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Surveyor's Construction Handbook,2003

Surveyor's Construction Handbook,2003

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Surveyor's Construction Handbook
Surveyor's Construction Handbook

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Update 15 published December 2003 Update 14 published September 2003 Update 13 published May 2003 Update 12 published January 2003 Update 11 published October 2002 Update 10 published August 2002 Update 9 published December 2001 Update 8 published October 2001 Update 7 published July 2001 Update 6 published December 2000 Update 5 published October 2000 Update 4 published May 2000 Update 3 published December 1999 Update 2 published October 1999 Update 1 published April 1999

Please note: References to the masculine include, where appropriate, the feminine. Extracts from Parry’s Valuation and Conversion Tables, A W Davidson (1989), (Estates Gazette) reproduced by permission of the College of Estate Management which owns the copyright. Appendix A, Section 2.3 is reproduced from the Building Cost Information Service publication, Standard Form of Cost Analysis: Principles, Instructions and Definitions (1969). Published by RICS Business Services Limited a wholly owned subsidiary of The Royal Institution of Chartered Surveyors under the RICS Books imprint Surveyor Court Westwood Business Park Coventry CV4 8JE UK No responsibility for loss occasioned to any person acting or refraining from action as a result of the material included in this publication can be accepted by the author or publisher. ISBN 0 85406 865 1 © RICS Business Services Limited (RBS) December 2003. Copyright in all or part of this publication rests with RBS, and save by prior consent of RBS, no part or parts shall be reproduced by any means electronic, mechanical, photocopying, recording or otherwise, now known or to be devised. Typeset and printed by Q3 Print Project Management Ltd, Loughborough.

1998 FOREWORD
Knowledge is of two kinds: we know a subject ourselves, or we know where we can find information upon it.
Samuel Johnson (1709–1784)

The fact that our profession serves a changing world increases the need for it to rely on well thought-out and reliable practices and procedures. Events move at an ever-increasing pace, imposing a requirement for quicker response times. Modern communication methods such as facsimile and now e-mail result in the need for information to be available almost instantly. This is made more difficult by an industry growing in complexity and which is subject to increasing customer expectations in terms of service and quality. The RICS has published this Surveyors’ Construction Handbook to help surveyors meet these needs. It is intended to become an important source of reliable information and guidance to all Chartered Surveyors who practise in construction. Much of the excellent information produced by the divisions in the past has now been updated for inclusion. Other material not yet revised will be added. The whole will be regularly reviewed and updated as necessary. RICS practice panels are continuing to produce information for inclusion to make it a useful construction reference document. We hope that this Handbook will become an invaluable aid to your day-to-day activities.

Christopher Powell, FRICS
PRESID ENT, QUANTITY SURVEYORS DIVISION, 1997–98

Trevor Mole, FRICS
PRESID ENT, BUILDING SURVEYORS DIVISIO N, 1997–98

ACKNOWLEDGEMENTS
Professor Roy Morledge, Professor of Construction Procurement at The Nottingham Trent University, for contributing the text of Part 3, Section 1. Major D.R. Bassett, Royal Engineers, for his contribution to the research underpinning the construction time charts in Part 3, Section 1; Central Unit for Procurement, HM Treasury (now Office for Government Commerce), for permission to use CUP guides extensively in the drafting of Part 1, Section 1 and Part 3, Section 1. Alan Turner, JP FRICS ACIArb, author of Building Procurement, for permission to use a number of the diagrams from his text in Part 3, Section 1.

CONTENTS
Foreword Acknowledgements List of Abbreviations Introduction
A B C D E F Aim and Scope of this Handbook Arrangement of Content Status of Content Currency of References Invitation Subscription Service 1 1 1 2 3 3 3

Part 1: The Client
Section 1.1: The Client’s Requirements and Roles
1.1.1 Establishing the Client’s Objectives 1.1.2 The Role for Independent Advice 1.1.3 Project Brief 1.1.4 The Client’s Role 1.1.5 The Client’s Responsibilities 1.1.6 Appointment of Project Manager (where appropriate) 1.1.7 Appointment of Consultants 1.1.8 Appointment of Constructors Appendix A: Further Reading 1 1 3 3 4 6 8 8 9 1

Section 1.2: Value Engineering

1 Introduction 1 1.2.1 Why Value Engineering? 2 1.2.2 Applicability 2 1.2.3 At What Stage Should Value Engineering be Carried Out? 3 1.2.4 Who Should Carry Out Value Engineering? 4 1.2.5 How Long Should It Last? 5 1.2.6 Preparing for a Value Engineering Workshop 5 1.2.7 Functional Analysis of Design Relative to the Client’s Requirements 5 1.2.8 Pricing the FAST Diagram 8 1.2.9 Presenting a Design Solution to a Value Engineering Workshop 8 1.2.10 The Workshop 8 1.2.11 Assessing the Value of the Workshop 9 1.2.12 Implementing the Results 10 1.2.13 Feedback from Post-Occupancy Evaluation 10 Appendix A: Health Centre Value Tree 1 Appendix B: Typical Example of a Value Engineering Process 1 Appendix C: Further Reading 1

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Part 2: Construction Design and Economics
Section 2.1: Pre-contract Cost Planning and Cost Management
Introduction 2.1.1 Pre-contract Cost Planning and Cost Management 2.1.2 Preliminary Cost Studies and Feasibility Studies 2.1.3 Budget 2.1.4 The Cost Plan at Outline Proposals Stage 2.1.5 The Cost Plan at Scheme Design Stage 2.1.6 Cost Checking 2.1.7 Action after Receipt of Tenders Appendix A: Sources of Cost Information Appendix B: Format of Budget and Cost Plans Appendix C: Element Unit Quantities Generation for Hypothetical Buildings Appendix D: Further Reading 1 1 2 4 4 8 11 13 14 1 1 1 1 1 1 1 5 10 14 15 1 1 1 1 1 1 1 1 1 1 2 1 1 1 2 3 3 5 6 8 1 1

Section 2.2: Life Cycle Costing
Introduction 2.2.1 The Client Context 2.2.2 The Life Cycle Costing Calculation 2.2.3 Tax Allowances, Incentives and Business Rates 2.2.4 Data Sources 2.2.5 Worked Examples Appendix A: Residual Values Appendix B: Obsolescence Appendix C: Costs And Values Appendix D: Glossary of Terms for Taxation Appendix E: Examples of Items of Expenditure Likely to Attract Taxation Allowances Appendix F: Further Reading

Section 2.3: Elements for Buildings
Introduction 2.3.1 Elements 2.3.2 Elemental Cost Analysis 2.3.3 Other Uses Appendix A: BCIS Standard Elements

Section 2.4: Design and Build - Guidance for Employer’s Agents
Introduction 2.4.1 Background 2.4.2 Contract Documentation 2.4.3 Additional Services 2.4.4 Employer’s Requirements and Contractor’s Proposals (including contract sum analysis) 2.4.5 Design and Build Variants 2.4.6 Novation Appendix A: Potential Services Associated with the Role of Employer’s Agent Appendix B: Employer’s Requirements/Contractor’s Proposal Checklist

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Section 2.5: The Chartered Surveyor as Lead Consultant
2.5.1 2.5.2 2.5.3 2.5.4 Introduction Definitions: The Difference Between a Project Manager and Lead Consultant Benefits of Appointing a Chartered Surveyor as Lead Consultant Issues to Consider before Undertaking the Role Schedule of Lead Consultant Duties

1 1 1 2 3 3 1 1 2 3 4 7 8 9 11 1 1

Section 2.6 Defining Sustainable Construction
Introduction 2.6.1 Technology Swaps 2.6.2 How Can the Environment and Sustainability be Valued? 2.6.3 How Does This Effect the Construction Industry? 2.6.4 Green Building Materials 2.6.5 Whole Building Sustainability 2.6.6 The Government Line 2.6.7 What Might the Future Hold Appendix A: Embodied Energy Content of Building Material Appendix B: Useful Addresses

Part 3: Construction Planning and Procurement
Section 3.1: Developing an Appropriate Building Procurement Strategy
Introduction 3.1.1 The Client’s Role 3.1.2 Procurement Strategy 3.1.3 Selection of Most Appropriate Procurement Strategy 3.1.4 Implementation Appendix A: Procurement Options 1 1 2 12 25 29 1 1 1 3 11 19 34 1

Section 3.2: Building Services Procurement
Introduction 3.2.1 Appointing the Building Services Designer 3.2.2 Design Coordination 3.2.3 Appointing a Building Services Contractor 3.2.4 Tender Documents Appendix A: Typical Example

Part 4: Construction Administration and Management
Section 4.1: The Problems of Practical Completion
Introduction 4.1.1 What Happens in Practice 4.1.2 Standard Form Approaches 4.1.3 Effects of Practical Completion 4.1.4 Methods for Dealing with Practical Completion 4.1.5 Definitions 4.1.6 Subsidiary Issues Appendix A: General Objectives to be Achieved at Practical Completion for Small to Medium-sized Building Projects Appendix B: Table of Cases Appendix C: Further Reading 1 1 1 3 13 14 16 20 1 1 1

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Section 4.2: Ascertaining the Amount of Loss and Expense Incurred in Building Projects
Introduction 4.2.1 General Principles 4.2.2 Definitions 4.2.3 Entitlement 4.2.4 Ascertainment 4.2.5 Admissible Items 4.2.6 Inadmissible Items Appendix A: Ascertaining the Cost of Running a Site Appendix B: Disruption Appendix C: Ascertaining the Cost of Head Office Overheads Appendix D: Checklist of Items for which Loss and/or Expense are Allowed Appendix E: Checklist of Steps Required when Considering Submissions by Contractor Appendix F: Further Reading

1 1 1 4 4 7 9 13 1 1 1 1 1 1

Section 4.3: The Management of Risk

1 Introduction 1 4.3.1 Definitions 2 4.3.2 The Rationale for Risk Management in the Construction Process 2 4.3.3 The Risk Management Process 5 4.3.4 Summary 14 Appendix A: Further Reading 1 Introduction 4.4.1 Valuations 4.4.2 Assumptions 4.4.3 Valuation Under a JCT Contract: Background 4.4.4 Recommended Action at the Start of a Contract 4.4.5 Communications 4.4.6 Approach 4.4.7 Content of a Valuation 4.4.8 Administration 4.4.9 Special Situations 4.4.10 Other Contract Terms (relative to valuations) 4.4.11 Valuations Under Other Forms of Contract Appendix A: Further Reading Appendix B: JCT Definition of ‘Reasonable Proof’ Appendix C: Example of Priced Activity Schedule 1 1 1 2 3 4 5 6 8 15 16 17 18 1 1 1 1 1 2 2 3 4 5 6 7 12 13

Section 4.4: Valuations for Interim Certificates

Section 4.5: Extension of Time
4.5.1 4.5.2 4.5.3 4.5.4 4.5.5 4.5.6 4.5.7 4.5.8 4.5.9
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Introduction Extension of Time Clauses Assumptions Extension of Time Under a JCT Contract Notice by the Contractor of Delay to Progress The Award of an Extension of Time during the Contract Period and Before the Completion Date The Award of an Extension of Time after the Completion Date Relevant Events Concurrent Delays Consequential Entitlement
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4.5.10 Administration 4.5.11 Extension of Time under an ICE Contract 4.5.12 Extension of Time under a GC Works Contract Appendix A: Further Reading

13 14 14 1

Part 5: Additional Guidance and Information
Section 5.1: Surveying Safely Section 5.2: Construction (Design and Management) Information
5.2.1 Schedule of Sources of Useful CDM Information 1 1 2 1 1 1 2 4 1 1 1 2 2 1 1 2 3 3 4 4 5 6 20 1 1 1 1

Section 5.3: Built environment group roles and information Section 5.4: Building Cost Information Service
5.4.3 BCIS Online 5.4.4 Other BCIS Publications and Services 5.4.5 Further details

Section 5.5: Building Occupancy Cost Information (BMI)
5.5.2 5.5.3 5.5.4 5.5.5 BMI Quarterly Cost Briefing Building Maintenance Price Book Special Reports for Benchmarking News, Digests and Reports

Section 5.6: Electronic document storage – legal admissibility
Introduction 5.6.1 Code of Practice – DISC PD 0008: 1999 5.6.2 Weight of evidence and document destruction 5.6.3 Authenticity 5.6.4 Photocopies, microfilm and image processing 5.6.5 Document storage 5.6.6 Storage and access procedures 5.6.7 Format of the Code of Practice 5.6.8 Conclusion Appendix A: Specimen form for recording scanning information Appendix B: Specimen form for recording retrieval Appendix C: References

Index

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Transport and the Regions (formerly the DoE) Document Management System Domestic Sub-Contract European Commission European Union Functional Analysis Systems Technique Federation of Civil Engineering Contractors Gross National Product House Builders’ Federation Her Majesty’s Stationery Office (now known as The Stationery Office) Health and Safety Executive Institution of Chemical Engineers Institution of Civil Engineers Information and Document Management Association Abbreviations (10/02) Page 1 .LIST OF ABBREVIATIONS ABE ABI ACA ACE AQL BCIS BEC BMI BRE BRECSU BREEAM BSI BSRIA BWIC CA CAWS CDM CD-R CECA CIB CIBSE CIC CIRIA CITES CCT CSM DBFO DoE DETR DMS DOM EC EU FAST FCEC GNP HBF HMSO HSE IChemE ICE IDMA The Surveyors’ Construction Handbook Association of Building Engineers Association of British Insurers Association of Consultant Architects Association of Consulting Engineers Acceptable quality level Building Cost Information Service Building Employers’ Confederation Building Maintenance Information Building Research Establishment Building Research Energy Conservation Support Unit Building Research Establishment Environmental Assessment Method Building Standards’ Institution Building Services Research and Information Association Builder’s Work in Connection Contract Administrator Common Arrangement of Works Section for Building Works Construction (Design and Management) Compact disc recordable Civil Engineering Contractors’ Association Construction Industry Board Chartered Institution of Building Services Engineers Construction Industry Council Construction Industry Research and Information Association Control in Trade of Endangered Species Compulsory Competitive Tendering Chartered Surveyors Monthly Design Build Fund and Operate Department of the Environment (now known as the DETR) Department of the Environment.

IFC JCT LCC LQ M&E MERA MW NEC NEDO NJCC NSC OMR PFI PSA RIBA RICS VAT WCD WORM WRC Intermediage Form of Contract Joint Contracts Tribunal Life Cycle Costing Limiting quality Mechanical and Electrical Multiple Estimate Risk Anaylsis Minor Works New Engineering Contract National Economics Development Office National Joint Consultative Committee for Building Nominated Sub-Contract Optical Mark Reading Private Finance Initiative Property Services Agency Royal Institute of British Architects Royal Institution of Chartered Surveyors Value Added Tax With Contractor’s Design Write-Once-Read-Many Water Research Centre Page 2 Abbreviations (10/02) The Surveyors’ Construction Handbook .

obtaining planning permission and building regulation approvals. and relevant information (including references to other useful material). Part 5. Throughout the Handbook. refurbishment works and alterations to the form of buildings. managers and employees who may instruct a surveyor. It discusses the establishment of their construction objectives and constraints.I NTRODUCTION INTRODUCTION A Aim and Scope of this Handbook A1 The aim of this Handbook is to help both building and quantity surveyors to provide construction-related professional services effectively and efficiently. conversion. not surveyors undertaking the role of the client’s representative who gives instructions to surveyors on behalf of the Client. although much of it is relevant to practice elsewhere. Each part is followed by Further Reading. The Handbook does not cover project management services. It seeks to achieve this by providing guidance which reflects what is often good custom and practice. or dispute resolution. partners. provides Additional Guidance and Information. The last Part. to which the numbered cross references in the Parts apply. the rights to construct the development and use the buildings when constructed. The first four Parts represent sequential phases of the construction process. The first four Parts are as follows: Part 1: The Client seeks to help surveyors to work with clients. Trusts and their Trustees. The contents of this Handbook apply across the complete range of this definition unless otherwise stated. ‘Client’ in this Handbook is used to include companies and their Directors or Officers. ‘Construction’ in this Handbook means new construction. in principle. It should be appreciated that this Handbook does not attempt comprehensive coverage of necessary or good practice. the Handbook is arranged in five Parts. it is assumed that possession and necessary access to the site are available and. A2 A3 A4 A5 B Arrangement of Content B1 After sets of Definitions and Abbreviations which apply throughout. So ‘construction’ does not embrace building surveys or building maintenance. The document is drafted on the basis of UK law and practice. leading to the The Surveyors’ Construction Handbook Introduction (4/98) Effective from 1/6/98 Page 1 B2 . The Handbook is addressed to surveyors providing services to clients (as defined). and also civil engineering works.

the Court is likely to take account of the contents of any relevant guidance notes published by the RICS in deciding whether or not the surveyor had acted with reasonable competence. feasibility studies. and comments on the engagement of professionals involved in the construction process. the Member will not necessarily be exonerated merely because the recommendations were found in RICS Guidance. Guidance and Information is integrated. It defines the client’s roles during the construction process. procedures which in the opinion of the RICS meet a high standard of professional competence. a Member conforming to the practices recommended in this Note should have at least a partial defence to an allegation of negligence by virtue of having followed those practices.e. however. Any Appendices are situated at the end of each Part. as the word implies advice to Members of the RICS on aspects of their profession.I NTRODUCTION development of construction briefs. C2 Page 2 Introduction (4/98) Effective from 1/6/98 The Surveyors’ Construction Handbook . If the guidance has been followed in an appropriate case. i.e. and cost-value relationships). i. Part 4 covers Construction Administration and Management. ‘Guidance’. However. i.e. Where recommended for specific professional tasks. Part 2: Construction Design and Economics covers development of the design concept. Each paragraph is prefixed with a G or an I to indicate its status. all post-contract matters. In the opinion of the RICS. procedures are intended to embody ‘best practice’. Should an allegation of professional negligence be made against a surveyor. B3 An Index follows Part 5. C Status of Content C1 For convenience. and confirmation of the final design proposal. Members have the responsibility of deciding when it is appropriate to follow the guidance. Part 3 relates to Construction Planning and Procurement. to the time the construction contract is placed. Members are not required to follow the advice and recommendations contained in such paragraphs. note the following points. They should. risk assessment. design and economics (including life-cycle costing.

CV4 8JE.INTRODUCTION On the other hand. they should do so only for good reason. Surveyor Court. where Members depart from any practices recommended in this Handbook. C3 Material classified as ‘information’ is intended to provide information and explanations to Members of the RICS on specific topics of relevance to the profession. F Subscription Service Any change of address should be notified to the address appearing below: The Surveyors’ Construction Handbook Subscription Service RICS Books Surveyor Court Westwood Business Park Coventry CV4 8JE Tel: 020 7222 7000 ext 647 The Surveyors’ Construction Handbook Introduction (revised 10/01) Effective from 1/12/01 Page 3 . It is the responsibility of each individual surveyor to decide on the appropriate procedure to follow in any professional task. the Court is likely to take account of the contents of any relevant information published by the RICS in deciding whether or not the surveyor has acted with reasonable competence. relevant to professional competence to the extent that a surveyor should be up to date and should have informed himself of such information within a reasonable time of its promulgation. E Invitation RICS Books would welcome comments upon and suggestions for additions and amendments to this Handbook. Coventry. the Court may require them to explain why they decided not to adopt a recommended practice. However. It is again. however. However. The function is not to recommend or advise on professional procedures to be followed by surveyors. Westwood Business Park. Members should note that if an allegation of professional negligence is made against a surveyor. D Currency of References The cases cited and the editions quoted were up-to-date at the time of writing. it does not follow that a Member will be adjudged negligent if he has not followed the practices recommended in this Handbook. readers should check current rulings and additions. Guidance Notes are relevant to professional competence in that each surveyor should be up to date and should have informed himself of Guidance Notes within a reasonable time of their promulgation. In the event of litigation. They should be provided in writing to RICS Books Publishing. In addition.

1.1. However.1.3 I 1. value for money is a key criterion.1.1 Client satisfaction will be maximised if the client’s objectives as established in the business case for the project are met. SECTION 1 PART ONE: THE CLIENT SECTION 1: THE CLIENT’S REQUIREMENTS AND ROLES 1. Owner occupiers are usually primarily concerned with building performance in terms of functionality and costs in use. They may also be concerned with image and building style.1.5 The Surveyors’ Construction Handbook Part 1. They may be predominantly concerned with speed rather than performance. certainty of completion date may be a key issue.PART 1.1 Establishing the Client’s Objectives G 1. on the other hand.4 I 1.1. There will usually be particular criteria for achievement which are critical or important to each particular client. Indeed.1.1. Possible objectives are as follows: (a) Cost-related • minimise capital cost • maximise capital cost/value ratio • maximise capital cost/worth to client ratio • achieve necessary income cash flow profile • minimise management costs • minimise maintenance and insurance costs • minimise tax liability • respect capital cost constraint • be energy efficient. There are market conditions where both of these issues may become important.9).6 and 3. Developers.1.1. the client’s purpose in initiating a building project is usually driven by the need for the project as a functional unit or as an investment.2 I 1.1. The surveyor should be able to assist with the development of the business case and the prioritisation of project objectives (see 3.1. The type of client will affect the criteria which must be met if the client is to be satisfied with the project. In this sense. Nor is it fair to suggest that developers are unconcerned about building performance or cost. Section 1 (01/03) Effective from 1/3/03 Page 1 .1. may be driven by market conditions which enable the project to be let or sold at maximum commercial advantage. This is not to say that owner occupiers are unconcerned about time. G 1.1.1.

G 1.1. SECTION 1 (b) Marketability • maximise prompt or future disposal (freehold or otherwise). 1997. Investing time at the beginning of a project in developing a complete definition taking account of all the requirements will reduce the likelihood of changes later. This is often because there is a sense of urgency fuelled by the desire for an immediate solution. However. the giving of advice on some of the requirements listed above is.g.1.7 1 Construction Industry Board. the client should be advised to seek other professional advice. Page 2 Part 1. The later that changes are made in a project. (c) Use-related • optimise operational requirements of intended occupier(s) • provide greatest flexibility in potential uses • reflect intended occupier’s requirements/preferences/ability to afford • meet social/management/occupier’s special needs (e. (d) Environmental • minimise health and safety risks • choose materials which reflect sustainability • aesthetically please (e.1.6 The importance of each of these criteria will be relative to the objectives of the client. Where such a particular requirement is important to the client and outside the client’s expertise. disabled). London.2. of course.4. Briefing the Team.1. Section 1 (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook .g. the more they are likely to cost in both direct and knock-on effects (see 3. Many construction projects suffer from poor definition due to inadequate time and thought being given at an early stage1. outside the competence of the surveyor.1.1.1.14(f) & (g)). (e) Timing • construct within a defined period • minimise risks of delay during construction.9). G 1.2. impression on occupier’s customers) • minimise any alterations to specific features • reflect planning authority’s brief/policies • minimise potential opposition • reflect corporate style or personal preferences of proposed occupier/employees • maximise comfort of occupants • minimise inconvenience to others during construction. A chartered surveyor will be able to assist the client in these matters. Thomas Telford Publishing.PART 1. the business case for the project and to the extent to which he/she is able to cope with risk (see 3.14 and 3. It is important that the client seek investment appraisal advice in respect of the project and that the appraisal considers ‘what if’ questions to ensure that the impact of changes of key components in the appraisal is clearly understood.

1. The advice offered should be informed and unbiased and it should be based upon a logical analysis of the needs of the client.1.1. SECTION 1 1.1. Section 1 (01/03) Effective from 1/3/03 Page 3 .1. The inexperienced client will need professional help in the preparation of the brief.PART 1.2.10 and 3. The project brief may include: (a) project description.1. This advice can be offered by a member of the client’s design team or can be a separate function.2 The Role for Independent Advice G 1.2 • • • • • Assistance in preparing the business case underpinning the project Identifying the needs and requirements of the client Defining the project Matching needs and project characteristics with appropriate procurement strategy Facilitating the associated selection and contractual processes and policies (the business case) (briefing) (project definition) (procurement strategy) (implementation) I 1. it may be part of a larger planned development).2.3 Possible sources for the appointment of independent advisers include suitably qualified and experienced construction professionals such as chartered surveyors. 1.1 The importance of a clear project brief to the successful completion of the project and in ensuring appropriate performance of the project cannot be over emphasised.1. The project brief is a comprehensive statement of the client’s requirements for the project based on close consultation between the client and users and based upon the parameters established (see 3. It may be more difficult for a design team member to remain impartial in carrying out this process and it is recommended that any expert retained should be solely for this purpose.g. the type and character of the project and the range of appropriate strategies available.3.2. all but the most experienced client may need advice.3 Project Brief G 1.1. The Surveyors’ Construction Handbook Part 1.1 With the potential for the involvement of many consultants and/or constructors in a project and the range of contracts associated with their employment. This function can be identified as the role of the principal adviser and may encompass: G 1.1.1. (b) how it fits into the client’s corporate plan (e.12).

If all the information required for the project brief is not readily available. (i) life span.3 1 Construction Industry Board. together with their space requirements. (e) standards. (g) when the building needs to be available for use.4.1. Section 1 (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook .1.4.4. all parties must have timely G 1. Page 4 Part 1. whose roles are also explained in this handbook. 1997. The success of any project will depend upon the motivation given by the client.2 This is the initial control document for the early planning of the project. (d) schedule of accommodation and quality of internal environment. and explains how it should be carried out. project managers and other consultants. Where projects are of a large or complex nature it may be advisable to consider the appointment of a project manager. London. To perform effectively. clients. SECTION 1 (c) number of people that are to occupy the building. (f) equipment and special services/requirements. less experienced clients will need to seek advice or to appoint advisers to assist them.1. Effective management is vital in any construction project. Briefing the Team. In carrying out their role. (j) site. Thomas Telford Publishing.1. A crucial part of any effective management structure is efficient communication.PART 1. (h) quality and cost limitations.1 This section briefly explains the client’s responsibilities through the life of a construction project. will need help from their professional advisers.1. G 1. This section aims to outline the client’s task in setting policy and formulating strategy.2 G 1. little constructive work can be done. depending on their knowledge and expertise. without it. it is better to issue it in an incomplete form and to update it progressively1.3. Experienced clients may take a leading role in the procurement process. The client’s prime role is to establish a structure for the management of the project and to make sure that it works. and (k) statutory controls. 1.4 The Client’s Role G 1.

1.4.1.4 The client has substantial influence on the design of the project in respect both of functional efficiency and of overall appearance. has to take particular care to: (a) understand fully the purpose of the building. More detail for each of these activities can be found in the section of this handbook indicated in brackets in the figure.4.8). The selection of the right people is emphasised as a key to success (see 3. Section 1 (01/03) Effective from 1/3/03 Page 5 .1.11). with a wide range of activities to perform and implement before both the design and the construction processes. The Surveyors’ Construction Handbook Part 1. ensure that the requirements of the users are accommodated.4.10). and (b) appoint designers with proven ability in designing buildings which satisfy users’ requirements and harmonise with and contribute to the quality of the built environment.1. G 1.PART 1. G 1. In the performance of these activities. As can be seen.1.5 The accompanying figure indicates the activities in the procurement process and when activities are usually performed. and communicate those requirements to the designers (see 3. and. SECTION 1 access to all information relevant to their tasks and the project’s objectives and status (see 3. therefore.1. the client can expect to be supported and advised by his/her adviser or (if appointed) the project manager.4. the client’s role is significant.

1.1.14) Quality control overview (3.1.19) Commissioning (3.2) Contractual arrangements (3.11) Systems and controls (3.1.4.9) Appoint adviser (3.1.1 The client should set policy and outline strategy including: (a) setting and prioritising the project objectives within the business plan. Section 1 (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook .1.4.1.1.12) Appointment of PM (if appropriate) (3.8) Procurement strategy* (3.1.4.16) Procurement strategy (3.1.4.4.1.4.1.6) Contractual arrangements* (3.17) Occupation and takeover (3.11) Implementation policy (3.4.4.1.10) Systems and controls (3.4.18) Appointment of constructors (3.1.3–5) Organisational structure (3.4.4.1. Page 6 Part 1.1.4.1.4.PART 1.1.12) Cost control overview (3.1.13) Time control overview (3.1.13) Value management (3.18) Change control overview (3.4.1.1.5 The Client’s Responsibilities G 1.4.6) Define client’s responsibilities (3.9) Design overview (3.1.1.7) Appointment of design and cost consultants (3.1. (d) controlling their implementation (the construction phase).2) Implementation Resources (Client) (3.1.14) Quality control overview* (3.11) * () Indicates the activity will continue into the next phase Indicates the section of this document referring to the activity in more detail 1.1.1.5.7) Project Brief (3.13) Whole-life Costs (3. (b) planing to meet the objectives (the pre-design phase).4.1.4.9) Confirming the business case (3.1.1.1.1.13) Design overview* (3.4.1.18) Procurement Strategy Procurement strategy development (3.1.4.1.1.15) Value Engineering (3.4.1.4.1.1.1.4. SECTION 1 FIGURE TO INDICATE THE ACTIVITIES IN THE P ROCUREMENT PROCESS Pre-Design Phase Pre-Construction Phase Construction Post-Construction Client’s Role Develop business case for project (3.1.10) Systems and controls* (3.1.17) Time control overview* (3.1.12) Cost Control overview* (3.4. (c) implementing the plans (the pre-construction phase).

(e) allowances made in the feasibility and viability assessments to cover possible risks are sufficient (contingency allowance).1. to co-ordinate functional and administrative needs. and (g) plans are in place for adequate project management including systems for cost.4 The client should also co-ordinate and resolve conflicts between all interested sections of the client organisation including (see 3.4. procure. This document is out of print..5. G 1. (f) substantial sensitivity analysis and ‘what if’ studies have been carried out to assess the effect of possible changed criteria on the viability of the project.3 In particular.2 project against the objectives (the The client also has a dual management function: (a) to manage the client input. (b) any constraints demanded by the project funder(s) are known and their impact understood.. G 1. 2 Construction Industry Board. (c) the critical assumptions made in preparing the initial estimates and programmes are valid. The Briefing Process: A Review and Critique. to resolve conflicts. and (f) evaluating the complete post-construction phase).6): (a) user groups – who will work in the building.4. Thomas Telford Publishing. 1997.5.1.1. quality and change control.9). SECTION 1 (e) arbitrating between conflicting demands. J. 1 Kelly.11). London. Briefing the Team. S. time.1. Section 1 (01/03) Effective from 1/3/03 Page 7 .1. and Male. RICS. monitor and control the external resources needed to implement the project (see 3. S.3–5).5. to assess. Heriot Watt University. G 1. and (b) to supply the technical expertise. The Surveyors’ Construction Handbook Part 1. (d) cost estimates are comprehensive and include all capital and resource costs.12).1.1.PART 1.4. realistic and achievable (see 3.1. Department of Building Engineering and Surveying.1. MacPherson.1. the client should be satisfied that: (a) the project brief is comprehensive and clear and has the full support of the users1&2 (see 3. (1992). to act as the formal point of contact for the project (see 3.

1. or predominant. In this case. Effective from 1/3/03 The Surveyors’ Construction Handbook Page 8 Part 1. Project management practices also exist to enable appointment to be made on a consultancy basis. This will include (see 3.6 Appointment of Project Manager (where appropriate) (see 3. G 1.1 Due to the complexity of modern buildings and the potentially large number of parties involved in the process the client may wish to appoint a single person to draw the process together and manage it to ensure that the overall performance. responsibility for the project.7) G 1.5.1.PART 1. 1. (c) ascertaining the time required for making decisions. communications.4.4.5 The client is responsible for ensuring that all necessary decisions are made on time. (b) identifying the decision makers and their required procedures. SECTION 1 (b) specialist groups – responsible for technical systems within the building.g.1. (e) warning decision makers regarding forthcoming submissions – making sure items are on the agenda. (g) following up submissions throughout the decision making process. (d) establishing a formal programme for decisions. (d) finance and accounts – who will plan and control expenditure and pay bills as they arise. computers. Timely decisions are necessary to avoid delays and increased costs: the decision-making process requires as much planning and management as any other activity. (f) preparing on time fully detailed submissions and/or presentations in full compliance with procedural requirements.11): (a) scheduling the key decisions to be made. The project manager may be a member of the client organisation who is given sole. cost and quality requirements are achieved. e.1.6.1. and (e) legal advisers – who will advise on and monitor the client’s formal relationships with outside parties. Section 1 (01/03) . time. (c) facilities management – who will manage the completed building including maintenance and security. and (h) promptly communicating decisions made to the parties affected by them.

1. The terms and conditions of these appointments are governed by the procurement strategy adopted for the project.1.4. 1.9) G The selection of those who will actually construct the project is often key to a successful outcome.2 It should be emphasised that the role of the project manager should be to act as part of the client organisation. and price. reputation. G 1.1. SECTION 1 selection should be based upon resources.6. The selection of procurement strategy is a complex one and is referred to in Part 3 section 1 of this handbook. and services should be clearly identified.7 Appointment of Consultants (see 3. 1.8 Appointment of Constructors (see 3. The Surveyors’ Construction Handbook Part 1.4.8) G The process of selecting and appointing the design team and the cost consultant is carried out by the client who may seek the advice of his/her advisers.1.PART 1. Section 1 (01/03) Effective from 1/3/03 Page 9 . Selection should always be on quality as well as price and ideally the procurement strategy governing when they are appointed should facilitate the early involvement of constructors in the design process.1.

Briefing the Team.PART 1. Partnering in the Public Sector: a Toolkit for the Implementation of Post-Award. Loughborough. 1997 European Construction Institute.. 1997 Construction Industry Council. Thomas Telford Publishing. Department of Building Engineering and Surveying. The Surveyors’ Construction Handbook Part 1. ECI. APPENDIX A Appendix A: Further Reading Construction Industry Board. Selecting Consultants for the Team: Balancing Quality and Price. S. 1997 Construction Industry Board. S. Heriot Watt University. London. SECTION 1. London. and Male. J. Partnering in the Team. London. 1992. RICS. Project Specific Partnering on Construction Projects. CIC. The Procurement of Professional Services: Guidelines for the Value Assessment of Competitive Tenders. This document is out of print. MacPherson. 1997 Construction Industry Board.. Section 1 Appendix A (01/03) Effective from 1/3/03 Page 1 . Thomas Telford Publishing. London. Thomas Telford Publishing.. The Briefing Process: A Review and Critique. 1997 Kelly.

Section 2 (12/99) Effective from 1/1/00 Page 1 . as described here. It involves clearly defining the client’s strategic objectives. value engineering) is a structured method of eliminating waste from a client’s brief and from the design on a construction project before binding commitments are made. Value management includes value engineering as part of this process. it can also reduce costs by up to 10 per cent. In describing the value engineering process this section aims to assist surveyors both in advising clients on the use of value engineering and taking part in a value engineering exercise as part of the design team. a method of ensuring that the client gets the best possible value for money in terms of safety. for example. The report also estimates that while the objective of value management is to increase value. considering optimum design solutions within the context of the client’s business objectives and deciding which of these provides the optimum lifetime value to the client. can be a stand-alone exercise (a value engineering workshop) or may be part of an overall value management process. The Surveyors’ Construction Handbook Part 1. i. through taking unnecessary costs out of designs. Value engineering. According to the Construction Task Force report. Value engineering is a ‘systematic approach to delivering the required functions to the required quality at the least cost’. as well as a review of the whole process after occupancy.e. performance and delivery targets.PART 1. i. SECTION 2 PART ONE: THE CLIENT SECTION 2: VALUE ENGINEERING Introduction Value management (and within it. ‘Rethinking Construction’ (published by the DETR in July 1998) it is practiced by up to a quarter of the construction industry in the UK. value management ensures a clearer understanding of the brief by all project participants and improves team working. It is not intended for surveyors acting as value engineering facilitators and makes no attempt to address the very particular skills required for this role. an evaluation of design solutions against the client’s brief. This section of the handbook looks at the carrying out of a value engineering exercise during the early design phase of a project. Value management is the wider term used in the UK to describe the overall structured team-based approach to a construction project. It is a structured form of consensus decision making that compares and assesses the design solutions against the value systems declared by the client.e. Used to deliver more effective and better quality buildings.

it can only act as a functional assessment of the technical design solutions and their relative cost.2.2 Many client organisations will only undertake value engineering on schemes over a certain value. However. This is because it is more difficult to develop the design brief in such instances and consequently a design solution may be adopted without being questioned. S ECTION 2 G 1.2. A value engineering exercise can only relate design proposals to a client’s business requirements if early value management studies have encapsulated these requirements within the brief. Consequently.1 The technique of value engineering can be employed on any project.1 Value engineering has grown in popularity for the simple reason that it actually works.1.2. For example.1.2. If a value engineering exercise is carried out in isolation from any strategic review of the project requirements. usually because of time constraints placed upon the designers. even in this limited function it can still be very useful.2. Value engineering relates design proposals directly back to a client’s business. However.PART 1. Railtrack will carry out the technique on projects valued at £250.2.2. Section 2 (12/99) Effective from 1/1/00 The Surveyors’ Construction Handbook . thus ensuring that a management system is in place which forces designers to justify their decisions when tested against the client’s required function. value engineering will be invaluable where repetitive schemes are being considered Page 2 Part 1. 1. Furthermore. Despite this. the true objectives of the client get lost along the way. more complicated and higher value buildings are likely to benefit the most (see figure 1).2 G 1.2 Applicability 1.2.000 or more and Northumbrian Water will only consider it for projects worth over £1m. Construction projects can often take on a life of their own when members of the design team become focused on their own particular problems and time constraints.1 Why Value Engineering? 1. Figure 1: Projects Benefiting from Value Engineering High Essential Complexity Optional Low Low High Value 1. there is no reason why the process should not be applied to smaller schemes.

if changed. The ‘objectives’ of the project should remain the same throughout the process and they should be validated at the beginning of each workshop.2. (b) A review of the project at ‘outline design’ could be conducted to ensure that the decisions taken earlier have been implemented or. (c) Another review (a functional analysis of the solutions) would then be carried out at ‘scheme design’ to test individual building elements involving traditional cost planning/life cycle costing techniques. that they still meet the functional requirements.2.3 The Surveyors’ Construction Handbook Part 1. 1.2. the technique is just as appropriate in ensuring that a well-defined statement of requirements is first established and that subsequent design solutions address the function of the building most economically.PART 1.3. Section 2 (revised 10/01) Effective from 1/12/01 Page 3 . for example.3.1 The greatest benefits can be obtained by commencing the VE process at the earliest possible stage.2 This section of the handbook considers the evaluation of a design at the end of the scheme design phase. and since this could generate the greatest benefit to the client the timing is crucial.2. When an experienced client has prepared the brief. Several workshops may be necessary at each of the crucial decision-making stages of a project: (a) A first exercise (a functional analysis of requirements).2.3 Value engineering works irrespective of the procurement route taken. The objectives of each workshop may be different. Once it has been established that the client’s needs will best be met through a construction project the purpose of the first VE exercise should be to inform the brief. could be carried out as early as ‘option appraisal’. the value engineering exercise (which will address the proposed design solutions) is best done towards the end of the ‘scheme design’. Where the contractor is mainly responsible for the design. leading to the sort of continuous improvement recommended by the ‘Rethinking Construction’ report. design and build. They can also be tested in practice. or a value management exercise has already examined the client’s requirements. It is important that time for the value engineering process and any resultant redesign is included in the scheme design programme at the outset. It is a discipline upon the design team members and the clients who appoint them. but the process will be the same whenever it is carried out. to define the project needs and inform the brief. Carry it out too early and not enough will be known about the problems associated with the building function. If the project objectives do change the whole direction of the project will need to reassessed.3. SECTION 2 as improvements and savings can be incorporated into future schemes. 1. G 1. 1.2. develop and construct or PFI projects. whereas too late and minds become set on the solutions formulated by the design team.3 At What Stage Should Value Engineering be Carried Out? 1.

