Mates are usually professionals, sub-contractors, tradies or suppliers and so they are businesses as well and really can’t do anything for free … and often the mark-ups or profit on materials are pretty slim (3-10% maybe on some products, like timber) so doing work at ‘cost’ delivers only slight savings.

The other problem is then putting these “mates” into the Building contract. How will this be done? Are they going to be nominated as preferred suppliers? And what happens if they’re not that cheap anyway? Do they want to be in the Building contract, and be managed and controlled and scheduled… if there’s no profit in it for them?

The one time it may work well is when you’re an owner-builder and you pop on a barbecue and get your mates to some small items of work for beer‘n’sausages … Or maybe if you’re prepared to buy second-hand goods, or pay cash for some things … Once again, it’s not something you can easily put into the documents, or into a building contract … and besides, you can’t pay for new fridges, sinks and plasterboard with beer‘n’sausages.

Also, owner-builders are very low in the pecking order. In other words, if one of your mates is working for free or cheaply or supplying something at rock-bottom prices, all of their other PAYING clients come first – as they’re paying the right price and probably offering more follow up work. And so these “mates” can actually hold up the progress and become a bit of a nuisance to the program if they don’t turn up or deliver on time… after all, when someone’s doing you a favour, it’s hard to be too tough on them.

We’ve all got ‘mates’ in the industry who will do something for us ‘cheap’. It may be better (and more economical and effective) in the long run to pay the right price for the right product and install it the right way first time.

The Elements system acts as a checklist so that nothing should be missed and also as a consistent way of summarizing and analyzing projects and their costs (and size) so that they can be compared and bench-marked to other, usually similar, projects. It’s a great little system and means that items (i.e. elements) such as floors, walls and roofs may be priced, or a potential price or cost allowed for, even if no trade or construction information is yet available.

The attached list (pdf) are the 46 Elements (excluding the sub-elements – which is a long and more detailed list that I haven’t used) as defined by the National Public Works Conference (NPWC) Cost Control Manual as used by Quantity Surveyors in Australia.

In Australia the format and content are generally based on the Australian Standard Method of Measurement (ASMM). The ASMM has been prepared in agreement between The Australian Institute of Quantity Surveyors and The Master Builders – Construction and Housing Association Australia Inc.

The main purpose of a Bill of Quantities is to itemise and define a project so that all tenderers are preparing their price and submission on the same information.

A BQ helps to eliminate the ‘guesswork’ and also minimise discrepancies in the tender documents. When preparing and measuring a BQ, the Quantity Surveyor needs to “build the building” almost in its entirety on “paper” before the real bricks’n’mortar construction starts. Discrepancies in the documents (i.e. the drawings stating one thing and the specification asking for another) are greatly reduced as documents across all disciplines are checked.

Other advantages

As well as the items mentioned above, the preparation of a BQ also has other advantages, such as:

•           Assisting the comparison and assessment of tenders, as tenders will be based on the same information;

•        Providing a good and fair basis for assessing variations during construction;

Hint A Bill of Quantities can only be as good as, and as accurate as, the documents it is based on. Incomplete drawings, vague schedules and performance-based specifications do not form a good basis for a useful and comprehensive BQ.

•        Being a basis for assessing and recommending progress claims and payments;

•        Helping to reduce the tender period (and its associated costs) as the tenderers then do not have to each reproduce the tender documents for their own quick (though it may take weeks), and sometimes rough or abridged, measurement and builders’ quantities;

•        And it also provides a basis for project cost analysis, so that future cost planning efforts have reliable information to refer to.

Timing

Sufficient time needs to be set aside (well in advance) in the design and documentation schedule and before tendering for the preparation of the BQ, which will take several weeks – the BQ is best based on complete documentation … And it really is not helpful for the consultants to be using this measurement period as a chance to finish-off incomplete documents (or even start new ones), which then need to be re-issued to the Quantity Surveyor for re-measurement and inclusion into the BQ.

Note: If a BQ is prepared in the correct and agreed format, they may form part of the Contract – that is, they become a contract document. And so the Contract Sum can be adjusted against the items, quantities, descriptions and rates included within it.

“By Separate Contractor”

These three words appear often, and I wish they wouldn’t – Why? This is most confusing for the Estimator when tendering – after all, they don’t want to win a project just because they’ve made a mistake with their price (and you don’t want them winning it this way to).

‘By Separate Contractor’ gets the estimator thinking:

•        Whose Separate Contractor is it? Ours? Or theirs?

•        Is the Builder or one of the Sub-Contractors to include it in, or to exclude it from, their price?

•        Or does the Consultant Engineer (whose drawings it may be on) mean it’s not on these particular drawings, and I should look elsewhere in the Tender Set, and that it is by the Builder and therefore in my price?… Or maybe it’s by the client and therefore not in my price…!  All these questions are giving me a headache, and the tender is due in three days, and the sub-contractors are responding “Too hard, way too hard!”…

Remember! The Contract documents are given to the Builder for a Contract with the Builder and not a contract with the sub-contractors. And so, we don’t want items excluded by accident when they really should be included …

For example: The mechanical engineer’s drawings might say “By Separate Contractor” in reference to some core-holes in slabs, or a steel plant platform … and even though it may not be built by the mechanical sub-contractor, it is to be built by the Builder, and so it is not part of a Separate Contract.

And so, if the item IS to be included by the Builder, then I don’t like these words appearing on the documents at all – after all, who are we (or you) to define which sub-contractor should do what? That is the Builder’s, or Main Contractor’s, job isn’t it? The Builder might, or might not, have all or some sub-contractors on wages – so are they really the SUB-contractors, or not?

