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Quantity Surveying - Professional Practice
Transcript of Quantity Surveying - Professional Practice
4. Professional Fees
Methods for calculating professional fees are individualized across the different professions.
Fees are based on the proportion of the building project work that is designed and intended to be facilitated by the professional person. Usually the proportion is an estimated percentage of the project work value.
Project value is in turn based on a method/(s) of cost estimation appropriate to the design information, which at early stages in the project is often a Order of Magnitude estimate of building costs. The method is based on building cost/m2 of the project design, also accounting for costs relating to preliminaries, escalation, provisional sums, but exclude contractors fees, contingency sums and VAT amounts.
VAT is calculated on total individual professional fee amounts and, the total is then apportioned to the different work stages according to the PROCAP document, spanning the full project timeline.
As a QS it is important to understand that different professions have different frameworks for establishing professional fees relating to building projects. While estimations are always to be checked and rechecked, knowing what the current hiring charge rate of building project professionals are on any given day makes for good time-saving skills for estimating purposes. Through careful estimation, the QS portrays prudent cost-control from the outset which fairly benefits both the client as well as the professionals to be included in the project’s design team . Quality QS service delivery involves, the correct determining the professional fees payable on the project; communicated clearly to the client; and agreed to by the relevant professionals.
1. THE QUANTITY SURVEYING PROFESSION
The profession relates to the
with a dedicated focus to improving the lives of people through
building and construction projects from design stage through to completion, in such a way that ens
ures the building
is optimized while maintaining
minimum project related costs
This presentation reports my understanding of the Professional Practice Course
taken in partial fulfilment of the degree in BSc Quantity Surveying Honours (UCT)
The objectives of this report are to:
Provide an overview of the course content to my understanding
To convey my understanding of Quantity Surveying services in relation to building and construction projects at milestone work stages.
Identify errors I made in interim assignments along with showing effort in correcting my understanding
Guest Lecture Sessions provided opportunities for understanding the degree to which theoretical quantity surveying practice ideals are played out in industry. Preparation for hosting of guest lecturers required organisational co-operation, co-ordination and most importantly, clear communication
1. Using the percentage allocation rate, determine the budgetary allocation for work stage 4
2. Calculate the budgeted Bill production costs in terms of monthly office overheads and salaries
3. Total Bill production time is determined by dividing up the work on the basis of calculating the anticipated productivity levels of office members and total productive hours
4. Through the above, we establish the minimum charge out rate per hour (total budgeted production cost / total productive hours)
To ensure profits are earned for effort, the PQS must calculate the maximum hours allowable for producing the BoQ. The following steps provide a brief summary of the calculation:
Pre Contract Stage involves in-house QS planning of resource allocation:
1. First deduct profit % for the firm’s earnings
Finally, divide the NACPB by the minimum charge out rate per hour as calculated in 4
Deduct non-recoverable expenses
= net allowable cost of bill production (NACBP)
"It is necessary to understand that charge out rates and budgeting of time is core to financial planning on the QS’s side of operations. It prevents the business books from running into deficits, and represents the cost of time dedicated to bill production (not all projects play out to the full extent)"
Recalling common law, the tender process translates into the employer/client’s offer of work to prospective contractors.
Although not conducted by the client himself, but rather the principal agent, ideally the QS, the procedure for facilitating the tendering process calls for both confidentiality and transparency.The process involves :
• Advertising of tenders –through newspaper publications, Tendering Services Bureau …
• Preparation of tender documentation
• Keeping a record of tender documents collected and submitted
• Public opening of tenders – before tenderers who choose to be present at the ceremony
Once the tenders have been read, the QS prepares a Tender Adjudication report to provide the client with a thorough analysis of the tenders submitted, focusing on identifying key factors which could impact on the contractor’s ability to deliver according to the time, cost, quality called for by the project information.
The report should provide a comparative assessment of at least the top three shortlisted candidates, indicating the following information:
• Name of the project
• List of consultants
• Tender expiry date
• List of tenders received, ranked in increasing order of value
• Comparison of received tenders to the latest QS priced estimate, providing insight into variations
• Comments on the validity of tenders
• List of suggested savings (if requested by client)
• Revised feasibility study
• Anticipated construction programme submitted by tenderers
• Updated cash flow
• A brief report on the ability to perform- and financial position of- the three lowest tenderers
• An informed recommendation
During the Construction period the QS prepares regular financial reports and cash flow projections to maintain management of project finances. Reports are mainly prepared for the client’s information, to allow him to keep track of project progress and indicate the rate at which funding is converted into the building product. Various graphs and tables are used to depict anticipated monthly cash flow forecasts and projections, tracking actual total and cumulative expenditure to date. Variations of work should be included (if any) to graphically illustrate the potential effects of adjustments to contract data.
It is important that the QS keeps his/her finger on the project pulse during construction phase. To keep the client at all times informed of progress on the project.
Allow the client sufficient time to make necessary arrangements to perform his financial obligations in respect of the contract, thereby providing steady monetary provision for the project members to progress along towards completion.
In my opinion I found the PROCAP document to be biased towards the Architecture professionals, emerging through the late inclusion of the QS to the design team.
The problem with the document is that it represents the traditional view of the late inclusion of the QS – which is not conducive to today’s industry.
The QS understands the interdependent relationship existing between time, cost and quality of function in designing and administering building projects. And with clients becoming increasingly cost conscious, the late introduction of the QS to the design team, stunts the clients’ chances of getting maximum value added to the project at an early stage.
Industry bodies act as a source, providing information on industry regulations and practice.
Standardized documentation provide a means to ensure a degree of professional uniformity. The importance of knowing which requirements prevail leading up to professional registration as a PQS, and measures of ensuring Continued Professional Development.