4. These may include: • those people with responsibility for the needs of the business.2 1. the client. where applicable. and • those who will be affected by the outcome.2. 1. engineers and quantity surveyor) and also the contractor.4. However. Different stakeholders will be required to participate at different stages of the project.1 It is strongly recommended that a value engineering exercise is organized by an experienced value management facilitator to ensure that the value engineering participants retain their objectivity and that an unbiased approach is maintained.4. letting agents or rating valuers. this practice has been known to cause resentment between the project team and the external advisers and might therefore compromise the final design solutions. 1. • those with specific responsibility for development. However. it is important that all stakeholders are represented even if this results in a larger group. However.2. It is important that each of the participants have the authority to make decisions at the workshop.2.2. design and implementation of the operation/project.4 Page 4 Part 1. It may also be appropriate to include clients’ advisers. Panels with fewer than four members could be considered ineffective.4 Who Should Carry Out Value Engineering? 1. It is common practice in North America to appoint an outside team of consultants to question the design team’s solutions. It is considered that an experienced facilitator independent of the design team. Section 2 (revised 10/01) Effective from 1/12/01 The Surveyors’ Construction Handbook .3 The optimum size of a value engineering panel would depend upon the complexity of the project as well as the skills of the facilitator. will ensure that the design team’s solutions are adequately tested at the workshop. it is considered that panels of more than twelve members are difficult to manage. SECTION 2 G 1. the building users and the design team (designer.4. for example. The participants should be those who can make decisions and provide information related to the specific aims and objectives of the workshop. The value engineering participants should represent the principal stakeholders in the project namely. • those with responsibility for the management and/or maintenance of the operation. with an appropriately briefed panel.2.PART 1.

5.2 G 1.7 Functional Analysis of Design Relative to the Client’s Requirements 1. The client’s value criteria will have been developed in the first value management workshop. All participants must be prepared to propose and challenge design solutions. it is most important that an agenda is agreed by the panel and distributed by the facilitator. With each successive workshop these criteria will be developed further into a function diagram.PART 1.5 How Long Should It Last? 1.2. 1. The ‘40-hour workshop’ is the classic industrial value engineering standard.1 The length of time taken over the value engineering workshop will depend on the complexity of the project and the level of design detail that has been completed.2.2.6 Preparing for a Value Engineering Workshop 1. a functional analysis of the client’s requirements should be drawn up. The input of all participants (not just those who are experts in a particular discipline) is one of the strengths of the VE process and should be encouraged by the facilitator.1 Prior to the workshop.7.2 1.2. two-day workshops at key points during the design process are more common in the UK construction industry. but the most common method is using a functional analysis systems technique (FAST) diagram.2.6.5. SECTION 2 G 1. 1.2. This can be simple ‘creative session’ of the functions and possible alternatives.2 G 1.7. The functional analysis should always be generated by the client representatives with the help of the other members of the workshop. not to take part in it. It is the role of the facilitator to facilitate this process. However. In addition to an agenda.3 The Surveyors’ Construction Handbook . If it is to be developed further this will take place as part of the information stage of the workshop.6.2. Section 2 (revised 10/01) Effective from 1/12/01 Page 5 1. The FAST system uses a ‘function diagram’ which identifies the basic function ‘what is required’ on the left-hand side and more detailed secondary functions working from left to right until all the means of achieving these Part 1. Functional analysis is any technique designed to appraise value by careful analysis of function. This should be included in the workshop handbook.1 It should be understood that it is not possible to find meaningful alternatives to a technical solution without first identifying the function required of it.2.2.7.2.

It should be understood that this is a broad-brush technique. See figure 2 for an example of a FAST diagram. it is the customer who should determine the value of the product and that the FAST diagram should include the customer/user in the development of value study projects. This diagram describes what a product. Reference is sometimes made to different types of FAST diagram: Classical FAST. element or component must do and is known as a Technical FAST. Subsequently it was recognized that all functions did not fit into the flow logic so it was decided to separate out the functions that are always active. The resulting FAST Figure 2: FAST Diagram Page 6 Part 1. This is known as a Classical FAST. Technical FAST or Customer/Task FAST. Section 2 (revised 10/01) Effective from 1/12/01 The Surveyors’ Construction Handbook .PART 1. ideally. It was also decided to separate out those functions that only occur one time regardless of repetitiveness of the process. The objective of functional analysis is to produce a complete description of the end purpose of the design in terms of what it must do. SECTION 2 functions ‘how are they to be fulfilled’ are identified on the right. It was a technique used to assemble the functions of a product in a hierarchy and to assess ‘why’ and ‘how’ they are delivered. The original FAST diagram was a presentation of the user-related and product-related functions of a design solution. whether the product is operational or not. It was then recognized that.

Function elements (object functions) are defined in the BCIS publication.7. 1.2. The scope is the portion of the project that is selected for the value study. VALUE TREE A Value Tree is a diagram that describes the business driver (mission) for a project or need and the criteria that need to be satisfied in order to achieve it. windows and doors or finishes.7. it can be developed at any stage in order to confirm the brief. A typical example of a value engineering process is included in Appendix B. This improves clarity. For example. SECTION 2 diagram has become known as a Customer or Task FAST. This process is called ‘functional decomposition’. The scope line limits the area of the project on which attention is being focused. for example. 1. A Value Tree should be developed at an early stage in order to inform the brief. walls. The functional requirements need to be broken down until they are reflected in elements which can be priced (and built).5 1. All FAST diagrams should include a scope line on the left-hand side of the diagram. only a valid FAST model. the requirement for increased energy efficiency might be provided by increased levels of insulation which might be achieved by changes to all or any of roof. The FAST model displays functions in a logical sequence and tests their dependency. helps all panel members develop a shared understanding and promotes the examination process.7.3 of this handbook. It is this concept from which the Value Tree has developed. The scope line for a project will begin to the right of the Value Tree. ‘minimize energy consumption’.7. It will generally be carried out by the client organization in order to establish whether a project is the solution to their needs. Section 2 (revised 10/01) Effective from 1/12/01 Page 7 . The criteria are then developed further into the functions required in order to achieve them.2. There is no such thing as a correct FAST model. However.PART 1.4 Most practitioners insist that functions are defined in terms of ‘active verb/measurable noun (or phrase)’ combinations. 1.6 The Surveyors’ Construction Handbook Part 1. Standard Form of Cost Analysis: Principles. It does not indicate how a function should be performed. These should be interrogated by asking ‘why’ the client requires this in order to examine how it should be achieved. The number of levels ‘of decomposition’ required cannot be predetermined. Instructions and Definitions and in Section 2.2. floor.7 Appendix A gives an example of part of a Value Tree and a FAST diagram for a health centre.2. The process of setting up a FAST diagram is of matching the functional elements of the building (object functions) to the client’s required functions (user functions).

8 Pricing the FAST Diagram 1. it should be remembered that it is the design solutions to the functional requirements that are being priced and compared to the value and importance that the client puts on that function.2 G 1. they should expect to be questioned quite extensively. Design solutions should not be developed at this stage to ensure that Page 8 Part 1. However.2. The facilitator will ensure that no one is allowed to become overly critical of another member’s contribution in order that ideas flow. Also. It is creativity in finding the most economical solution that is the essence of the value engineering exercise.2.2. it becomes possible to establish alternative costs for achieving a given function. what is it’s value? It is at this stage that the FAST diagram is developed and it is against the background of this information that the value engineering evaluation will be made. designers should be prepared to stand by their design solution if they think it is correct for the function being considered.9 Presenting a Design Solution to a Value Engineering Workshop 1. SECTION 2 G 1. speculation. what are it’s subsidiary functions?. the client can identify the value of savings from reduced energy consumption or may rank this as important for other reasons. Fees and value added tax (VAT) and other financial and fiscal matters may also need to be considered.2.1 Design solutions should be presented as designers normally would to any panel of users. All ideas should be logged at this stage. they should not be analysed or rejected. (b) ‘Speculation’ is the brainstorming stage which will generate the ideas from which solutions will be developed. They should keep an open mind and maintain objectivity in justifying their proposals because the objective is to find the most cost-effective solution. It asks the questions about what is the prime function of an element?. It is important that the underlying functions of suggestions for improvement are listed for evaluation later.10 The Workshop 1.8.PART 1.10.2. development and presentation: (a) The ‘information phase’ identifies the spaces. However. it is important that all functions are clearly defined if costs of alternative proposals are to be meaningful.8. 1. in order to encourage idea building. It is important that each member of the panel thinks positively.9.2. The value engineering team’s task is to put a price on the various design solutions suggested that will achieve this end. On the other hand. evaluation.1 A value engineering workshop will work through phases of information. However. Section 2 (10/01) Effective from 1/12/01 The Surveyors’ Construction Handbook . For example. G 1. elements and components in terms of the functions they fulfill. not to criticize for the sake of it.1 As the FAST diagram progresses and different solutions are found. what does it cost?.2.

G 1. and (iii) those that are identified for investigation but not implemented The financial benefit should then be identified against all elements within categories (i) or (ii). This report is normally presented to the client by the value engineering panel at a meeting held within one or two weeks of the date of the workshop.11.PART 1. A major benefit of the workshop which will be enjoyed by the panel members is a better understanding of the project functions and common ownership of the team-based designs solutions which have evolved. Again. for example. (e) ‘Presentation’ takes the form of a report prepared by the facilitator which records in some detail all elements of the study and concludes with those options to be incorporated in the developed design. if the exercise has suggested a change to a piece of M&E equipment.2. It is essential to ensure that all the ramifications of any suggested changes should be considered.3 The Surveyors’ Construction Handbook Part 1.11 Assessing the Value of the Workshop 1.2. (ii) those that are added/changed and result in additional cost. At this stage some ideas will be rejected and the best taken forward. For example.1 Areas for research/change identified at the workshop could be grouped into three categories: (i) those that are removed/changed and result in reduced cost. Life cycle costing can be an important factor in the process when considering optional solutions but the criticality of this aspect will hinge on the client’s philosophy.10.2. will be continued beyond the initial meeting and the outcome presented to a subsequent meeting for the panel to determine which design options to adopt. Often the detailed development including life cycle costing. All optional solutions should only be considered at the evaluation stage.11.11. the effects on the control management systems and structural requirements must also be considered. parts of the FAST diagram which are important to the client but which have been allocated little money or have cost a lot of money but do not contribute to the function. 1. Section 2 (10/01) Effective from 1/12/01 Page 9 .2 The workshop should focus on expensive items or ‘mismatches’.2 1.2. if appropriate. a positive feeling will be encouraged by the facilitator with advantages/disadvantages being discussed in an even-handed manner. SECTION 2 ‘what is to be achieved’ is properly addressed. (d) ‘Development’ of the ideas to be taken forward will be initiated at the meeting and a programme established for completion of this stage. (c) ‘Evaluation’ is the analysis of the ideas generated by the earlier speculation. 1.2.

13 Feedback from Post-Occupancy Evaluation 1. These should always be set against the cost of carrying out the exercise.2. SECTION 2 G 1. decisions should be fed back to the design team.13.1 The value engineering panel’s decisions are recommendations that need to be accepted by all stakeholders.12. it should be established whether the project represents best value for money and whether or not key design changes made as a result of value engineering have achieved the benefits expected. Those stakeholders that are not part of the panel are likely to have a right to comment before decisions are adopted.2.PART 1.2. Section 2 (10/01) Effective from 1/12/01 The Surveyors’ Construction Handbook .2. As part of the project evaluation process. briefing those members whose work is affected as to why the changes were made.2. Page 10 Part 1.2.3 G 1.12 Implementing the Results 1.1 It is important for any client to carry out a project review to demonstrate how project objectives have been achieved and particular problems overcome.12. 1. If necessary.12.2 1. design programme and scope of professional team’s brief should be incorporated into these documents. Once the workshop’s proposals have been sanctioned by the client. amendments to the design brief.

PART 1. SECTION 2. Section 2 Appendix A (revised 10/01) Effective from 1/12/01 Page 1 . APPENDIX A Appendix A: Health Centre Value Tree The Surveyors’ Construction Handbook Part 1.

There is a saving in the amount of ductwork required. acoustic requirements stipulated by the district surveyor). At the ‘information phase’. the functional requirement. with no material effect on quality or health and safety. (The The Surveyors’ Construction Handbook Part 1.PART 1. the client set a target of reducing the costs on these projects by 10 per cent. was examined against the client’s desire to reduce capital costs. Cost plan figures were based on the client’s current specification. S ECTION 2. Air is introduced at low level and at low velocity. distribution ductwork. To encourage value engineering. This identified that a high proportion of the cost of the mechanical installation related to the provision of ventilation to the sales floor of the store (plant. A PPENDIX B Appendix B: Typical Example of a Value Engineering Process B1 BACKGROUND A retail client with a regular development programme for a series of new stores (typical size 8. sprinklers and electrical). the partnering contractors share in any savings that relate to any accepted proposals. In an effort to reduce costs and ultimately add value to the schemes. Allowances were included for any items that were classified as ‘site specific’ (e. Due to the volume of developments undertaken by the client and the repetitive nature of the works. diffusers. Section 2 Appendix B (12/99) Effective from 1/1/00 Page 1 .) At the ‘speculation phase’. Natural convection currents are utilised to remove excess heat and pollutants out of the occupied zone. the client’s engineering department worked closely with the mechanical partnering contractor to consider alternative methods of ventilating the sales floor of the store. as only two runs of ductwork are needed on the sales floor. To set a benchmark for this reduction model cost plan costs for a typical store (derived from historical records) were modified to suit the new scheme layouts.g. etc. including the need for ventilation. With displacement ventilation. For two of these projects the client opted for a design and build contract for the services installations (mechanical. the savings generated by value engineering can be incorporated in any future schemes.000m2) entered into a partnering agreement with key members of the construction team for four new projects. air is only conditioned at the level at which occupiers are breathing. B2 SPECIFIC EXAMPLE: VENTILATION TO SALES FLOOR The original design was based on previous solutions and included ‘traditional’ ventilation. The alternative method of ventilation proposed was of the displacement type.

S ECTION 2. the project programme and the interface with other subcontractors were taken into account.PART 1. Summary of Value Engineering Exercise Original installation: Traditional ventilation Value engineering proposal: Displacement ventilation Benefits: Saving on air handling plant size Saving on chiller plant size Saving on sales floor ductwork Air handling plant Chiller plant Ductwork and diffusers 10% 5% 25% Savings on capital cost: At the ‘development phase’. This has resulted in capital cost savings on plant and in the likely running costs of the system. with the facility of automatically varying the air throw pattern whether in heating or cooling mode. A PPENDIX B traditional method is designed for four separate branches of ductwork. the proposed system required ventilation to the occupied zone only rather than the full building space. Page 2 Part 1. The evaluation identified significant savings.) The new specification requires diffusers of the displacement type. Furthermore. Section 2 Appendix B (12/99) Effective from 1/1/00 The Surveyors’ Construction Handbook . the proposed method was discussed with other members of the design team to ensure that any impact on the other building elements.

Brian.. 1981 May. Construction Industry Research and Information Association. Grongvist and Bowles. Kelly. R. A Study of Value Engineering and Quantity Surveying Practice. 1990 Institution of Civil Engineers. 1995 The Surveyors’ Construction Handbook Part 1. The Practice of Value Management: Enhancing Value or Cutting Cost? RICS.. Heriott-Watt University. Creating Value in Enginering.. Value Management in Construction: A Practical Guide. London 1998 Norton. London. 1991 Law. RICS Books. Value Engineering in the Construction Industry. John. Elements for Design and Build. 1996 Kelly. N. Alphonse. New York. Coventry. APPENDIX C Appendix C: Further Reading British Standards Institute. London.. Stuart. College of Estate Management.P. Value Engineering: Practical Software Applications for Design.. MA. and Male. J. London. Standard Form of Cost Analysis. and McElligott. G. Value Analysis Vocabulary – Part 1: Value Analysis and Functional Analysis. British Standards Institute. D.P. 1988 Kelly. C. Heriot-Watt University. Stephen.R. Thomas Telford Publishing. Washington DC. BCIS Ltd. Maintenance and Operations. Value Engineering. 1969 (Reprinted 1997) Connaughton. Section 2 Appendix C (revised 10/01) Effective from 1/12/01 Page 1 . Kingston. An Introduction to Value Engineering: A New Technique in Technology Assessment and Evalution. Value Engineering: The Search for Unnecessary Cost. BCIS Ltd. and Male. London. S. Alastair G. Department of Building Engineering and Surveying. BS EN 1325–1 1997.. Means & Co. C. J. Instructions and Definitions. Van Nostrand Reinhold Co. SECTION 2. 1983 Dell’isola. John and Male. Royal Institution of Chartered Surveyors. 2000. Stuart. S. Alastair. Green. 1994 Mole. A. Law. Susan. 1996 Building Cost Information Service. Value Management in Construction: A Client’s Guide. Edinburgh. Berkshire.PART 1. 1989 Kelly. D. Thomas Telford Publishing. 1996 Dell’isola. College of Estate Management. William. R. Value Engineering and Value Management: A CPD Study Pack. Fernie.R. 1997 Green. Building Cost Information Service. Construction. Chartered Institute of Building. Peter. CIRIA. Principles. Macmillan. Basingstoke. The Value Management Benchmark: Good Practice Framework for Clients and Practitioners. and Popper. Alphonse. S. A Study of Value Management and Quantity Surveying Practice. Reading.

Can Any Facilitator Run a Value Engineering Workshop? RICS. Beck. N. K. H.. K. Glen.. Royal Institution of Chartered Surveyors... J. Van Nostrand Reinhold & Co. D. 1998 Zimmerman.. A Critique of Value Management. London. 1982 Page 2 Part 1.PART 1. Chartered Institute of Building. W. APPENDIX C Palmer. Wyatt. SECTION 2. 1992 Smith. Shirazi. M. Larry. and Hart.. Hampson. Section 2 Appendix C (10/01) Effective from 1/12/01 The Surveyors’ Construction Handbook . London. Designers and Contractors. Smyth. Jackson. New York.. 1990 Royal Institution of Chartered Surveyors.. RICS. Angela. Berkshire. R. Value and the Client (papers presented at a conference held at the RICS on 29 January 1992). Value Engineering: A Practical Approach for Owners. Chapman. A.

cost checks and reconciliation should be adhered to whenever possible.) On projects where non-traditional procurement routes are used. In practice. Control of costs can only be achieved by the actions of the whole project team. The procedures are not designed for use with civil engineering projects. the client’s quantity surveyor will be responsible for the cost plan at feasibility and outline proposal stage and the D&B contractor’s quantity surveyor will be responsible for developing the cost plan with the contractor’s design team to produce the tender. cost plan. The quantity surveyor’s role is to facilitate the design process by systematic application of cost criteria so as to maintain a sensible and economic relationship between cost. The information and guidance which follow are based on a traditionally procured new-build project. through the various design stages to the acceptance of a contractor’s tender. the responsibility for developing the cost plan may change but the stages suggested here remain appropriate. However. but varying client requirements and different procurement methods may prevent implementation of some aspects of the following procedures. (See the figure showing the outline of the cost planning procedure. on Design and Build (D&B) schemes. but should provide a framework appropriate to civil engineering needs. Section 1 (4/98) Effective from 1/6/98 Page 1 . the principles of budget. The process described would apply to refurbishment or conversion schemes and the elemental approach would be suitable even if all elements were not required.PART 2. SECTION 1 PART TWO: CONSTRUCTION DESIGN AND ECONOMICS SECTION 1: PRE-CONTRACT COST PLANNING AND COST MANAGEMENT Introduction This Section of the Handbook sets out procedures which enable pre-contract cost management of building projects to be carried out from the client’s brief. utility and appearance which thus helps in achieving the client’s requirements within the agreed budget. The Surveyors’ Construction Handbook Part 2. quality. the design of the elements may proceed at different speeds and the stages described here may overlap. For example. including the client.

1 Pre-contract Cost Planning and Cost Management I 2. SECTION 1 2.1.1.PART 2. Cost management is the total process which ensures that the contract sum is within the client’s approved budget or cost limit. Section 1 (4/98) Effective from 1/6/98 The Surveyors’ Construction Handbook . It allows for the redistribution of the budget between elements as the design develops. It is the process of helping the design team design to a cost rather than the quantity surveyor costing a design.1.1 DEFINITION Pre-contract cost planning is the technique by which the budget is allocated to the various elements of an intended building project to provide the design team with a balanced cost framework within which to produce a successful design. Page 2 Part 2.

2 OBJECTIVES (a) To ensure that the client obtains an economical and efficient project in accordance with the agreed brief and budget. for example. G 2. sums have been included in the approved budget.1. Section 1 (05/03) . The links to the cost planning procedures outlined in this section are summarised here: Design Stages Stage B: Feasibility Quantity Surveyor Prepare feasibility studies and determine the budget Consider with client and design team alternative strategies and prepare cost plan Carry out cost checks and update cost plan if necessary Stage C: Outline Proposals Stage D: Scheme Design Stage E: Detail Design Stage F: Production Information Carry out cost checks Stage H: Tender Action The Surveyors’ Construction Handbook Prepare reconciliation statement Effective from 1/7/03 Page 3 Part 2.1.g. SECTION 1 G 2.1. (b) to make the design process more efficient.1.1. and (d) to advise the client and members of the design team of cost-in-use or life-cycle costing techniques. at any time.PART 2. whilst still maintaining the desired objectives for quality and function. at all times.4 DESIGN STAGES References to Design Stages are to the RIBA Plan of Work (taken from the RIBA Handbook of Architectural Practice and Management) and refer to the main stages through which a project design typically passes.1. (b) If. work with the other design team members to satisfy the client at a lower cost if possible. the engineering services should also be subject to the cost planning process). the consequential saving should always be notified to the client. thus reducing the time needed to produce a successful design.3 GENERALLY (a) A general principle applies throughout the cost planning process that any agreed budget or cost limit is seen as the maximum cost. for abnormal site costs which subsequently are found to have been wholly or partially unnecessary. (c) to ensure that all requirements arising from the client’s brief to the design team are included in the cost planning process (e. G 2. and the quantity surveyor should.

) 2. therefore.PART 2.3.1. The client’s and project’s status with regard to VAT (Value Added Tax) will also need to be established. Section 1 (05/03) Effective from 1/7/03 The Surveyors’ Construction Handbook G 2. in consultation with other members of the design team and the client. SECTION 1 I 2.5 VALUE ENGINEERING A value engineering exercise may be carried out on all or part of the design during the design process.1. as a matter of importance. G 2.2. (c) to provide a statement of the recommended methods of construction and of the contractual procedures to achieve the required occupation date. affect the budget and the cost plan. the quantity surveyor. 2. It is possible to produce a typical elemental estimate for Page 4 Part 2.1.3 Budget I 2. section 2 of this handbook.3 INFORMATION REQUIREMENTS (a) The ideal requirements from the client and members of the project team to the quantity surveyor are given below. The client’s budget is established as a result of these studies.1.3.1. (b) to provide the client with a statement of the likely area and quality of building. the quantity surveyor should state clearly any assumptions made. and (d) to provide the client with alternative budgets for different occupation dates and qualities of building.1. should undertake such feasibility studies as may be necessary to ensure that the client’s requirements can be reasonably accommodated within the finance that is available for the project.1 DEFINITION Budget is the total expenditure authorised by the client which is the responsibility of the design team at the end of the feasibility stage (Design Stage B).3.2 Preliminary cost studies and feasibility studies G 2.1.1.1. which is achievable within the limit of expenditure. (For further details see part 1. OBJECTIVES (a) To establish the limit of expenditure necessary to meet the client’s brief.2 . (See 2.1 It is recommended. if appropriate. that before and during the formulation of the client’s brief (Design Stage B: Feasibility). On projects where this level of information is not available.) This might affect both the client’s requirements and the chosen design solution and changes would.3.

(b) Information required from the client: • location of the site.PART 2. (c) Information required from the designer. • any information on the types of systems. The information from the quantity surveyor to the design team is as follows: The Surveyors’ Construction Handbook Part 2. (d) Information required from the structural engineer: • advice on probable ground conditions. Note: If the quantity surveyor is not responsible for cost planning the engineering services. building surveyor. • names of other similar buildings of broadly suitable quality if appropriate. • instructions regarding Construction (Design and Management) Regulations. architect or building surveyor. and • names of similar projects previously designed by the practice. • the required occupation date or phased occupation dates. availability of the site for commencement of construction work. • designer’s concept of building. a schedule of accommodation. (e) Information required from the services engineer: • advice on areas of building which will require specialist engineering services. • requirements in respect of the treatment of inflation. or other source: • approximate location of the building on the site. but it is important to clarify as many information issues as possible before such an estimate is accepted as the budget for a particular project. • advice on probable floor loadings. and • any information on structural solutions. this should be clearly stated in the budget and cost plan. • any specific requirements relating to life-cycle costs. and • the client’s VAT status and any other tax matters which may affect the overall cost of the project. • advice on necessary storey heights for any specialist areas shown on schedule of accommodation. Section 1 (4/98) Effective from 1/6/98 Page 5 . • advice on routes of public sewers and the like. • in conjunction with the designer. SECTION 1 a particular type of building from very little information. • any specific requirements as to specification and/or procedures. • advice on statutory regulations. and • advice on availability of public utility services. architect.

5. and • a more detailed statement of the quantity and quality parameters included in the calculations. (c) The main elemental quantities of hypothetical buildings can be generated using agreed parameters.PART 2. or on an appropriate cost model. (b) For most types of project.) (f) Information to be provided to the client involves a report containing: • the budget. it is possible to build up an elemental budget using the parameters set out under G 2. it provides the first cost plan for the project.3. with alternative proposals if appropriate. (h) Information to be provided to other consultants: • such quantity and quality parameters as relate to their area of design. Section 1 (4/98) Effective from 1/6/98 The Surveyors’ Construction Handbook .5 STATEMENT OF QUANTITY AND QUALITY PARAMETERS The main parameters which should normally be incorporated in the calculation are as follows (the list is not exhaustive): Page 6 Part 2. This can be based on cost information from previous projects. • a statement setting out the programme for design and construction on which the budget is based. and the framework for the actual design to be developed.4 METHODS OF PREPARATION (a) The method of preparation depends on the type of project involved. to which rates applicable to agreed quality and performance standards can be applied. • an outline cash-flow forecast. An example of a method of calculating hypothetical quantities is described in Appendix C to this Section. and • assumptions in respect of inflation forecasts and current/future market conditions.3. • a statement of the basis of the budget calculation including any important assumptions made. (g) Information to be provided to the designer: • a copy of the report sent to the client. projects of great complexity and projects containing a large element of alterations are more difficult to budget accurately at an early stage. • a statement of any items not included.1. G 2.1.1. other published sources. Unusual projects. SECTION 1 (An example of a format for the quantity surveyor’s report is given in Appendix B to this Section.3. from the RICS Building Cost Information Service (BCIS). (d) Once the budget has been established. G 2.

(b) Some clients. landscape.3. and • length of boundary walls or fencing. • lighting levels.g.1. internal vertical division. the client should be informed and instructions requested. • the density of vertical division or partition/floor ratio (see appendix C to this section). • air change rates. Likewise. (b) Quality • A general statement of quality and specification which relates to the rates used for the budget calculation. • road area and number of car parking spaces. This should cover specifically at least the following: foundations. This can be calculated using predictions published.PART 2. • areas of the brief with special functions of significant cost. • floor loadings. • the number of storeys of a possible solution. roof. circulation) used to calculate a gross floor area. for example by BCIS or the Department of Trade and Industry. lighting and other services. particularly in the public sector. internal finishes. Section 1 (05/03) Effective from 1/7/03 Page 7 The Surveyors’ Construction Handbook . external walls. • the storey height(s). a statement of the allowances (e. and a statement of cost at current prices may be adequate. have their own inflation controls.1. planting and the like. External works should include roads. The assumptions upon which the prediction is made should be stated. if it becomes Part 2. a range of probable inflation is best provided. Where an assessment of inflation is required for more than a few months ahead. • proportion of window area.6 INFLATION (a) The prediction of future inflation may not be necessary for some clients. • thermal resistance values of fabric.3. Where the client requests that a particular level of inflation be included in the budget. G 2. G 2. • total electrical load. paths. • heating and hot-water loads. and service mains. boundary walls and fences. the quantity surveyor should inform the client if he or she believes it to be unrealistic. floors and vertical circulation. • paved pedestrian areas.7 COST REPORTING If at any time during the design process it becomes apparent that the agreed budget is likely to be exceeded without the brief being changed. SECTION 1 (a) Quantity • in addition to the briefed areas. • the square index or wall/floor ratio (see appendix C to this section).

• confirmation of the brief.2 . OBJECTIVES (a) To describe. • confirmation of the programme for design and construction times stated in the budget report.3 INFORMATION REQUIREMENTS The basic information requirements from the members of the project team to be provided to the quantity surveyor are as follows: (a) Information required from the client: • the budget. the targets can be checked and adjustments made so that the overall cost of the project is managed within the budget. SECTION 1 apparent that the whole of the agreed budget will not be required. G 2. (b) to set cost targets for the main elements so that. quantity. and (d) to provide the opportunity for consideration of life-cycle costs. and • authority to proceed.1.4.1 DEFINITION The cost plan at outline proposals stage is a statement of the probable cost of the project at Design Stage C which sets out the cost targets for the main elements of a building. Section 1 (05/03) Effective from 1/7/03 The Surveyors’ Construction Handbook G 2. together with their approximate quantity and quality parameters. Where alternative budgets have been quoted in the budget report. (c) Information required from the structural engineer: • outline proposals or alternative structural solutions.4. as the design develops. and • an indication of the preferred specification for the main elements.1. • acceptance or variation of any other matters within the budget report. (c) to provide the design team with controls which communicate the costs. Page 8 Part 2. the client should be informed. 2. (b) Information required from the designer: • outline drawings of the building and site works indicating alternative solutions.4.PART 2. quality and time parameters to be followed. the client should state the preferred alternative.1.1. the chosen distribution of the resources within the budget to provide a balanced design to meet the client’s needs. together with the outline proposal drawings.4 The cost plan at outline proposals stage I 2.

or systems.1. and • an update of inflation projections. e. and to include the structural and service elements.4 METHODS OF PREPARATION (a) The method of preparation should be appropriate to the level of detail available for each element and may be: • the measurement of approximate quantities and the application of rates to the quantities generated.4. The Surveyors’ Construction Handbook Part 2.PART 2.g. and • the cost plan with target costs for each element. • a request for decisions on any alternative proposals and/or procurement routes. • use of appropriate cost models. • a broad indication of the specification. (h) Information to be provided to other consultants: • such quality and quantity parameters as relate to their design responsibilities and target costs. However. indicating any alternative systems. Section 1 (4/98) Effective from 1/6/98 Page 9 . The ‘key’ elements on each project will vary. with advice thereon. and/or • a mixture of the above methods. • allowances for contingencies and design reserve. and service installations. • an updated cash-flow forecast. (g) Information to be provided to the designer: • a copy of the documents sent to the client.) (f) Information to be provided to the client involves a report containing: • a statement of cost. G 2. • a statement of floor areas. and • an indication of the preferred specification. they are likely to be those with major financial consequences. of the ‘key’ elements. The basic information requirements from the quantity surveyor to the design team are as follows: (An example of a format for the quantity surveyor’s report is given in Appendix B to this Section. (e) Information required from specialist consultants: • outline proposals. • comparison of the requirements with analyses of previous projects of a similar character. after acceptance by the designer of its visual implications. structural elements. (b) Evaluation should be made of the alternative forms of construction. SECTION 1 (d) Information required from the services engineer: • outline proposals for installations.

and where possible. be based upon the outline drawings and preferred specifications. and Page 10 Part 2.1. to the proposal. • in all considerations of alternative proposals. the use of consultants for additional work should take into account any consequential addition to professional fees. when considering a proposed change. in principle. plant-room space. G 2.4. expanded to incorporate additional information. or would cause the total budget to be exceeded. • the designer should confirm his agreement.1. the following procedures should be implemented: • all relevant members of the design team should be informed. (b) Quality • a statement of quality and specification. • the quantity surveyor should take into account.6 DESIGN AND CONSTRUCTION PERIOD (a) In establishing the outline cost plan.PART 2. • where the proposal involves additional cost over the elemental target. it is recommended that the quantity surveyor take account of proposals made by the other members of the design team and their effects upon both the design and construction programmes. (b) If completion dates are critical.g. this applies to consulting engineers. office/classroom space. The parameters should follow those included at the budget stage. and • a schedule of those items for which lump sum allowances have been incorporated and a note on the sources of this information. sanitary accommodation space. circulation space).4.4. in a similar format to that provided at budget stage. or to the scope of the work. the quantity surveyor should identify to the design team alternative savings that are available in order to maintain the overall budget.5 STATEMENT OF QUANTITY AND QUALITY PARAMETERS The quantity surveyor’s statement should include the following: (a) Quantity Confirmation of information provided at budget stage with the addition of: • the areas of the accommodation divided into use classification (e. G 2. and his confirmation or otherwise that the proposal can be met within the elemental target.7 CONTROLLING CHANGES TO THE COST PLAN Should a change be proposed to the outline cost plan. totalled to give gross floor area. components and/or systems should be selected with a view to the availability of acceptable alternatives so as to avoid supply difficulties. whose fees are calculated only on specific parts of the project. In particular. Section 1 (4/98) Effective from 1/6/98 The Surveyors’ Construction Handbook .1. SECTION 1 G 2. any likely effect on the design and construction programme. • no proposal should be incorporated into the cost plan without the agreement of the quantity surveyor.

5. and (c) To provide the whole design team with a control document which describes.4.1. G 2. together with the quantity and quality parameters described by the scheme drawings and specifications. the quantity surveyor should communicate to the client and all members of the design team. • scheme drawings and scheme specifications.2 . • acceptance or variation of any other matters within the previous cost plan report.PART 2.1. the costs. Section 1 (4/98) Effective from 1/6/98 Page 11 G 2.1.1 DEFINITION The cost plan at scheme design stage is a statement of the cost of a selected design at Design Stage D which details the cost targets for all elements of a building. The Surveyors’ Construction Handbook Part 2.5 The Cost Plan at Scheme Design Stage Note: If the cost plan has been produced at an earlier design stage only updating may be required.5. quality and time parameters which have been adopted. • an indication of any preferred alternatives in a previous cost plan. OBJECTIVES (a) To set out for the design team the actual distribution of resources described by the scheme design.1. G 2. quantity. I 2.8 INFLATION Any changes in inflation forecasts should be reported periodically. (c) Information required from the structural engineer. (b) To set cost targets for all the elements so that.5. as the detail design develops.1. in detail. the effects of such change and provide an updated cost plan. SECTION 1 • upon the determination of a proposed change. and • authority to proceed. the targets are checked and adjustments made in order that the overall cost of the project is managed within the budget. 2. • confirmation of the brief. (b) Information required from the designer: • scheme drawings and scheme specifications.3 INFORMATION REQUIREMENTS The information to be provided to the quantity surveyor is as follows: (a) Information required from the client: • confirmation or otherwise that the cost plan prepared at the outline stage is accepted.

and • the cost plan with target costs for each element. and • detailed design parameters. Pipework and cables will normally still need to be priced on an overall basis relating to floor area or service points at this stage. and electrical loads. Major elements will normally need to be priced in greater detail. Page 12 Part 2. • a statement of the relevant life-cycle costs. The basic information requirements from the quantity surveyor to the design team are as follows: (An example of a format for the quantity surveyor’s report is given in Appendix B to this Section.4 METHODS OF PREPARATION (a) The method of preparation is normally by measurement of approximate quantities from the proposed scheme drawings.1. (e) Information required from specialist consultants: • scheme drawings and scheme specifications. involves a report containing: • a statement of the cost. e. from which approximate quantities of equipment can be measured and priced using all-in rates. Section 1 (4/98) Effective from 1/6/98 The Surveyors’ Construction Handbook .g. Some elements may still be most suitably priced on an elemental unit rate basis. where appropriate. where appropriate. and • an update of inflation forecasts. • a statement of the floor areas. (d) Information required from the services engineer: • scheme drawings and scheme specifications. heat loads. SECTION 1 • confirmation of floor loadings and the like. (h) Information to be provided to the other consultants: • such quality and quantity parameters as relate to their area of design and their target costs. and • provisional indication of reinforcement weights. The pricing should be similarly related. The degree of detail to be measured should relate to the cost significance of the elements in the particular design. G 2. (b) The preliminary engineering and specialist services scheme drawings and outline specification notes will be required from the consulting engineers.) (f) Information to be provided to the client. • a statement of the specification. where appropriate. where the cost significance is low. This ensures that the likely implications of the builder’s work are understood by the design team and the costs are taken into account. (g) Information to be provided to the designer: • a copy of documents sent to the client. • a cash-flow forecast. • a statement of the proposed design and construction programme.PART 2.5.

