,
these standards have remained
unaltered since 2008 and I suspect most
industry professionals are unfamiliar with
them. They are generic, unpopular and
of little relevance to large businesses,
suggesting the setting up of focus
groups, which is impractical.

Matthew Maslen is an Assistant

Project Manager and CDM-C at Norman
Rourke Pryme

Related competencies include

Managing people,
Health and safety

A P R I L / M AY 2 0 1 5 2 1




With the right to request flexible working now extended to all,

Helen Crossland considers best practice for employers

Bending to the rules

on 30
June 2014,
with all
employees now having the
right to request to work
flexibly, and for any reason.
Employers facing a new wave
of applications for lifestyle
reasons must ensure equal
billing is given to all requests,
regardless of whether they
are sought for more traditional
or atypical reasons.
The ability to offer flexible
working is undoubtedly an
attractive recruitment and
retention tool for employers,
and varied working patterns
are seen as the shape of
things to come in these days
of home and remote working.
However, not all organisations
have the infrastructure and
types of work available to
sustain different working
Employers must
nevertheless have in place a
strategy to deal with flexible
working requests, since there
is a greater expectation that
applications will be properly
and reasonably considered.

Who can ask?

An employee no longer has to
be the parent of a young child
2 2 A P R I L / M AY 2 0 1 5

or carer of a dependent adult

to make a flexible working
application. Any individual can
now make a request, provided
they are:
bb an employee
bb have worked for the
organisation for at least
26 weeks
bb have not lodged a request
to work flexibly in the previous
12 months.
The legislation does not cover
contractors or casual and
agency workers.

What can they

ask for?
Employers should not assume
flexible working requests
will always represent a
desire to work fewer hours.
Applications could include
seeking more hours, flexitime, compressed hours (i.e.
working the same number of
hours in fewer days), working
from home or a different
location some or all of the
time, or job sharing.
Whereas applications will
still primarily be made to
satisfy childcare or other
caring responsibilities,
other reasons may now be
advanced, i.e. to facilitate
study/training, external
interests, enterprises or
hobbies, to reduce commuting
time or free up more leisure
Image iStock

time, all of which must be

given even consideration
unless company policy
stipulates otherwise.

What if you receive

a request?
From June 2014 the formal
procedure for handling
flexible working requests was
much relaxed. But eligible
employees must still ensure
that their applications:
bb are dated, in writing, and
stated to be made under the
statutory procedure
bb specify the change sought,
when it is required from,
identify any likely impact of
the proposed variation on the
business and how this may be
bb confirm details of any
previous request(s) made.
The new process affords
employers far more leeway

The new
process affords
employers far
more leeway
in how to deal
with requests

in how to deal with requests,

provided applications are
considered reasonably
and processed within
three months. Gone are
the strict requirements to
acknowledge requests and
schedule meetings within
certain timeframes, although
employers must still discuss
any request with an applying
employee, unless it can be
readily accommodated.
If a request can be
allowed (which may be an
agreed alternative to that
initially requested by the
employee), the employer
should write to the employee
confirming the accepted
new working pattern, and
stating it will amount to a
permanent change to their
terms and conditions.
It is otherwise best practice
to meet formally with the
employee to discuss their
application and consult with
them before communicating
the reasons why a request
may not be granted.

Any choice?
While an employer must
consider any application
reasonably, they can reject
a request on the basis of
one or more of eight
business grounds:
1. planned structural changes
2. burden of additional costs


3. detrimental impact
on quality
4. inability to recruit additional
5. detrimental impact
on performance
6. inability to reorganise work
among existing staff
7. detrimental effect on ability
to meet customer demand
8. lack of work during the
periods the employee
proposes to work.
The law is nevertheless
designed to encourage
employers to make a
concerted effort to consider
how any application can
be accommodated, and
explore any compromises if
the employees preference
cannot be facilitated. This
would be prudent where
there is a likelihood of losing
a valued employee if their
request is declined.
If an employees request
is refused without suitable
reasons, they may have
grounds for discrimination or
constructive dismissal claims,
or a complaint under the
flexible working legislation.
However, even where an
application is legitimately
declined, there is potential for
a grievance/appeal/claim from
an employee, and employers
should protect their positon
by ensuring the reason(s) for

rejection are confirmed to the

employee in writing, clearly
setting out one or more of the
above business grounds and
reiterating any alternatives
that were explored.