6. Tender Stage
COMMENTARY ON PROCAP
Guest lecture sessions
The reasons these bodies are so vital in a professional sense, is because of the effect of their documentation and industry guidelines which aim to regulate the profession, through standardizing procedure, protocols and formal documentation typical to Quantity Surveying work.
A 10 year professional career plan constituted our first assignment for the course, wherein which I paid tribute to the newly acquired information about the available routes towards becoming a Professional QS and maintaining the reserved professionalism- both locally in South Africa and internationally.
An industry professional addressed our class on what it means to be a QS. This was insightful for me particularly since she was a female in the "typically perceived as" male dominated industry. Strong points derived from the presentation included: the non-monotony of being a QS, continued conscious learning across disciplines and knowledge application, being in a position to direct project performance towards achieving greater quality, function and cost goals, which collectively is the nexus for satisfying society needs at large over time.
Quantity Surveying services are commissioned in a number of ways, depending on the marketing strategy employed, which often relies on whether Quantity Surveying is an in-house division in larger firms, or independent consultant practitioners. Since managing operational costs is the lifeblood of any enterprise, the QS firm must approach new work take-ons with sufficient resource availability to take on the task.
Resources include available man power for motioning the new project in relation to other work currently being run by the firm. Beforehand, due consideration must be given to payment methods regarding remuneration for project work done, as proper financial planning is fundamental to the continued existence of the firm as a reputable provider of quality professional services.
QS’s are traditionally commissioned to:
• Consult with the architect to develop a financially cost effective and practical building design
• Calculate estimations of project cost at a number of stages in the project’s life
• Facilitate the tendering process
• Facilitate the contract’ administration of the during construction phase
• Evaluate contractors’ claims for issuing correct interim payment certificates
• Prepare project final account at the close out stage of a project
Given the skills set needed to competently deliver all of the traditional QS services mentioned above and more, quantity surveyors often find employment in other industry sectors quite easily – especially if they bear the Professional QS status.
Having worked for a PQS running his own consultancy helped build my understanding of the in-house dynamics concerning running a small firm. Firm administrative work is as important as individual project work for a number of reasons: the state of your administration lends itself to communicating whether or not new work is worth taking on, and proper referencing system serves a dual function of availing clarity on minor aspects of the work later down the line, as well as refresher info for those new kids on the office block. From an employment perspective: Understanding how QS services are commissioned helps you identify industry sought after skills and qualities, in line with potential employers targeting specific client groups.
2. Commissioning Of QS Services
7. Contract Stage
errors in fee report assignment
My initial fee report assignment was flawed showing my poor understanding of the section at that time.
The entire fee calculation was based on a problematic base amount. The base amount for fee calculation purposes rely on building up a, estimated total cost of construction costs. My problem laid in over-measuring the construction area by allowing for additional electrical and electronic services, HVAC and a few others, when the general construction rates per m2 (as published by AECOM) notes the inclusion of basic services typical to the respective building type.
I realized what was lacking then, was a proper understanding of the rates used to conduct the estimate of construction areas on plan, and that incorrect amounts at this early stage can have catastrophic effects, resulting in compounded errors down the line. Had I been more aware of this pitfall, my calculation of professional fees and Pre-contract assignment would have tallied up more accurately. I am glad to have made the error now though, as opposed to later as a professional
8. Final Account Stage
5. PreContract Stage
This introductory module was aimed at introducing the profession in the South African legal context with reference to the QS Professions Act 49 of 2000. Quantity Surveying was briefly defined with the discussion highlighting the importance of being an informed member of professional related industry bodies such as the ASAQS, SACQSP, RICS, CIOB, and CIDB of South Africa.
Through discussing the eight modules of the course I feel I have gained a better understanding of what services are provided by the QS during the life of a building project.
This report has thus outlined my improved understanding of QS professional practice made possible through comprehensive lectures by course convenor Karen Le Jeune; interestingling informative guest lecture sessions by various industry professionals and knowledge consolidation through challenging module related assignments.
This module provided insight into the Procedural Guide for Clients, Architects and Other Professionals document, published by the South African Institute of Architects, identifies key stages common to all built environment projects. The document places into perspective the roles of the Quantity Surveyor at each work stage, and in relation to other professional consultants who are party to the project.
PROCAP outlines 7 stages with the general outline provided in the table below:
This final module focused on the role of the QS as still adding value to the project dynamic, through the timeous preparation of the project Final Accounts.
To avoid prolonging of the final account settlement, and final certificate payment, the QS should, during the contract stage, prepare the final account as the works progress, and seek to acquire as much information from relevant parties, regarding the works and changes thereto.
The final account certificate should include confirmation and verification relating to:
all contract variations
appropriate adjustment of all provisional sums
all provisionally measured works as remeasured and included in the final accounts
dates used for CPAPA escalations
adjustment of prelims amounts (where applicable)
achievement of contract participation goals
Professional Indemnity Insurance & Public Liability Cover
The 2-part Guest Lecture session which addressed this important topic, provided a necessary reminder of the uncertainty regarding mishaps in ones professional capacity as a PQS.
Being a PQS one has a Contractual Duty to the Client to ensure sound professional delivery of QS services. In the unfavourable event of the QS being sued by the client, Professional Indemnity Insurance is, if if decided to be used, designed to protect the QS firm from suffering into bankruptcy.
In addition to the above, the PQS owes the public at large a delictual duty in the form of providing for worst case scenarios, eg, unforeseeable litigation or damages claims as a result of his services and the reliability of other project team members on the soundness of the QS's work.
A number of companies offer professional Indemnity Insurance to Built Environment Professionals, Santam, QuantiServe, and those represented by the two firms represented in class.