5 STATEMENT OF QUANTITY AND QUALITY PARAMETERS The quantity surveyor’s statement should include the following: (a) Quantity confirmation of the information provided at outline proposal stage (b) Quality a statement of quality and specification based on scheme drawings in sufficient detail to provide control of the production information drawings by the designer and consultants (c) Life-cycle information a statement of the likely relevant maintenance.1.6 Cost Checking I 2. INFLATION Any changes in inflation forecasts should be reported. (b) The dominant considerations in deciding the priorities for cost checking elements are as follows: The Surveyors’ Construction Handbook Part 2.2 .3 PRINCIPLES (a) The methods will vary according to the stage reached in the design process.5.6.5.7 2. G 2. and (b) To reduce the abortive design work and lost time caused through proceeding too far in the design process before realisation that the budget will be exceeded. cleaning. Normally.1. this takes the form of measurement of approximate quantities from the consultants’ drawings to provide a check on the quantity and quality of parameters set down in the appropriate cost plan.1.4.1 DEFINITION Cost checking is the process of calculating the costs of specific design proposals and comparing them with the cost plan during the whole design process (Design Stages D–F). 2.1.1.5.PART 2. G 2.6 CONTROLLING CHANGES TO THE COST PLAN The principles have been described in G 2. SECTION 1 G 2.6.1.1. OBJECTIVES (a) To confirm that as the design develops.1. and running costs which are required or implied by the scheme design proposals and the expected life of major components.6. The gross floor area should always be the first check at any stage. however.7. the cost remains within the budget. Section 1 (4/98) Effective from 1/6/98 Page 13 G 2.

6.7. sound cost planning will produce tenders within budget. and (b) To provide suitable analyses for future projects. Should a wide range of cost be possible in an element. SECTION 1 • the cost significance of an element related to the total cost of the project. (b) It is important for the quantity surveyor to maintain records of the cost checking process.1 DEFINITION (a) Action after receipt of tenders is that required at the tender stage (Design Stage H) in analysing each tender and updating information for the client and consultants.1.PART 2.4 IDENTIFICATION AND NOTIFICATION OF EXCESS COSTS (a) It is recommended that judgement be applied before notifying the designer of possible excess expenditure in a particular element. then such excess should be reported immediately and the design team be asked to consider modification of the cost plan. information on potential savings will need to be identified by the design team.1. adjustments need to be made to a tender. Identification of the drawings and information upon which the cost check has been based is also important.1. and • If there are significant changes from the initial tender documents. and to set down in summary the value of the elements cost checked compared with the cost plan targets. the excess (or saving) revealed in an element is relatively small and there are still a number of elements to be checked. Section 1 (4/98) Effective from 1/6/98 The Surveyors’ Construction Handbook .1. If an excess revealed during cost checking is of such significance that it is highly improbable that compensating savings are available elsewhere. 2. Page 14 Part 2. (b) The following points should be noted: • In most cases. G 2. consideration should be given to the need for seeking revised tenders. it becomes necessary to cost check it before checking any elements of low variability but of the same overall cost significance. it is usually more appropriate to advise the designer of the difference and to suggest that action is held until other cost checks have been carried out. however.7.2 OBJECTIVES (a) To obtain a contract sum within the approved budget. If. due to market conditions or late changes in designs and specification. and • the known variability in cost of any element. G 2.7 Action after Receipt of Tenders G 2. If.

• a provisional list of potential areas of saving (to be considered during tendering period and before tender acceptance). (b) Information required from the designer. where appropriate. architect. consideration of this matter should be given during the preparation of the Bills of Quantities). and • permission to submit analyses to BCIS if appropriate. (e) Information to be provided to the designer: • a copy of documents sent to the client. (f) Information to be provided to the other consultants: • such information as relates to their area of design and associated costs. • any further information in respect of the construction programme. The Surveyors’ Construction Handbook Part 2. SECTION 1 G 2. and • a detailed reconciliation between the tender and the latest cost plan. if appropriate. where standard analyses are always required.7. if required.1. if required. and • a detailed list of drawings and other sources of data from which to determine actual savings. building surveyor and other consultants. (c) Information required from other sources: • indexing of the tender by BCIS to establish confirmation of tender levels. • details in respect of any analyses required. Section 1 (4/98) Effective from 1/6/98 Page 15 . The basic information requirements from the quantity surveyor are as follows: (d) Information to be provided to the client involves a report containing: • a statement of the cost reconciled to the latest budget.PART 2. (Where the client body is a Public Authority or similar. and • an updated preliminary cash-flow forecast.3 INFORMATION REQUIREMENTS Information to be provided to the quantity surveyor is as follows: (a) Information required from the client: • acceptance of potential savings.

• Spon’s (E & FN Spon) – a range of price books covering most areas of construction. and • Building. • Ti Wessex – a range of price books covering most areas of construction. Section 1. A2. APPENDIX A Appendix A: Sources of cost information A1 OBJECTIVE To ensure that all costs used are up to date and accurate. A2 A2. The use of published information The following points should be considered carefully when using any of the above information: • differential rates of inflation on various aspects/elements of the building. • the published indices of the Department of Trade and Industry. • regional variations. • Griffiths Building Price Book. A2. • Architects’ Journal. Note: Current editions of price books are available from RICS Books.PART 2.3 Published indices • tender indices and cost studies on regional variations – BCIS. • Price Adjustment Formulae for Construction Contracts (NEDO) Indices – Department of the Environment.1 SOURCES Elemental cost analysis • in-house cost analyses of previous projects. • Building Cost Information Service (BCIS). • market conditions applicable to information based on project specific information such as elemental cost analyses and bills of quantities.2 A3 The Surveyors’ Construction Handbook Part 2. • external published information. SECTION 1. Appendix A (05/03) Effective from 1/7/03 Page 1 . • Building Maintenance Information’s Building Maintenance Price Book. • specialist suppliers’ quotations. • acute shortages in specific trades at different times. Transport and the Regions. and • Glenigan Cost Information Services – Material Price Guides. • Laxton’s – a range of price books covering most areas of construction. Unit rate information • in-house priced bills of quantities. and • Architects’ Journal.

building regulations can be statutorily amended. the assumption that cost information in elemental cost analysis is tendered price information. initial quotations from specialists are likely to be low. special planning conditions applying either to the analysed or to the current project. firm price or fluctuating contract terms. and site-specific constraints in either the analysed or current project. high levels of inflation demand constant checking and revision of rates and prices.PART 2. Care must therefore be taken to ensure that the analysis used is consistent with current building standards. e. whereas a significant amount could be in prime cost or provisional sums. Appendix A (05/03) Effective from 1/7/03 The Surveyors’ Construction Handbook . Section 1.g. Page 2 Part 2. energy conservation measures have increased the ‘U’ value (a measurement of thermal resistance) requirements for insulation properties of roofs and walls. APPENDIX A • • • • • • • • consideration of the tender period of the analysis and its relationship to the current project’s tender period. SECTION 1.

and the format of documents should reflect the importance that the profession attaches to this service. Simple projects may require less information than shown in the example. The ‘Report to Client and Design Team’ is intended as a guide as to what can be provided to a client to ensure that there is a clear statement of the budget or cost limits. Provision is made for the quantity surveyor to suggest alternatives which the client may wish to consider.2 B2. The main parameters affecting the cost targets should be clearly set out. The presentation and content will need to be adjusted to meet the specific requirements of individual organisations and their clients.3 B2. These are client orientated. The level of detail to be included in these documents should relate to the size and complexity of projects.PART 2. Section 1.1 OBJECTIVE To communicate clearly the basis of the budget and cost plans to the client. its inclusions and exclusions. A copy of information sent to the client should also be sent to the design team. Budget and cost plans result from the application of a high level of professional skill.4 The Surveyors’ Construction Handbook Part 2. SECTION 1.1 B2. complex projects significantly more. designer and consultants. together with the total programme to which the budget relates and the standards which have been used in its calculation. B2 B2. Additional information to be sent to the design team once the cost plan is prepared is set out in the ‘Report to the Design Team’. Appendix B (05/03) Effective from 1/7/03 Page 1 . APPENDIX B Appendix B: Format of budget and cost plans B1 B1. The example format included here is intended to be an example of good practice showing the main areas of information that may require coverage. FORMAT The presentation of information to the client and design team should be of a high standard.

.) Price base date: New building work: Site works: Alterations: Construction costs (at stated price base) Estimate inflation to probable tender date of Construction costs at tender Estimated increased costs payable to contractors during construction period Construction costs at completion Professional fees of all consultants including expenses Value Added Tax – On construction On fee Total budget of construction works and fees % % Exclusions from budget Page 2 Part 2...2 of this appendix) CONSTRUCTION BUDGET AND PROGRAMME Client Project Location Budget serial number: COSTS (for basis see sheet .. Section 1.. Appendix B (05/03) Effective from 1/7/03 The Surveyors’ Construction Handbook .PART 2. APPENDIX B REPORT TO CLIENT AND DESIGN TEAM (referred to in B2.. SECTION 1.

PART 2. Section 1 Appendix B (4/98) Effective from 1/6/98 Page 3 . APPENDIX B zzz REPORT TO CLIENT AND DESIGN TEAM (continued) TIME Preliminary/Final Programme (weeks) as Budget Cost 0 Client decision to accept budget and proceed Final brief and scheme design approved Alternative 1 0 Alternative 2 0 Receipt of first tenders Formation of contract Construction commencement Client occupation: phase phase phase phase Total Cost Variation (including fees) Contractor and/or construction implications of programme The alternative time scales shown make the following assumptions: Alternative 1 Alternative 2 CASH FLOW – FORECAST Quarterly from acceptance of budget and authority to proceed (including fees) 1Q As Budget Cost 2Q 3Q 4Q 5Q 6Q 7Q 8Q 9Q 10Q 11Q 12Q Balance Total Alternative 1 Alternative 2 Note: All figures in thousands ’Occupation quarter indicated by ‘O’ Construction commencement quarter indicated by ‘C Balance shown normally payable during first year of occupation The Surveyors’ Construction Handbook Part 2. SECTION 1.

Section 1 Appendix B (4/98) Effective from 1/6/98 The Surveyors’ Construction Handbook . SECTION 1. floor loadings – kN/m2 Comment TOTAL FLOOR AREA Quality Standards External elevations: Internal finishes: Heating & ventilation: Lighting: Site works: Other (specify): Exclusions from budget: Page 4 Part 2.PART 2. APPENDIX B REPORT TO CLIENT AND DESIGN TEAM (continued) BASIS OF BUDGET Areas Schedule of accommodation Area m2 Min. floor to ceiling height (m) Max.

PART 2. SECTION 1. Section 1. Appendix B (05/03) Effective from 1/7/03 Page 5 . APPENDIX B REPORT TO CLIENT AND DESIGN TEAM (continued) Alternative standards Alternatives Cost: extra/saving Comment Budget prepared by: Signature: ____________________________________________ Date: ____________________ Firm: ____________________________________________ ____________________________________________ ____________________________________________ ____________________________________________ The Surveyors’ Construction Handbook Part 2.

3 of this appendix) TECHNICAL QUANTITY AND QUALITY PARAMETERS Budget serial number BUILDING Quantity Gross floor area Maximum square index No. % (length of partitions and internal walls measured over door openings m. of storeys m2 (Perimeter on plan Floor to ceiling heights: lowest floor intermediate floors highest floor Floor/roof zone Calculated external wall/floor ratio Density of vertical division Proportion of glazed external wall area m. Appendix B (05/03) Effective from 1/7/03 The Surveyors’ Construction Handbook .) m. Section 1. APPENDIX B REPORT TO DESIGN TEAM (referred to in B2.PART 2. m. m. m.) Calculated partition/floor ratio Lifts ____________________________ Stairs: number of flights Number ____________________ Type _______________________________ Structural Ground bearing pressure Floor loadings: kN/m2 Ground water level Ground Intermediate Highest Roof loading: kN/m2 (maximum live) kN/m2 (maximum live) kN/m2 (maximum live) kN/m2 (maximum live) Environmental Fabric ‘U’ values: Roof Walls (average) Ground floor Air change rates and air temperature (Specify spaces and rates/hour and minimum temperatures) Heating load Hot water load kW kW ( W/m2) W/m2°C W/m2°C W/m2°C Page 6 Part 2. SECTION 1.

m2 If quantities calculated from drawings state drawing number(s) etc. lux level and load in W/m2) Total lighting load Total power load kW kW ( ( w/m2) w/m2) Special areas with higher than average service or other costs (specify) Other External Works Site area Road area hectares m2 Car Parking: Number of spaces Area Pedestrian paved area Boundary walls or fencing Other m2 m2 No. APPENDIX B REPORT TO DESIGN TEAM (continued) REPORT TO CLIENT AND DESIGN TEAM (continued) TECHNICAL QUANTITY AND QUALITY PARAMETERS (continued) Lighting levels (Specify spaces. Section 1 Appendix B (4/98) Effective from 1/6/98 Page 7 .PART 2. The Surveyors’ Construction Handbook Part 2. SECTION 1.

........ SECTION 1...................... Total cost Cost per m2 Element unit quantity Element unit rate 1 2A 2B 2C 2D 2E 2F 2G 2H 2 Substructure Frame Upper floors Roof Stairs External walls Windows and external doors Internal walls and partitions Internal doors Superstructure 3A Wall finishes 3B Floor finishes 3C Ceiling finishes Internal finishes 4 5A 5B 5C 5D 5E 5F 5G 5H 5I 5J 5K 5L 5M 5N 5O 5 Fittings Sanitary appliances Services equipment Disposal installations Water installations Heat source Space heating and air treatment Ventilating systems Electrical installations Gas installations Lift and conveyor installations Protective installations Communications installations Special installations Builder’s work in connection Builder’s profit and attendance Services Building sub-total 6A 6B 6C 6D 6 7 Site works Drainage External services Minor building works External works Preliminaries Total (less contingencies) Contingencies Construction costs 8 Page 8 Part 2...PART 2...................................... Section 1 Appendix B (4/98) Effective from 1/6/98 The Surveyors’ Construction Handbook ................ APPENDIX B REPORT TO DESIGN TEAM (continued) REPORT TO CLIENT AND DESIGN TEAM (continued) COST PLAN Element Building: ..................

........ Specification included in budget/cost plan Alternatives Cost + or – 1 Substructure 2A Frame 2B Upper floors 2C Roof 2D Stairs 2E External walls 2F Windows and external doors 2G Internal walls and partitions 2H Internal doors 3A Wall finishes 3B Floor finishes 3C Ceiling finishes 4 Fittings and furnishings 5A Sanitary appliances 5B Services equipment 5C Disposal installations Page 9 Part 2................... SECTION 1...................... Section 1 Appendix B (4/98) Effective from 1/6/98 The Surveyors’ Construction Handbook ............PART 2............................. APPENDIX B REPORT TO CLIENT AND DESIGN TEAM (continued) REPORT TO DESIGN TEAM (continued) COST PLAN Elements Building: ...............

......... Section 1 Appendix B (4/98) Effective from 1/6/98 The Surveyors’ Construction Handbook .............................. SECTION 1.......... Specification included in budget/cost plan Alternatives Cost + or – 5D Water installations 5E Heat source 5F Space heating and air treatment 5G Ventilating systems 5H Electrical installations 5I 5J Gas installations Lift and conveyor installations 5K Protective installations 5L Communication installations 5M Special installations 5N Builder’s work in connection with services 5O Builder’s profit and attendance on services 6A Site work 6B Drainage 6C External services 6D Minor building works Page 10 Part 2............. APPENDIX B REPORT TO CLIENT AND DESIGN TEAM (continued) REPORT TO DESIGN TEAM (continued) SPECIFICATION Elements Building: ................PART 2......................

............. Elements Price base: ............... Section 1 Appendix B (4/98) Effective from 1/6/98 The Surveyors’ Construction Handbook ..............................................................PART 2..... SECTION 1....... Parameter Rate Target cost 19 ... APPENDIX B REPORT TO CLIENT AND DESIGN TEAM (continued) REPORT TO DESIGN TEAM (continued) COST TARGETS Building: ....... Cost per m2 Page 11 Part 2.........

WALL TO FLOOR RATIO This is a simple method of expressing the relationship of the external walls to internal floor area. measured over doors A = gross internal floor area d = density of vertical division The Surveyors’ Construction Handbook Part 2. Formula s = p — 4í a where p = perimeter length on plan a = area on plan (not the gross floor area in multi-storey buildings) s = square index DENSITY OF VERTICAL DIVISION This density provides a coarse measure of the amount of partitioning. Formula w = e A where e = area of external walls including windows and doors A = gross internal floor area w = wall to floor ratio SQUARE INDEX This is an alternative way of expressing the relationship between the floor area and the external walls. with a constant shape on each floor. etc. Any single storey building can be described. – åp) + L Formula d = ( 1 2 A where p = sum of the perimeter lengths of a building measured on each floor L = total length of partitions. Some of the most common formulae and some worked examples are given here. as can also multi-storey buildings.PART 2. It describes the degree to which the perimeter length of an actual building exceeds that of a building of the same area which is a perfect square. estimates of elemental quantities can be produced using standard formulae and typical assumptions. Section 1 Appendix C (4/98) Effective from 1/6/98 Page 1 . As the formula includes the perimeter of the building. SECTION 1. It is the ratio of the area of external walls (including windows and doors) to the gross internal floor area. it takes into account the contribution to the enclosure of spaces that this makes. loadbearing walls. APPENDIX C Appendix C: Element Unit Quantities Generation for Hypothetical Buildings Where very little quantity information is available at the early stages of a project. that a building contains. etc.

6 m. The quantities calculated in this. or for checking the approximate cost difference of alternative design solutions.3 Area of ground floor = 675 m2 * These parameters can be based on information from typical or similar schemes.7 Percentage of windows and doors in external walls*: 30% Density of vertical division*: 0. SECTION 1.7 m. e. † A percentage can be used to split ‘wall’ from ‘window’. Page 2 Part 2. APPENDIX C Example of element quantity generation for a hypothetical building ASSUMPTIONS From brief. Assumed floor/roof zone: 0.4 Wall to floor ratio*: 0.g. or similar ways. Square index*: 1. gross floor area = 1350 m2 (including circulation) Site area dictates a two storey solution = 2 storeys Average floor to ceiling height: 2. Section 1 Appendix C (4/98) Effective from 1/6/98 The Surveyors’ Construction Handbook . can then be used with selected element unit rates to calculate budgets and cost plans for projects in the earliest stages of design.PART 2. window and door area = external walls × w = 945 m2 × 30% = 284 m2.

APPENDIX C where A= n= a= s= f= d= w= gross floor area number of storeys ground floor area square index floor to wall ratio density of vertical division percentage of windows and doors in external walls.PART 2. The Surveyors’ Construction Handbook Part 2. SECTION 1. Section 1 Appendix C (4/98) Effective from 1/6/98 Page 3 .

and Hogg. L. S. E & FN Spon. and Greeno. BCIS. N. Butterworth Heinemann. R. P. 2001 Ashworth. J. 1980 Brandon. A. 1982 Chudley. Instructions and Definitions. 1999 Ashworth. Heinemann.. 1969 (reprinted August 2001) Cartlidge. Practical Cost Planning: A Guide for Surveyors and Architects.PART 2. 1980 Ashworth. Elements for Design and Build. 1998 Gruneberg. D. BOOKS Ahuja. W.. Feasibility Studies in Construction.. P.. 1999 Egan. H. Oxford. E. Blackwell Science. R. Building Construction Handbook (4th edition). D. P. and Grant. 2003 Building Cost Information Service. D. J.. P. I.. Contractual Procedures in the Construction Industry (4th edition). and Mehrtens. Tendering and Estimating (2nd edition). Butterworth Heinemann. K. D. Harlow. Section 1. Oxford.. Blackwell. 1982 Brandon.. Kingston upon Thames. DETR.ricsbooks. Mitchell.. 2002 Bathurst. 1990 The Surveyors’ Construction Handbook Part 2. New York. S. D. A.. Building Cost Control Techniques and Economics (2nd edition).. Building Cost Techniques: New Directions. and Construction Task Force. D. London. London. Standard Form of Cost Analysis: Principles. Willis’s Practice and Procedure for the Quantity Surveyor (11th edition). and Weight. Oxford. Rethinking Construction. E. Building Cost Modelling and Computers. A. Successful Construction Cost Control. A. Butterworths. 2001 Ferry. London. Longman. J. (ed.. London. 1983 Ashworth.com). F.). RICS.. Economics. 1987 Buchan. P. R. 2001 Ashworth. Cost Planning of Buildings (7th edition).. (ed. 1996 Building Cost Information Service. Estimating for Builders and Surveyors (2nd edition). Appendix D (05/03) Effective from 1/7/03 Page 1 . A. F. Ferry. and Brandon. E. N. John Wiley & Sons. London. London. APPENDIX D Appendix D: Further reading A selection of further reading is given below. Whilst not comprehensive it is considered to be appropriate. E & FN Spon. Longman. Fleming. A. Blackwell Science. and Butler. London. Oxford. K. S. Hutchinson. SECTION 1. Building Economics and Cost Control: Worked Solutions. Pre-Contract Studies: Development. H. Cost Studies of Buildings (3rd edition). Copies of articles and older books are available from the RICS Library whilst current books are available from RICS Books (www.).

Constructing Cost Estimating for Project Control. 1980 Stone. et al. Blackwell. Ruthtrek Limited. Basingstoke. Best Value in Construction. J. SECTION 1. F. Developing an Appropriate Building Procurement Strategy (see part 3.. Spon Press. M.. M. Macmillan. D. Building and Civil Engineering Cost-Value Comparisons. P. 1983 Strategic Forum for Construction. F. et al. Pergamon Press. Aldershot.. Section 1. Oxford. Batsford.. R. Constructing the Team: Joint Review of Procurement and Contractual Arrangements in the United Kingdom Construction Industry: Final Report July 1994. 2003 Institution of Civil Engineers. and Liverpool John Moores University.. N. Introduction to Building Procurement Systems (2nd edition). Stallworthy. 1992 Page 2 Part 2. A. Blackwell. P. 2001 McCabe. Project Cost Control in Action (2nd edition)... New York.PART 2. Butterworth Heinemann. 2002 Ward. Design and the Economics of Building. section 1 of this handbook) Seeley.. BCIS. O. Oxford. Building Design Cost Management. et al. S.. Oxford.. Design Production and Organisation (3rd edition). Oxford. D. HMSO. 2002 Kharbanda. London. Oxford. J. J. Blackwell Science. Pre-Contract Practice and Contract Administration for the Building Team (9th edition).... Blackwell. Cost Engineering for Effective Project Control. Civil Engineering Cost Analysis (CECA). 1982 Nisbet. Prentice Hall Inc. I. 1994 Royal Institution of Chartered Surveyors. London. A. and Morton. Herne Bay. Oxford. L. E & FN Spon. Estimating and Cost Control. Rethinking Construction. R. A. Management of International Construction Projects. Oxford. Project Cost Control in Construction (2nd edition). Thomas Telford. 2001 Miller. 1992 Neil. Building Economy.. 1987 Latham. London. Building Economics: Appraisal and Control of Building Design Cost and Efficiency (4th edition). and Williams.. and Department of the Environment. Spon. 1985 Jaggar. 1997 Kelly. and Greeno. Building Design Evaluation: Costs in Use (3rd edition). Kingston upon Thames. 2002 Hall. 1961 Pilcher. John Wiley & Sons. H. 1994 Masterman. F. R. Gower Technical Press. S. Appendix D (05/03) Effective from 1/7/03 The Surveyors’ Construction Handbook . 1996 Stone. J. M. New Jersey.. Benchmarking in Construction. 1995 Jaggar. 2002 Jaggar. P.. Accelerating Change. APPENDIX D Hackett. D. E. A.. Blackwell Scientific Publications Ltd. London. Building Services Handbook (2nd edition).

‘Cost Control in Building Design’. M. and Flanagan. J. Construction Management & Economics. and Skitmore. 395–404(10) Costing Services. 11(9) May 1989.. first edition March 1951. D. ‘A New Approach’. 11(3) November 1988.. 1983 ARTICLES AND REPORTS Abdullah. Ascot. A.. 11(4) July 1993. 35–36 Watson. P. Cost Study. CIRIA Report 122. University of Salford. Cost Engineering. J.PART 2. A. 28(4) 1990. 8–10(3) Watson. Life Cycle Costing: a Radical Approach. Chartered Quantity Surveyor. O. 34 (1) January 1992. ‘Procurement – the Key Area for Cost Control’.. Z.. 4. K. and Tyler. R. 14(11) November 1992. ‘Cost Planning Engineering Services Contracts’. Appendix D (05/03) Effective from 1/7/03 Page 3 . second edition March 1957. J. S. 1991 Gilmour. Cost Control Handbook (2nd edition). Chartered Institute of Building (Construction Papers 7).. 12–13(2) The Surveyors’ Construction Handbook Part 2. 36–38(2) Kaka. et al. ‘Meeting the Problems of Cost Control Systems’. 17–24(8) Bowen. London. F. A. Salford. 33(1) Skitmore. 1968 Morris. 25–31(7) Farrow. and Rutter. 260(7889) 21 April 1995. Section 1. R and D Building Management Handbook 4. P. 14–16(3) Baxendale. SECTION 1. (52) April 1996. Construction Industry Research and Information Association. 24(4) August/September 1988. 1996 Ferry. R. Building Technology & Management. HMSO. ‘Interpersonal Communication in Cost Planning During the Building Design Phase’.. H. T.. Chartered Quantity Surveyor. J.. ‘A Rational Approach to Cost’. ‘Consultant Cost Control in The Pacific Rim’. Chartered Institute of Building (Construction Papers 67). Construction Computing. Ascot. ‘The Accuracy of Construction Price Forecasts’. Integration of Time and Cost Control. ‘A New Approach to Early Stage Estimating’. K. (1996) 14.. 1992 Betts. D. Performance Setting and Monitoring on Building Projects for Contractors. T. Building. Cost Engineer. and Edwards. London. M. A.. Aldershot. M. and Gunner. A. R. third edition 1972 Ministry of Public Building and Works/International Tutor Machines Ltd. APPENDIX D Wilson. 271–283(13) Ministry of Education Building Bulletin No.. 1990 Southgate. B.. J. Construction Management & Economics. Gower Publishing. and Price. ‘Modelling Standard Cost Commitment Curves for Contractors’ Cash Flow Forecasting’. P. M. Building Services. D..

2. and • determine sinking fund requirements to finance planned maintenance programmes.2. The objective of this Section is to inform chartered surveyors of the increasing need to adopt life cycle costing (2. Major construction clients are now insisting upon an analysis of life cycle costs and not just capital costs. 2.1 Following the recession of the early 1990s construction clients are generally more streamlined and competitive and some recognise that their ongoing property costs may provide them with the business ‘edge’ they need.5.2. The life cycle cost (LCC) of an asset is defined as the present value of the total cost of that asset over its operating life (including initial capital cost. to: • evaluate design options at the elemental or component level. occupation costs.1 The Client Context 2. Life cycle cost techniques can be used. VALUE ENGINEERING Value engineering involves preparing structured option appraisals during the design process so demonstrating value for money for clients. The following Sub-sections expand on this trend by covering recent changes in the industry and their effect on LCC.2.1. • determine optimum maintenance strategies.1) and to introduce them to the techniques and their application. There is therefore increased attention to life cycle costing. operating costs and the cost or benefit of the eventual disposal of the asset at the end of its life).2 The Surveyors’ Construction Handbook . for example refurbishment versus new build. • analyse relocation strategies. Section 2 (4/99) Effective from 1/6/99 Page 1 2.2. • evaluate total building options.1. Its use is Part 2. SECTION 2 PART TWO: CONSTRUCTION DESIGN & ECONOMICS I SECTION 2: LIFE CYCLE COSTING Introduction It is becoming increasingly important that investment appraisal uses a whole life approach in a more systematic way than at present.PART 2. for example. Worked examples for the above are included in 2.

” 2. and furthermore to consider the health and safety implications of maintaining the structure when complete. complies with the spirit of Regulation 13. or of any person who may be affected by the work of such a person at work. the selection of PVCu window frames with ‘easy clean’ hinges involves limited maintenance and allows cleaning from the inside.PART 2. Such increased focus on maintenance may therefore encourage greater consideration of maintenance costs. Similarly marble flooring is cheaper than cork tiles over a 60-year period and while the decision to use marble is economically sound it also removes health hazards 1 Latham. M. This statement includes life cycle costs. HMSO London Page 2 Part 2. or of any person who may be affected by the work of such a person at work. 2. The report also strongly advocates the need to ‘build right first time’ in which environment life cycle cost calculations (involving assumptions about future maintenance) have more credibility.1. SECTION 2 increasing and with it comes the opportunity and need for LCC to be part of the options appraisal criteria.3 THE LATHAM REPORT Sir Michael Latham’s report Constructing the Team1..2. CONSTRUCTION (DESIGN AND MANAGEMENT) REGULATIONS 1994 The Construction (Design and Management) Regulations 1994 place a specific duty upon clients and their designers to consider the potential hazards associated with the construction process during design. (particularly where access to those elements involves working at height). Constructing the Team: Joint Review of Procurement and Contractual Arrangements in the United Kingdom Construction Industry: Final Report.2.4 (ii) It follows that the selection of materials for certain elements of a structure that may involve maintenance. calls for a 30% real reduction in construction costs. Section 2 (4/99) Effective from 1/6/99 The Surveyors’ Construction Handbook . to combat at source risks to the health and safety of any person at work carrying out construction work or cleaning work in or on the structure at any time.1. This principle is enshrined in Regulation 13(2)(a)(i) and (ii) which states: “(2) Every designer shall: (a) ensure that any design he prepares and which he is aware will be used for the purposes of construction work includes among the design considerations adequate regard to the need: (i) to avoid foreseeable risks to the health and safety of any person at work carrying out construction work or cleaning work in or on the structure at any time. For example. Sir. (1994).

with energy bills contributing significantly to the operating costs. 2. light and service buildings accounts for almost half of the UK’s energy bill. and helps justify decisions which have beneficial health and safety implications. maintained. cleaned.1. To assist this process some suppliers give guaranteed long-term costs. secured.5 THE PRIVATE FINANCE INITIATIVE (PFI) The PFI is driven by a cash flow which is achieved by the private sector provider delivering a service to the client. the selection of the materials referred to above may be more expensive than their traditional counterparts. Typical investments for analysis would be economic thickness of insulation. It is therefore critical that the provider accurately predicts the cost in use of the service or the facility over its operational life so that he can calculate the cash flows generated by the assets over the term of the contract. The use of life cycle costing places initial capital cost in the context of future maintenance expenditure. This cash flow should sufficiently cover all costs and outgoings. air conditioned property (typically £20/m2 per year in 1991 compared to £15/m2 for the same ‘best practice’ office). Section 2 (4/99) Effective from 1/6/99 Page 3 . it lasts longer.2. For example. There is common feeling that property overheads are too large. a manufacturer can supply a light bulb some ten times more expensive than a normal one.2. e. energy conscious refurbishment of buildings and passive cooling techniques versus air conditioned design. ENERGY EFFICIENCY ISSUES IN RELATION TO BUILDING PROJECTS Studies by the Building Research Establishment through the BRECSU (Building Research Energy Conservation Support Unit) ‘Best Practice Programme’ have found that energy consumed to heat. 2. Office buildings were found to have the highest energy costs. insured and renovated. building energy management system installations. intelligent buildings. lighted. Life cycle costs and their accurate prediction. By reducing costs over this term it should be financially viable for the private sector to provide a service to the public sector and to achieve an acceptable return. Such data is vital so as to negotiate the complexities of the contract to both parties’ satisfaction.g. uses less The Surveyors’ Construction Handbook Part 2. Energy costs are potentially one of the most controllable items of overheads and life cycle costing can be used as a tool for predicting the benefits of investment in energy efficiency. cooled.1. especially prestigious. leaving the provider with a surplus or profit which should be commensurate with his risk exposure. however.PART 2. In purely capital cost terms. SECTION 2 associated with fumes and vapour when cork has to be resealed. energy efficient services. This service will include the management of a building which should be heated. control and reduction are critical to the successful performance of a PFI deal. for lifts and kitchen equipment. and there is considerable scope to reduce it.

accounted for by the operation. Sainsbury has been the first grocery retailer to produce an environmental report and recognises that energy probably accounts for its single biggest direct environmental impact. Such consideration is more valid the shorter the predicted current building life. If sufficient consideration were to be given at the initial design stage for potential future uses of a building. Such costing is increasingly carried out by a specialist Quantity Surveyor so bringing greater opportunity to focus on M & E life cycle costs which are a significant proportion of a building’s cost in use.PART 2. Significantly it is also the third largest controllable cost in running a typical supermarket.1. Such a concept will require building layouts and structures to be more flexible with maintenance.7 MECHANICAL AND ELECTRICAL BUILDING SERVICES The increasing capital cost significance and complexity of M & E services has resulted in greater cost emphasis during the early design stages. A cost in use study would explore the economics involved of using a building for its notional design life and for its intended use in the usual way. 2. raised flooring or greater storey heights to demonstrate continual viability for future generations. condensing gas boilers can save 10–20% of fossil fuel bills with pay back in five years. it could be used to demonstrate the continued asset value of the property and go a considerable Page 4 Part 2. A cost in use study at design stage may justify larger bay sizes. re-servicing and conversion to alternative uses being simplified and made more economical. Buildings have not been traditionally designed for anything beyond their immediate requirement.g. Section 2 (4/99) Effective from 1/6/99 The Surveyors’ Construction Handbook . Similarly.g.8 BUILDING SUSTAINABILITY If there is to be a conscious shift of opinion towards sustainable buildings i. 2.2. SECTION 2 electricity and performs better.1. energy use and replacement costs associated with the M & E installations. e. Similarly. those which have a viable life expectancy beyond their initial designed use. However. supplementary investigations would explore potential alternative uses for the building and the conversion cost (and possibly the cost in use for a further notional period). However. e. as more are being converted to alternative uses it is probably only a matter of time before investors in property call for properties to be constructed with a view to extending the building’s usable life. It is also worth noting that oil is becoming increasingly harder to extract and environmental concerns generally will increase in the very near future. some light industrial units for English Partnerships have been designed for a ten-year life.2. conversion to house a growing less mobile and aged population.e. then there has to be a simultaneous re-examination of a building’s costs in use or perhaps more correctly costs in uses. Hertfordshire County Council have housing and nursing homes with a 20-year life expectancy.

3 includes a residual value in the calculation). At the end of the life of a building. SECTION 2 way to minimising the obsolescent properties which currently dominate certain market sectors. Section 2 (4/99) Effective from 1/6/99 Page 5 The Surveyors’ Construction Handbook . the assessment of the time horizons must be considered with special care.5. say 20 years or less. To determine and analyse the future costs it is necessary to establish: • the building life. and would take into account the residual value.PART 2. • the discount rate (which.1 THE BUILDING LIFE An essential element of life cycle costing is defining the life cycle period to be adopted. When the building life is assessed to be over 40 years.2. elemental or total building level as appropriate).2. Building life is influenced by obsolescence.2 THE DISCOUNT RATE The life cycle cost technique is concerned with the assessment of the time stream of costs and revenues that will flow throughout the life of a construction project option.2. 2. is the difference between the interest and inflation rate and is used to convert future payments to present values). the causes of which are summarised in Appendix B. • any tax implications (see 2. Residual values are briefly discussed in Appendix A (and worked example 2. minimises the effect of such future payments).2. In cases where calculations are based on a relatively short building life. Part 2. • the cost and frequency of future payments (at the component.3). will be expected to hold an interest in the building.2 The Life Cycle Costing Calculation INTRODUCTION The calculation generally involves the appraisal of options. for whom the study is being conducted. residual values can be very significant factors in determining the optimum life cycle cost options.2. each option having different capital and future costs. the building (or component) and the land will have a residual value. An assessment must therefore be made of the life of the investment – ‘building life’. 2. Typically the relevant building life will be the period over which the organisation. expressed simply. 2. explained below. the precise life is not critical for the purposes of life cycle costing (as discounting.2.2. In the case of relatively short life cycles or high value land.

accountants and clients will all have different views about future levels of inflation and interest rates. these differences should be taken into account in setting discount rates. There are two main approaches to discounting: (a) use a rate which ‘implies’ inflation of future costs and values (in this case future costs and values will be priced at today’s prices). i. Economists.2.PART 2. These diversities of view ‘before the fact’ make it difficult to recommend any firm guidelines for surveyors to adopt for selecting discount rates. some judgement will need to be made about the degree of risk return (interest) and the likely levels of future inflation rates. (b) use a rate which requires an ‘explicit treatment’ of inflation in relation to future costs and values. there is quite a stable relationship between inflation and the bank base interest rate. where no better information is Page 6 Part 2. Interest rates are particular to the client and the degree of risk. (in this case future costs and values will be priced at today’s prices and adjusted by a factor to reflect future inflation). This recommendation is based on the assumption that when inflation rates are reasonably low. 2.3 DISCOUNT RATE METHODS (a) Test Discount Rate In the absence of better information it is recommended that a test discount rate should be used. Section 2 (4/99) Effective from 1/6/99 The Surveyors’ Construction Handbook . a technique has to be adopted that will express future costs or revenues in present values. less than 15%. SECTION 2 As ‘money today’ has a different value from ‘money tomorrow’ or ‘money in ten years’ time’. It is therefore essential to involve the client (and his accountant if appropriate) in the process and reach agreement on the discount rate to be used. The process of converting ‘future money’ to ‘present money’ is called discounting.e. Some forecasters may take the view that as different categories of cost inflate at different rates. implying a real discount rate of between 4% and 5% (i. Discounting involves establishing the discount rate to be used. It is suggested that it is easier to deal with the former situation where future costs and values are assessed at current prices. Three approaches on the selection of discount rates are given for guidance purposes and in each the future costs are priced at current prices.e. It is recommended that in the circumstances.2. the interest rate is 4 to 5% greater than inflation). In making the decision on a discount rate for a particular project.