Top tips
The new legislation offers
employers far more freedom
in how they administer
applications, but there is also
an added onus on businesses
to handle requests with care
and consistency. To this end:
bb review as a business how
you plan to manage flexible
working applications going
forward and, if necessary,
adapt or draft a new flexible
working policy to effect this
bb consider all applications
positively and with an open
mind, however inventive the
proposal or reason for it
might be
bb operate a first come first
served system and state in
your policy that applications
will be considered in this way
bb consider the potential for
constructive dismissal claims
where one employee makes
a successful application
but another cannot be
accommodated explain
in your policy why it will not
always be possible to agree
like requests
bb consider whether you
wish to give preference to, or


process differently requests

from certain groups; i.e. those
with childcare/other caring
responsibilities and, if so,
acknowledge this in your policy
bb ultimately, any request
should be assessed based
on the employees role and
not on the reason for the
application. For example, an
application by a supervisor to
work compressed hours to
help care for an elderly parent
may be less manageable than
a request from an employee to
take Wednesday afternoons
off to undertake voluntary
work and whose role does not
require them to be as visible or
on hand to manage others
bb if you are unsure of the
long-term workability of a
request, consider a trial period
to assess the impact of the
variation, or explore whether
the change could be offered on
a short-term basis
bb where an informal request
is made, consider requesting
that the application be
processed as formal to rule
out the opportunity for the
employee to make another

formal request for 12 months

bb consider offering a
right of appeal for any
rejected applications (optional
under the new legislation),
which would be less
cumbersome than dealing
with complaints under your
grievance procedure.

The law has rightly moved
to give parity to all employees
who for reasons important
to them, wish to have the
right to ask for variable
hours. The law is however,
fully supportive of employers
whose operations are
incompatible with less
conventional working systems.
As long as the organisation
can demonstrate a willing
and reasoned approach to
considering flexible working
requests it can, for now at
least, be business as usual. b

Helen Crossland is a Partner

in the Employment team at
Hamlins LLP

Related competencies include Managing people

A P R I L / M AY 2 0 1 5 2 3




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2 4 A P R I L / M AY 2 0 1 5

12/02/2015 11:56



Aaron Wright introduces the new BCIS

Benchmark Report tool being offered in
return for construction cost data

Comparing notes

he Building Cost
Information Service
(BCIS), part of RICS,
has been collecting
data for more than
50 years, and
remains the only truly
independent and unbiased source of
construction information in the UK,
unparalleled in the industry.
The reciprocal service is made possible
by the help of its subscribers and
members of the construction industry
providing real project cost information.
BCIS spends up to two days analysing
each and every project to maintain and
produce the wide range of benchmarking
tools and indices. All providers of data
benefit from this consultancy support.
Now, in addition, all suppliers will receive
a complimentary benchmark report.
Using the comprehensive database,
which currently exceeds 19,000 projects,
industry professionals will be able to
compare the performance of their own
projects against others. The report is
designed to guide strategic decisions
while facilitating best practice and
continual improvement. It also allows
each recipient to view their project in
relation to comparable projects in the
construction industry.

What does the report cover?

Analysis is provided for the group
elements showing how these compare
against the average of comparable
projects, as well as showing the range
of results.
Key findings are summarised relating
to construction cost and group elements
as well as providing analysis on functional
costs, if applicable. The report also gives

What BCIS needs

All BCIS needs from you is your project
cost data, preferably with a contract
breakdown. The more detailed the
information, the more useful it is for
both of us.
The data can be accepted in any
format because it will be standardised
during analysis. You can send it by email,
in the cloud or to our freepost address.
We can even collect it from you if you
would prefer.

an insight into simulations that BCIS has

modelled, and allows it to estimate the
cost impact of adjusting the base date
and the region. The report also provides
an estimate of the life cycle cost for
operating and maintaining the facility for
30 years and how the contract duration
compares with similar projects.
The benchmark report gives access
to areas that professionals may have
previously thought too difficult or
time-consuming to follow up or put into
practice, and it comes from the UKs
largest source of construction cost data.
By submitting your project to
BCIS, not only do you receive the new
BCIS Benchmark Report, you also
contribute to raising the quality of
benchmark data in the construction
sector and ultimately support the industry
to drive efficiency. For more information
and to view an example, please visit

BCIS guarantees the absolute
confidentiality of your data, and nothing

will be published without your or the

clients permission. If you are concerned
about the commercial sensitivity of the
data you provide it can be anonymised
for use in statistical studies. b

Aaron Wright is Head of Data Collection


The BCIS Benchmark Report was

formally launched at the RICS
BIM Conference in London on
12 February
Related competencies include
Building information,
Data management, building
information modelling (BIM),
Quantification, costing and
price analysis, Cost prediction
and analysis, Design economics
and cost planning

A P R I L / M AY 2 0 1 5 2 5




Health and safety duty of care

As a health and safety adviser in the construction

industry, I work on various sites inspecting works.
What risks do I face if anything goes wrong?