It is always worth thoroughly checking the tender documents to make sure they are clear and not open to misinterpretation – which often leads to costly variations and possible delays.

Here are some abbreviations that I have seen and used… (And if I’ve left anything out, please let me know, Geoffrey)

Abbreviations PDF as mentioned.

This list should consider Normal Hours as well as Overtime hours.

… And do be sure the GST is noted clearly, as either included or excluded. And also make sure ‘profit & overheads’ are also clearly noted.

Here is a sample list (pdf) I have prepared.

But it’s just not true.

Including Contingences in a Cost Plan is not the Quantity Surveying saying they just can’t price … or they may have forgotten something and can’t work out what it is… or that they don’t really know how the building is going to go together, so let’s whack the cost up just to be sure… No, contingencies are much more subtle and useful than that. And consider, that if a Design Contingency is only maybe 5% at the Schematic Design stage, and a Contract Contingency may be only 2 or 3%, then we’re really only playing with some small numbers… In other words, the Cost Planner really is cutting it fine, to hopefully cope with some future unknown cost … If you ask me to delete the Design Contingency at Schematic Design so that the cost looks a bit lower, I won’t do it… and that request, when coming from a professional, really makes my blood boil.

These allowances, properly included in a project budget and cost plan, really help to keep it all  together and maintain budget control… increasing the possibility of your project proceeding to completion.

Contingencies – What are they? And why?

A contingency is a cost, (or maybe quantity or even time) allowance included into a budget, price, estimate, or even a quote, to accommodate unknowns in the design, the site, the client, the brief, things that haven’t been considered yet or other problems, issues and circumstance that may arise with further knowledge or investigation.

It really is a very sensible part of the cost planning process because in the early stages of design not everything has being thought of… The site may not have been fully inspected, the design brief might be a bit wishy-washy, the drawings are really only sketches, the specification isn’t written and the engineers are yet to have their say.

During design and documentation both the client and the design team will look at drawings and add the stuff they hadn’t thought of yet (… It is unusual for them to take things off the drawings). You know, things like – Can we have another basin? How about a cupboard here? A pergola out the back would be nice. A coffee machine would be good. And of course, we do need some roof walk-ways to access the plant & equipment we’ve just popped up onto the roof… and so the list and opportunities for extra costs goes on…

And there are the potentially costly issues that can’t be seen – soft ground to be replaced, rocks not yet discovered, existing in-ground services inadequate for the new project… or asbestos pipes in the ground and damp walls or rotten floorboards to be repaired or replaced. Cost management means anticipating the unresolved and putting money aside for them in advance.

There are three contingencies I like to use

I like to isolate the following three contingencies in my cost plan reports.

1. Design Development Contingency – for changes during design and documentation;

2. Contract (or Construction) Contingency – for changes and variations during construction;

3. Project Contingency – for other unknowns, factors and activities that may be required.

These Contingencies should be well thought through and realistic. They should always part of the budget and must be monitored and adjusted during design, documentation and construction.

This sample of course doesn’t cover all items required or all possible circumstances that may be encountered (as the design is far from complete) but it will help the Cost Planner with the preparation of their report for you.

If other items, works or potential costs are required (ie. difficult access or close proximities to neighbours; specific major repairs… or the like), then extra notes should be included to help acknowledge them.

Note also: Indicative $/unit allowances (ie. $2,000 for the supply of a stove) are for more helpful at this early stage than are brand names – as all brands have an assortment of models for any particular item and so generally have a wide range of possible costs. And also, comments like ‘medium range’ or ‘high quality’ will occasionally also not be a very helpful description, as one designer’s idea of ‘high quality’ may be another designer’s opinion of ‘low range’… the indicative $ figures are more helpful.

View Preliminary Specification Sample as PDF

Please note though: as I am constantly updating, improving and reviewing the format and content of my cost plan template, not all reports will look exactly like this one, and the current re-vamped version has a few things moved around, plus a few graphics changes…

View Sample Costplan Report as PDF

Tendering (for both the main contract and sub-contracts) is a very important process in the construction industry and should be handled professionally and consistently. After all, it is the beginning of the contractual process and errors and omissions here could be very costly, and lead to unexpected surprises for you and your client.

Here is a list of points that, in my opinion, should be considered:

Important points

Tenders are confidential,

Only call tenders when the client has a definite commitment to proceed with the project promptly as well the financial abilities to proceed … Tendering should not be a tyre-kicking or just an information-seeking process (it costs a builder a lot of money and time to submit a bona-fide tender),

Ensure the project site is accessible during the tender period,

Ensure all documents have been approved by the relevant authorities and consultants,

Ensure the documents are complete and have been adequately co-ordinated by all of the consultants,

The date of closing, method of submission and location for tender must be clear,

A single point of contact should be provided to the Tenderers for questions, confirmations and issues of information – inconsistent responses to questions could cause unnecessary confusion,

Tenders should only be considered if they are on time and in the format prescribed (i.e. verbal tenders should not be considered),

Tenders that have been submitted early must not be opened before the actual tender date and time,
All tenderers are to be given equal opportunities, shall be treated fairly, the same and without bias,

Tenderers shall acknowledge all documents used and received, including Addendum,
Advise unsuccessful tenderers promptly.

.. and, Some Don’ts

Don’t give information or advice to one tenderer and not another,

Don’t issue Addenda within 7 working days of the closing date,

Don’t close tenders on a Monday or directly after a public holiday, rostered day off or industry closure day,

Do not issue partial or incomplete tender documents and then use the tender period as an opportunity to complete or finalise and coordinate your documents.

Finally…

I hope the above points help… and if I’ve missed anything, please let me know.