SECTION 2 available. the discount rate for construction investment could be assessed as: No risk return Construction premium risk (8% × ½) Average construction risk return discount rate 3% 4% ——– 7% ——– (d) A further approach to establishing a discount rate is to analyse transactions involving the sale of comparable properties. This is mathematically imprecise. a test discount rate of 4% is used. In the examples of the calculation of discount rates. On this basis the discount rate would be assessed as: Treasury Bond rate of return Less Inflation No risk return discount rate 8% 5% —— 3% —— (c) Average risk premium discount rate The average return on equities reflects the interest required on an average risk. (b) No risk return discount rate Investment in long-term Treasury Bonds can be assumed as having no risk. This method is often adopted in the public sector where minimal risk associated with the investment is assumed. Therefore the discount rate can be taken as the Treasury Bond rate less an allowance for the expected rate of inflation. The Surveyors’ Construction Handbook Part 2. The excess of this rate of return over that expected from the above Treasury Bonds can then be taken as the premium expected for the average risk. and to utilise the ‘all risks’ yield as the discount rate. Section 2 (4/99) Effective from 1/6/99 Page 7 . The actual calculation will need to be compounded. On this basis the average risk premium could therefore be calculated as: Average equity rate return Less Treasury Bond rate Average risk premium discount rate 16% 8% ——– 8% ——– Therefore if construction is deemed to be half as risky as equities. and are a good reflection of the return to be expected on other investments where there is no risk.PART 2. concurrent interest and inflation rates have been added and subtracted in order to clarify the methodology.

for example. 2.4 includes possible sources for such data.2.05 = 0. with assumptions made regarding when payments will occur in the future. Once the discount rate is established valuation tables can be used to convert future payments to present value.2.7 ‘present value of £1’) = £82.PART 2. For example. For example. the effect of future payments on an LCC calculation is in inverse proportion to the level of discount rates i. a risk taking client is less likely to spend money on the building to reduce future costs since he can use this money to get a higher return elsewhere. As an approximation however this may be ignored.02857 = 2.5. SECTION 2 In the ‘no risk return discount rate’ method. (e) In summary.e. some calculations will be relatively straightforward (see the option appraisal exercise for internal doors as shown Page 8 Part 2.19 Such conversion of future payments to present value provides a basis for comparing alternative expenditures. Section 2 (4/99) Effective from 1/6/99 The Surveyors’ Construction Handbook .4 THE COST AND FREQUENCY OF FUTURE PAYMENTS The costs are generally dealt with using current prices (using the discount rate to allow for inflation).e.857% The same methodology should be adopted for actual calculations using other methods. the higher the discount rate the less effect future payments have on the LCC calculation. Selection of a suitable discount rate is crucial as it can overwhelm all other decisions. Treasury Bond rate net of inflation (1 = Treasury Bond rate) = ——————————— – 1 (1 + Inflation rate) 1.08 = —— – 1 1.82192 (from valuation tables at 2. Depending upon requirements.2. the calculation should be as follows: Treasury Bond rate of return Inflation rate 8% 5% Discount rate (i. the present value of £100 to be paid in five years’ time at a discount rate of £4% = £100 × 0.2. 2.

it would be unwise to assume that market conditions would remain unchanged for any extended period when tender levels for building work are very depressed. furniture and equipment. replacement and alterations costs occupancy costs residual values and disposal costs. Indeed an additional advantage of life cycle costing is that it requires design assumptions to be stated explicitly rather than implied. professional fees. it is important that future cost assessment should reflect any expected divergence of a specific cost from the level of inflation allowed in the discount rate. The significance of any tax benefits and grants should be established with the client. The following costs for each category should be considered and where necessary established with the client. (a) Capital costs – include land. the cost effect of alternative sources of funds. all expenditure throughout the life of the building could be included if the total building analysis were required. Section 2 (4/99) Effective from 1/6/99 Page 9 . or permanent improvements thereto. the future flexibility of funds in terms of amounts and sources. The major categories of costs are: • • • • • • • capital costs financing costs operation costs annual maintenance costs intermittent maintenance. building. However. inter alia. For example. The Surveyors’ Construction Handbook Part 2. An expanded check list of costs is given in Appendix C. which form assets for the business to use in its operation. and • the taxation implications of the various options. • construction period finance charges and long-term finance costs. SECTION 2 in the worked examples). Consideration should also be given to • the accounting effect of capital employed. and gearing.PART 2. Estimates for these costs will be based upon assumptions about future events and should be clearly stated. The level of detail used will be dictated by the availability of information and the requirements of the client. Some allowance should therefore be made to adjust current building prices to more normal market conditions when pricing future building work. Although current costs are generally used. with an intended useful life of more than one year. (b) Financing costs – the method of funding the project should include.

g. (g) Residual values and disposal costs – estimate of the resale value and the cost of disposing of the building. Page 10 Part 2. Maintenance costs are a charge on the profit and loss account. producing motor vehicles). reference should be made to manufacturers. maintenance managers and other sources of such data (as discussed in 2.PART 2.2. As an example. Currently. which may change within the life of the building. Occupancy costs are distinguished from operation costs. energy costs. during the life of the asset.3 Tax Allowances. a more relevant estimate can be produced based on information obtained from manufacturers or maintenance managers. A glossary of terms is included in Appendix D. building related staffing costs and other staffing costs. a car manufacturer may change to the production of heavy goods vehicles. (d) Annual maintenance costs – average maintenance costs are available but once details of design are completed. land and other assets after the expiry of the life cycle.4). In seeking a realistic assessment of the life of materials and components. whereas his building related operation costs could be relatively unchanged. Many buildings. Care should be taken in assessing this value as it can have a major effect on the life cycle costing calculations (see Appendix A). (f) Occupancy costs – the cost of performing the function for which the building is intended (e. as not relating directly to the building. and to be offset against a private commercial organisation’s taxable profits. SECTION 2 (c) Operation costs – include estimates of rent. rates. legislation offers tax relief by allowing expenditure upon certain assets to be depreciated.2. cleaning costs. Tax relief is available on both capital and revenue expenditure. Some clients might not require the surveyor to take these costs into account. particularly those with an ‘open market value’ will have a significant residual value. 2. (e) Intermittent maintenance. as they relate to costs attributable to a specific process undertaken by the client. Incentives and Business Rates INTRODUCTION This Sub-section deals with the effect of taxation allowances and incentives available for expenditure upon property and construction applicable in the United Kingdom to date. replacement and alteration costs – replacement costs can be produced using normal cost estimating techniques. Section 2 (4/99) Effective from 1/6/99 The Surveyors’ Construction Handbook . which again reduces the tax payable. This would impact on his occupancy costs. plant. Capital costs receive this relief by way of capital allowances which are deductible items from the taxpayer’s taxation liability account.

000 × 25% reducing balance × 35% Corporation Tax with future allowances discounted at 10% per annum (a discounting calculation is required in order to establish the above figures). SECTION 2 The significance of tax relief depends upon the amount of allowable expenditure.000 350 1.PART 2. which is dependent on the annual rate of taxation allowances.000 889 778 650 i. 2. The impact of tax relief should be sensitively tested at the earliest possible stage. after tax relief.2 TYPES OF ALLOWANCES The types of allowances and rates of depreciation often change. 2.000 1111 Where capital allowances are allowed on 100% of capital expenditure £ 1.000 222 Relief given on maintenance 100% £ 1. The impact of tax relief on the life cycle evaluation lessens proportionately with the ratio of allowable expenditure to the total expenditure and the timing of relief. so making the use of efficient plant more attractive than increasing the thermal efficiency of the building. a new oil refinery will have a greater proportion of allowance than a shop unit shell.000 spent on differing types of expenditure.3.2. capital allowances available that relate to Real Property were as follows: The Surveyors’ Construction Handbook Part 2. of £1.3. For example.000 1. It is also worth noting that capital allowances tend to be greater on plant than on buildings. Following the Finance Act 1985. A detailed estimate of the allowable expenditure should only be prepared if tax relief is found to be significant. being dependent upon the type and function of the asset. No relief £ Expenditure Tax relief assuming 35% Corporation Tax Net discounted cost after tax relief 1 Where capital allowances are allowed on 50% of capital expenditure £ 1. its design and sophistication (particularly in respect of services) and whether or not the project is a new building or a refurbishment. Section 2 (4/99) Effective from 1/6/99 Page 11 . 50% of £1.2.e.1 The following example shows the net discounted cost. This varies considerably.

2. 100% allowance) against taxable profits in the year of expenditure. clients will incur differing overall capital expenditure for the same item depending upon whether they can or cannot recover. and so on. It should be noted that the significant part of capital allowance relief on a 25% reducing balance basis comes in the first five to seven years. 25% of 75% in the second. Straight line allowances are calculated as a percentage of original cost and at 4% the allowance is spread evenly over 25 years. While the building itself may be subject to a 4% straight line allowance the plant and machinery in the building will receive a 25% reducing balance.3 VALUE ADDED TAX (VAT) Capital allowances are given against the net capital cost to the taxpayer. 2. Currently the running and maintenance costs of an asset are deductible in full (i. A reducing balance computation is achieved each year by first deducting all previous allowance amounts from original cost and then applying the allowable percentage to the balance.PART 2.e. certain assisted projects or expenditure relates to a transitional period e. Section 2 (4/99) Effective from 1/6/99 The Surveyors’ Construction Handbook . In certain circumstances allowances may be at a higher rate i. first year and writing down are explained in the Glossary of Terms (Appendix D). Regional development grants (or their Northern Ireland equivalent) may also be available.3. Different types of allowances. terms of the Finance Act 1984 (applicable until 31 March 1987). Therefore. initial. as VAT is part of that capital cost. i.g. 25% in the first year. SECTION 2 Allowable expenditure Plant and machinery Industrial buildings Agricultural buildings Dredging Scientific research Cemeteries and crematoria Dwelling houses let on assured tenancies – only expenditure expended prior to 1 April 1987 Hotels Enterprise zone building expenditure Mining and certain related construction works Timing or percentage per annum 25% (reducing balancing) 4% (straight line) 4% (straight line) 4% (straight line) 100% Ratio based upon grave spaces used 4% (straight line) 4% (straight line) 100% 40% plus a ratio based upon usable life Subsequent to the Finance Act 1997 first year allowances were changed and at the time of writing were still being finalised. This is included in the above example where the tax relief amount is a product of the incremental annual writing down allowance. or recover only a proportion of.e. discounted.e. they relate to specific incentives. These are not treated as taxable and may be disregarded when assessing the capital cost upon which tax relief is calculated. the VAT. Page 12 Part 2.

(d) whether the owner will be liable to tax during the period between the date of construction or first use and the date of replacement. (g) the impact of these adjustments therefore needs to be taken into account in the life cycle costing assessment. These arise because: (a) the Government uses taxation to impose fiscal policy and influence the economy and therefore statutes are introduced amending previous rates of depreciation.3. Entitlements are also restricted between connected persons). (e) whether the item’s economic life will be shorter than the tax write down period. The recipient has to prove to the Inland Revenue that he qualifies for allowances (i. (b) the future Corporation Tax and allowance rate at the date of replacement. regulations and entitlements. the entitlements are aimed at providing incentives for commercial organisations and therefore expenditure upon residential property is largely excluded.2. its profit or loss on cost. These circumstances will generate a taxable profit or loss on proceeds above or below the tax write down value and will attract a balancing adjustment. certain parameters need to be ascertained: (a) the Corporation Tax and allowances rate that will be current at the date of construction of first use. This will either generate an added write down amount when it is demolished. Section 2 (4/99) Effective from 1/6/99 Page 13 . against which revenue running costs can be charged. (f) the value of the balancing allowances. or if the item or building is to be sold at the end of its economic life. and if the owner will have sufficient taxable profits to use the allowances generated in any one year.4 CALCULATION OF THE EFFECT OF CAPITAL AND REVENUE ALLOWANCES Before calculating the effect of taxation allowances.PART 2. (c) the Corporation Tax rate current at dates between date of construction of first use and the date of replacement.5 DYNAMICS The surveyor should therefore appreciate the variables and frequent changes that occur in respect to the application of taxation allowances.e.3. 2. charges or taxable profits needs to be considered against the relevant Corporation Tax rate.2. SECTION 2 2. The Surveyors’ Construction Handbook Part 2. (b) the interpretation of entitlement is affected by case law precedents. Caution is further necessary as there are specific restrictions.

installation and usage as well as technical development.5. professional judgement should not be disregarded. Section 2 (4/99) Effective from 1/6/99 The Surveyors’ Construction Handbook .7 WORKED EXAMPLES Worked example 2.4 Data Sources Lack of data in a suitable format for maintenance. Expert advice should be sought in such a situation. SECTION 2 (c) the Inland Revenue practices and extra statutory concessions develop to address specific issues or vagaries. Ltd – generally published annually. Page 14 Part 2.3.2. Building Surveyors and Facility Managers will often have valuable in-house data. Butterworth & Co. Butterworths Yellow Tax Handbook.6 APPLICATIONS Taxation allowances provide the opportunity for innovative funding arrangements whereby the tax relief can be ‘exported’ to a party who can enjoy more benefit from the entitlement. Furthermore. Further reading for taxation Tolley’s Capital Allowances. replacement and energy costs is said to be a significant reason for LCC rarely being carried out at present. and/or energy costs. 2.6 includes a detailed calculation of the capital and revenue allowances. reality is dependent upon individual design. Notwithstanding this. Lack of such accurate data in a suitable format may affect the credibility of the LCC calculation.2. LCC calculations require information regarding the durability of materials/components.3 summarises the effect of capital and revenue allowances. Business Rates Large plant and machinery regarded as an integral part of the building can attract additional rates which can be influenced by design niceties (such as how the plant is covered over). Worked example 2. CCH Editions Ltd – incorporating extra statutory concessions 2.2.2. 2.2. However.3.5. They also need to be advised during property transfers so the relevant balancing adjustments can be calculated and the purchasers advised of their proper entitlements. Tolley Publishing Co. while historic data is useful.PART 2. (Publishers) Ltd – abstract of Statutes Tax Statutes and Statutory Instruments.

worked examples 2.5.000 (present cost) × 0.2.290 • The total present value of the capital cost.5 Worked Examples INTRODUCTION Life cycle costing can be used in numerous situations. (a) The present value for purchasing the doors is obviously the same as the capital cost: £35. The remainder consider more detailed scenarios.2. The information is summarised in the table below with an explanation of the calculation for option 1 detailed at (a) to (d) below.2 will readily convey the principles of life cycle costing including discounting.2.89/m2 × 20 m2 = £218 • £218 incurred every year for 60 years at 4% discount = £218 × 22. Section 2 (4/99) Effective from 1/6/99 Page 15 .62459** = £3. as used by surveyors in practice. it gives an indication of the level of information available.5. 2.5.7 (present value of £1) The Surveyors’ Construction Handbook Part 2.6* = £4. Trade literature which is a prime source of detailed information is not included.20828** = £7.2. maintenance and replacement costs = £57. Chartered Quantity Surveyors. and the relative complexities of associated calculations.1 and 2. The examples follow in order of complexity.040 × 0.1 DESIGN OPTION: INTERNAL DOORS This example is kindly provided by Messrs Gardiner & Theobald. say Year 12 at 4% discount = £6.2.2. Any tax implications are excluded.5. 2.000 (b) For the annual running costs: • £10. SECTION 2 Whilst the selection of data sources given in Appendix F is not comprehensive.037 showing option 1 is the most expensive life cycle cost * from valuation tables at 2. annual running cost.040 for new ironmongery and repainting taking place in. ranging from a simple elemental option appraisal to complex total building analyses. The intention of this Sub-section is to give the reader an appreciation of its application.773 (d) The replacement cost after 40 years = £35.5. The objective is to evaluate four comparative specifications over a building life of 60 years using a discount rate of 4% (7% interest rate less 3% inflation rate).927 present value (c) For maintenance the present cost of £6.PART 2.7 (year’s purchase or present value of £1 per period) **from valuation tables at 2.

040 340 340 6.000 – 17.356 113 97 1.927 200 4.000 20.90 m2 17.89 m2 9.140 2.000 – 20.00% per annum Discount Rate 4.520 118 2.000 35.472 71 61 919 44 38 300 300 6.927 11.000 20.000 14.773 182 155 2.00% per annum (Interest Rate (7%).99 m2 5.000 300 300 256 219 3.000 – 14.000 17.00 m2 Capital Costs £ £ £ £ 10.000 – OPTION 2 Hardwood Glazed Vision Panels Finish Life 30 Years Maintenance Period 4 Years Estimated Cost LCCM5 Internal Doors Unit: 20 m2 OPTION 3 Softwood Finish Life 20 Years Maintenance Period 4 Years Estimated Cost Present Value OPTION 4 Metal Finish Life 30 Years Maintenance Period 4 Years Estimated Cost Present Value PROJECT LIFE Discount Rate 60 Years 4.670 360 8.00 m2 £ 700.040 340 340 6.000 17.000 300 300 6.040 340 340 291 248 3.140 8. Inflation (3%)) COSTS Capital Costs Aluminium Glazed Hardwood Glazed Vision Panels Softwood Metal Contingency Total Year 1 Annual Running Costs Aluminium Glazed Hardwood Glazed Vision Panels Softwood Metal Maintenance OPTION 1 Repaint Repaint New ironmongery Repaint Repaint Repaint New ironmongery Repaint Repaint Repaint New ironmongery Repaint Repaint Repaint New ironmongery Repaint Repaint Repaint OPTION 2 Repaint Repaint New ironmongery Repaint Repaint Repaint New ironmongery Repaint Repaint Repaint New ironmongery Repaint Repaint Repaint Present Value £ 1750.000 218 4.040 340 340 6.040 340 340 6.748 160 137 2. Section 2 (4/99) Effective from 1/6/99 The Surveyors’ Construction Handbook .670 21.99 m2 35.PART 2.000 300 300 6.00 m2 £ 1000.068 4.341 100 86 1.988 4.462 62 53 Page 16 Part 2.00 m2 £ 850.000 14.000 300 300 6. SECTION 2 PROJECT: Life Cycle Model SHEET NUMBER: ELEMENT: OPTION 1 Aluminium Glazed Finish Life 40 Years Maintenance Period 4 Years Estimated Cost Present Value 35.000 300 300 6.040 340 340 6.000 300 300 13.080 340 340 6.040 340 340 300 300 6.520 7.040 340 340 6.588 Total Annual Running Costs Year Present Cost 4 340 8 340 12 16 20 24 28 32 36 40 44 48 52 56 4 8 12 16 20 24 28 32 36 40 44 6.

037 47.100 300 300 6.000 300 300 320 320 3.560 75.100 40 300 44 300 48 6.820 320 320 3.486 62 53 928 39 33 3.916 17.100 52 300 56 300 Year Present Cost 40 35.628 17.297 46.917 18.389 2.988 Total Maintenance/Replacement Costs Total Running Costs Total Net Present Value of Life Cycle Costs 62.380 100 86 1.000 30 20.480 53.586 44.810 160 137 2.297 40.132 15.PART 2.000 7.00% per annum (Interest Rate (7%).100 300 300 6.000 300 300 913 39 33 320 320 3.000 14.386 171 146 1.820 320 320 3.290 20.100 256 219 3.820 320 320 3.000 6.490 107 91 931 67 57 581 42 36 300 300 6.000 20 14.000 30 17.776 20.000 58.820 52 320 56 320 4 300 8 300 12 6. SECTION 2 PROJECT: Life Cycle Model (continued SHEET NUMBER: ELEMENT: OPTION 1 Aluminium Glazed Finish Life 40 Years Maintenance Period 4 Years Estimated Cost Present Value OPTION 2 Hardwood Glazed Vision Panels Finish Life 30 Years Maintenance Period 4 Years Estimated Cost LCCM5 Internal Doors Unit: 20 m2 OPTION 3 Softwood Finish Life 20 Years Maintenance Period 4 Years Estimated Cost Present Value OPTION 4 Metal Finish Life 30 Years Maintenance Period 4 Years Estimated Cost Present Value PROJECT LIFE Discount Rate 60 Years 4.000 6. Inflation (3%)) COSTS Maintenance New ironmongery Repaint Repaint Repaint OPTION 3 Repaint Repaint New ironmongery Repaint Repaint Repaint New ironmongery Repaint Repaint Repaint New ironmongery Repaint Repaint Repaint New ironmongery Repaint Repaint Repaint OPTION 4 Repaint Repaint Repaint Repaint Repaint Repaint Repaint Repaint Repaint Repaint Repaint Repaint Repaint Repaint Replacement OPTION 1 OPTION 2 OPTION 3 OPTION 4 Year Present Cost 48 52 56 4 8 12 16 20 24 28 32 36 40 44 6.560 The Surveyors’ Construction Handbook Part 2.132 40.820 320 320 3. Section 2 (4/99) Effective from 1/6/99 Page 17 .000 5.100 16 300 20 300 24 6.400 65.820 320 320 3.000 35.820 320 320 274 234 2.988 15.810 48 3.100 300 300 6.820 320 320 Present Value 6.037 57.241 14.100 300 300 6.100 28 300 32 300 36 6.586 32.166 14.00% per annum Discount Rate 4.993 23.000 40 14.109 22.

Section 2 (4/99) Effective from 1/6/99 The Surveyors’ Construction Handbook . The objective is to evaluate the above options for a building of 3. SECTION 2 2.PART 2.2 BUILDING SERVICES DESIGN OPTION: AIR CONDITIONING AND UNDER FLOOR TRUNKING VERSUS HOT WATER HEATING AND RING MAIN ELECTRICS This example is again provided by Messrs Gardiner & Theobald. The information is summarised overleaf with the methodology for the calculation being exactly as that for the previous example.2. Page 18 Part 2.5.000 m2 floor area. Any taxation implications are excluded. a life of 60 years and a discount rate of 4% (7% interest less 3% inflation).

000 160.000 5.000 2.000 2.500 787.500 472.000 5.000 2.500 450.000 5.000 2.000 300.991 102.000 600. Inflation (3%) COSTS Capital Cost Air Conditioning U/Floor Trunking HW Heating & Ring Main Electric Contingency Total Year 1 Annual Running Costs Air Conditioning U/Floor Trunking HW Heating & Ring Main Electric Total Annual Costs Maintenance OPTION 1 Overhall Overhall Overhall Overhall Overhall Overhall Overhall Overhall Overhall Overhall £ £ 750.000 5.155 878 667 507 385 293 222 Year 15 30 45 Present Cost 600.000 5.355.375 499.696.000 5.000 1.000 37.540 616.000 339.214 OPTION 2 OPTION 3 OPTION 4 25 50 Total Maintenance/Replacement Costs Total Running Costs Total Net Present Value of Life Cycle Cost 1.278 2.000 5.338.000 5.876 1.000 300.159 184.PART 2.352 OPTION 2 Genearl repaint/repair Genearl repaint/repair Genearl repaint/repair Genearl repaint/repair Genearl repaint/repair Genearl repaint/repair Genearl repaint/repair OPTION 3 OPTION 4 Replacement OPTION 1 1.000 2.000 5.776 2.110 3.000 5.762 15.000 5.000 112.378 2.000 5.000 2.000 2.000 641.516.228 The Surveyors’ Construction Handbook Part 2.000 600.00% per annum (Interest Rate (7%).041 856 704 578 2. SECTION 2 Element: Services PROJECT LIFE Discount Rate 60 Years 4% per annum OPTION 1 Air Conditioning U/Floor Trunking Finish Life 15 Years Maintenance Period 5 Years Estimated Cost 250 m2 150 m2 5% Capital Costs £ 25.000 2.000 5. Section 2 (4/99) Effective from 1/6/99 Page 19 .000 1.520 1.696.535 42.762 Present Value Unit: 3.000 450.040 3.500 75.282 1.000 5.000 5.000 2.000 2.000 22.000 300.000 5.000 1.855.000 600.000 2.000 4.728 972.000 5.352 339.500.000 900.000 2.000 5.000 2.000 5.000 2.000 5.542 1.000 2.000 m2 OPTION 2 HW Heating & Ring Main Electrics Finish Life 25 Years Maintenance Period 7 Years Estimated Cost Present Value OPTION 3 OPTION 4 Finish Life Maintenance Period Years Estimated Cost Present Value Finish Life Maintenance Period Years Estimated Cost Present Value Discount Rate 4.000 6.267 1.000 750.00 m2 £ 5.000 333.719 300.125.000 Year 5 Equipment 10 Equipment 15 Equipment 20 Equipment 25 Equipment 30 Equipment 35 Equipment 40 Equipment 45 Equipment 50 Equipment 55 7 14 21 28 35 42 49 56 Present Cost 5.000 600.000 600.00 m2 4.000 5.

000 £5.181 291 ——– 2. firstly to provide the cleaning gantry and secondly to omit the gantry. SECTION 2 2.447 present value The Surveyors’ Construction Handbook . Section 2 (4/99) Effective from 1/6/99 £36. The following figure compares two options.3 MAINTENANCE OPTION: WITH/WITHOUT CLEANING GANTRY This example is kindly provided by Gerald Hall.000 £2.908 291 ——– 3. The capital cost and costs associated with anticipated maintenance were calculated by using normal cost estimating techniques. Assumed criteria: – Building Life – VAT assumed to remain at current levels with the client being an ‘end user’ under VAT rules – Gantry capital cost – The gantry will have a residual value – Capital cost for opening lights in lieu of gantry – Discount rate (assuming the interest rate will average 11% over 25 years and the inflation rate 6%) – Corporation Tax Taxation Calculation The capital cost for plant and machinery receives a 25% reducing balance.199 ——– £ 2.5.250 × 25% × 33% £881 × 33% = = £ 2.000 5% 33% Year 2 with gantry calculation: Capital Maintenance £35. Year 1 with gantry calculation: Capital Maintenance £35.510 present value £26.2. Maintenance and running costs receive 100% allowance.PART 2.472 ——– 25 years 17. However: with gantry investment without gantry investment Page 20 Part 2.5% £30.250 less 25% × 25% × 33% £881 × 33% = = The methodology applies for the rest of the 25 years as summarised overleaf. The client initially considered that the gantry would pay for itself due to savings in maintenance and cleaning cost.

000 5.250 0 35.084 31.024 (849) – – 750 131 881 2.175 679 – – 750 131 881 679 – – 750 131 881 808 – – 2.250) – – 750 – – 2.239 35.043 31.864 0.541 Costs Maintenance Annual – 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 Year Capital Financing Operation Present value of £1 @ 5% 0 30.326 0.823 0.645 0.295 – – 750 131 881 3.318) 0.000) – – – – – – – – 750 1.343 30.964 36.028 264 263 354 253 245 809 227 218 279 199 191 609 (422) 36.175 881 881 2.250 33.443) (733) (524) (258) 953 52 137 320 229 250 1.866 30.685 35.467 35.342 0.354 36.199 (2.546 31.226 31.024 33.963 36.5% TOTAL inc VAT Less tax allowance NET TOTAL CUMULATIVE PRESENT VALUE 35.500 438 2.430) – – 750 131 881 1.472 (1.207) (1.500 438 2.175 2.500 (1.089 31.600 30.119) – – 2.000 175 – – 750 131 – – 750 131 881 881 1.052 33.250 1.585 0.541 PRESENT VALUE VAT 17.000 – – The Surveyors’ Construction Handbook 1 – – – 2 – – – 3 – – – 4 – – – 5 – – – 6 – – – 7 – – – 8 – – – 9 – – – 10 – – – 11 – – – 12 – – – Part 2.436 0.505 0.660 1.952 – – 30.278 73 202 496 372 427 1.458 0.938 881 881 1.907 0.947 574 578 778 583 585 1.711 0.938 (1.518 (637) – – 1.037 31.614 0.591) 0.396 0.500 – – 750 131 438 131 131 175 131 131 438 131 – – 750 131 – – 1.186 34.746 0.933 34.211 (330) – – 750 131 881 1.965 (1.750 – – 250 – – 1.310 0.481 0.750 – – – – (2.938 – – 750 131 881 – – 750 131 881 509 454 1.557 0.092 383 360 440 330 320 991 307 303 397 298 296 973 311 – – 1.677 0. Section 2 (4/99) 13 – – – 14 – – – 15 – – – 16 – – – 17 – – – 18 – – – 19 – – – 20 – – – 21 – – – 22 – – – Effective from 1/6/99 23 – – – 24 – – – 25 – – – PART 2.784 0.175 881 881 2.530 0.000 175 1.775 32.431 35.580 33.250 (2.377 0.750 – – 250 – – 1.000 750 750 2.000 175 1.359 0.416 0.000 Disposal/ residual value 35.846 498 521 735 551 561 1.316 33.COMPARATIVE COMPONENT LIFE CYCLE COSTING CLIENT: PROJECT TITLE: Retail Development/Shopping Mall JOB NO: OPTION: Cleaning ‘with’ gantry – curtain walling to new facace TOTAL Occupacy Intermittent – – – 250 – – 1.163 36.750 – – 250 – – 1.250 35. SECTION 2 TOTAL PRESENT VALUE AT END OF INVESTMENT LIFE Page 21 .938 1.

199 £ 2. (ii) Inflation rate – 7% average over 25 years. The Surveyors’ Construction Handbook . 291 ——— 3. 4 It is assumed that VAT will remain at around 17. 1st year Maintenance and running costs with 100% allowance – ie 1st year total 8 9 (i) Interest rate – 11% average over 25 years.908 PART 2. SECTION 2 FORECASTER’S ASSUMPTIONS 7 1 The capital cost includes allowances for preliminaries and associated builders work. Section 2 (4/99) 3 The life cycle costing is based on an agreed investment life of 25 years.e. (1 + 11%) ————— (1 + 7%) – 1 × 100% = 5% discount rate. 2 Details of the maintenance requirements and cost estimates can be provided upon request.5% and the client is the ‘end user’ under VAT rules. Discount rate: Taxation allowances are subject to negotiation and agreement. Effective from 1/6/99 5 There are disposal cost advantages with this option. Part 2.Page 22 COMPARATIVE COMPONENT LIFE CYCLE COSTING (continuation of table on page 21) 6 Capital cost as plant and machinery with 100% tax allowance – i.

181 1.645 0.436 0.500 1.575 24.500 1.124 1.749 13.500 1.163 582 – – 1.181 0.500 1.181 1.763 1.500 1.181 – – 1.257 23.500 1.070 9.500 1.117 1.500 – – – – – 1.444 Costs Maintenance Annual – 1.952 – – 5.500 – – – – – – – – – – – – – 1.706 24.020 971 925 1.763 3.362 1.500 1.763 582 – – 1.095 26.037 20.359 0.071 1.181 1.000 263 3.500 – – 3.634 21.500 263 1.090 10.763 1.500 1.763 1.784 0.500 1.181 1.000 1.500 1.500 1.363 26.500 1.525 1.763 1.396 0.500 263 – – 1.181 0.557 0.763 582 1.742 22.585 0.151 24.061 10.181 1.711 0.181 2.500 1.530 0.763 582 1.763 – – 6.181 1.342 0.505 0.500 1.500 1.500 – – 1.763 – – 1.763 582 1.500 263 1.763 582 582 2.181 – – 1.500 1.500 1.386 15.181 – – 1.000 875 5.500 263 1.500 1.500 263 – – 1.181 5.147 15.295 – – 1.525 1.411 20.763 582 1.677 0.864 0.310 0.763 1.907 0.500 1.500 1.500 Year Capital Financing Operation Present value of £1 @ 5% 0 5.763 839 799 761 725 690 2.000 – – 1.875 1.978 25.525 1.500 263 1.000 – – 1 – – – 2 – – – 3 – – – 4 – – – 5 – – – 6 – – – 7 – – – 8 – – – 9 – – – 10 – – – 11 – – – 12 – – – 13 – – – 14 – – – 15 – – – 16 – – – 17 – – – 18 – – – 19 – – – 20 – – – 21 – – – 22 – – – 23 – – – 24 – – – 25 – – – TOTAL PRESENT VALUE AT END OF INVESTMENT LIFE .763 582 1.763 1.500 1.181 1.181 – – 1.163 582 582 582 582 582 1.377 0.500 – – – – – – – – – – – 1.500 1.849 626 596 568 541 515 981 467 445 424 404 384 732 349 26.500 263 1.986 12.500 263 1.500 1.875 6.181 1.181 1.500 1.500 263 1.500 263 1.562 19.763 1.416 0.999 8.362 1.500 263 1.458 0.614 0.138 7.521 582 582 582 582 582 1.5% TOTAL inc VAT Less tax allowance NET TOTAL CUMULATIVE PRESENT VALUE 5.763 582 – – 1.500 1.763 582 – – 3.500 263 1.763 3.239 23.500 3.326 0.163 2.362 1.181 1.823 0.587 14.500 263 1.444 PRESENT VALUE VAT 17.COMPARATIVE COMPONENT LIFE CYCLE COSTING CLIENT: PROJECT TITLE: Retail Development/Shopping Mall JOB NO: OPTION: Cleaning ‘with’ gantry – curtain walling to new facace TOTAL Occupacy Intermittent – – – – – – 1.481 0.500 1.638 – – 1.000 Disposal/ residual value 5.763 1.181 1.875 1.181 1.500 263 – – 1.872 16.181 2.202 21.746 0.500 1.500 263 525 263 263 263 263 263 263 263 – – 1.875 0 5.

2 Details of the maintenance requirements and cost estimates can be provided upon request. without capital allowances. Section 2 (4/99) 3 The life cycle costing is based on an agreed investment life of 25 years.Page 24 COMPARATIVE COMPONENT LIFE CYCLE COSTING (continuation of table on page 23) 6 7 8 9 (i) Interest rate – 11% average over 25 years. (1 + 11%) ————— (1 + 7%) – 1 × 100% = 5% discount rate. Capital cost as plant and machinery with 100% tax allowance – NIL PART 2. Maintenance and running costs with 100% allowance. 4 It is assumed that VAT will remain at around 17. (ii) Inflation rate – 7% average over 25 years. SECTION 2 FORECASTER’S ASSUMPTIONS 1 The capital cost includes allowances for opening lights now required. The Surveyors’ Construction Handbook . Part 2. Discount rate: Taxation allowances are subject to negotiation and agreement. Effective from 1/6/99 5 There are disposal cost advantages with this option.5% and the client is the ‘end user’ under VAT rules.

thereby providing a more accurate projection.04296** = £387 * from valuation tables at 2.2. Section 2 (4/99) Effective from 1/6/99 Page 25 .4 HOUSING SINKING FUND (BASED UPON COSTED PLANNED MAINTENANCE) (a) Background This example is kindly provided by Ian Sloan of Armour Construction Consultants.013 × 0. Guidance Booklet No 3’ published in January 1997.761 £9.5. In summary £24.e.41726* i. The data could also be presented as an annual sinking fund e. on two spreadsheets.761 would have to be invested now for 15 years at 6% compound interest in order to meet the costs in Year 15 of £9. a Planned Maintenance Programme. and a ‘costed’ Planned Maintenance Programme which establishes in this case the present value of future costs. Housing Associations and Co-operatives in Scotland generally request that their investment/sinking fund requirements are prepared in accordance with the Scottish Federation of Housing Associations’ (SFHA) ‘Planned Maintenance and Repairs (Revised). which then allows actual costs and maintenance periods incurred to form the basis of the life cycle costs.PART 2. The spreadsheets can be ‘fine tuned’ to meet specific client requirements.5.2. total maintenance and repair expenditure at current prices = £9. the amount to be invested for each of 15 years at 6% compound interest in order to meet the costs in Year 15 of £9.013 = £3.5.g.013 × 0. An example of the calculation shown overleaf is: Year 15.013 is: £9. In due course they can be adapted to allow historical information to be fed into the programme.2. The discount rate is 6%.942 would have to be invested now at 6% to cover all maintenance and repairs for the next 60 years. (b) Brief The client needed to establish the capital to be invested for a new build housing project to cover all maintenance and repairs for the next 60 years.7 (annual sinking fund) The Surveyors’ Construction Handbook Part 2.7 (present value of £1) ** from valuation tables at 2. One method widely accepted is shown below. SECTION 2 2.013. There are various ways of presenting the data. £3.

1.4.5 HEAT SOURCE 5. Pointing 2. Radiators/fires T 1 1 1 < < < < < < < < < < < < < < < < < < 1 1 0 0 0 5. Ventilation EXT FABRIC 2.1.7.2.2.3.3.4.2 EXTERNAL WALLS 2.3.1.3.2.4. Door Operation < < < < < < < < < < < < 2.1.4. Flashings 2.2.1.1.1. INTERNAL DRAINAGE 5. Skirtings 3. DISPOSAL INST 5.6. Ironmongery FITTS FURN 4.2.3.1. Openings 1.7 VENTILATION 5. SECTION 2 1.1.1 INTERNAL WALLS 3. SERVICES 5.3. whbs Stainless steel Water pipes etc Insulation Pipes & Fittns Effective from 1/6/99 < < < < < < < < < < < < < < < < < < < < < < < < 1 1 < < < < < < < < < < < < < < 1 < < < < < < < < < < < < < < 1 1 < < < < < < < < < < < < < < < < < < T 2.1.1.1.3.1.2. 5. Handrails etc 2.4. Roofs 1. Gutters etc Part 2.2 SERVICES EQUIPMENT 5.2. Stairs 1.3.1. Painting 2.1 ROOF 2.1.2.1.3 FLOORS 3. Door Operation 3.1.5.3.4 EXTERNAL DOORS 2.2.1.3.2.1. Kitchen Units 4.2. 5. Walls & Open’s 3.1.2. Walls 2.6 HEAT SYSTEM 5. Grab rails etc 5. Ironmongery 2.4.1.2. Section 2 (4/99) < < Timber/Glass < < / < < < / 1 < < < < < < < < < < < < < < < 1 < < / 1 / < < < < < < < < < < < < < < < < < < 1 < < < < < < < / < < < < < < < / < < < < < < < < < / < < < < 1 < < / 1 < < < 1 < < < < < < < < < < < < < < < < < < < < < < < < < 1 1 1 1 1 1 < T < T T Timber/Metal 2. Flooring 3.3.1 FITTINGS & FURNISH 4. Sanitary ware 5.4 DOORS 3.4.1.4. baths. Rendering 2.4.3 WINDOWS 2.1 SANITARY APPLIANCES 5.3 WATER SUPPLY 5.1. Painting Brick/pboard Ceramic Plasterboard Timber/Vinyl Timber Timber Units/Worktops Wcs.1 STRUCTURE 1. Pointing 2.1.2.2 STAIRS 1. Roof Tiles etc < < < < < < < < < < < < < < < 1 < < < < < < < < 1 < < < < < < 1 < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < 1 < < 0 0 0 0 0 0 2.1. Window Op 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2. Ceilings INT FABRIC 3.2.4. Fans etc .4.3.1.2.1.2.2. Pipes & Fittns 5.2. Ironmongery 3.1. Kitchen sinks 5.3.3. Floors < < < < < < < < < < < < < < < < < < < < < < < < < < / < < < / < < < < < < < < < < < < / < < < < < < < < < < < < < T < T T T < < < < < < < < < < < / < < < / 1 < < < < < < < < < < < < < < < < < < 1 < T < T T T < < < < < < < < < < < / < < < / < < 1 < 1 < < < < < < < < < < < < < < < < < < < < < < < < < < 1 < < 1 < < T < T T < < < < < < < < < < < / < < < / < 1 / < < < 1 < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < 1 1 < 1 < T < T T < < < < < < < < < < < < < < < / < < < < < < < < < / < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < T < T T < < < < < < < < < < < < < < < < < < 1 1 STRUCTURE 1.KEY 1 = Inspect/Consider T = Test until replacement Cumulative 1 0 0 0 0 0 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Cost Page 26 < = Inspect and Remedy < = until Replacement / = Decorate / = Inspect & 1 = Renewal/Replacement 02/12/98 COMPONENT Timber Timber Concrete/Brick Timber Timber Concrete Tiles Lead UPVC Facing Brick PLANNED MAINTENANCE PROGRAMME EXAMPLE Date Printed CODE ELEMENT SUB-ELEMENT PART 2. Boilers/equipment The Surveyors’ Construction Handbook < < < < 5.4.2.1.1. Wall Tiling 3.3.1.2 CEILINGS 3.1. Water storage 5.