Ferrisis a
is SenioratAssociate
Pinsent at
Furley Page
LLP and
Safety and
Health Practitioner

others that may be affected by your acts or omissions

at work (section 7 of HSWA). A failure to do this will amount
to a criminal offence, which may result in a number of
sanctions including:
bb imprisonment of up to two years
bb an unlimited fine.

> Kevin Bridges

The legislative framework for health and safety in the

UK is vast and it is crucial that you understand both your
responsibilities as a health and safety adviser, and the legal
and commercial risks that arise out of those responsibilities.
You will ordinarily provide your services in accordance with an
agreed appointment, which constitutes the contract with your
employer. This will usually specify both your responsibilities to
the employer and your obligations as a health and safety adviser,
and you therefore need to be familiar with what is required. For
example, your contract may require you to carry out a certain
number of risk assessments, prepare method statements,
complete site investigations or deliver tool box talks.
A failure to perform your obligations under your contract
may result in a breach of contract, entitling your employer
to terminate your appointment and recover damages from
you. Where possible, you could seek to agree a limit or cap
on liability or any other terms that could reduce a potential
liability under the contract. There are, however, other types of
liability to consider.
As a health and safety adviser you also owe certain duties of
care to those that may be affected by your acts or omissions.
If you have caused injury, or even the death of an individual and
your act or omission is found to have been negligent, then the
injured party (or their dependants) may be able to pursue a claim
for compensation against you and/or your employer.
If it is determined that the breach of duty was so grossly
negligent that you could be deemed to have disregarded the life
of the deceased, then you could also face prosecution under
criminal law, carrying with it a custodial sentence.
Criminal sanctions
In the UK, the general principles of health and safety law can be
found in the Health and Safety at Work etc. Act 1974 (HSWA).
Under the HSWA all employers and employees (and others)
owe duties to ensure the health, safety and welfare of
persons at work.
As a health and safety adviser you will be responsible for
taking reasonable care for the health and safety of yourself and
2 6 A P R I L / M AY 2 0 1 5

The grave consequence of failing to comply with health

and safety obligations is highlighted in R v Sidebottom and
Goulding. On 4 December 2014, Southwark Crown Court
imposed an immediate custodial sentence on an external health
and safety adviser following the death of a worker carrying out
basement excavation works at a residential property in Fulham,
south-west London.
The court found that the adviser had failed to adequately
monitor the safety of the works, and in particular, had failed
to identify that excavation works were not being carried out in
accordance with the method statement. Conrad Sidebottom
was found to be in breach of his duties under section 7 of
HSWA, and gaoled for nine months.
This is the first time an immediate custodial sentence has
been imposed for a breach of section 7 HSWA, and serves as a
warning to all health and safety advisers.
Finally, any conviction for a breach of health and safety law
will carry with it a stigma that may have a negative impact on
your future employment as a health and safety adviser.
Limiting the risks
There are certain steps that can be taken to help reduce risks:
bb Know your appointment/contract and make sure that
you understand your obligations; e.g., what is required of
you in relation to the production of method statements, risk
assessments, etc.
bb Make sure that all documents (e.g. risk assessments and
tool box talks) are tailored to the particular project you are
working on. Avoid using pro formas or templates that may not
address all risks on a specific project.
bb Keep good records, making sure you can evidence the
standards of safety that you have employed at any given time
throughout the life of the project.
bb Be thorough when completing onsite inspections and record
all of your findings and recommendations accurately, as well as
taking a proactive approach and trying to identify all key issues.
bb Make sure you intervene if you see any unsafe working
practices on site, even at the risk of delaying the project. b



BCIS Benchmark Report

Now launched
Complimentary Benchmark Report
provided for every project we analyse
If you submit construction project data to BCIS you
will now receive in return a Benchmark Report of your
project(s). This new Benchmark Report created using
industry data will compare the performance of your
construction project(s) against similar projects.

For more information on how to receive your BCIS Benchmark Report

visit rics.org/bcisbenchmarkreport

Submitting more data. By submitting your project data to BCIS, not only do you receive the new BCIS Benchmark Report, you also contribute to raising the quality of benchmark data in the
construction sector and ultimately support the industry to drive efficiency. If you are concerned about commercial sensitivity, the data you provide can be anonymised for use in statistical studies.
View our Confidentiality Policy at rics.org/bcisconfidentiality

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