Case Study Sharing of construction cost ( Quantification & Conflict avoidance )

RICS Senior Professional Route

Case study 1 -

Sharing of construction cost Quantification & conflict avoidance

Introduction

Most of the times, disputes between the parties involved in the construction activity can get
out of control and may result in the loss of faith, a break down of trust, and ultimately have a
long term impact of the progress of the project. Earlier, the parties contributing the dispute
are only the client and contractor, but now with evolvement of big projects this extends into
the business partners as well.
One of the biggest commercial & retail mall in Mumbai suburbs by the local developer (
Group A ), under partnership with foreign real estate investment group ( Groub B ), gives me
a good ice breaking experience. Mall is approximately 20 lacs sqft, divided in 2 phases and a
common Atrium joining the 2 phases, with a total investment of INR 700 Cr+. Each phase
comprise of basement and 4 floors with floor to floor ht of 5.4 mt. The phase 2 of the mall is
designed in such a way that, structurally it can take the load of additional 4 floors ( with floor
to floor ht of 4 m ) of office coming over it, with a provision of lift shaft & ramp start from the
ground level.
The key issues

Involvement of Groub B, was only in the development & operation of Mall area, and not in the
development of office, where as Group A was partially involved in mall and 100 % in the
office block proposed over Phase 2 development.

Nilesh Kushe

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Case Study Sharing of construction cost ( Quantification & Conflict avoidance )

As some of the facilities are commonly used by Mall as well as office, it is very important to
exactly access the liability of each party and the benefit of such mixed use development,
based on which some business transaction are going to take place.
Refer the floor plans ( Phase 2 mall & office )

Group B is keen to recover the actual cost on account of the area used by office from ground
to fourth floor and passive cost on account of increased loading & sharing of activities. By
planning office block, above mall area, group A has taken the benefit of common
infrastructure, relief / discount from some mandatory requirements, lower cost on account of
foundation (comparing office block separately), whereas they are ready to pay only the
additional construction cost on account of office block coming over it, which is very
controversial. Hence both the parties decided to take a third party opinion from the QS
agency to conclude this matter, in such a way that interest of both parties will be secured.
My role and personal involvement

As a Sr.QS/ Team leader, my responsibility was to do a fair analysis and to recommend an

equitable opinion on the said matter, so that there should not be any conflict between the two
parties and both should get the benefits of sharing premises with each other.
Problems faced and how I resolved them
them

Before directly going into the cost analysis, I prepared a statement / matrix showing the
proposed logic for the bifurcation of cost and get it principally approved from both the parties,
Nilesh Kushe

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Case Study Sharing of construction cost ( Quantification & Conflict avoidance )

after incorporating their views and observations. It takes a long time, to deal on each point,
but we know, its equally important before going ahead on the actual cost impact on the
same.
As this is one its kind of activity, and share of both parties are equally important, I have to
deal with utmost care. Secondly as per as the calculation of passive cost is concerned, I
have to take the expert opinion from the structural consultants as well, to backup my working.
Refer the logic statement prepared
Step 1 List down all the activities involved, where we have to take a call,
Step 2 Logical breakdown of activities, into different groups.
Step 3 Costing for all the activities, as per the current market trend.
( Note :- please find below the list of activities & proposed breakdown )

Groups Logic
Part A Cost bifurcation based on the
proportionate construction area
for Mall-Phase 2 ( Basement
+ 4 floors ) & Office ( basement
part + office floors )

Activities Involved
- Exca. in soil & rock for the normal construction (upto first 2 m )
- Back filling & Plinth filling & Soling.
- Anti termite treatment ( 50 % : 50 % )
- Superstructure Columns - Needs to bifurcate with special opinion
from Structural consultant. We recommend 25 % of the cost should
be allocated to office part.
- Plum Concrete/ Raft / Steel, Concrete for Foundations, Columns,
Footings, Plinth Beams.
- Softscaping & Hardscaping works near the external road.
- External road works
- Compound wall works
-Excavation for the basement ( approximate 6.5 m, below 2 m
excavation considered in part A above )
-Construction of retaining wall and columns for basement
construction
-Waterproofing to basement retaining wall & raft
-Internal ramp ( ground floor to basement )
-Services Cost - Fire Fighting High Side works,
( as only fire fighting pumps are common between, phase 1, phase
2 & office part, and rest all are specially designed for the respective
use )

Part B

Cost bifurcation based on the

proportionate construction area
for Mall -Phase 2 (
Basement ) & Office ( only
basement part )

Part C

Cost bifurcation based on the

proportionate construction area
for Mall -Phase 1& 2 (
Basement + 4 Floors ) & Office
( basement part + upper floors )
100 % Cost by the Mall - Phase -Finishes in mall area as per actual
2.
-Cost for the external ramp going in the basement
100 % Cost by Office Part.
-Finishes in area reserved for office as per actual
-Special Canopy at first floor level for the office entry
-Internal ramp ( ground floor to basement )
-Any special cost for the security of office part - e.g. card access
system, boom barrier, etc.

Part D
Part E

Nilesh Kushe

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Case Study Sharing of construction cost ( Quantification & Conflict avoidance )

Based on the above pre agreed concept, a) estimated cost for the above heads were worked
out along with b) expected cost saving by mall on account of proposed office, to arrive on the
final figure.
Refer the final outcome of the exercise, as per sheet enclosed herewith
Outcome and conclusion

The exercise was successfully delivered within the schedule and appreciated by both the
parties. The outcome/results of this exercise shows a good managerial skills, team work,
negotiation skills, communication, logic building and expression of thoughts.

Nilesh Kushe

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