1.11.2 Telephones 6.10 LIFT INSTALLATION – 5.00 0.1.00 0.00 0. Roads. Walls etc 6.1.00 0.00 0.2.2.00 0.9.8.1.4 OUTBUILDINGS 6.1 LANDSCAPING 6.2.1. Binstores/platts Part 2.00 0.11.00 0. Smoke detectors < < T < < / / < < < < < < < / / < / < < < < / < / < < < 1 < 1 < < < < < < < < < < < < < 1 < < < < < < < < < < < < < < < < < < < < 1 < T < T < < 1 < < < < 1 1 < < < < T 1 < < < < 1 1 < < < < T 1 0 0 0 0 0 0 0 0 0 0 0 5.00 0.00 0. External Lighting 5.3.00 0.00 0.3.00 0.1.2.1. Power and lighting < < < 1 0 < < < < < < < 1 1 < 1 1 0 < < < / / < < < < < < < < < / < < < < < < / / < < < < < < 1 1 1 < 1 1 < 1 1 < 1 1 < < 1 < < 1 1 < 1 < < 1 5.00 0.1.1.2.2 DRAINAGE 6. Door entry 5.00 Effective from 1/6/99 PART 2. Clothes poles 6. SECTION 2 Page 27 .00 0.000’s of 0.12. Fences and gates 6. Ducts & cables 6. Section 2 (4/99) COST IN .1.1.KEY 1 = Inspect/Consider T = Test until replacement Cumulative 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Cost 0 0 0 0 0 PLANNED MAINTENANCE PROGRAMME EXAMPLE (Continued) 1 = Renewal/Replacement 02/12/98 COMPONENT < = Inspect and Remedy < = until Replacement / = Decorate / = Inspect & Date Printed CODE ELEMENT SUB-ELEMENT 5.3.00 0.11 PROTECTIVE INST 5.8 Close Light T T T T T T ELECTRICAL INST 5.2.2. TV system etc The Surveyors’ Construction Handbook < < < < < < < < 1 < < < < < < < 1 < < < < < T < < < / < < < < £ 5.00 0.2 EXT WORKS BOUNDARIES & ENCLOSURES 6.12.00 0.1. Manholes etc 6. Pipes & fittings 6.8.1.2.1.00 0. Grass/planting < < < / < / / < < < < < < < < < < < < < < < < 6.00 0.3 EXTERNAL SERVICES 6.1.8.00 0.2.00 0.9 GAS INSTALLATION 5.00 0. Switchgear 5.00 0.00 0.1.1.00 0.00 0.1.00 0.1. Equipment & supply SERVICES 5.4. footpaths 6.00 0.2.2 COMMUNICATION 5.

Walls Part 2.3.2.2 External walls 2.4.2. Sanitary ware 5.2.1.380 3.6.000 420 545 145 540 120 60 550 120 780 0 3.3.1. Boilers/equipment 5. Pointing 2.3.1.1.020 870 1.2 Disposal inst 5.1.607 960 4.1.4.3.2 Stairs 1.3 Water Supply 5.4.1.1. Pointing 2.2.2.1.2.1.3.3. Window Op EXT FABRIC 2.1.1 Internal walls 3.3. Rendering 2.3.3. SECTION 2 1. Ventilation 2.4 External doors 2. Ironmongery Effective from 1/6/99 3.1.1 Fittings & Furnish 4. Wall Tiling 3.4.2.1.3. Flooring 3. Roofs PART 2. Grab rails etc 5.2. baths.555 990 1. Flashings 2. Insulation SERVICES 5.1.4.330 735 3.2 Services Equipment 5. Floors ) STRUCTURE 1. Water pipes etc 5.1.390 290 100 5 5 60 5 5 5 5 100 5 5 60 inc inc inc inc inc inc inc inc 60 10 275 20 290 inc 83 83 83 83 83 83 83 83 1200 inc inc inc inc inc inc inc inc 480 60 60 60 60 60 60 60 60 800 10 10 10 10 10 10 10 10 200 5 5 5 5 inc inc inc inc 160 125 inc inc 60 inc 20 40 5 5 5 5 5 200 100 5 5 5 5 5 inc 5 5 5 5 125 inc inc 60 inc 20 5 100 5 5 5 5 5 5 5 450 inc inc inc inc inc inc inc inc 160 250 125 inc 60 inc 650 40 40 40 40 40 40 40 40 750 5 200 1500 Cumulative 3 50 50 50 50 50 300 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Cost CODE ELEMENT SUB-ELEMENT 2 1.1 Sanitary Appliances 5. Radiators/fires 5.2.1.1. Ceilings INT FABRIC 3.1. Handrails etc 2. Pipes & Fittns 5.1. Power and lighting .1.4.2.3.2.8 Electrical inst 5.2.4.2 Ceilings 3.2.1. Section 2 (4/99) 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 2100 100 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 100 100 100 100 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 inc inc inc inc inc inc inc inc 210 5 5 5 5 5 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 inc inc inc inc inc inc inc inc inc inc inc inc inc inc 480 inc inc inc inc 60 60 60 60 60 60 60 60 60 800 60 60 60 60 60 60 60 60 60 800 10 10 10 10 10 10 10 10 10 200 10 10 10 10 10 10 10 10 10 200 Wcs.1.1.3. Kitchen Units FITTS FURN 4. Painting 2.4. Walls & Open’s 3.1. Stairs 1.1 Internal drainage 5.1 Structure 1.2.040 485 875 125 0 360 0 1.1.Page 28 02/12/98 COMPONENT Timber Timber ) Concrete/Brick ) Timber Timber Concrete Tiles Lead UPVC Facing Brick inc inc Timber/Glass 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 100 inc inc inc inc inc inc inc inc inc 210 inc inc inc inc inc inc inc inc inc Timber/Metal 5 60 inc inc inc inc inc inc inc inc inc 60 inc inc inc inc inc inc inc inc inc Brick/pboard Ceramic Plasterboard Timber/Vinyl Timber Timber Units/Worktops inc inc inc 50 50 290 20 20 20 inc inc 275 10 10 10 60 60 60 60 60 inc 10 inc 20 50 inc 83 inc 83 inc 60 10 5 5 5 450 5 5 125 inc inc 60 inc 20 5 100 5 5 5 5 200 5 100 5 5 5 125 inc inc 60 inc 650 5 1500 PLANNED MAINTENANCE PROGRAMME (COSTED) Date Printed EXAMPLE Years 1 50 100 25 140 140 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 2380 20 20 20 20 20 20 20 20 20 150 20 20 20 20 20 20 20 20 20 150 20 20 20 20 20 20 20 20 20 20 20 20 20 20 220 20 20 20 20 20 inc inc 10 10 100 inc 400 inc 5 inc inc 5 5 5 inc 5 5 5 5 100 5 5 60 10 inc 20 50 inc 5 5 5 5 inc inc inc inc inc inc inc 20 20 20 20 20 20 20 75 75 75 75 75 75 75 75 75 75 20 20 20 20 20 20 20 20 150 20 20 20 20 20 20 20 20 220 20 inc inc 25 25 25 25 25 100 100 100 100 100 600 0 150 0 4.2. Pipes & Fittns 5.7 Ventilation 5.3.4 Doors 3.1.2.4. Roof Tiles etc 2.2.1.400 2.5 Heat source 5.4. Fans etc The Surveyors’ Construction Handbook 5.6 Heat system 5.2.3 Windows 2.1.3. Openings ) 1. Skirtings 3. Door Operation 3.3 Floors 3.000 120 0 0 2.4.1. Ironmongery 4.3. whbs Stainless steel 125 inc inc 60 inc 20 5 5 5 5 5 5 5 5 5 5 5 5 5 5 inc inc inc inc inc inc inc inc inc 160 inc inc inc inc 40 40 40 40 40 40 40 40 40 750 40 40 40 40 40 40 40 40 40 750 2.2.1.8. Gutters etc 2.4.1. Water storage 5.1 Roof 2.1.7. Kitchen sinks 5.1 Door Operation 2. Ironmongery 2. Painting 1.

9. Walls etc EXT WORKS 6.3 External services 6. Equipment & supply 5.1 Landscaping 6.1.4.1.11 Protective inst 5.12. Door entry The Surveyors’ Construction Handbook 518 518 1208 518 1448 1208 518 518 1208 4068 518 1208 518 518 9013 518 518 1208 518 8673 1048 518 518 1208 1448 518 1208 518 518 15460 489 461 1014 410 1082 852 344 325 715 2272 273 600 243 229 3761 204 192 423 171 2704 308 144 136 298 337 114 251 101 96 2692 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 (Yrs 31–60) 518 518 1208 518 1448 1208 518 518 1208 4068 518 1208 518 518 9013 518 518 1208 518 8673 1048 518 518 1208 1448 518 1208 518 518 15460 £57902 £115804 (Current cost) 85 80 177 71 188 148 60 57 124 395 48 105 42 40 655 36 33 74 30 471 54 25 24 52 59 20 44 18 17 469 £3701 £24942 (Present Value) 5. Grass/planting 6.400 3.2. Manholes etc 6.1.1.200 50 40 100 inc 25 50 40 100 inc 25 50 40 50 750 500 inc 400 500 300 1.1.2.4 Outbuildings 6.3.3. Smoke detectors 5.2.2. SECTION 2 Page 29 .2. Roads.1.10 Lift installation – SERVICES n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 50 50 50 50 50 50 50 50 50 50 50 50 50 50 500 50 50 50 50 50 50 50 50 50 50 50 50 50 50 500 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 750 10 10 500 10 10 500 10 10 500 10 10 500 10 10 3000 10 10 500 10 10 500 10 10 500 10 10 500 10 10 3000 50 40 100 inc 25 50 £ PRESENT VALUE (at discount rate of 6%) Repeat Years Current Cost per yr Present Value 50 50 25 25 inc inc 100 100 40 40 40 200 40 50 50 50 5.11.2.1.PLANNED MAINTENANCE PROGRAMME (COSTED) (Continued) Date Printed 02/12/98 EXAMPLE Years 1 inc Close Light 25 25 10 10 10 10 75 10 10 10 10 75 10 10 10 10 75 10 10 10 10 75 10 10 10 10 75 10 10 10 10 10 10 100 10 10 150 25 150 25 150 75 25 25 25 25 25 inc 100 inc 100 inc inc 200 150 0 525 690 0 100 240 0 2.270 1. TV system etc 5.1.2.1. Ducts & cables 6.11.1.3.2 Boundaries & Enclosures 6.650 10.902 (Yrs 1–30) 21241 Yrs 1–30) inc inc inc inc inc 0 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Cost Cumulative COMPONENT CODE ELEMENT SUB-ELEMENT 5.2 Drainage 6. External Lighting 5.8.1. Clothes poles 6.1. footpaths 6. Section 2 (4/99) TOTAL COST PER YEAR Effective from 1/6/99 PART 2.2.1.2.1.8.1.2.1. Telephones 6. Fences and gates 6.2.000 0 525 750 57. Pipes & fittings 6.2 Communication 5.1.1.12. Switchgear 5. Binstores/platts Part 2.9 Gas installation 5.

(d) Capital Income Options 2 and 3 will free up existing space for sale and rent which are included as a deduction against expenditure. those costs in excess of £10. Even with constant staff numbers these costs reduce with centralisation. fire prevention. Page 30 Part 2. (e) Discount Rates In accordance with the client guidelines the investment horizon is 40 years and the discount rate 8%. Three options were identified: • do nothing. machinery. • rates were not provided by the client by the deadline and are therefore excluded.2. • staffing costs were excluded as they would remain constant.5 CENTRALISATION OF OFFICES STUDY (a) Brief This example is kindly provided by Gerald Hall. (b) Capital Costs These were calculated using traditional cost estimating and included cyclical capital costs.000 are included in the capital cost element under the assumption they would be part of the capital cost programme.PART 2. The distinction between cyclical capital costs and cyclical maintenance costs is often vague. • maintenance costs under £10. telephones. The offices were originally spread out over three main sites. mail collections. • centralise at location A and construct additional new offices. (c) Revenue Costs • fuel: the energy manager provided existing costs which were used as the basis for the new proposal. • centralise at location B and construct additional new offices. sanitary hire. water coolers. hygiene. Again this was based on existing client data plus judgement. The client wished to investigate a centralisation (of offices) strategy as a means to improve business efficiency in an increasingly competitive market. Section 2 (4/99) Effective from 1/6/99 The Surveyors’ Construction Handbook . Relocation costs (labour and plant required to transport office equipment. insurances. • security costs are based on existing security costs and judgement. stores. SECTION 2 2. compound materials and stationery items) are included under Year 0 on the assumption they would be complete within 12 months and a contingency for new furniture included.000. • water costs were excluded (the client was a water company). • operation costs for this client included waste removal. • cleaning costs are based on existing cleaning costs and judgement. although this would require repair and refurbishment of the existing offices.5.

047.068 Option 1 Option 2 Option 3 (i) Sensitivity Analysis An analysis of different discount rates and time frame confirm option 2 as the most favourable.164.950 £1. Discount Rates 6% 6% 6% 8% 8% 8% 10% 10% 10% Life Cycle 0 20 40 0 20 40 0 20 40 Option 1 £ 287.000 1.262.900 1.451.960. electrical and mechanical plant replaced after 20 years with a refurbishment after ten years or mid-life. • Capital Allowances would help support options 2 and 3.PART 2.593.000 £1.607. windows and doors after 30 years.444.000 1.843.100 1.900 £1.423.000 1.262.506.000 2.607.614.262.900 1.100 2.859.562 Option 2 £ 1. All costs are calculated using traditional cost estimating and included as present costs.000 1.896 £1.100 1.091 1. (g) Renewal and Refurbishment Costs General building refurbishment has been allowed in ten-year cycles. Year 0 Expenditure £ £203.068 1.164.960.900 1. profiled metal decking.721 Option 3 £ 1.900 1.164.896 1.100 Year 40 Net Present Value £ £1.164.100 1.420 287.950 287. SECTION 2 (f) Tax Implications Tax allowances have been excluded on the basis that this study is a minor part of the overall company business and assumptions are not appropriate.709. (h) Cost Comparison The detailed calculation is summarised over for option 2 which is the most cost effective over 40 years. Section 2 (4/99) Effective from 1/6/99 Page 31 .632.721.522 1. However it is worth noting that: • Value Added Tax on all capital costs would affect the financial benefits of options 2 and 3 which require considerable capital expenditure.262.000 1.100 1.638.100 1.515.843.762.826.900 1.900 1. felt roofs replaced after 20 years.146 The Surveyors’ Construction Handbook Part 2.

4 0 12 0 1.7 1.9 19.1 7.4 27.06 0.9 19.1 0.4 27.23 0.2 5.4 1.9 19.4 27.2 0 1.9 209.5 -7.2 5.1 5.5 -7.7 1.2 5.4 1.4 1.74 0.25 0.7 1.2 0 1.2 5.2 0 1.5 -7.4 27.5 -7.16 0.7 7.4 1.9 19.5 0 -8 0 -8 0 -8 0 -8 0 -8 0 -8 -7.1 5.5 -7.4 27.29 0.9 19.2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 12 0 1.2 5.4 27.4 0 12 0 1.4 27.1 7.12 0.1 7.63 0.9 19.2 5.9 19.7 1.2 0 1.4 27.4 27.5 -7.2 5.2 5.9 19.9 19.5 -7.7 1.4 27.5 -7.9 19.7 1.9 412.2 5.4 27.7 1.2 0 1.4 0 12 0 1.7 1.4 1.2 5.5 -7.7 7.2 5.9 19.7 1.5 -7.9 19.93 0.4 0 12 0 1.1 7.1 5.4 1.4 27.9 19. SECTION 2 YEAR (SEPT 1996) 0 1 2 3 4 5 6 £’000 Capital Costs Building Works 1176 0 0 0 0 0 0 Relocation Costs 15.4 27.2 5.2 5.2 0 1.4 27.7 1.1 5.4 27.2 5.4 1.46 0.21 0.5 -7.4 1.2 5.9 Present Value of £1 @ 8% 1 0.9 19.4 1.7 7.5 0.14 0.Page 32 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 Total Value £000 0 0 0 0 0 0 190 0 0 0 0 0 0 0 0 0 300 0 0 0 0 0 0 0 0 0 393 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 190 0 0 0 0 0 0 0 0 0 300 0 0 0 0 0 0 0 0 0 393 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 310 0 0 310 2.2 0 1.4 1.1 5.5 -7.1 7.9 19.9 19.5 -8 -8 -8 -8 -8 Revenue Costs Fuel 1.4 1.1 5.4 27.4 27.4 1.7 1.4 0 12 0 1.11 12 11 CLIENT JOB TITLE JOB NO DATE WATER COMPANY LIMITED CENTRALISATION OF AREA OFFICE STUDY 3985 29th MARCH 1996 PART 2.4 27.5 -7.2 0 1.1 5.4 1.4 0 12 0 1.4 27.1 7.7 7.7 7.5 0 -8 -308 -55 -363 0 -8 -8 -8 0 0 1.123 0 0.896 .9 19.9 19.15 0.2 5.4 27.2 Staff Costs 0 0 0 0 0 0 0 Value 27.5 -7.5 0 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -8 -7.5 -7.2 0 1.79 0.1 7.4 27.1 5.4 27.2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 0 1.2 5.7 7.1 7.9 19.5 -7.5 -7.1 5.7 1.4 Water 0 0 0 0 0 0 0 Maintenance 12 12 12 12 12 12 12 Effective from 1/6/99 Rates 0 0 0 0 0 0 0 Cleaning 1.54 NET PRESENT VALUE 1165 18 17 16 15 14 13 The Surveyors’ Construction Handbook EXPENDITURE NVP£=1.2 0 1.5 -7.7 1.07 0.9 19.1 7.27 0.9 19.1 7.5 -7.4 27.607.1 7.4 1.1 7.9 19.05 4 4 3 3 3 3 2 2 2 41 2 2 2 1 1 1 1 1 1 15 1608 0.9 19. Section 2 (4/99) Capital Income Annual Rental -7.9 19.4 27.4 1.4 27.4 1.5 -7.369 16 9 2.4 27.7 1.5 -7.9 319.7 7.37 0.4 1.4 27.4 27.34 0.09 0.7 7.4 0 12 0 1.1 7.7 7.1 5.7 1.5 0 0 0 0 0 0 Value 1200 0 0 0 0 0 0 Part 2.7 1.06 0.4 1.7 7.2 5.7 1.1 7.32 0.5 -7.9 19.1 7.1 7.4 27.1 7.4 27.1 7.9 19.4 1.4 27.7 1.5 -7.4 27.4 27.17 0.08 0.7 7.5 -7.4 1.9 19.9 19.4 27.2 0 1.1 5.2 5.4 27.4 27.1 7.58 0.07 0.9 19.43 10 97 9 8 7 7 6 6 5 5 5 69 0.9 329.2 0.9 19.9 19.1 7.4 1.1 5.7 7.4 Net Cash Flow 1164.1 7.13 0.5 -7.9 19.4 1.5 -7.05 0.5 -7.1 7.7 7.7 1.7 1.4 1.68 0.5 -7.4 0 12 0 1.4 0 12 0 1.4 27.5 -7.7 1.4 27.1 5.5 -7.9 19.05 0.393 -7.7 1.1 Operation Costs 5.4 0 12 0 1.9 19.4 1.1 5.4 1.86 0.5 -7.7 Security 7.5 -7.5 -7.2 5.4 1.1 7.5 0 0 0 0 0 0 Furniture 8.9 19.2 5.4 0.5 -7.5 Land Sale -55 0 0 0 0 0 0 Value -62.5 -7.7 7.4 0 12 0 1.5 -7.4 0 12 0 1.7 7.4 27.9 19.4 1.4 1.7 1.1 7.4 27.1 5.7 1.5 -7.7 1.5 -7.1 5.2 5.2 0 1.2 5.2 0 57 0 492 0 70 291 213 0 1.09 0.18 0.2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 5.2 0 7.

– occupancy costs. Solid party walls to both sides. Single-storey concrete basement. (b) Discount Rate The building is in owner-occupation and the client’s accountants have advised the use of a long-term government stock interest rate of 7%. as far as practicable. VAT is to be included as the client is VAT-exempt. • refurbish the existing building to meet.03) – 1] The client has agreed that the discount rate can be rounded to 4%. (d) Description of Existing Building Late 1950s office block of multi-storey framed construction with curtain wall cladding to front and rear.5. The client has been advised that an inflation rate of 3% is a reasonable assessment.2.88% [(1. – financing charges associated with the redevelopment. (c) Building Life It has been agreed with the client to use a 20-year life cycle. – residual values of land or buildings. The discount rate calculation is as follows [(1. the client’s requirements. re-using existing systems wherever possible.PART 2. Section 2 (4/99) Effective from 1/6/99 Page 33 .07) – 1] —— × 100 = 3. SECTION 2 2. The appraisal is to include all taxation implications for comparative purposes.6 TOTAL BUILDING OPTION: DEMOLISH AND REBUILD VERSUS REFURBISHMENT (a) Brief The life cycle cost appraisal is to evaluate the life cycle cost effects of the following options: • demolish existing building and rebuild to the client’s specific requirements incorporating ‘all-air’ air conditioning systems. (e) Description of Existing Engineering Services Gas-fired low pressure hot water boiler situated in basement serving perimeter convector system with warm air ventilation to central parts of the building. The following costs are to be excluded: – costs associated with the purchase of land. Fluorescent luminaires to all office areas and tungsten fittings to circulation. The Surveyors’ Construction Handbook Part 2. – costs associated with the removal and temporary re-housing of staff during the construction period.

The structural engineers have advised that no work is required to party walls. incorporating ‘all air’ air conditioning systems. other than temporary shoring. SECTION 2 (f) Condition of the Existing Building The building is structurally sound with few defects. re-using systems wherever possible. it is in a poor state of decorative repair. The calculation of the above is detailed below.PART 2. (h) Summary Net Present Value £k OPTION A demolish existing building and rebuild to the client’s specific requirements.7 m2 700 m2 The adjacent buildings will continue to remain in use as offices during and after the development. Section 2 (4/99) Effective from 1/6/99 The Surveyors’ Construction Handbook . for instance to look at different discount rates and time frames. % difference (A extra on B) 3889 2177 ——— 79% ——— The net present value is a key factor in the option appraisal. the client’s requirements. Page 34 Part 2. OPTION B refurbish the existing building to meet as far as practicable. However other less tangible benefits and disadvantages of each option should be carefully considered in relation to the business objectives. however. (g) Basic Requirements of the Redevelopment Gross internal area Ratio of net to gross internal area Number of occupants Ratio of occupants to net internal floor area External wall area (excluding party walls) 1500 m2 70% 110 9. It is also recommended that a sensitivity analysis be carried out.

4564 81 - Operation - 104 104 Maintenance: annual - 27 27 intermittent - - Occupancy - - Disposal/residual value - - Total 2154 131 131 VAT 17½% 377 23 23 Total (inc VAT) 2531 154 154 Part 2.6246 77 154 161 157 154 154 154 227 152 179 23 24 23 23 23 23 34 23 27 23 154 48 106 .8548 .9246 Present value 2531 50 61 Effective from 1/6/99 TOTAL NET PRESENT VALUE £3889k PART 2.9615 .4746 50 27 86 217 40 257 80 177 . Section 2 (4/99) Less Tax allowance 0 102 88 NET TOTAL 2531 52 66 Present value of £1 at 4% 1 .8219 . SECTION 2 Page 35 .5775 61 153 27 180 56 124 .7599 .6496 68 70 67 61 57 55 53 74 52 55 124 .5134 54 27 131 23 154 48 106 .LIFE CYCLE COST SUMMARY 3 £k 104 104 104 104 104 104 104 104 104 104 104 104 104 104 104 104 104 £k £k £k £k £k £k £k £k £k £k £1 £k £k £k £k £k 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 £k 104 OPTION A Year 0 1 2 Costs - £k £k £k Capital 2154 - Financing - - The Surveyors’ Construction Handbook 27 131 23 154 78 76 .6006 64 131 137 134 131 131 131 193 134 152 131 131 23 154 48 106 .4936 52 27 131 23 154 48 106 .8890 68 72 77 76 74 72 71 103 .7026 .6756 84 94 96 97 99 101 153 105 .5553 69 6 3 62 3 21 22 27 27 27 27 27 27 27 27 27 27 27 27 27 3 134 23 157 49 108 .5339 58 27 131 23 154 48 106 .7903 .7307 .

6496 55 122 142 126 122 122 122 175 126 147 46 101 .6006 50 104 121 107 104 104 104 149 107 125 104 104 18 122 38 84 .6756 80 68 86 78 78 79 80 118 54 56 48 44 43 42 57 41 85 .8890 56 58 71 62 59 58 56 .5553 61 17 3 45 3 21 32 15 15 15 15 15 15 15 15 15 15 15 15 15 3 107 19 126 39 87 .9615 .8548 .6246 63 18 21 19 18 18 18 26 19 22 18 122 38 84 .7903 .9246 Present value 1062 45 52 The Surveyors’ Construction Handbook TOTAL NET PRESENT VALUE £2177k .8219 .7307 .4746 40 173 30 203 63 140 .7026 . SECTION 2 OPTION B Year 0 1 2 Costs £k £k £k Capital 904 - Financing - - Operation - 89 89 Part 2.4936 41 15 69 104 18 122 38 84 . Section 2 (4/99) Maintenance: annual - 15 15 intermittent - - Occupancy - - Disposal/residual value - - Total 904 104 104 Effective from 1/6/99 VAT 17.4564 64 15 - LIFE CYCLE COST SUMMARY PART 2.Page 36 3 £k 89 89 89 89 89 89 89 89 89 89 89 89 89 89 89 89 89 £k £k £k £k £k £k £k £k £k £k £1 £k £k £k £k £k £k 89 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 15 104 18 122 59 63 .5339 46 15 104 18 122 38 84 .7599 .5134 43 15 104 18 122 38 84 .5775 49 136 24 160 50 110 .5% 158 18 18 Total (inc VAT) 1062 122 122 Less Tax allowance 0 75 66 NET TOTAL 1062 47 56 Present value of £1 at 4% 1 .

0 7.5 232.0 The Surveyors’ Construction Handbook Part 2.5 506.5 3% 19.0 84.0 Sub-total Preliminaries (% of sub-total) Contingencies (% of sub-total) Total construction cost Professional fees( % of construction cost) Total capital costs to life cycle cost summary 1553.0 315.0 – 6.0 2.0 28.PART 2.0 OPTION B £/m2GFA £ 9.0 1222.0 54.0 56.0 14.0 3. Section 2 (4/99) Effective from 1/6/99 Page 37 .0 98.0 – 12.0 14.0 252.0 321.0 77.0 60.0 9.0 5.5 21.0 1.0 14.0 2.0 21.0 904.0 94.0 67.5 3% 1833.0 210.0 1036.0 19% 2154.0 168.5 101.0 Total cost £k 14.0 15% 46.5 84.5 144.0 70.0 42.0 14.0 15% 643.0 17.0 – 9.0 91.0 51.0 105.0 6.5 21.5 126.5 £/m2GFA £ 47.5 429.0 147.0 – 17.0 490.5 96. SECTION 2 CAPITAL OPTION A GFA: 1500 m2 Elemental Cost Plan Demolition Substructure Superstructure External walls Internal walls Internal finishings Fittings/fixtures Sanitary appliances Public Health services Mechanical services Electrical services Lift installation External work Drainage Total cost £k 70.0 36.0 6.0 327.0 63.0 10.5% 759.0 8.

00 per m2 OPTION B Budget allowance £42.00 per m2 10500 13617 OPTION B £ per annum 9964 OPTION B Budget allowance £9.2% of building cost (£2154) OPTION B OPTION B Budget allowance 0.PART 2.00 per m2 NB: air conditioned building attracts higher rates Insurance Building fabric replacement OPTION A Budget allowance 0. Section 2 (4/99) Effective from 1/6/99 The Surveyors’ Construction Handbook . SECTION 2 OPERATION OPTION A £ per annum Energy see next page Cleaning OPTION A Budget allowance £7.2% of building cost (£904) Total operation costs Total £k to life cycle cost summary 103425 104 1808 75000 13500 63000 4308 88272 89 Page 38 Part 2.00 per m2 NB: existing building materials more labour intensive for cleaning Rates (including water rates) OPTION A Budget allowance £50.

8 = 1.800 33.800 2904 1815 6316 13617 1500 1500 1500 20 10 20 52.076** 1500 160 240.5:1 Therefore w/m2 for cooling 120/2.ENERGY OPTION A Building usage Diversity Unit energy cost (p/kwh) kwh* (f) (d) (e) (c) (d) (e) £ per annum (g) f × c/100 m2 w/m2 m2 w/m2 kwh* (f) Area Energy rate Area Energy rate OPTION B SYSTEM (hrs per annum) (a) (b) The Surveyors’ Construction Handbook (%) £ per annum (g) f × c/100 2000 50 1.50 1500 20 52. Section 2 (4/99) Power for mechanical services Effective from 1/6/99 PART 2.600 2904 1815 2178 9964 *NB: formula for kwh = area (d) × energy rate (e) × unit energy cost (c) × building usage (a) × diversity (b) 1000 ** Gas Board rate per therm 30p 1 therm = 27.000 3 9. SECTION 2 Page 39 .076 *** Assume cooling load 120 watts/m2 Conversion rate electricity to cooling 2.840 80 5.50 1500 58*** 100 5.5 = 48 + 10 (other mechanical plant) = 58 Gas Heating – Option A Electricity Lighting Small Power Part 2.8 kwh rate per kwh = 35.000 2582 1500 190 285.000 3067 2200 2200 2200 Total energy costs to operation costs summary 60 5.2/27.50 1500 10 33.000 114.

250 £14.250 Total £k to life cycle cost summary £27k £15k * NB: full air conditioning maintenance for Option A Page 40 Part 2.50 OPTION B £ per annum 6000 6000 2250 Total annual maintenance costs £26. SECTION 2 ANNUAL MAINTENANCE OPTION A £/m2 General building maintenance Engineering services maintenance Lifts – service agreement 4.00 1.00* 1.PART 2. Section 2 (4/99) Effective from 1/6/99 The Surveyors’ Construction Handbook .50 £ per annum 6000 18000 2250 £/m2 4.00 4.00 12.

5 45 – – – 3.5 – – – – 5.0 – 21 – – – – – – 5.0 – – 16.5 – – – – – – – 3.0 – – – – – – – 14 5.0 – – – – 3.5 – – – – 5. etc. Section 2 (4/99) Costs £k £k Roof renewal – – External decoration (facades.5 – – – – 3. etc.5 3.5 carpets – – The Surveyors’ Construction Handbook – – – – – – – 6 3 – – – 62 3 21 – – – 6 3 – – – 62 3.5 21. etc.INTERMITTENT MAINTENANCE 2 £k – – – – 0.5 – – – – – – – 17 3.0 21 – – – – – – – – – – – – – – – – – – – – – – 14 – – – – – 15.5 – – – – 0.5 32 32 – – – 3.0 – – – – – – – – – – – – – – – – – – – – – – – – – – – 14 14 – 44.0 3 – – – – – – – – – – – – – – – 14 14 – 68. – – Engineering services: mechanical (equipment) – – electrical (luminaires) – – Effective from 1/6/99 lifts (major overhaul) – – Totals – – PART 2.) – – Internal finishings: carpets – – paintwork.0 – – – – 5.5 – – – – 0.0 3 – – – – – – – – – – – – – – – 42 14 – 86 86 2 £k – – – – 11 – – – – 11 – – – – – – – – – – £k £k £k £k £k £k £k £k £k £k – – 3 4 5 6 7 8 9 10 11 12 13 £k – – 14 £k – – 15 £k – 11 16 £k – – 17 £k – – 18 £k – – 19 £k – – 20 £k 10 11 – – – – 5.0 3 – – – 21 21 – – – – – – – – – – – – 15.5 3.5 69 paintwork.5 3.0 – – – – – – 14 5.5 OPTION A Year 0 1 Costs £k £k Roof renewal – – External decoration (fire escapes only) – – Internal finishings: – – – – 5.5 – – – – – – – – – – – – – – – – – – – – – £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 £k 10 0.5 22 – – – – – – – 42 – – – – – – – – 3. SECTION 2 Total £k to life cycle cost summary – – Page 41 .0 21 – – – 3. – – Engineering services: mechanical (equipment) – – electrical (luminaires) – – lifts (major overhaul) – – Totals – – Total £k to life cycle cost summary – – OPTION B Year 0 1 Part 2.

capital item £10. the client can claim back VAT he cannot claim tax relief on this portion of his costs. Corporation Tax The client currently pays corporation tax at the rate of 31%.g. If.43 Tax allowance .50 £36.capital costs Certain capital items are classified as plant and machinery (see appendix E) and are tax deductible at a rate of 25% per annum on reducing balance.PART 2.g.8 56. This percentage has been assumed for all calculations.9 25. e. running cost VAT Total Tax allowance @ 31% 377 158.500 × 25% × 31% Tax allowances can only be allowed one year in arrears. This is only applicable when the client is an end user and exempt from VAT.50 £117. e.5 VAT RATE % 17½ 17½ 17½ 17½ OPTION A £k 320.running costs 100% tax deductible based upon total inclusive of VAT*.000 First year tax allowance 10. Section 2 (4/99) Effective from 1/6/99 The Surveyors’ Construction Handbook .5 144.3 OPTION B £k OPTION B Total VAT to capital costs Total £k to life cycle cost summary VAT is chargeable directly on all running costs items and appears on the summary. *NB. Tax allowance .2 377 158 £100 £17. Page 42 Part 2.000 × 25% × 31% Second year tax allowance 7. SECTION 2 TAX VAT CHARGEABLE VALUE £k OPTION A Capital costs Fees Capital costs Fees 1833 321 759.2 132. in the course of his business.

a. reducing balance – 174 Running cost allowances From LCC summary (inc VAT) 154 Total 328 Apply current tax rate 31% Total £k to LCC summary 102 OPTION B Capital allowances Part 2. reducing balance – 121 Running cost allowances From LCC summary (inc VAT) 122 Total Apply current tax rate 31% 243 Effective from 1/6/99 Total £k to LCC summary 75 PART 2.1k (inc VAT) @ 25% p.TAX ALLOWANCE 2 £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 0 1 £k £k OPTION A Capital allowances Total allowances see next page The Surveyors’ Construction Handbook 131 98 73 55 41 31 23 17 13 10 – – – – – – – – – 154 285 252 227 216 198 185 177 171 240 167 179 154 154 154 154 161 157 154 154 154 227 157 179 154 154 150 180 157 157 154 154 154 154 154 154 257 257 88 78 70 67 61 57 55 53 74 52 55 48 48 56 49 48 48 48 80 90 68 51 38 29 21 16 12 9 7 – – – – – – – – – 122 212 66 59 54 56 48 44 43 190 173 180 155 143 138 122 122 142 126 122 122 122 134 42 175 184 57 126 133 41 147 147 46 122 122 38 122 122 38 160 160 50 126 126 39 122 122 38 122 122 38 122 122 38 203 203 63 £696k (inc VAT) @ 25% p. SECTION 2 Page 43 .a. Section 2 (4/99) Total allowances see next page £482.

5 96.6 91. Section 2 (4/99) Effective from 1/6/99 The Surveyors’ Construction Handbook .7 482.0 88.3 – 16.5 19.3 103.5 101 54 105 – 9.4 45.9 65.4 45.5 21 252 147 77 21 8.2 – – 9.5 27.5 21 94.1 Option A – Fees only GFA: 1500 m2 Elemental cost plan Demolition Substructure Superstructure External walls Internal walls Internal finishings Fittings/fixtures Sanitary appliances Public Health services Mechanical services Electrical services Lift installation External work Drainage Sub-total Preliminaries (% of sub-total) Contingencies (% of sub-total) Total construction cost Professional fees (% of construction cost) VAT Total tax-allowable capital costs to previous page BWIC allowable on refurbishment BWIC allowable on refurbishment Office lighting and associated switchgear not allowable Taken on proportion of construction costs Page 44 Part 2.5 1553.5 – 252.4 Tax Remarks allowable £k – – 5.8 8.8 88.0 9. SECTION 2 CAPITAL ALLOWANCE Proposed capital allowance for taxation purposes Subject to negotiation and agreement with the Inland Revenue on evidence of eventual costs Total cost £k 70 42 315 490 14.0 – – 292.5 27.5 84 2.7 696 Total cost £k 14 – 17.5 144.5 – 94.4 45.6 71.5 75.5 759.5 233 46.5 27.5 27.2 77.0 – – 427.4 45.5 1833 321 377 OPTION A % tax allowable £k – – – – – – 20 100 – 100 60 100 – – 27.1 64.5 Tax allowable £k – – – – – – 0.PART 2.4 9.1 43.5 126 91 7 3 634.1 12.5 158 OPTION B % tax allowable £k – – 30 – 30 – – 100 – 100 60 100 – – 45.

4511 14.6466 12.6646 18.4236 34.2526 9.8289 11.5753 11.7217 8.1591 17.8540 12.6235 5 0.7101 7.5771 3.3577 8.9291 14.5903 14.6616 29.9379 12.3064 8.3766 4 0.0025 16.0392 8 0.7 A SELECTION FROM PARRY’S VALUATION AND INVESTMENT TABLES (for full tables rewference is made to Parry’s Valuation and Investment Tables.5361 7.0032 13.4683 23.2813 21.0772 18.7200 20.1929 16.5070 13.7076 15.9427 8.8679 17.7648 13.7833 2.3238 14.1426 19.6221 15.6785 16.8775 15.0112 17.6628 17.7069 21.8527 9.8861 2.7368 14.2007 10.0292 14.0416 12.9369 16.2245 15.8258 11.9416 2.3936 9.9810 18.8633 9.9615 1.5845 19.3838 8.1184 11.3601 7.6730 3.3317 13.9695 26.5302 9.1661 13.8323 22. Section 2 (4/99) Effective from 1/6/99 Page 45 .0021 6.3681 14.2922 18.8082 23.3832 15.9886 24.6299 4.8276 11.2442 8.6748 10.4925 22.6916 13.7754 25.0757 5.9524 1.9346 1.6631 16.1318 21.2944 17.7868 10.9352 11.5579 13.1216 9.5187 24.6014 6.2559 18.7538 12.2920 17.3725 15.5824 6.8100 10.3888 20.9173 5.4112 18.6896 12.9804 1.2667 25.4062 13.8869 8.9038 8.2961 11.0429 21.2335 12.7535 14.2124 4.7466 6.8786 11.9672 12.5244 15.3121 3.1374 12.9927 4.4524 13.8736 18.3255 8.2105 13.9713 6.2303 7.PART 2.8181 10.0004 20.6430 14.4124 23.4902 29.2122 12.7113 16.4622 12.0771 12.0800 29.7641 19.4888 25.2348 28.2302 14.2866 30.4773 10.1630 13.3797 10.2064 5.5288 10.1390 7.1581 11.4632 7.4693 11.8017 7.1643 12.4822 22.9491 15.4436 16.0853 12.3514 17.4987 7.5488 20.8594 2.0247 25.0463 15.8460 14.1084 12.7986 14.8514 9.8027 16.1891 12.5611 13.2.4406 26.5777 14.5469 16.9709 1.0511 11.5318 12.7632 10.8493 13.4232 17.1935 13.4353 8.5890 15.1622 8.3555 27.6731 31.7232 3.9246 11.2950 9.3270 18.9377 23.2649 13.6210 14.5885 17.6593 13.8334 2.8378 11.8801 17.4982 14.7668 13.8768 18.9986 25.9434 1.5152 7.5504 12.9540 10.4150 15.3719 9.6523 12.8923 30.5928 15. A W Davidson (1989).4131 17.5907 13.8839 3.9828 16.3498 11.2722 11.1672 22.3708 20.7751 3.5139 11.3034 12.7658 21.7995 28.3679 19.3484 12.1079 9.9931 20.9083 19.9135 2.5631 11.7305 13.7834 13.9837 17.7122 10.5017 25.9819 24.4720 7.7298 27.0197 7.7609 3 0.8847 21.3296 16.9355 17.0170 17.7605 9.1148 23.3752 14.0939 14.0612 11.3062 15.0168 10.1371 12.4350 11.7455 9.6036 9.8986 10.1614 7 0.4986 24.4090 12.8286 3.1411 15.3356 10.1885 19.1210 20.0236 7.8355 11.7619 16. SECTION 2 2.8007 14.1687 18.7928 19.6536 11.5869 11.0432 12.9826 9.8077 4.0067 12.9259 1.3415 21.5235 20.4466 9.1059 10.7641 12.9026 27.7752 11.4558 15.3295 5.9477 13.8212 13.9856 10.2578 11.6350 11.1078 7.3872 4.4651 4.6756 Single Rate 6 0.7327 7.5595 8.1856 20.4518 5.8444 22.6500 13.2098 6.1380 15.9139 19.7172 11.2469 6.2543 24.9867 12.7741 17.1170 13.1476 18.3893 5.6055 13.3941 13.5.2421 6. (111th Edition) (Estates Gazette) YEARS’ PURCHASE RATE PER CENT No Income Tax Years 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 60 2 0.3965 22.8080 2.5940 10.3742 16.6229 5.2919 14.7864 6.1951 21.9920 15.7861 8.4699 11.9293 The Surveyors’ Construction Handbook Part 2.3711 10.6546 11.8568 15.7665 5.6004 20.4872 21.5459 17.6580 18.1339 13.0840 14.1002 4.1584 11.7135 5.1109 8.2777 12.8981 15.4886 13.7171 4.3851 9.5797 5.1062 12.2470 15.6243 3.2741 11.1657 12.0352 13.6500 15.0521 31.7014 23.4172 6.0591 10.5460 4.

3770262 .0394641 .1463411 .7894092 .5631123 .6864308 .1112965 .1851682 .6611178 .5375493 .4711872 .1642548 .4936281 .0444986 .2436687 .6139133 .0816296 .7884932 .5568374 .1405628 .3901215 .5000276 .7440939 .6597758 .1741101 .1460179 .0579857 .9345794 .4388336 .7730325 .7920937 .3624460 .0545127 .7430147 .6768394 .3971138 .2073680 .4631935 .5218925 .6805832 .0915639 .0950604 5 .2281071 .6495809 .4969694 .2082890 .2567365 .4688390 .7049605 .0818088 .2419988 .3305130 .1566054 .6301696 .8889964 .5002490 .2317121 .6231669 .1420457 .7224213 .8705602 .8573388 .0770091 .3255713 .3942684 .8626088 .5834904 .1956301 .2109469 .0764569 .1726574 .3883370 .8396193 .5339082 .1251868 .5858620 .0303143 7 .1504022 .4919337 .2550936 .5820091 .2584190 .8162979 .5918985 .9151417 .3589424 .5846793 .7664167 .4057263 .5402689 .3118047 .1609304 .1576993 .0536905 .3553834 .0872037 .1644356 .2617973 .3606892 .2198100 .3957340 .2145482 .1549574 .4172651 .0626246 .4528904 .0676345 .1839405 .2329986 .5520709 .3713644 .4806109 .6418619 .6468390 .7129862 .7472582 .0339478 .1780463 .0624116 .2203595 .3206514 .2342968 .0213212 .4440102 .0917190 .2964603 .8899964 .2502490 .6005741 .4267688 . Section 2 (4/99) Effective from 1/6/99 The Surveyors’ Construction Handbook .0476135 .7013799 .6446089 .1998725 .7141626 .5702860 .0730453 .4440120 .8548042 .2918905 .4219554 .5050680 .3387346 .0542884 .1582826 .0583286 .6227497 .7578750 .8130915 .3503438 .3468166 .1491480 .1986557 .3418499 .3165744 .1703153 .9803922 .4119868 .2889592 .1845567 .5066917 .5303214 .1812903 .6245970 .9057308 .3768895 .2257132 .1092389 .4581115 .2805429 .5412460 .1721955 .8367553 .2469785 .4288829 .4149644 .0961421 .2958639 .4423010 .2850579 .0575457 .1352816 .6274124 .5100282 .3999871 .1072347 .3751168 .2313774 .1301052 .5083493 .1925749 .6341559 .3878172 .PART 2.2678483 .4636947 .6663422 .0646583 .7462154 .41552-7 .9523810 .1168613 .2098662 .4243464 .5583948 .9611688 .1059967 .5873946 .4563869 .0172573 8 .3349829 .1157932 .4184007 .0920160 .4370768 .3936463 .2002779 .5267875 .3252262 .1461862 .0290073 .2723718 .8374843 .5202287 .3676979 .3047823 3 .0667804 .0509464 .4750928 .8534904 .9423223 .4501891 .6217215 6095309 .6809513 .5439337 .1288396 .4101968 .1073275 .2775051 .1697331 PRESENT VALUE OF £1 RATE PER CENT 4 .0726501 .0535355 6 .1379115 .3152417 .5975793 .5743746 .5133732 .1030555 .3334775 .1903548 .4902232 .0415875 .3715279 .4353041 .2812407 .6050164 .6650571 .7835262 .1352018 .5552645 .1711984 .7025867 .3100679 .1407126 .7284458 .0313279 .9433962 .4810171 .2415131 .5536758 .4746424 .0230269 .0388668 .8227025 .9615385 .0972222 .7350299 .1147411 .2976280 .0788889 .9245562 .0363241 .8884870 .2252854 .2635521 .2765083 .9238454 .1227730 .2429463 .0714550 .9425959 .9708738 .7938322 .4619482 .1227408 .2941554 .1159137 .9259259 .5774751 .7106813 .7628952 .3660449 .2953028 .0338341 .8734387 .4776056 .0609984 .1313671 .2702690 .3157535 .8203483 .9070295 .1009492 .4021537 .8042630 .7599178 .2349503 .2534155 .7306902 .3450324 .6755642 .0852000 .0875355 .1521948 .8879714 .2644386 .0936629 .0460309 .5306333 .3789584 .3404610 .7903145 .2166206 .0098759 Page 46 Part 2.1971466 .7001594 .0993773 .1002193 .8638376 .2740942 .1646139 .1227044 .3865376 .0248691 .4362967 .0365408 .3065568 .8219271 .0268586 .0497134 .2492588 .0426212 .6729713 .0865274 . SECTION 2 No Income Tax Years 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 60 2 .3083187 .1842492 .0685378 .

0068938 .0139096 .4901961 .0346681 .0042018 5 1.0034996 .0366314 . (11th Edition) (Estates Gazette) reproduced by permission of the College of Estate Management which owns the copyright.0329769 .0126018 .0000000 .0372157 .0601437 .0000000 .0090729 .0232932 .0030374 .0389933 .0057951 .0198323 .0296294 .0100174 .0064615 .0200022 .2285915 .0181561 . The Surveyors’ Construction Handbook Part 2.0496508 .2426238 .0132804 .0062368 .0024598 8 1.0221147 .1507619 .0389521 .0312204 .0182919 .0030341 .1704565 .0592770 .0984339 .0023899 .0087680 3 1.0250045 .0061330 4 1.0324252 .0122040 .0128869 .0123919 .0780774 .0180321 .0068516 .0361386 .0114487 .0274279 .0459525 .0354448 .1363154 .0411567 .4807692 .0151116 .0081073 .1124564 .0243929 .0465218 .1266096 .3172086 .0095778 .0040359 .0290474 .0437818 .0906901 .0165557 .0185068 .0074508 .0086645 .0110717 .0130179 .0050396 .0046596 .0121917 .0104345 .0546690 .0047767 .1010359 .0226106 .0000000 .0681184 .0308139 .0105235 .0097969 .3110517 .0156972 .1397958 .0110023 .0171225 .0105864 .0095984 .0041851 .0053868 .0230456 .1047218 .0282931 .0467021 .0387848 .0204058 .0044149 .0045389 .0103625 .0059282 .0536501 .0067153 .3267547 .0149780 .0358576 .0056834 .0870222 .0241368 .0092842 .0143148 .0421985 .0241276 .0138439 .0302426 .0795046 .0564558 .3141098 .0279961 .0028015 .1809748 .2390270 .0107852 .0199989 .0178301 .0053447 .0145926 .0209525 .0821779 .0159719 .0190466 .0096185 .0196790 .0038602 .0075219 .0600763 .0117922 .1921584 .0386991 .0200130 .0084081 .0665522 .0143879 .0158038 .0269897 .0116981 .0537666 .3203485 .0088274 .0210193 .0245642 .0526950 .0099605 .0150514 .0135773 .0132824 .0240120 .1345120 .0913265 .0259383 .0246499 .0475849 . SECTION 2 No Income Tax Years 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 60 ANNUAL SINKING FUND FOR THE REDEMPTION OF £1 CAPITAL INVESTED RATE PER CENT 2 1.1120724 .0578255 .0158105 .0348718 .0188799 .0168554 .1085278 .0832909 .0800797 .1585258 .1025154 .0035615 .0134257 .0273091 .0323565 .1545975 .0529601 .0628254 .0267530 .0058033 .0060589 .0028282 6 1.0169043 .0082782 .3235304 .0082625 .3080335 .4878049 .0741490 .0312801 .1433626 .1738907 .0065502 .0068571 .0089739 .0496108 .0077967 .0063041 .1191350 .0834865 .0087646 .0944930 .0690295 .4950495 .0355462 .0257784 .0148899 .0255868 .0124900 .0192329 .0225674 .0025873 .0640295 .0758680 .0069933 .0000000 .0703889 .0723775 .0141321 .0291988 .0212385 .0499698 .0043359 .0368295 .0000000 .1846271 .0073947 .0017429 Extracts from Parry’s Valuation and Investment Tables.0050061 .0427087 .0088655 .0216865 .0212785 .0071806 .1470175 .0165393 .0026385 .0397946 .0098398 .0126489 .0463423 .0110608 .0271846 .0135796 .0296209 .0585263 .1155532 .0872305 .0164222 .0072340 .0160455 .1305064 .0114481 .2219208 .0022080 .0104889 .0053184 .0622020 .0078820 .0038977 .0328711 .0036636 .0047005 .0020403 .0095402 .0062617 .0412969 .4926108 .0745596 .4830918 .0118232 .0145610 .0090899 .0173220 .0000000 .0178206 .PART 2.0049244 .0667929 .0443449 .0208187 .0171711 .0032868 .0078223 .0182267 .0559020 .0422699 .0704621 .0092131 .0056142 .0224709 .0429628 .0041477 .0127124 .0327450 .0195643 .0296992 .0078574 .0510240 .0050091 .0028307 .0187139 .0122396 .0159486 .0136788 .1165098 . Section 2 (4/99) Effective from 1/6/99 Page 47 .0018856 .0218522 .0117554 .0171890 .0083948 .0335818 .0112298 .4854369 .0259705 .0267021 .0102729 . A W Davidson (1989).0151036 .1228198 .0235963 .2354900 .0499411 .0144593 .0032600 .0327474 .0154173 .0034443 7 1.1883546 .0134534 .0053331 .0037577 .1773964 .2320118 .0222890 .0066163 .0974678 .0940148 .0073581 .0294126 .0398139 .0633569 .2252281 .0000000 .0458200 .0116319 .0125071 .

A2 A3 A4 A5 A6 A7 The Surveyors’ Construction Handbook Part 2. Residual values will be of particular significance if the time horizon used for life cycle costing calculations is relatively short. an allowance should be made for the cost of disposing of plant and equipment and for the demolition of buildings.PART 2. If the plant and machinery is ‘scrapped’ the remaining value is written off and a balancing allowance brought into account. Either the building will have reached the end of its life. with no alternative use. Owners also need to be cognisant of taxation issues and whether these affect their property/building decisions. the component/building and the land will have a residual value. but does have an alternative use. In assessing demolition costs. APPENDIX A I Appendix A: Residual Values A1 At the end of the life of a building. if appropriate. There are strict guidelines for taxation adjustments that arise at disposal. In considering residual values. Alternatively if the building (and the plant and machinery contained therein) is sold. as parties to property transactions sometimes select/contract disposal values of tax relievable components with specific tax planning objectives. There will be one of two situations. allowance should be made for the value of any re-usable materials. the vendor should declare whether allowances have been claimed. Appendix A (4/99) Effective from 1/6/99 Page 1 . Section 2. SECTION 2. An adjustment to their after tax cost will arise depending upon whether the disposal value is greater or less than the written down value remaining on the vendor’s accounts. or the building will have reached the end of the life for its planned purpose. This area of tax advice is experiencing increased scrutiny from the Inland Revenue and the District Valuer’s Department. In either situation the residual value of the building and/or the land may be significant and will need to be carefully assessed as it may have a substantial effect on life cycle costing calculations.

How long will the building be economic for the client to own or operate? The value of the land on which the building stands is more than the capitalised full rental value that could be derived from letting the building. However. six different forms of obsolescence can be categorised as: • • • • • • B2 physical economic functional technological social legal. The table below gives definitions and examples of each form of obsolescence: Types of obsolescence Definition of type of obsolescence Basis for assessment of building life How long will the building stand up? Examples of factors leading to obsolescence Deterioration of external brick walls affecting their structural stability. with little or no flexibility for changing their use.PART 2. B3 Physical Life of the building to when physical collapse is possible. or in the redevelopment or refurbishment scheme. The asset would achieve a better rate of return in the possession of another. are therefore likely to have shorter lives than buildings offering flexibility for the change of function of the building. Deterioration of suspended concrete floors. Economic Life of the building to when occupation is not considered to be the least cost alternative of meeting a particular objective. Section 2. Appendix B (4/99) Effective from 1/6/99 Page 1 . The Surveyors’ Construction Handbook Part 2. Buildings designed for a specific specialised use. Almost all its forms relate to economic considerations. SECTION 2. APPENDIX B I Appendix B: Obsolescence B1 Building life is influenced by obsolescence. Buildings usually end their ‘life’ before the end of their physical life. affecting structural stability. in multi-storey buildings. containing high alumina cement. The most common reasons for buildings becoming obsolete are probably economic and functional considerations.

Technological How long will the building be technologically superior to alternatives? Prestige office unable to accommodate introduction of high level of computing facilities. (with the exclusion of economic considerations). in consultation with the client. Social and Legal The life of a building until the time when human desire or legal requirement dictates replacement for reasons other than economic considerations. SECTION 2. village railway stations converted into private houses. Timber football stand replaced (following Bradford Football Club fire disaster). How long will the building meet human desires. Life of the building until the building is no longer technologically superior to alternatives. Appendix B (4/99) Effective from 1/6/99 The Surveyors’ Construction Handbook . In making that assessment the surveyor will need to take account of a number of factors which may influence the final assessment of building life in any particular case. While the above examples relate to the whole building. Multi-storey flats in inner city demolished (following social and community problems). B4 Notwithstanding the difficulty of the task. should make an informed assessment of the building life to be used in any particular study. APPENDIX B Types of obsolescence Definition of type of obsolescence Basis for assessment of building life How long will the building be used for the purpose for which it was built? Examples of factors leading to obsolescence Cinemas converted into bingo halls. Section 2. the surveyor.PART 2. for example major refurbishment of retail buildings at say 15-year intervals to remain attractive. Functional Life of the building to when the building ceases to function for the same purpose as that for which it was built. obsolescence of elements or components is also relevant. Storage warehouse unable to accommodate the introduction of robotics for goods handling. B5 Page 2 Part 2.

12 C1.8 C3.5 C4.10 C3.2 C2. Section 2. This list is not exhaustive and items may need to be added or others disregarded as applicable to any particular project. INTERMITTENT MAINTENANCE.6 CAPITAL COSTS Land Fees on acquisition Design team professional fees Demolition and site clearance Construction price for building work Cost of statutory consents Development Land Tax Capital Gains Tax Value Added Tax Furnishings Other capital costs Commissioning expenses Decanting charges FINANCING COSTS Finance for land purchase and during construction Finance during period of intended occupation Loan charges (public sector) OPERATION COSTS Energy Cleaning Rates Insurances Security and Health Staff (related to the building) Management and administration of the building Land charges Energy conservation measures Internal planting Equipment associated with occupier’s occupation ANNUAL MAINTENANCE COSTS.2 C3.2 C4.3 C1.1 C3. SECTION 2.10 C1.1 C4.5 C3.3 C3.6 C1.13 C2 C2.11 C1.4 C3.1 C2. REPLACEMENT ALTERATION COSTS Main structure External decorations Internal decorations Finishes.5 C1.3 C4.7 C3. Appendix C (4/99) Effective from 1/6/99 AND The Surveyors’ Construction Handbook Page 1 .3 C3 C3.1 C1.7 C1.4 C4.9 C3.6 C3.PART 2.8 C1.2 C1. fixtures and fittings Plumbing and sanitary services Heat source Part 2.11 C4 C4.4 C1.9 C1. C1 C1. APPENDIX C I Appendix C: Costs And Values The following checklist provides suggestions for cost and value categories to be considered.

1 C6.11 C4. Section 2. SECTION 2.PART 2.15 C5 C5.12 C4.8 C4. land and plant and equipment Related costs – demolition and site clearance and disposal of fees and charges Capital Gains Tax and balancing charges Page 2 Part 2.9 C4.7 C4. Appendix C (4/99) Effective from 1/6/99 The Surveyors’ Construction Handbook .2 C6.3 Space heating and air treatment Ventilating systems Electrical installations Gas installations Life and conveyor installation Communications installation Special and protective installations External works Gardening OCCUPANCY COSTS Client’s occupancy costs RESIDUAL VALUES Resale value – building.1 C6 C6.14 C4.13 C4. APPENDIX C C4.10 C4.

tunnels and mines. This should be differentiated from the rate of depreciation adopted by accountants/auditors when preparing company management accounts to allow provision for replacement of assets. manufacturing.3 there are various types of taxation allowances and the proportion of initial expenditure which attracts tax relief is often varied by successive Finance Acts. These assets should have a useful life of more than one year. REVENUE EXPENDITURE Expenditure incurred as a trading expense e. Part 2. Appendix D (4/99) Effective from 1/6/99 Page 1 D2 D3 D5 The Surveyors’ Construction Handbook . TAXATION ‘DEPRECIATION’ ALLOWANCES (FOR TAXATION PURPOSES) This is a collective term for taxation relief afforded to commercial (tax paying) organisations to offset the cost of capital expenditure incurred upon assets used for the purposes of their trade. PLANT AND MACHINERY This type of tax relief was introduced after the second world war to provide an incentive to industry to replace equipment used in industry and commerce.PART 2. APPENDIX D I Appendix D: Glossary of Terms for Taxation D1 CAPITAL EXPENDITURE Money expended in acquiring long life assets which includes land. buildings. furniture and equipment thereto. There are specific rules which apply where part of the building is used for a non-qualifying purpose. As explained in 2. Section 2. To assist clarification examples of items likely to attract taxation relief are illustrated in Appendix E.2. consumables. D4 INDUSTRIAL BUILDING Industrial buildings or structures which qualify for capital allowances are defined in the statutes CAA 1968 S7 and CAA 1990 S18. The precise definition of plant and machinery is frequently contested in the courts. When an asset is disposed of a review of the allowances received is required and an adjustment may be necessary. D6 INITIAL ALLOWANCES/FIRST YEAR ALLOWANCES These were introduced to provide an acceleration to the standard rate of annual tax relief (depreciation allowance) being a proportion of the original capital expenditure. which are intended for use in the carrying out of business operations. permanent improvements or additions/extensions to existing assets including associated professional fees. occupancy and regular maintenance costs. docks. salaries. storage.g. SECTION 2. This is because the depreciation allowance for taxation purposes is fixed by legislation. These include factories.

original cost less the amounts already calculated and benefiting from tax relief.PART 2. APPENDIX D Governments use successive Finance Acts to vary the proportion awarded to increase or reduce this incentive as a method of influencing or stimulating capital investment within the commercial sector of the economy. BALANCING ALLOWANCE Upon disposal of an asset a comparison between its value and the written down amount remaining on the owner’s accounts is required. If the asset is sold for a sum in excess of the vendor’s after tax relief cost. Section 2. Alternatively. if the asset is ‘scrapped’ or disposed of at low value (compared with the residual amount) then an additional tax relief is awarded. termed a ‘balancing allowance’. D8 Page 2 Part 2. D7 ANNUAL ‘WRITING DOWN’ ALLOWANCE This is the annual depreciation allowance awarded in respect to ‘qualifying expenditure’ as a proportion of the residual balance of the initial expenditure i. Appendix D (4/99) Effective from 1/6/99 The Surveyors’ Construction Handbook . reduction of tax relief).e.e. then a ‘profit’ has arisen which is subject to an adjustment to the depreciation allowance (i. SECTION 2. termed a ‘balancing charge’.

cookers and equipment including flues and builder’s work in connection 5. 6. cloakroom fittings. water pumps. 7. 3. Plumbing and sanitary services 1. 1. Wall finishes where they can be removed from the building. ash removal plant Control equipment to the heating system Builder’s work in connection with the heat source Part cost of boiler room Equipment in connection with heating. 2. etc. 8. 7. SECTION 2. 6. display counters. Gas installations 1. 2. lockers. APPENDIX E I Appendix E: Examples of items of Expenditure Likely to Attract Taxation Allowances Item Finishes/fixtures/ fittings Plant and equipment 1. Section 2. 4. curtain track. 5. flue. 5. 6. 3. 6. ventilating or air conditioning system Any movable fixtures and fittings Demountable partitions Curtains. Appendix E (4/99) Effective from 1/6/99 Page 1 .PART 2. 3. e. telephone booths Sanitary fittings (not the pipework) Vanity units Soap dispensers Mirrors Demountable toilet partitions Coat hooks and racks Towel rails and cabinets Toilet roll holders Tanks Boilers and equipment. Space heating and air treatment 1. 2. 8. 6. 4. 9. blinds and furnishing Cupboards. shelves. 3. 4. battens for fixing Floor finishes such as carpets and any floor finishing that can be removed from the building Door mats and matwell frames Suspended ceilings which are airtight and can be used as an extract system or any ceiling which is an integral part of the heating. 4. 4. 3. curtains. Electrical installations 1. (not the pipework from the boiler) Boiler bases and foundations Oil storage tanks and foundations Fuel hoppers. dustbins. 5. 7. fuel pumps. 2. Heat source The Surveyors’ Construction Handbook Part 2.g. 2. chalkboards. air conditioning and hot water installation (not the pipework or ducting) Builder’s work in connection with the equipment Plant room Electrical and mechanical control system Solar heating systems Insulation to pipework Dust and fume extraction equipment including ductwork and builder’s work in connection Extract fans and builder’s work Ventilators Instrumentation controls Electrical installation to all plant and equipment (excludes conduit and wiring to power and lighting for the building generally) Light fittings Emergency lighting Switchgear and transformers Control gear and distribution boards Plant rooms Builder’s work in connection with the electrical installation Gas fires. 2. 3. 5. 4. Ventilation systems 1. 7.

5. 1. 2. 3. 12. SECTION 2. 16. 6. lift guides and plant room Escalators and hoists are as for lifts Clocks Sound distribution. 2. 2.PART 2. Section 2. 15. motors and ancillary builder’s work Refuse disposal equipment including ancillary builder’s work Lighting conductors and earthing systems Occupational equipment associated with the building user Computer equipment and all ancillary work Crane gantries All builder’s work in connection with items 1 to 20 above Removable fire escapes Shelving Safes and strong rooms Roller shutters Ladders Dock levellers Signs/notice boards Interior planting External signs Traffic signs. 21. crash barriers Drainage where it is specifically required for plant and equipment Cycle racks Special installations/ protective installations Special items within a building (the items shown are only given as indicative of the types of item) 1. signals and the like Fire alarms Burglar alarms Telephone installation Builder’s work in connection with communication installations Sprinkler system Dry riser system Hosereel system CO2 system Fire extinguishers Refrigeration equipment Kitchen equipment Laundry equipment Health equipment Laboratory equipment Manufacturing equipment Incinerators and flues Water heaters Hand dryers Window cleaning hoists and equipment including track. APPENDIX E Item Lift and conveyor installations Communications installations Plant and equipment 1. 6. 14. 8. 13. 5. 7. External works Page 2 Part 2. Lift installation complete including builder’s work in connection with lift motors. 4. 17. 8. 11. 4. 1. 2. 6. 19. 5. 2. 4. 18. 3. 3. Appendix E (4/99) Effective from 1/6/99 The Surveyors’ Construction Handbook . 10. 20. bells. 7. 4. 1. 9. 3.

London. 1992. London. Facilities Economics. CIB. R. Occupancy Cost Planning. London. London. George. contact details as above. HM Treasury. BSP Professional Books. Includes numerous good practice case studies..PART 2. Oxford. 1994 British Standard 7543: 1992 Guide to Durability of Buildings and Building Elements. 12 Great George Street. Kent. Flanagan. 1983 Flanagan. Life Cycle Costing: A Radical Approach. Norman. Bernard Williams Associates. 1992 Data Sources Bernard Williams Associates. Graham. London. Building Research Energy Conservation Support Unit. CIBSE Guide. British Standards Institution. CIB W80 report 96: Prediction of Service Life of Building Materials and Components CIBSE. George Meadows. Life Cycle Costing: Theory and Practice. Building Economics Bureau Ltd. Roger. BMI. Chartered Institute of Building Services Engineers. Tel: 0171 222 7000. Building Maintenance Information. Guidance Note No. 1991 Flanagan. 1992 Building Research Energy Conservation Support Unit. Central Unit on Procurement. Includes addresses of numerous trade and professional organisations as possible data sources. Tel: 0181 460 1111. Life Cycle Costing For Construction. WD2 7JR. contact details as above. London. Watford. A comprehensive study including hard costs. good practice guides and energy consumption guides for different building types including costings. Owning and Operating Costs. Geoffrey M. Building Maintenance Information. APPENDIX F I Appendix F: Further Reading Ferry. Roger. Review of Maintenance and Occupancy Costs. Construction Industry Research and Information Association (CIRIA Report 122).. 35: Life Cycle Costing. maintenance costs and rough life spans for plant (currently being updated in more detail). 1989 HM Treasury. Energy Efficiency Best Practice Programme. Section 2. Justin Robinson.J. Tel: 01923 664 258..O. Appendix F (4/99) Effective from 1/6/99 Page 1 . Norman. Energy Consumption Study. David & Townsend. Furbur. BMI. 1996. Products and Components. SECTION 2. Surveyors Publications. 1995. Covers typical energy costs for different building types. Building Maintenance Information. SW1P 3AD. The Surveyors’ Construction Handbook Part 2. BMI. Section B18. D. Gives indicative details of energy consumption. J.

London HMSO 1991. Tel: 0171 204 2481. SECTION 2. 1992. Dell’isola. ISO Guide to Service Life Planning of Buildings (under preparation at the time of writing but it will include a method of estimating the durability of individual building components).. Appendix F (4/99) Effective from 1/6/99 The Surveyors’ Construction Handbook . A review of 300 buildings including unit costs. Stephen J. 1995. Maintenance Cycles and Life Expectancies of Building Components and Elements: a guide to data and sources. Includes 45 pages of maintenance and replacement data (in dollars) covering all elements. Life Cycle Costing For Design Professionals.. Alphonse J. RICS. 1995. Life Expectancies of Building Components. Kirk. McGraw-Hill Inc. Page 2 Part 2. 1985. NBA Construction Consultants PSA Cost in Use Tables. Office Service Charges Analysis 1995. NBA Construction Consultants. Includes elemental analysis of cleaning. London. Jones Lang Wootton. Jones Lang Wootton. E & FN Spon. Section 2.PART 2. New York. APPENDIX F HAPM Component Life Manual. RICS Research Paper Series No 11. (2nd Edition). Preliminary results from a survey of Building Surveyors’ views. 3rd Edition. Comprehensive life-span assessment for over 500 housing components based on insured life assessments. maintenance and repair costs.

3. specification or construction.3. Standard Form of Cost Analysis: Principles.3. separating the internal and external environment.1.2. specifications. However.3.3. Therefore. Part 2. 2. contract drafting and tender evaluation as well as for cost planning/cost analysis. SECTION 3 PART TWO: CONSTRUCTION DESIGN & ECONOMICS SECTION 3: ELEMENTS FOR BUILDINGS Introduction The Building Cost Information Service (BCIS) elements were originally produced for use in cost planning.2.1. The tender cost is broken down into the standard BCIS elements (see Appendix A) using the definitions to determine which items should be included in any particular element.2. I 2.2 I 2. Instructions and Definitions. for example.e. the development of a design with a preset budget and were published in the BCIS document. the element ‘external walls’ provides the external vertical envelope to a building.1 Elements 2.1 An elemental cost analysis is prepared following the receipt and acceptance of a tender for building work.3 2. For further information on the preparation of an elemental cost analysis using the BCIS elements.PART 2. budget estimates are normally prepared in elemental form and developing the designs are normally described and costed in this manner. since their introduction elements have become widely used for structuring building information in value engineering. i. Section 3 (10/99) Effective from 1/11/99 Page 1 2.2.3.3. Instructions and Definitions.3. please refer to the BCIS publication. The elemental cost analysis can then be used to estimate future projects of a similar type. Elements relate to the design process.1 An element is a part of a building which fulfils a specific function or functions irrespective of its design. This section discusses some of the uses for elemental information and gives a complete definition for each element..2 2. irrespective of how it may be constructed. The elements are also referred to in other sections of the handbook. Standard Form of Cost Analysis: Principles.2 Elemental Cost Analysis 2.4 The Surveyors’ Construction Handbook .

1 DESIGN AND BUILD In the procurement of design and build projects there has been an increase in the use of elements to structure both employer’s requirements and the contract sum analysis. Section 3 (10/99) Effective from 1/11/99 The Surveyors’ Construction Handbook . with the more detailed specification in trade (work sections) form.3. setting it out in design elements will be helpful to both the employer and the contractor. This helps to avoid some conflicting statements that may arise in contract documents if standard elements are not used. 2. particularly where an outline specification is being prepared. CD/1A states that the employer’s requirements may be little more than a description of accommodation required. or may be anything up to full ‘scheme design’ or further. but if anything beyond basic accommodation requirements is being given. However.3.3. where necessary. encourage a structured thought process and produce more coherent employer’s requirements. on the other hand. • Using the element headings to structure the requirements will act as a checklist for the employer and his representatives in producing any design requirements they may have. (a) Employer’s Requirements The Joint Contracts Tribunal (JCT) practice note on the Standard Form of Building Contract With Contractor’s Design. Where a more detailed specification is required it may be more helpful to give performance requirements in elemental form. It also means that the requirements are presented to the contractor in a form that will assist him in developing his design proposal. Performance specifications and outline specifications naturally fit into an elemental format. • There is no set format for the employer’s requirements. prepared for the employer by his own consultants or other professional advisers: • Any design input from the employer must be embodied in the employer’s requirements as there is no provision for design input from the employer during the course of the contract. the use of non-standard elements and definitions can be confusing. as detailed in the following subsections. S ECTION 3 I 2. Standard elements. • Elements are the most helpful form for structuring specifications to be included in the employer’s requirements.3 Other Uses The standard elements can be used successfully for other purposes. Page 2 Part 2.PART 2.

Contractor’s proposals on contractor-led design projects should be systematically checked to ensure that they meet the employer’s requirements.PART 2. Alternative A is by stage payments and Alternative B is by periodic payments. The structuring of the requirements. Indeed. If the contract sum analysis has been set out elementally it lends itself to Alternative A. the existence of an elemental cost plan and an elemental contract sum analysis prove invaluable in assessing the tender value. but the standard forms of contract provide for a contract sum analysis for assisting the employer in assessing tenders. S ECTION 3 (b) Contractor’s Proposals The contractor’s proposals should follow the format of the employer’s requirements. This identifies where individual tenders have proposed any elemental solutions with a significantly different cost. as elements and sub-elements provide easily definable stages.1 (e)).3. Comparison of the tender with the cost plan element by element helps in assessing the contractor’s compliance with the employer’s design. Section 3 (10/99) Effective from 1/11/99 Page 3 . (e) Interim Payments The JCT Standard Form of Building Contract With Contractor’s Design 1998 (CD98) provides for the use of one of two methods for interim payments. (c) Contract Sum Analysis Design and build contracts are for a lump sum price. The preparation of the specification for materials and workmanship in elemental form facilitates the development of the specification alongside the design and tendering process. the employer should in theory be able to accept the lowest tender. (d) Evaluation of Tender Proposals On client-led design projects where tenders are based on a detailed set of employer’s requirements and a highly developed design. The Surveyors’ Construction Handbook Part 2. If the contractor’s proposals were not structured in this way. It also highlights any amendments to the employer’s requirements either proposed by the contractor or requested by the client.3. Contract sum analyses presented in consistent elemental form allow comparison both with the client’s quantity surveyor’s original cost plan and between the competing tenders. Where alternative solutions have been put forward for particular elements. The use of standard elements to format the contract sum analysis makes the foregoing procedures simpler (see Section 2. the proposal and the contract sum analysis in consistent elemental form greatly assists in this process. for checking interim payments and for valuation of changes in the employer’s requirements. it is difficult to imagine any successful detailed technical check of a tender that did not follow a design elemental form. the process would be much more difficult.

2. S ECTION 3 With Alternative B .3. particularly if different design solutions within a single element are identified separately.1 (e)) and overcomes some of the problems that may arise if activity schedules have been broken down into trades.an elemental breakdown of the contract sum analysis makes valuations relatively easy. Section 3 (10/99) Effective from 1/11/99 The Surveyors’ Construction Handbook . However.3. using a BCIS standard list of elements (Appendix A) to provide an activity schedule eliminates any problems with definitions. Furthermore. Page 4 Part 2. a periodic payment for the external walls would be a simple task of proportioning the amount of external wall completed to the total. it must be by agreement with the employer. prime cost sums and any contractor’s profit thereon’.3. an elemental breakdown makes valuation for interim payments simple (see Section 2.PART 2. This overcomes some of the problems that arise in checking interim valuations where the contract sum analysis has been prepared in trade format but no bill of quantities or quantified schedule of rates has been provided.3. For example. The use of an activity schedule broken down into BCIS standard elements would also allow an elemental cost analysis to be completed relatively easily and would be particularly useful if projects have been procured without bills of quantities.2 ACTIVITY SCHEDULES The JCT Standard Form of Building Contract 1998 (JCT98) contains an option for the contractor to include an activity schedule for use in interim payments. If the contractor does include an activity schedule. The activity schedule is defined as ‘the schedule of activities as attached to the Appendix with each activity priced and with the sum of those prices being the contract sum excluding provisional sums.periodic payments . There is no standard format stipulated for the activity schedule.

Main floor and roof beams. including eaves and verges.) 2C4 Roof lights Roof lights. frame. tiling and the like. Section 3 Appendix A (10/99) Effective from 1/11/99 Page 1 . 2 2A SUPERSTRUCTURE Frame Loadbearing framework of concrete. kerb and glazing. opening gear. internal walls and chimneys above plate level. trusses. Battening. 2B Upper floors Upper floors. steel or timber. Insulation. ties and roof trusses of framed buildings. felt. balconies and structural screeds. together with relevant excavations and foundations. rainwater heads and roof outlets.PART 2. suspended floors over or in basements. 2C Roof 2C1 Roof structure Construction. slating. The Surveyors’ Construction Handbook Part 2. parapet walls and balustrades. S ECTION 3. Pavement lights. Flashings and trims. Casing to stanchions and beams for structural or protective purposes. Eaves and verge treatment. A PPENDIX A Appendix A: BCIS Standard Elements (Please also refer to the notes which follow the definitions) 1 SUBSTRUCTURE All work below underside of screed or where no screed exists to underside of lowest floor finish including damp-proof membrane. plates and ceiling joists. 2C3 Roof drainage Gutters where not integral with roof structure. (Rainwater downpipes to be included in ‘Internal drainage’ (5C1). 2C2 Roof coverings Roof screeds and finishings. gable ends.

2E External walls External enclosing walls including that to basements but excluding items included with ‘Roof structure’ (2C1). Moveable spacedividing partitions. A PPENDIX A 2D Stairs 2D1 Stair structure Construction of ramps. thresholds. Internal balustrades excluding items included with ‘Stair balustrades and handrails’ (2D3). cavity damp-proof courses and work to reveals of openings. linings and trims. fanlights and sidelights. Chimneys forming part of internal walls up to plate level. landings and stairwells. 2F2 External doors Doors. sills. S ECTION 3. Escape staircases. Insulation. Sliding and folding doors. Ironmongery and glazing. Lintels. linings and trims. Curtain walling. stairs and landings other than at floor levels. Ironmongery and glazing. 2H Internal doors Doors. Lintels. Screens. Hatches. landings (other than at floor levels). Vertical tanking. sheeting rails and cladding. Applied external finishes. Page 2 Part 2. 2F Windows and external doors 2F1 Windows Sashes. thresholds and work to reveals of openings. cavity damp-proof courses and work to reveals of openings. strings and soffits. Chimneys forming part of external walls up to plate level. linings and trims. 2D3 Stair balustrades and handrails Balustrades and handrails to stairs. borrowed lights and glazing. Section 3 Appendix A (10/99) Effective from 1/11/99 The Surveyors’ Construction Handbook . risers.PART 2. Frames. Frames. frames. Shop fronts. partitions and insulation. fanlights and sidelights. Ironmongery and glazing. 2G Internal walls and partitions Internal walls. Lintels. 2D2 Stair finishes Finishes to treads. Ladders. ramp surfaces.

PART 2, S ECTION 3, A PPENDIX A

3 3A

INTERNAL FINISHES Wall finishes Preparatory work and finishes to surfaces of walls internally. Picture, dado and similar rails.

3B

Floor finishes Preparatory work, screeds, skirtings and finishes to floor surfaces excluding items included with ‘Stair finishes’ (2D2) and structural screeds included with ‘Upper floors’ (2B)

3C

Ceiling finishes 3C1 Finishes to ceilings Preparatory work and finishes to surfaces of soffits excluding items included with ‘Stair finishes’ (2D2) but including sides and soffits of beams not forming part of a wall surface. Cornices, coves. 3C2 Suspended ceilings Construction and finishes of suspended ceilings.

4 4A

FITTINGS AND FURNISHINGS Fittings and furnishings 4A1 Fittings, fixtures and furniture Fixed and loose fittings and furniture including shelving, cupboards, wardrobes, benches, seating, counters and the like. Blinds, blind boxes, curtain tracks and pelmets. Blackboards, pin-up boards, notice boards, signs, lettering, mirrors and the like. Ironmongery, other than to doors and windows. 4A2 Soft furnishings Curtains, loose carpets or similar soft furnishing materials. 4A3 Works of art Works of art if not included in a finishes element or elsewhere. 4A4 Equipment Non-mechanical and non-electrical equipment related to the function or need of the building (e.g. gymnasia equipment).

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5 5A

SERVICES Sanitary appliances Baths, basins, sinks, etc. WC’s, slop sinks, urinals and the like. Toilet-roll holders, towel rails, etc. Traps, waste fittings, overflows and taps as appropriate.

5B

Services equipment Kitchen, laundry, hospital and dental equipment and other specialist mechanical and electrical equipment related to the function of the building.

5C

Disposal installations 5C1 Internal drainage Waste pipes to ‘Sanitary appliances’ (5A) and ‘Services equipment’ (5B). Soil, anti-syphonage and ventilation pipes. Rainwater downpipes. Floor channels and gratings and drains in ground within buildings up to external face of external walls. 5C2 Refuse disposal Refuse ducts, waste disposal (grinding) units, chutes and bins. Local incinerators and flues thereto. Paper shredders and incinerators.

5D

Water installations 5D1 Water – mains supply Incoming water main from external face of external wall at point of entry into building including valves, water meters, rising main to (but excluding) storage tanks and main taps. Insulation. 5D2 Cold water services Storage tanks, pumps, pressure boosters, distribution pipework to sanitary appliances and to services equipment. Valves and taps not included with ‘Sanitary appliances’ (5A) and/or ‘Services equipment’ (5B). Insulation. 5D3 Hot water services Hot water and/or mixed water services. Storage cylinders, pumps, calorifiers, instantaneous water heaters, distribution pipework to sanitary appliances and services equipment. Valves and taps not included with ‘Sanitary appliances’ (5A) and/or ‘Services equipment’ (5B). Insulation. 5D4 Steam and condensate Steam distribution and condensate return pipework to and from services equipment within the building including all valves, fittings, etc. Insulation.

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5E

Heat source Boilers, mounting, firing equipment, pressurising equipment, instrumentation and control, ID and FD fans, gantries, flues and chimneys, fuel conveyors and calorifiers. Cold and treated water supplies and tanks, fuel oil and/or gas supplies, storage tanks, etc., pipework, (water or steam mains) pumps, valves and other equipment. Insulation.

5F

Space heating and air treatment 5F1 Water and/or steam (heating only) Heat emission units (radiators, pipe coils, etc.) valves and fittings, instrumentation and control and distribution pipework from ‘Heat source’ (5E). 5F2 Ducted warm air (heating only) Ductwork, grilles, fans, filters, etc., instrumentation and control. 5F3 Electricity (heating only) Cable heating systems, off-peak heating system, including storage radiators. 5F4 Local heating (heating only) Fireplaces (except flues), radiant heaters, small electrical or gas appliances, etc. 5F5 Other heating systems (heating only) 5F6 Heating with ventilation (air treated locally) Distribution pipework ducting, grilles, heat emission units including heating calorifiers, except those which are part of ‘Heat source’ (5E) instrumentation and control. 5F7 Heating with ventilation (air treated centrally) All works as detailed under 5F6 for system where air treated centrally. 5F8 Heating with cooling (air treated locally) All work as detailed under 5F6 including chilled water systems and/or cold or treated water feeds. The whole of the costs of the cooling plant and distribution pipework to local cooling units shall be shown separately. 5F9 Heating with cooling (air treated centrally) All work detailed under 5F8 for system where air treated centrally.

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5G

Ventilating systems Mechanical ventilating system not incorporating heating or cooling installations including dust and fume extraction and fresh air injection, unit extract fans, rotating ventilators and instrumentation and controls.

5H

Electrical installations 5H1 Electric source and mains All work from external face of building up to and including local distribution boards including main switchgear, main and sub-main cables, control gear, power factor correction equipment, stand-by equipment, earthing, etc. 5H2 Electric power supplies All wiring, cables, conduits, switches from local distribution boards, etc., to and including outlet points for individual installations. 5H3 Electric lighting All wiring, cables, conduits, switches, etc. from local distribution boards and fittings to and including outlet points. 5H4 Electric lighting fittings Lighting fittings including fixing.

5I

Gas installations Town and natural gas services from meter or from point of entry where there is no individual meter: distribution pipework to appliances and equipment.

5J

Lift and conveyor installations 5J1 Lifts and hoists The complete installation including gantries, trolleys, blocks, hooks and ropes, downshop leads, pendant controls and electrical work from and including isolator. 5J2 Escalators As detailed under 5J1. 5J3 Conveyors As detailed under 5J1.

5K

Protective installations 5K1 Sprinkler installations The complete sprinkler, installation and CO 2 extinguishing system. Including tanks, control mechanism, etc.

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5K2 Fire-fighting installations Hose reels, hand extinguishers, asbestos blankets, water and sand buckets, foam inlets, dry risers (and wet risers where only serving firefighting equipment). 5K3 Lightning protection The complete lightning protection installation from finials conductor tapes, to and including earthing. 5L Communication installation Warning installations (fire and theft) Burglar and security alarms Fire alarms Visual and audio installations Door signals Timed signals Call signals Clocks Telephones Public address Radio Television Pneumatic message systems 5M Special installations All other mechanical and/or electrical installations (separately identifiable) which have not been included elsewhere, e.g. chemical gases; medical gases; vacuum cleaning; window cleaning equipment and cradles; compressed air; treated water; refrigerated stores. 5N Builder’s work in connection with services Builder’s work in connection with mechanical and electrical services. 5O Builder’s profit and attendance on services Builder’s profit and attendance in connection with mechanical and electrical services.

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6 6A

EXTERNAL WORKS Site works 6A1 Site preparations Clearance and demolitions. Preparatory earth works to form new contours. 6A2 Surface treatments Roads and associated footways Vehicle parks Paths and paved areas Playing fields Playgrounds Games courts Retaining walls Land drainage Landscape work 6A3 Site enclosure and division Gates and entrances. Fencing, walling and hedges. 6A4 Fittings and furniture Notice boards, flag poles, seats, signs.

6B

Drainage Surface water drainage. Foul drainage. Sewage treatment.

6C

External services 6C1 Water mains Main from existing supply up to external face of building. 6C2 Fire mains Main from existing supply up to external face of building; fire hydrants. 6C3 Heating mains Main from existing supply or heat source up to external face of building. 6C4 Gas mains Main from existing supply up to external face of building. 6C5 Electric mains Main from existing supply up to external face of building. 6C6 Site lighting Distribution, fittings and equipment.

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6C7 Other mains and services Mains relating to other service installations (each shown separately). 6C8 Builder’s work in connection with external services Builder’s work in connection with external mechanical and electrical services: e.g. pits, trenches, ducts, etc. 6C9 Builder’s profit and attendance on external mechanical and electrical services. 6D Minor building work 6D1 Ancillary buildings Separate minor buildings such as sub-stations, bicycle stores, horticultural buildings and the like, inclusive of local engineering services. 6D2 Alterations to existing buildings Alterations and minor additions, shoring, repair and maintenance to existing buildings. 7 PRELIMINARIES Priced items in preliminaries bill and summary but excluding contractors’ price adjustments. This is not classed as an element but is included for allocation of costs. 8 EMPLOYERS CONTINGENCIES This is not classed as an element but is included for allocation of costs.

Notes
1 Substructure (a) Where lowest floor construction does not otherwise provide a platform, the flooring surface shall be included with this element (e.g. if joisted floor, floor boarding would be included here). (b) Stanchions and columns (with relevant castings) shall be included with ‘Frame’ (2A). (c) External enclosing walls to basements shall be included with ‘External walls’ (2E). Frame (a) Structural walls which form an integral part of the loadbearing framework shall be included either with ‘External walls’ (2E) or ‘Internal walls and partitions’ (2G) as appropriate. (b) Beams which form an integral part of a floor or roof which cannot be segregated therefrom shall be included in the appropriate element.

2A

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(c) In unframed buildings roof beams and trusses and floor beams shall be included with ‘Upper floors’ (2B) or ‘Roof structure’ (2C1) as appropriate. (d) If the ‘Stair structure’ (2D1) has had to be included in this element it should be noted. 2B Upper floors (a) Where floor construction does not otherwise provide a platform the flooring surface shall be included with this element (e.g. if joisted floor, floor boardings would be included here). (b) Beams which form an integral part of a floor slab shall be included with this element. (c) If the ‘Stair structure’ (2D1) has had to be included in this element it should be noted. Roof structure (a) Trusses which form part of a whole building framework shall be included in ‘Frame’ (2A). (b) Beams which form an integral part of a roof shall be included with this element. (c) Roof housings (e.g. lift motor and plant rooms) shall be broken down into the appropriate constituent elements. Stair structure (a) The cost of external escape staircases shall be shown separately. (b) If the stair structure has had to be included in the elements ‘Frame’ (2A) or ‘Upper floors’ (2B) this should be stated. External walls (a) If walls are self-finished on internal face, this shall be stated. Wall finishes (a) Surfaces which are self-finished (e.g. self-finished partitions, fair-faced work) shall be included in the appropriate element. (b) Insulation which is a wall finishing shall be included here. Floor finishes (a) Where the floor construction does not otherwise provide a platform the flooring surface will be included either in ‘Substructure’ (1A) or ‘Upper floors’ (2B) as appropriate. Access floors. Ceiling finishes (a) Where ceilings principally provide a source of heat, artificial lighting or ventilation, they shall be included with the appropriate ‘Services’ element. Fittings, fixtures and furniture (a) Ironmongery to ‘Windows and external doors’ and ‘Internal doors’ should be included in (2F) and (2H) respectively.

2C1

2D1

2E

3A

3B

3C

4A1

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4A3

Works of art (a) Where items in this element have a significant effect on other elements a note should be included in the appropriate element. Services equipment (a) Local incinerators shall be included with ‘Refuse disposal’ (5C2). Internal drainage (a) Rainwater gutters are included in ‘Roof drainage’ (2C3). Cold water services (a) Header tanks, cold water supplies, etc. for heating systems should be included in ‘Heat source’ (5E). Steam and condensate (a) Steam and condensate pipework installed in connection with space heating, or the like, shall be included as appropriate with ‘Heat source’ (5E) or ‘Space heating and air treatment’ (5F). Heat source (a) Chimneys and flues which are an integral part of the structure shall be included with the appropriate structural element. (b) Local heat source shall be included with ‘Local heating’ (5F4). Space heating and air treatment System described as having: (a) ‘Air treated locally’ shall be deemed to include all systems where air treatment (heating or cooling) is performed either in or adjacent to the space to be treated. (b) ‘Air treated centrally’ shall be deemed to include all systems where air treatment (heating or cooling) is performed at a central point and ducted to the space being treated. Space heating and air treatment - Electricity (heating only) (a) Electrically-operated heat emission units other than storage radiators should be included under ‘Local heating’ (5F4). Electric source and mains (a) Installation for electric heating (‘built-in’ systems) shall be included with ‘Space heating and air treatment’ (5F3). Lifts and hoists (a) Special structural work, e.g. lift walls, lift motor rooms, etc., shall be included in the appropriate structural elements. (b) Remaining electrical work shall be included with ‘Electrical power supplies’ (5H2). (c) Each type of lift or hoist shall be stated separately where appropriate.

5B

5C1

5D2

5D4

5E

5F

5F3

5H1

5J1

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Communication installations (a) Each installation shall be stated separately where appropriate. instrumentation and controls. Where this is not the case the items shall be included here. compressors.e. be shown separately. Builder’s profit and attendance on services (a) The profit and attendance in connection with each of the services elements shall. (b) The cost of the work in connection with electrical supply shall be included with ‘Electrical power supplies’ (5H2). (b) Items deemed to be included under ‘Refrigerated stores’ comprises all plant required to provide refrigerated conditions (i. A PPENDIX A 5K1 Sprinkler installations (a) Electrical work shall be included with ‘Electrical power supplies’ (5H2). to and including disposal point. where possible. where possible. where appropriate. Section 3 Appendix A (10/99) Effective from 1/11/99 The Surveyors’ Construction Handbook . cold room thermal insulation and vapour sealing. 5L 5M 5N 5O 6B 6C8 6C9 Page 12 Part 2. refrigerated stores and the like other than that required for ‘Space heating and air treatment’ (5F8 and 5F9).) for cold rooms. housings and the like are included in the gross floor area. their component parts shall be included under the appropriate elements. Builder’s profit and attendance on external mechanical and electrical services (a) Profit and attendances shall be stated separately for each installation where appropriate. be shown separately. be shown separately. cooling towers. (b) Where tank rooms. Builder’s work in connection with services (a) Builder’s work in connection with each of the services elements shall. S ECTION 3.PART 2. Special installations (a) The cost of each installation shall. etc. Drainage (a) To include all drainage works (other than land drainage included with ‘Surface treatment’ (6A2)) outside the building. connection to sewer or to treatment plants. Builder’s work in connection with external services (a) Builder’s work shall be stated separately for each installation where appropriate. cold room doors.

Section 4 (09/03) Effective from 1/11/03 Page 1 . With regard to procurement strategies. section 1 of this handbook (‘Developing an Appropriate Building Procurement Strategy’) which provides extensive guidance on selection of the most appropriate option for the procurement of buildings. workshops. it assumes that all optional procurement strategies have been carefully considered by clients and their advisors and that the decision has been made to adopt design and build. However. etc.) At its most basic. ‘Design and build’ describes contracts whereby the contractor assumes responsibility both for completing the design for the works and for carrying out the construction in return for a fixed lump sum. This form of contract makes no provision for a contract administrator (CA) and all matters which would have been certified by the CA are ascribed to either the client or the contractor.’. reference should be made to part 3. There are a number of ‘standard’ forms of design and build contracts. It should be noted that the prescribed duties of the employer’s agent are restricted to ‘access to documents on site’ and ‘access to works. the role of the employer’s agent is to act on behalf of the client in the matters specified in the contract.PART 2. Importantly however. The Surveyors’ Construction Handbook Part 2. in practice there are a wide range of tasks that a client may ask an employer’s agent to undertake. it is to the current edition of the Joint Contracts Tribunal (JCT) Standard Form of Building Contract With Contractor’s Design 1998 (CD 98). the contract also allows the client to delegate his or her responsibilities under the contract and in practice this is usually what happens. the term ‘client’ is used in relationship to the employer’s agent and ‘employer’ to denote the relationship to the contractor. SECTION 4 PART TWO: CONSTRUCTION DESIGN & ECONOMICS SECTION 4: DESIGN AND BUILD – GUIDANCE FOR EMPLOYERS’ AGENTS Introduction This section describes some of the tasks and responsibilities that a surveyor may be asked to undertake when appointed as an employer’s agent on a design and build contract. but where specific reference is made in this section. Generally. This section is not about procurement options. (Note: The organisation or person commissioning a building is referred to in this section as both the client and the employer.

4. It is thought that design and build has become more popular because clients believed that in some circumstances the traditional route failed to deliver their projects on time and to budget. is firmly placed with the contractor. 2.1. the function of the lead consultant may not be dissimilar to that of a project manager. the scope of the role can vary considerably depending upon the particular circumstances of the commission. in recent years the use of design and build has extended to cover a significant number of building projects of all types. In appendix A the services which may be requested from an employer’s agent are set out.4.1 The JCT Standard Form of Building Contract With Contractor’s Design was first introduced in response to demand for a form of contract which allowed the contractor to carry out a complete contract (including design development) for a lump sum.4. G 2.4. as well as the construction of a project. SECTION 4 The services of an employer’s agent can be provided by any one of the construction professionals (determined by the nature of the project) but often it is a chartered surveyor. Effective from 1/11/03 The Surveyors’ Construction Handbook Page 2 Part 2. Proponents of design and build also claim that it can allow tenderers to bring their skills to the design which. It would be unusual for any client to require all the services listed in appendix A but they serve to indicate the extent to which this role can be developed. through the competitive process.2 2.4. materials and plant in their design and pricing considerations.1 Background 2.5 I 2. On more complex projects the role of employer’s agent may sometimes be provided by a team comprising the ‘lead’ consultant. reduced professional fees. as well as providing greater cost certainty for clients through a single point of contact.1.1.4 2. In such circumstances. However.2 Contract documentation 2.PART 2. Furthermore.4.4.1 Design and build is not a new concept. shorter construction programmes and cost savings. Section 4 (09/03) . improved lead-in times.1. Many historic buildings have been procured in this way and the technique has been used for simple industrial shell buildings.3 2.1. can deliver benefits to the client in terms of buildability. Responsibility for the development of the design. However. This is perceived to clarify any litigation or dispute between the parties to the contract.2. tenderers can take account of current availability of labour. with other consultants advising on matters relative to their respective disciplines. Proponents of design and build claim that it can deliver coordinated planning.4.

3 2. SECTION 4 2. Where the employer’s agent has been delegated the authority by the client.4.3.4. Section 4 (09/03) Effective from 1/11/03 Page 3 .PART 2. 2. regulations affecting building development and increasing expectations and involvement of clients. The employer’s agent will normally be involved from the outset and will be instrumental in producing the contract documentation. If a day-to-day inspection is required this should be carried out by a clerk of works. 2.4. • the contractor’s proposals. An inability to deliver a service could expose the employer’s agent to claims for negligence from both the client and the contractor.4. contractor’s proposals and contract sum analysis. employer’s requirements.3 Additional services 2. Great care should be exercised by the employer’s agent in advising on which duties to incorporate within the commissioning contract.2 2.1 The list in appendix A is intentionally comprehensive and involves some duties which may be beyond a surveyor’s normal skills.3. time and cost issues.3. controlling expenditure and overseeing contractor compliance with all current regulations. resident engineer or quality control inspector and should be the subject of a separate agreement outside the employer’s agent commission.2 Throughout its life the JCT Standard Form of Building Contract With Contractor’s Design has been subject to many amendments to account for changes in the law. In England and Wales the contract documents under this form are: • the employer’s requirements. Thereafter. the agent can arrange or assist with the selection of tenderers and arrange the formal tendering process. he or she is responsible for ensuring that the project is carried out in accordance with the conditions of contract. Subsequently he or she can review the contractor’s proposals (including the developed design and the contract sum analysis) to ensure that all aspects of the employer’s requirements have been met with particular reference to quality. and • the articles and conditions set out in the form including optional supplementary provisions and appendices.3. The employer’s agent will be responsible for checking the contractor’s valuations and confirming interim and final payment amounts to the client in accordance with the contract conditions.4.2. The role will usually include monitoring the construction process to ensure best practice.4. Typically.2.4 The Surveyors’ Construction Handbook Part 2. including the employer’s requirements based on the brief developed with the client. • the contract sum analysis.3 G 2. it will also involve the administration of the project in terms of design and cost by sanctioning all design issues and by instructing any changes.4.

4.4.PART 2. It would be an unusual project arrangement if these essential tasks were not delegated by the client to the employer’s agent. it is strongly recommended that the agent’s contractual responsibilities as delegated by the client.4. provide technical and professional advice and draft the employer’s requirements in order to protect the client and to ensure the project is completed.2 2. On the other hand.8 G 2. However. 2. 2. If the employer’s requirements and the contractor’s proposals are long and/or complicated.4.7 2. Design and build is fundamentally about the allocation of risk and responsibility.6 2. Therefore. concern about the possibility of a conflict between the two documents may well remain. the duty to approve the contractor’s design development and drawing should be included expressly or by implication in the contract between the client and the employer’s agent. The appointed employer’s agent has an obligation to guide the client. The employer’s agent should advise the employer on those roles that are within his or her competency. The employer’s requirements can be by way of performance specification. and that the client understands the position. so it is important that the proposals are examined in detail and that they match the requirements. Section 4 (09/03) Effective from 1/11/03 The Surveyors’ Construction Handbook .3. SECTION 4 2. are clearly defined and recorded. It has been held that an employer’s agent was responsible for failure to comment on high risk design elements of the contractor’s proposals and an ongoing failure to approve the contractor’s design development proposals. In this case it may be worth consdering inserting an additional clause as to how conflicts between the two are to be resolved.5 The role of employer’s agent is not just one of monitoring the contractor’s performance.4. or on a prescriptive basis where a great deal of design may have been produced initially.3. Any areas of conflict should be resolved since the contract assumes they are compatible when it is signed.3 Page 4 Part 2.4 Employer’s requirements and contractor’s proposals (including contract sum analysis) 2.4.3.4.4.4. the employer’s agent should not hinder or prevent the contractor from fulfilling his or her duties.1 The contractor’s proposals and the employer’s requirements taken together set out the scope of the works. together with any additional duties the agent has agreed to undertake on behalf of the client. which attract a duty of care similar to that under traditional procurement methods and advise the employer on the appointment of any other consultants required to fulfil any additional roles.3.4. even after thorough checks have been carried out. good practice requires an active approach to ensure that the contractor undertakes all of his or her responsibilities under the contract.4.

The requirements should always be sufficiently detailed to ensure the client obtains the building he or she needs.4. however.9 The Surveyors’ Construction Handbook Part 2. most important that the client’s input is sufficiently detailed to enable the production of clear and concise ‘employer’s requirements’ to achieve the client’s objectives. The requirements should also be comprehensive enough to avoid amendments during the construction process as these can be very costly.4. SECTION 4 2.4 The employer’s agent and the employer should agree between them the standard of performance and the requirements of the building. in turn employers or their consultants are responsible for all that they design and/or specify. Any ambiguity between these two documents could give rise to conflict at a later date.PART 2. and their definition.4. is also given in section 2. There should be no misunderstanding as to what comprises the employer’s requirements. performance and desired end requirements of the project and to avoid involvement in the construction method. Some clients may require a detailed level of specification.4. any amendments to the contractor’s proposals after they have been submitted should be incorporated.4. if the employer’s requirements become unnecessarily prescriptive as to the contractor’s basic construction methods.3 of this handbook. unless there has been a pre-agreed limitation to the contract. The employer’s agent should try to encourage the client to concentrate on the purpose. Thus.4.4. The Building Cost Information Service (BCIS) publication. Additional requirements arising from meetings during the tender process should be incorporated into the requirements by amendment.4. It is. the contractor may lose sight of the client’s real requirements. Therefore. The employer’s agent should offer guidance on the effect that this might have on the contractor’s flexibility in design and construction.4.4. The list of elements. Section 4 (09/03) Effective from 1/11/03 Page 5 . in order for the employer to maximise the benefit from design and build. However. Contractors are only responsible for that which they design or specify. Similarly.8 2.4.6 2.7 2. 2. All relevant parts of the client’s brief should be given in the employer’s requirements. Elements for Design and Build is considered to be important supplementary reading. the extent of any designing and specifying by prescription in the employer’s requirements should be limited to those elements in which the employer requires such control. Elements for Design and Build offers guidance to employer’s agents on the use of building elements for structuring the employer’s requirements and the contractor’s proposals/contract sum analysis.4.5 2. great care should be exercised by the employer’s agent in advising the client on the appropriate level of detail to be provided in the employer’s requirements and that requested in the contractor’s proposal.

Any chartered surveyors acting as employer’s agents are advised to make themselves aware of all matters which are relevant to the client and the client’s business so as to ensure that the employer’s requirements/contractor’s proposal reflects the client’s needs.5 Design and build variants 2.4. 2. imposes a design and/or specification developed to a greater degree than most (for example.4. The contractor is obliged to adopt this data and should reflect this developed design information in the contractor’s proposals. A fully developed preliminary design may negate many of the advantages associated with conventional design and build. Appendix B is a checklist of matters which surveyors are advised to consider when compiling employer’s requirements and checking contractor’s proposals. the client may be happy to forego these advantages and to impose his or her own particular design or specification in return for other benefits perceived to derive from a design and build procurement strategy.PART 2. develop and construct. A turnkey contract additionally requires that the building is fully fitted out to enable immediate operation by the end user.5.2 package deal. two-stage tender.4.3 DEVELOP AND CONSTRUCT Develop and construct is the name given to the ‘variant’ where the client. Section 4 (09/03) Effective from 1/11/03 The Surveyors’ Construction Handbook .5. PACKAGE DEAL AND TURNKEY Package deal and turnkey are both expressions used to describe traditional design and build.1 The forms of design and build contract allow for the production of variation to the conventional design and build contract. turnkey. but with the absolute minimum of client involvement in the design development (or the building operations).4. as part of the employer’s requirements. The list covers the major matters and the elements that relate to buildings in general. and design build fund and operate. I 2. It cannot be exhaustive when applied to any particular buildings. However. Page 6 Part 2. listing specific manufacturers’ products). SECTION 4 Note should also be made of the Code of Procedure for Selective Tendering for Design and Build published by the National Joint Consultative Committee for Building (NJCC) in 1995 and as amended from time to time. for example: • • • • • • 2.5. joint venture/negotiated.

since his or her involvement should help limit any abortive design. SECTION 4 2. the earlier the employer’s agent can be introduced the better. Novation is not defined in CD 98. and receives the benefit of continuity of design. although it is widely practised. it is not applied to the quantity surveyor who remains with the client acting as the employer’s agent during the design development and construction phase. Often when novation is implemented. the service of the employer’s agent does not alter radically and can still be developed from the items of service listed in appendix A. That tenderer then works up the preferred submission in greater detail. I 2. the client will appoint a shadow design team to ensure that user’s requirements are properly established and communicated to the bidders. The shadow team checks the offers received to ensure that the user’s requirements have been addressed and continues to monitor design and development with the preferred bidder.6 Novation 2.5. Irrespective of the design and build variant employed. Clearly. The contractor assumes the responsibility for the payment of fees and associated value added tax (VAT). although it could feature in a subcontract. 2.6.6 DESIGN BUILD FUND AND OPERATE Design build fund and operate (DBFO) contracts have been created as a result of the private finance initiative. Thereafter the shadow team ensures that the building incorporates the specified user requirements. Section 4 (09/03) Effective from 1/11/03 Page 7 . In most instances.1 Novation can be employed on any of the design and build variants and involves the transfer of the client’s contract with his or her designer (or designers) to the successful contractor.PART 2. Many successful projects have been carried out using this route with considerable benefit to the client. 2.5. this arrangement having been included in the tender documents.4. CD 98 is not therefore appropriate as part of the primary agreement.5.4.4.5 JOINT VENTURE/NEGOTIATED Joint venture/negotiated projects arise when a client is approached by a contractor or developer with a proposal which broadly aligns with the client’s needs.4 TWO-STAGE TENDER Two-stage tender requests seek to obtain proposals from a number of tenderers from which one is selected.4. Although this form of procurement has been listed as a design and build variant it should be remembered that the end user never actually owns the building (unless otherwise provided).4. The Surveyors’ Construction Handbook Part 2.

SECTION 4 2.6.PART 2.2 Where designers are novated it is important for clients to understand that their designers’ allegiance transfers from the client to the contractor. This transfer of allegiance should be properly explained to the client prior to a decision to implement novation.4. Page 8 Part 2. Section 4 (09/03) Effective from 1/11/03 The Surveyors’ Construction Handbook . It is also important that the employer’s agent advises on selecting appropriate designers and contractors and that the transfer of roles occurs and is maintained.

if any) and ensuring that these are ‘signed off’. • Investigating/establishing location of existing services to site with local and statutory authorities. • Agreeing with the client the scope of the employer’s requirements (including the need for preliminary design.PART 2. • Preparing or procuring preliminary design for the development.) • On projects involving the refurbishment of existing buildings the provision of design. rights of way. • Initiating measured survey with levels. The Surveyors’ Construction Handbook Part 2. • Consulting as appropriate with relevant agencies. APPENDIX A Appendix A: Potential services associated with the role of employer’s agent The services to be provided should follow the NJCC’s Code of Procedure for Selective Tendering for Design and Build (1995). A1 INITIAL DESIGN INPUT • Advising on the need for specialist appointments where necessary including appointments under CDM (Regulations) 1994 (also competency and resource check). SECTION 4. • Advising on the implementation of the Construction Act and any other relevant legislation. etc.). • Establishing with the client the programme to suit funding availability. cost assessment and submission of formal town and country planning applications. English Nature and English Heritage. for example. The scope of services should be fully agreed between the employer’s agent and the client at the outset of the commission and all interested parties should be informed as to the extent of delegated authority. • Assessing suitability and cost effectiveness of general and structural design. restrictive covenants. • Reviewing scheme under Town and Country Planning Acts including consultations with local planning authority leading to initial outline town planning application. Section 4 Appendix A (09/03) Effective from 1/11/03 Page 1 . • Examining land transfer documents to clarify boundary positions including an assessment of the likely impact of existing easements (including rights of light. Reference should also be made to the BCIS publication Elements for Design and Build which provides guidance on how to structure documents for design and build contracts. • Initiating and reviewing subsoil reports. (Note: submission of formal full town and country planning application is normally at a later stage (see A2) and sometimes this application is by the contractor.

Section 4 Appendix A (09/03) Effective from 1/11/03 The Surveyors’ Construction Handbook . • Assessing environmental impact and advising generally on environmental issues. • Advising level of contingencies and preparing appropriate daywork clause.or two-stage tendering. • Advising on services installation and future maintenance to these services including checking and commenting upon working drawings produced by tenderers. • Advising on tendering options including single. • Conducting local public investigations as related to town planning. • Assisting with completion of formal applications in connection with approvals relating to funding. including consultation with building occupiers prior to submitting a full town and country planning application.PART 2. Page 2 Part 2. SECTION 4. • Establishing with client the format of the contract sum analysis. • Developing project brief with client and reflecting same in the employer’s requirements. develop and construct or joint venture. • Advising on the need for provision of Party Wall Act or Access to Neighbouring Land Act Agreements. • Advising on need for risk analysis to include market research to underpin financial viability. • Advising on all aspects of future maintenance of the completed development. advising (after interview if required) on the selection of suitable tenderers including their capacity. • Preparing cost estimate/structured cost plan. • Advising on any possible archaeological implications for the site. APPENDIX A A2 PRE-CONTRACT • Advising on the need for further specialist appointments where necessary. • Arranging drawings and performance specification for mechanical and electrical services. • Advising on optional clauses in standard forms of contract. • Reviewing subsoil reports and commenting on foundation design and contamination considerations. necessary consents and other requirements. • Advising on dispute resolution. • Reviewing and reporting on tenders received for the project including comparison with cost plan and comment on programme proposed by each. • Where applicable. • Arranging design/cost audit at appropriate work stages if appropriate. in particular CD 98 supplementary provisions which provide both parties with time and cost certainty. resources. • In consultation with client finalising the employer’s requirements document and arranging for this to be formally ‘signed off’ by the client. financial and tax exemption status.

subcontractors and consultants. if appropriate. • Providing information to client in connection with post-tender documentation for lender/funder. Section 4 Appendix A (09/03) Effective from 1/11/03 Page 3 . footpaths. • Approving/monitoring/commenting. parent company guarantees. • Ensuring access audit is executed (to meet the requirements of the Disability Discrimination Act). where applicable. National Housing Energy Rating and Standard Assessment Procedure. • Advising both client and tenderer on any agreed amendments to the employer’s requirements following receipt of contractor’s proposals and other relevant inputs. for example. • Preparing and agreeing a schedule of rates for valuation or negotiation purposes. SECTION 4. on contractor’s design development. also. The Surveyors’ Construction Handbook Part 2. • Arranging for the appointment of a clerk of works. • Arranging for all necessary collateral warranties to be prepared and completed by contractor. • Advising on novation of designers’ contracts.PART 2. • In conjunction with the client’s broker reviewing contractor’s and client’s insurances (including professional indemnity insurance of designers). agreeing documentation with both parties and arranging execution. A3 CONTRACT DURATION • Issuing letters of intent where appropriate. roads. • Visiting the construction site.) • Ensuring that there are regular properly conducted site meetings with a chairman operating to a prescribed agenda and formal minutes. • Auditing contractor’s proposals (including design and detailed drawings) to ensure compliance with employer’s requirements. • Preparing contract documentation. • Advising on necessity for and wording of performance bonds and. • Distributing contract documents in accordance with the contract. • Attending site with contractor and assisting in arranging closure of roads and footpaths. • Agreeing with contractor cash flow based on stage or periodic payments. as appropriate. (The number of site visits depends on the stage of construction (or as agreed with client) and may be weekly during initial stages until all superstructure is erected and complete. • Preparing cash flow forecasts. APPENDIX A • Advising on energy ratings. shrubs and other similar items liable to be damaged. town and country planning. • Visiting the site with the contractor and agreeing by schedule and photographic records the existing condition of any buildings to be retained. • Advising on assignment and subcontracting (including design). trees. building regulations and any further criteria imposed upon the project by external organisations.

Regularly reporting to client. Agreeing valuation of fluctuations in the cost of labour. Checking contractor’s final account and issuing final statements. APPENDIX A • • • • • • • • • • • • • • • • • • • • • • • • • Page 4 Part 2. in a format agreed with the client. for example. Issuing instructions on behalf of the client to instigate changes to the design quality or quantity of the works or on any other matter as required by the contract. granting and issuing any notice of extension of time. Issuing all other final statements relating to the final accounts that may be required by the client. Assessing compliance of service installations. Negotiating and agreeing any loss and expense claims submitted in writing by the contractor. Preparing snagging lists. non-completion certificate and advising on the implications of imposition as well as the amount of liquidated and ascertained damages which may be deducted by the client from any payment certified. Receiving requests. defects and weather stoppages. etc. SECTION 4. Preparing and issuing financial statements as may be required by the client. Ensuring that all required tests are carried out by the contractor and documented proof provided prior to practical completion. Generally monitoring the works in terms of quality and progress. Ensuring that there is no adjustment to the contract sum other than as provided in the contract. Addressing requests from contractors for payment for off-site material. Measuring for and agreeing with contractor any variations resulting from changes to the employer’s requirements during construction as well as the expenditure of any provisional sums. where applicable. Effective from 1/11/03 The Surveyors’ Construction Handbook . Ensuring that adoption procedure is put in hand at appropriate stage and following through to achieve adoption prior to handover and to include for drainage installation. Assessing compliance with contract conditions by contractor. quality. Section 4 Appendix A (09/03) Attending all site meetings. Ensuring compliance with all reserved matters contained within Town and Country Planning Certificate. matters of interest. progress against programme. Checking contractor’s valuations for stage or periodic payments and notifying the client. Also. preparing. plant and materials. Arranging and attending pre-handover inspections.PART 2. site organisation and labour employed. Issuing certificate of practical completion. Issuing. assessing. Monitoring spend rate against cash flow forecasts including earned value analysis. Ensuring that appropriate VAT is levied in accordance with current legislation.

APPENDIX A • Ensuring that all snagging items are rectified before inviting client to receive handover. • Issuing notices on making good defects at end of defects liability period. • Arranging and attending handover sessions. • Obtaining final clearance certificates from local authority in connection with compliance with building regulations. • Advising on values for building insurance purposes. Section 4 Appendix A (09/03) Effective from 1/11/03 Page 5 . bomb threats and construction of communication rooms. for example. The Surveyors’ Construction Handbook Part 2. agreeing value thereof. • Advising on special design requirements. • On partial possession and/or sectional completion. if applicable. attending final commissioning and procuring test certificates. • Advising on insolvency of any party involved with the contract. • Ensuring that all service installations are completed in accordance with original approved design. • Ensuring the provision of ‘as built’ information compiled in manual form and supplied to the client at completion of construction process – user’s manual and/or computer disk. examining the rectified works and certifying completion of making good defects. • Advising on provision of post-handover service relating to ongoing maintenance. Feng Shui. for example. • Issuing notices of practical completion on client satisfaction or beneficial occupation. • Ensuring compliance with any insurance requirements. • Preparing post-contract schedules of defects after occupation and arranging for rectification by contractor and on completion notifying client. • Advising on alternative means of remedying defects. • Resolving any issues concerning latent defects. A4 POST-CONTRACT • Receiving health and safety file from planning supervisor and delivering to client. where applicable. • Advising on contingency planning and business recovery for select buildings. SECTION 4. A5 GENERAL ADDITIONAL SERVICES • Dealing with essential items of defect that arise during maintenance periods. • Advising on obtaining statutory approvals such as registration for food preparation.PART 2. • Reviewing means of escape as built and ensuring procurement of fire certificate by the contractor. • Preparing capital allowances and revenue schedules. if appropriate. terrorist insurance.

An indication of the employer’s business and overall objectives (to provide a feel for the eventual product) • Access to site • Site boundary defined • Form of contract • Permissible modification to standard form of contract • Details of appendices to the conditions of contract • Form of contract sum analysis Building and Accommodation Outline Outline description of the building Accommodation schedule • schedule of net usable areas (including definition of occupancy) • schedule of occupancy numbers and duration of occupancy • circulation requirements Part 2. Section 4 Appendix B (10/99) Effective from 1/11/99 Page 1 B2.1 General Information • Project title • Employer • Employer’s agent • List of drawings and other information accompanying documents • Location. However.2 The Surveyors’ Construction Handbook . including a narrative on the proposed use/user of the building. an outline design or a fully worked up design. where a great deal of design work has taken place a prescriptive specification would be needed. The required level of detail will vary from client to client and contract to contract but it is suggested that information on this checklist would be the minimum requirement. The contractor’s proposals should be in sufficient detail to allow the client to judge between the tenders on design as well as price. Where little design work has been carried out before tenders and proposals are invited. B2 CHECKLIST (Note that this list is not intended to be exhaustive in total or in any section) B2. optional supplementary provisions and appendices set out in the form of contract. a performance specification would be normally required. A PPENDIX B Appendix B: Employer’s Requirement/Contractor’s Proposal Checklist B1 CONTRACT DOCUMENTATION The contract documentation will include: • the employer’s requirements • the contractor’s proposal • the contract sum analysis • the article conditions. S ECTION 4. The employer’s requirements can be a brief statement of the client’s accommodation requirements.PART 2.

3 Form of Detailed Specification (Note: The detailed employer’s requirements can be drafted in performance specification terms. Page 2 Part 2. A PPENDIX B Basis of design Conceptual design statement and drawings • site layout • plans • elevations • sections • relevant working details • site works and landscaping layouts • sketch perspectives • structural design • services design Design standards • legislation or standards • details of standards which apply (for example codes of practice) • statement of workmanship • tolerances • CDM regulations Aesthetics • specific aesthetic needs (other than planning requirements) Integration of components • relationship with each other • methods of dealing with interfaces • method of dealing with services installations. Section 4 Appendix B (10/99) Effective from 1/11/99 The Surveyors’ Construction Handbook . S ECTION 4. or a combination of performance and prescriptive specification.) The scope of work (see Section B2. level of concealment of services and architectural treatments to exposed surfaces B2. The specifications and design checklist (see Section B2.PART 2.4) assumes an employer’s requirement drafted in performance specification terms and the contractor’s proposals should convert these performance specifications into clearly defined design proposals.5) can be used in preparing employer’s requirements or a specification for a contractor’s proposal. A performance specification should be checked to ascertain that it is feasible to design a structure with the requirements given and that there is no conflict between performance and other prescriptive requirements given. For example. or in prescriptive terms (contractor delivery) by including detailed specification and drawings.

PART 2. Section 4 Appendix B (10/99) Effective from 1/11/99 Page 3 . Image/description of key areas • drawings • sketches • statements Flexibility • flexibility of accommodation • flexibility of design Energy • energy conservation and heat measures • insulation values • Building research establishment environmental assessment method (BREEAM) certification rating • plant room layouts Loading requirements Details of dead and imposed loadings Facilities for disabled • provision statement to comply with building regulations and current disability legislation • specific needs of disabled Building configuration • written statement and/or drawing • relationship of accommodation • size of accommodation • purpose • layout • dimensional constraints including clear heights under slabs and beams • natural lighting . S ECTION 4. A PPENDIX B B2.lux levels and method of measurement • natural ventilation • column grid arrangement including projections from walls. • clear ceilings/soffit heights • tolerances • vehicle access door heights and widths • toilet/bathroom/locker room requirements • kitchen/catering requirements • restaurant/vending requirements • plant room configuration • noise breakout between rooms The Surveyors’ Construction Handbook Part 2. etc.4 Scope of Work (Performance Requirements) Performance specification may relate to the whole building or include elements or both. The following are some matter which may be addressed.

S ECTION 4.5 Specifications and Design Specification of performance. Section 4 Appendix B (10/99) Effective from 1/11/99 The Surveyors’ Construction Handbook . The standard elements are listed below. cupboards.PART 2. cleaners. Standard Form of Cost Analysis for definition of elements. or the form of construction. kind and quality may be given in elemental or other format.) 1 Substructure 2 Superstructure 2A Frame 2B Upper floors 2C Roof 2C1 Roof structure 2C2 Roof coverings 2C3 Roof drainage 2C4 Roof lights 2D Stairs 2D1 Stair structure 2D2 Stair finishes 2D3 Stair balustrades and handrails 2E External walls 2F Windows and external doors 2F1 Windows 2F2 External Doors 2G Internal walls and partitions 2G1 WC cubicles 2H Internal doors 3 Internal finishes Page 4 Part 2. A PPENDIX B • storage space. (Please see Section 2.3 of this handbook or the BCIS publication. maintenance facilities • access for cleaning and maintenance • security Means of escape Plantrooms External works • car parking • leisure facilities • environmental considerations • visual effects • waste disposal • emergency vehicle access • water features • loading bays • existing site features and treatments • function buildings within externals • site survey B2.

fixtures and furniture 4A2 Soft furnishings 4A3 Works of art 4A4 Equipment 5 Services 5A Sanitary appliances 5B Services equipment 5C Disposal installations 5C1 Internal drainage 5C2 Refuse disposal 5D Water installations 5D1 Water mains supply 5D2 Cold water service 5D3 Hot water service 5D4 Steam and condensate 5E Heat source 5F Space heating and air treatment 5F1 Water and/or steam (heating only) 5F2 Ducted warm air (heating only) 5F3 Electricity (heating only) 5F4 Local heating (heating only) 5F5 Other heating systems (heating only) 5F6 Heating with ventilation (air heated locally) 5F7 Heating with ventilation (air heated centrally) 5F8 Heating with cooling (air heated locally) 5F9 Heating with cooling (air heated centrally) 5G Ventilating systems 5H Electrical installations 5H1 Electric source and mains 5H2 Electric power supplies 5H3 Electric lighting 5H4 Electric lighting fittings 5I Gas installation 5J Lift and conveyor installations 5J1 Lifts and hoists 5J2 Escalators 5J3 Conveyors 5K Protective installations 5K1 Sprinkler installation 5K2 Fire-fighting installations The Surveyors’ Construction Handbook Part 2. A PPENDIX B 3A Wall finishes 3B Floor finishes 3C Ceiling finishes 3C1 Finishes to ceilings 3C2 Suspended ceilings 4 Fittings and furnishings 4A Fittings and furnishings 4A1 Fittings. Section 4 Appendix B (10/99) Effective from 1/11/99 Page 5 . S ECTION 4.PART 2.

A PPENDIX B 5K3 Lightning protection 5L Communication installations 5M Special installations Details of each installation 5N Builder’s work in connection with services 5O Builder’s profit and attendance on services 6 External works 6A Site works 6A1 Site preparation 6A2 Surface treatment 6A3 Site enclosure and division 6A4 Fittings and furniture 6B Drainage 6C External Services 6C1 Water mains 6C2 Fire mains 6C3 Heating mains 6C4 Gas mains 6C5 Electric mains 6C6 Site lighting 6C7 Other mains and services 6C8 Builder’s work in conjunction with external services 6C9 Builder’s profit and attendance on external mechanical and electrical services 6D Minor building work 6D1 Ancillary buildings 6D2 Alterations to existing buildings B2. Section 4 Appendix B (10/99) Effective from 1/11/99 The Surveyors’ Construction Handbook .6 Particular Requirements Additional Responsibilities The employer’s requirements should state who is responsible for all matters that affect the construction of the building including such matters as: Site investigations • soil survey • ground conditions • topographical surveys • existing services • hazardous waste • archaeological features Development controls or other controls • planning permission (including reserved matters) • building regulations • Water Authority • Licensing Authority (liqour) • Licensing Authority (entertainments) • fire officer requirements Page 6 Part 2. S ECTION 4.PART 2.

required to be handed over on completion including: • record drawings • maintenance manuals • CAD data disks • design calculations • staff training requirements • warranties and guarantees Exclusions Give details of items not to be designed and/or constructed by the contractor and the requirements and responsibilities for integrating these into the works Future developments Provide details of any provisions required for future developments The Surveyors’ Construction Handbook Part 2.PART 2. etc. Section 4 (10/99) Appendix B (10/99) Effective from 1/11/99 Page 7 . Information requirements The employer’s requirements should give details of all records. A PPENDIX B • • • • • • • factory inspector environmental health officer employer’s building insurers (if appropriate) Traffic Planning Authority utilities National Rivers Authority Any other authority or statutory undertaker which has jurisdiction with regard to the works Establish responsibility for fees payable in connection with above Other legislation or provisions Adjoining premises • rights of access to adjoining premises Trespass.. nuisance • contractor to acquire rights as required and absolve the employer of responsibility Use and maintenance of existing: • roads • sewers • services If the responsibility for any of these matters is to be with the contractor the client should include disclaimers in any information which is provided to the contractor. drawings. S ECTION 4.

but the most common and obvious diversification has been to take on the role of lead consultant or project manager. Some have become barristers. For those embarking on this route care must be taken to ensure that the additional duties required by the role of lead consultant are fully understood and considered when undertaking the project. This arrangement is most beneficial to clients who. On some projects consultants are appointed by the project manager as subconsultants.1.5. many have become planning supervisors.PART 2.1 The role of project manager is to directly manage and coordinate all other consultants involved with a project on behalf of the client. do not wish to have a pro-active involvement with the project. I 2. In the past. This section highlights some of the issues which the chartered surveyor should consider before undertaking this role. this role has largely been the domain of the architect.1 Definitions: The Difference between a Project Manager and Lead Consultant 2. SECTION 5 PART TWO: CONSTRUCTION DESIGN AND ECONOMICS SECTION 5: THE CHARTERED SURVEYOR AS LEAD CONSULTANT Introduction Over recent years many property and construction professionals have diversified into areas outside their core discipline. The Surveyors’ Construction Handbook Part 2. Section 5 (05/00) Effective from 1/7/00 Page 1 . in recent years many clients have increasingly used the services of the chartered surveyor to carry out these duties. A schedule of the additional duties that are likely to be required in excess of the main professional duties defined in appointment documents (such as those for building and quantity surveying) is included at the end of the section. However. together with the associated professional liabilities.5. through desire or inexperience. It also identifies some of the benefits for both clients and projects when appointing a chartered surveyor as lead consultant. or are managed and paid by the project manager (although the client directly appoints them). Ultimately the delivery of the project is the direct responsibility of the project manager.

5. However. Figure 2: Project Structure using a Lead Consultant Client Client’s Representative Advising & coordination Lead Consultant Arch. Eng. ensuring that other parties in the design. the chartered surveyor can provide added value to the management of a construction project.PART 2.5. and often clients will appreciate this financial control being extended to a project liaison function. Sup. party wall and boundary disputes. QS Plann. 2. S ECTION 5 Figure 1: Project Structure using a Project Manager Client Project Manager Managing & coordination Arch. QS Plann...2 The position of lead consultant is more of a coordinating role. By utilising this awareness. Sup.2. procurement and construction process of a project provide the right input at the right time. therefore. Eng. I 2. Section 5 (05/00) Effective from 1/7/00 The Surveyors’ Construction Handbook . etc. right to light. is better suited to more informed clients who may have their own in-house project managers undertaking an overall management role. Chartered building surveyors are not only involved in design.1 In many circumstances a chartered surveyor can provide a greater breadth of knowledge and understanding of the complete process of a construction project.5. Page 2 Part 2. the management of the other consultants is ultimately down to the client and. and to take an overall view to ensure coordination of all aspects of the project. Chartered quantity surveyors have an inherent knowledge of the complete design package through their cost control role.1.2 Benefits of Appointing a Chartered Surveyor as Lead Consultant 2. etc. but also in the peripheral activities such as wayleaves.

3. SECTION 5 2. It may be that some of the lead consultant duties overlap with existing duties and that economies may be obtained.5.5.2.1 The schedule of duties of a lead consultant is not exhaustive. However. condition survey.3.5. the converse may equally apply and it is essential that the chartered surveyor thoroughly reviews the actual additional duties required before providing fee quotations.3 I 2. The Royal Institution of Chartered Surveyors provides a range of publications which describe in more detail individual professional services such as quantity and The Surveyors’ Construction Handbook Part 2. For those individuals or practices who do not wish to undertake the more encompassing role of project manager. This early involvement opens the door of opportunity for the chartered surveyor to take up the reins as lead consultant. or in parallel with the concept designs. Fees for these additional activities must be at the discretion of the provider. care must be taken to ensure that the necessary additional skills exist to be certain that the increased responsibility can be taken on comfortably and to the ultimate benefit to the client.5. for example farms management.2.2. Other benefits to a client can be derived where the ‘project’ requires a distinct specialism and the design process is only part of a more specialised activity. 2. This front-end advice provides the opportunity to advise clients and add value before the appointment of the architect.4. However.5.2 As well as simply the design of the buildings.4 Schedule of Lead Consultant Duties 2.4 I 2.1 Before taking on the role of lead consultant.3.3 Issues to Consider before Undertaking the Role 2. They should take into account the level of additional time and resources required in excess of the core professional services provided.3 2. the chartered surveyor is in a prime position for providing real added value to the process. The chartered surveyor is frequently called upon in matters associated with land purchase. valuation.2 2. With the constant changes in the way that buildings are procured and designed. but feel that they can make a positive contribution by directing a particular project.5.PART 2. development potential and building cost. many other skills are required to provide a functional space for a client and the chartered surveyor is often more conversant with these additional activities. Section 5 (05/00) Effective from 1/7/00 Page 3 .5. This level of competency will impact directly on professional liability insurance policies and ‘competency’ under the Construction (Design and Management) (CDM) Regulations.5.5. then the role of lead consultant fits the bill. 2. careful consideration must be taken to ensure that there is sufficient competency to undertake the additional duties involved in the role.

standards. the surveyor refers to these when confirming the scope of service to be provided as lead consultant. 2. AB/2 Advise on the need for site investigations. Monitor the service provided by all consultants to ensure that they are carrying out their duties to the standard required at each work stage. coordinate and confirm design drawings of all project team members.4 STAGES A AND B: INCEPTION. who may or may not be an active design member of the project team. Submit all reports. Regularly review the design with the client and designers and formally minute any agreed amendments. AB/3 Investigate planning constraints. cost and programme.5.4. Review. Page 4 Part 2. The lead consultant. Ensure that all drawn and specification material is forwarded to all other consultants in accordance with the previously agreed project team programme.4. cost and design.PART 2.5. will liaise with the client representative and will be responsible for the following activities. The client nominates a lead consultant for each capital project undertaken. S ECTION 5 building surveying and it is recommended that. The lead consultant’s role is to provide the client with comprehensive professional support to ensure that the client’s requirements are met with regard to legislation.5.3 GENERALLY (a) Establish the client’s brief and ensure that it is agreed with the client and communicated to all designers. plans and proposals to the client with the request for approval to proceed to the next work stage. but be aware that professional responsibility for the proper management of all aspects of the project lies solely with the lead consultant and project team members.4. 2. FEASABILITY AND BRIEFING AB/1 Establish the scope of the project and ensure that all other members of the project team have the same understanding. Section 5 (05/00) Effective from 1/7/00 The Surveyors’ Construction Handbook . (b) (c) (d) (e) 2.2 PURPOSE During a construction project many issues can arise on which the client may require professional advice from his or her consultants. wherever possible. Seek advice from the client where necessary. Inform the client of the impact of these amendments on time. Deal with all queries and solve problems as they arise.

5 STAGE C: OUTLINE PROPOSALS C1 Arrange dates and venues. AB/6 Advise on procurement methods. financial and programming requirements. statutory. S ECTION 5 AB/4 Direct the activities of any supporting consultants such that the option appraisal/feasibility study is fully investigated. Compile and submit Stage C report to the client.4.5.6 STAGE D: SCHEME DESIGN D1 Arrange for any site investigations and consultations which are still necessary. AB/7 Advise the client with regard to the general application of the CDM Regulations and comply with Regulation 13(1).4. Collate and prepare a report for submission to the client. D2 The Surveyors’ Construction Handbook Part 2. AB/5 Assist the client with the preparation of detailed briefing documents with special input on technical. legal. brief and the client’s decisions. With the project team’s assistance prepare and agree a detailed design programme of work and flow of information. Discuss and agree a detailed design and general construction programme with all members of the design team. Chair and minute all regular design team meetings (at least monthly up to tender stage). Ensure compliance with Regulation 13(2) of the CDM Regulations and liaise with the planning supervisor. investigations and consultations with statutory bodies. Request approval to proceed to Stage D. Arrange dates and venues with the architect and client representative for brief development and presentation meetings. Review progress. Arrange to circulate a list of specific duties of each consultant to establish roles and responsibilities. 2. AB/9 Obtain further instructions from the client. Attend presentation meetings as required.PART 2. Arrange for surveys.5. AB/8 Agree fee with the client. Section 5 (05/00) Effective from 1/7/00 Page 5 . C2 C3 C4 C5 C6 C7 2.

E4 E5 E6 2. Clarify items of fixed furniture and equipment required by the client. Compile and submit the Stage E report to the client which. and • schedule of areas showing the direct relation to the areas in the brief. in addition to the usual reports and cost plans. F2 Page 6 Part 2. Request approval to proceed to Stage F.4. Advise on the form of contract. • sample boards and recommendations for selection of materials and finishes.5.8 STAGE F: PRODUCTION OF INFORMATION F1 Ensure appropriate applications for approval under other applicable statutory requirements (including negotiating waivers or relaxations). With the architect. • phasing and site management drawing showing the effects of disruption on the operation of the establishment. undertake a formal presentation (or presentations) to the client. Request approval to proceed to Stage E.PART 2. D4 D5 D6 D7 D8 2. Consider the need for pre-ordering of materials or equipment.4.5. should comprise: • furniture and layout drawings. Section 5 (05/00) Effective from 1/7/00 The Surveyors’ Construction Handbook .7 STAGE E: DETAILED DESIGN E1 E2 E3 Review the outcome of planning submission. • reports from advising authorities. S ECTION 5 D3 Prepare the initial health and safety plan (if acting as the planning supervisor). Ensure compliance with Regulation 13(2) of the CDM Regulations and liaise with the planning supervisor. Ensure compliance with Regulation 13(2) of the CDM Regulations and liaise with the planning supervisor. Ensure appropriate applications for approval under the building regulations or other applicable statutory requirements (including negotiating waivers or relaxations). Compile the Stage D report from work undertaken and coordinated by all project team members.

Ensure that planning and building regulation approval has been achieved.9 STAGE G: BILLS OF QUANTITIES G1 Discuss with the client and project team suitable amendments to standard contract preliminary clauses. S ECTION 5 F3 Discuss any aspects of the design. Update the health and safety plan. Liaise with the property manager/client for all temporary site management and services issues. H2 H3 H4 The Surveyors’ Construction Handbook Part 2. fire officer. crime prevention officer and highway authority will be incorporated in the contract documents. construction methods or site management that could be of concern under health and safety legislation.4. Be available to assist tenderers in the clarification or correction of data within the tender documents. On instructions to proceed to tender. undertake redesign.10 STAGE H: TENDER ACTION H1 Ensure that all arrangements for temporary works and client site preparation have been undertaken.5. Inform the client of readiness.4. performance bonds.5. Ensure that a list of tenderers from approved register of contractors is obtained. F4 F5 F6 2. Follow all the client’s standard procedures for this activity. Carry out tender appraisal in conjunction with other consultants and submit a formal tender report to the client recommending (or otherwise) the acceptance of a single tender. G2 G3 G4 2. Contact each contractor giving outline details of the scheme and request that they confirm their interest in submitting a bona fide tender.PART 2. and/or negotiation with tenderer(s) and client. changes to standard contract conditions. Section 5 (05/00) Effective from 1/7/00 Page 7 . Confirm all requirements from the planning authority. the completion of the appendix to the contract. on reductions in tendered contract sum to meet the client’s budget. instruct the quantity surveyor (if appointed) to issue tender documents. methods of appointing subcontractors and suppliers and insurance liabilities. Obtain pre-tender estimate from quantity surveyors. Report to the client at monthly intervals on progress and cost plan checks. If necessary.

and signed by the contractor. client and head of establishment. S ECTION 5 2. K2 K3 K4 K5 K6 K7 K8 K9 Page 8 Part 2. Give a short general report at appropriate intervals during the course of the contract on progress. client and clerk of works to appraise them of progress and to establish and resolve any concerns that may be arising. Ensure that all the client’s handover procedures have been followed before accepting the building from the contractor. Attend regular site meetings with the contractor. Notify the client’s insurers that work is complete and arrange for release of bonds. Liaise and coordinate the work of all design consultants during the postcontract period ensuring solutions are found to issues that may arise and that the schedules for issue of later design information are met. Hold regular meetings on site with the head of establishment. site relationships. Ensure that all temporary and enabling works are complete.4. Visit the site as appropriate to inspect the progress and quality of work.5. subcontractors. Advise on arrangements for access to the site and deal with queries and concerns on works. Monitor contractor’s health and safety plan and records. clerk of works.11 STAGE J: PROJECT PLANNING J1 Prepare the building contract and arrange for it to be forwarded to the client or his or her solicitor. consultants. other consultants and clerk of works.12 STAGE K: OPERATIONS ON SITE K1 Ensure that the contract is administered in accordance with its terms. quality of workmanship and any other pertinent matter.PART 2. J2 J3 J4 2.4.5. Arrange a pre-contract meeting with the contractor. Produce short financial reports on a cumulative basis (cash flow predictions are required to be attached to each valuation certificate). Notify the client’s insurers. Section 5 (05/00) Effective from 1/7/00 The Surveyors’ Construction Handbook . Ensure that certificates are issued for interim payments on the RIBA standard form to the client. Produce a detailed financial report showing the value of all actual and expected variations to be issued at three monthly intervals throughout the construction process. Ensure that cost control of the project is maintained.

Resolve any issues relating to emergency latent defects over the defects period. are obtained and handed to the client. L2 L3 L4 L5 L6 L7 L8 L9 L10 Ensure that all fire safety certificates. Resolve any issues relating to emergency latent defects after the patent defects period. building control certificates. contractor and other consultants. agreed with the head of establishment in writing. Ensure that the quantity surveyor completes the final account to an auditable standard. etc.PART 2. Complete quality assurance questionnaire on performance of the client. Send to the client with the request for approval to issue final certificate. licenses. Ensure that the issue of final certificate is made and that all consultants complete construction certificate.5. complete with observations on successes and failures. Section 5 (05/00) Effective from 1/7/00 Page 9 . Continue to produce a financial report at three monthly intervals. L11 Review the project from start to finish and report findings to the client. in relation to completion of the works. The Surveyors’ Construction Handbook Part 2. are administered. On completion of all making good. Ensure that all parties involved are sent a copy of the report. issue certificate of making good defects. Ensure that the terms of the contract. Ensure that the health and safety file is completed and handed to the client.13 STAGE L: COMPLETION L1 Check making good of all outstanding patent defects. Resolve contractual claims and provide any necessary reports to the client. S ECTION 5 2.4.

At that time timber was declared to come from ‘sustainable sources’. Development can be taken in any context. Something which is sustainable has.’ This definition appears quite clear in its meaning: we are charged with the responsibility of ensuring that our activities do not damage the legacy which we are passing on to our successors. This can be regarded as the principal of ‘common inheritance’ or. In the construction industry a resource stock can either be land. 40 or 50 years. 30. A source of supply for timber may be well managed. The time frame element is therefore the difference between something which is well managed and something which is sustainable. Unless purely organic materials. The Surveyors’ Construction Handbook Part 2. often referred to as the Brundtland definition: ‘Humanity has the ability to make development sustainable – to ensure that it meets the needs of the present without compromising the ability of future generations to meet their own needs. SECTION 6 PART TWO: CONSTRUCTION DESIGN & ECONOMICS SECTION 6: DEFINING SUSTAINABLE CONSTRUCTION Introduction The term ‘sustainable’ was first used in the construction industry when it was applied to sources of timber. clay and minerals which are deposits available in finite quantities and cannot be regenerated. ‘intergenerational equity’. Section 6 (10/00) Effective from 1/12/00 Page 1 . which are capable of self-regeneration. But what is this difference? The definition of sustainability that seems to have achieved almost universal acceptance is that put forward by the World Commission on Environment and Development in 1987. It confers upon us the responsibility to consider the impact of our activity now and the legacy that we are leaving behind us. alternatively. then in-organic materials are used such as stone. from the economic development of a nation to the construction of a simple building. Today. are used. an infinite timescale and therefore has inter-generational equity (where the term equity can mean a resource stock. but may only be so for 20. timber from ‘sustainable sources’ has been replaced with the expression ‘well managed’ or even ‘managed’ sources implying that there is a difference between being sustainable and being well managed. the availability of raw materials or the buildings from which the raw materials have been constructed. theoretically. capital stock or a stock of technologies).PART 2.

under the definition. and we are likely to enjoy the benefits of it for at least another 100 years or so. which are only available in finite quantities. Page 2 Part 2. is the exhaustion of fossil fuels. and the consumption of finite raw materials justified. I 2. the industry has a responsibility to consider the design. detailing and construction methods as well as the cost in use to show that a valuable legacy has been left to future generations. To ensure that this takes place. the result of using one resource has been the production of an alternative technology which is a direct substitute for the resource that has been exhausted. Section 6 (10/00) Effective from 1/12/00 The Surveyors’ Construction Handbook . this would be an example of sustainability in practice in the form of a technology swap. The inter-generational equity principal is therefore a mechanism by which the total available resource to future generations is maintained at a constant level. and in order to demonstrate a sustainable. the construction industry cannot be considered to be sustainable in terms of resource usage because raw materials.6.1 Technology Swaps Sustainability can be demonstrated. In this instance. it is universally agreed that human activity will have to change and the reliance upon oil will have to decline as the availability diminishes and it becomes more costly to extract. if a technology is produced that is a substitute for the original raw material resource once this is exhausted. To summarize. The development of an alternative renewable. The best demonstration of this. pollution-free energy source is therefore vital to the sustainability of human development. or at least a ‘more’ sustainable construction industry it is the industry’s responsibility. sustainable energy sources. development. Oil provides a very good example of non-sustainability in practice. For the industry to be seen to act in a sustainable manner it needs to provide a building stock that demonstrates appropriate investment of these raw materials such that the swap is an equitable one. economic and political stability depend entirely upon the availability of oil as a fuel and a raw materials source. Although estimates of available economic oil reserves continually extend.PART 2. The definition of sustainability has therefore been satisfied in that the activities of one generation in achieving their goals has not prevented future generations from achieving their goals. and probably the first major challenge that will face humankind. S ECTION 6 The mineral resources that are used are therefore not sustainable in themselves. are being extracted and processed into building products for incorporation into a building where the building itself is only designed for a finite life. to ensure that the buildings being constructed from the finite raw material resources are capable of inter-generation usage. However. Today. if the revenues generated from the use of oil were diverted to the research and development of alternative. sustainable.

which is available for their use. This environmental cost cannot be quantified in economic terms because no cost yardstick has been devised for attributing economic value to our environmental stock.6. At present. however. can either be in the form of raw materials. capital wealth or alternative technologies. Under these criteria. be quantified if there was a technology to replace the ozone layer which would itself carry the missing cost element within the equation. the national economic balance sheets would take on a considerably different complexion. This could. knowledge and technical advances will still be made and future generations will still be at least as well off as the present generations. The Surveyors’ Construction Handbook Part 2. Section 6 (10/01) Effective from 1/12/01 Page 3 . But how do we value the environmental damage and possibly attempt to justify it in terms that are economically acceptable? It has been suggested that the only way that ozone layer depletion could be argued and justified as economically acceptable is if there was a way of reinstating it at an acceptable cost.PART 2. GNP assumes all matters relating to the environment have zero value. but one that is being imposed on future generations. This leads to the conclusion that acts which damage the environment do carry a penalty for future generations and therefore to ignore them is a risk. Providing that each generation adheres to these principals. If economic values are attributed to environmental functions in relation to economic development. the element of timescale judgement is removed as each successive generation looks after the next. The important factor is that the overall equity stock must not be diminished.2 How Can the Environment and Sustainability be Valued? At present the only method that has been developed for assessing the impact of human activities has been to put a financial value on everything. but the likely loser will be the industrialized economy which will have to alter the way in which the indicators of economic development are measured. Under a philosophy of sustainability it is the responsibility of the present generation to hand on to the next generation the same total stock as it itself inherited so as to ensure the same overall balance of advantages for future development as originally inherited. SECTION 6 This resource. An example of a technology advance resulting in huge potential environmental damage is the CFC gases that have been identified as being largely responsible for the depletion of the ozone layer. In other words. I 2. This risk may not necessarily be a risk for the present generation. However. industrialized nations generally consider economic development to mean an increase in Gross National Product (GNP) per capita. a technology advance has been made for economic gain but at an environmental cost. In the fullness of time it is to be hoped that we will devise different methods of quantifying value.

which has been used as a cladding material for many years. World War II resulted in timber shortages again and the emergency created the major post-war plantation of quick-growing conifers. Mahogany is also on the fringes of being listed and it is widely reported that there are no longer any legal sources for the supply of the true Swietenia mahogany.6. The history of timber production in the UK is an interesting one which has seen the rapid depletion of forests from approximately 90 per cent forest coverage at the time the Romans arrived to a low point of less than 5 per cent of land coverage at the early part of this century.1 MATERIALS Most construction materials are a finite resource and will eventually be exhausted.2 BENCH MARKING ENVIRONMENTAL IMPACTS In order to be able to assess the effect that we are having upon the environment as a result of our activities a scientifically rigorous and consistent method of analysis and bench marking is required. The use of terrazzo has now been superseded by the increased use in solid marble and granite although it will only be a matter of time before these sources are similarly exhausted. is now so endangered that it appears on the Control in Trade of Endangered Species (CITES) list as being illegal for fear of extinction. Such a method would have to attribute units of measurement to each environmental impact and in turn to relate these back to a datum to render the results meaningful on a human scale. Using a variety of comparison models and mathematical techniques Ecopoint values have been attributed to building materials and systems. An example closer to home is the UK’s reliance upon imported timber having used up its own supply.6. Timber was first imported after the Great Fire of London and in 1668 it became necessary for Acts of Parliament to be passed to create forest reserves like the New Forest in Hampshire to try to arrest the situation. are no longer available as entire mountains in Italy have been levelled. 2. have been exhausted or the quarries closed and it now has to be obtained from the Continent. It has developed Envest. Local British sources of Portland stone. World War I saw timber in short supply again and resulted in the birth of the Forestry Commission as a Government Agency in 1919. The Building Research Establishment (BRE) has undertaken more work than most in this area. Section 6 (revised 10/01) Effective from 1/12/01 The Surveyors’ Construction Handbook . once popular in the 1960s. which was very popular for making high-quality furniture in the 1960s.3 How Does This Affect the Construction Industry? 2. Many already are. Brazilian Rio Rosewood. Humankind has a history of failing to adequately consider the impact that its activities are having on the resource base and examples are easy to find.3. an environmental estimating software tool which attributes Ecopoints to environmental impacts. with 100 Ecopoints being equivalent to the environmental impact of the average UK citizen. Certain colours of terrazzo marble. SECTION 6 I 2. Even organic materials are not immune.3.6. and it Page 4 Part 2.PART 2.

8 12. SECTION 6 is now possible. Section 6 (revised 10/01) Effective from 1/12/01 Page 5 . • human toxicity to air and water.0 6. • low-level ozone creation (summer smog). building operations. From this data one form of construction can be analysed against another.04 tonnes 0.4 5.0275 kg toxicity Climate change Fossil fuel depletion Ozone depletion Human toxicity to air Waste disposal Water extraction Acid deposition Eutrophication Ecotoxicity Photochemical ozone creation Mineral extraction Human toxicity to water 37.19 tonnes 418000 litres 58. 5. refurbishment and custom use.286 kg CFC11 eq. 0.1 5. • water extraction. not only by building type and the method of construction that should be used but also the decision whether to build new or to refurbish. All these factors have been considered. and • mineral extraction.3 3.PART 2. quantified.5 2.8 3. to calculate the total Ecopoints score for building types. • ecotoxicity. 8. • waste disposal. • ozone depletion.01 kg PO4 eq 178000 m3 toxicity 32.1 4. Table 1: Environmental Impact of UK Citizens Issue % weighting Characterized impact associated with a typical UK citizen 12300 kg CO2 eq.0 8.2 7. the following must be considered carefully: • climate change. (100yr) 4. via the software package.3 4. Environmental Impacts In undertaking the assessment of environmental impacts and attributing Ecopoints values to various activities and products. • fossil fuel depletion. It is also possible to quantify the decision-making process using environmental criteria. compared and weighted in relation to the impact associated with a typical UK citizen and are shown in table 1.6 % may not add up to 100% due to rounding The Surveyors’ Construction Handbook Part 2.09 tonnes oil eq.2 kg ethene eq.7 kg toxicity 7. 90. • acid deposition.9 kg SO2 eq. • eutrophication (or over enrichment of water courses).

SECTION 6 So for example.3.2) which can also take account of the building form and fabric typical replacement intervals and other data held by the Centre for Sustainable Construction. to calculate the Ecopoints for 1 tonne of mineral extraction: Characterized impact = 1 tonne mineral extraction Characterized impact for 1 typical UK citizen = 5. a single brick. It should therefore be scientifically possible to establish a method of calculating the quantity of embodied energy that is required to make a building component.04 tonnes mineral extraction Normalized impact = 1 divided by 5. and eventually to demolition and possible reprocessing. The actual monetary value of energy can also be different from country to country. the unit of energy input itself can be used. However. Conversely. carry a larger embodied energy by virtue of the cost of global transportation. Embodied energy impacts associated with materials have also been assessed quantitively by the BRE using Envest (see 2. Section 6 (revised 10/01) Effective from 1/12/01 The Surveyors’ Construction Handbook .3.04 = 0.PART 2. their transportation and processing into building components up to the point when they are assembled into completed buildings is the energy requirements of the various processes.5% Ecopoints = 0.6.693 Ecopoints 2.198 Weighting = 3. The results generated are quoted in Ecopoints per m² of element and factors such as replacement intervals can also be factored in as part of a full cost and use study. If materials have to be imported or are chosen to be imported on the grounds of economic cost these will.3 EMBODIED ENERGY As materials can be extracted in any part of the world and either processed into building components locally or transported as raw materials. a square metre of glass or a sheet of plasterboard.6. A fundamental difference in environmental terms between refurbishment and redevelopment is the saving of embodied environmental impact and energy if refurbishment is undertaken in preference to demolition and redevelopment. Appendix A shows a comparison of embodied energy values for some common materials. economies may be derived by local energy consumption and waste disposal which can also be incorporated into the equation. From this it can be appreciated just how energy intensive some processes are and therefore how relatively good and bad some components are. by definition. it is virtually impossible to examine all of the possible environmental impacts that the various activities are likely to have because the variables are just so great. As energy is required to be consumed at every stage of the production process. Perhaps the only constant method there may be in the winning and working of materials. therefore it is not possible to use monetary value of energy as a unit of measure. be it a cubic metre of concrete. Page 6 Part 2. the sum total of these energy inputs can be termed as the embodied energy of that product. from extraction of the raw material to its incorporation into a construction.198 multipled by 3.5 = 0.

As well as having a relatively low embodied energy content. Ideally. However. Dense concrete blocks are preferred to lightweight aerated blocks which use more energy in production. Some species of timber are better than others at resisting rot and decay. Brick manufacturers are now keen to promote their products which use low energy kilns. In particular. insulating and easy to work. but they would have to pay for the privilege. Conversely. The Surveyors’ Construction Handbook Part 2. Western Red Cedar and Douglas Fir. timber should be sourced in the UK but the supply is severely limited. SECTION 6 2. It is also now possible to obtain plaster and plasterboard made from waste gypsum which is a by-product from fuel gas de-sulphurization.PART 2. and is strong. it absorbs and stores carbon from CO2 when growing. Pulverized fuel ash blocks contain over 50 per cent fuel ash which is a waste product from power stations. which are again being considered as a viable alternative to PVC-u or aluminium.4 Green Building Materials Timber is undoubtedly the material most favoured by green designers. because this enables the bricks to be used again in the future. Another form of construction finding favour is a solid block or concrete wall with insulation and render externally. This would enable those that wish to exceed the design criteria of the regulations to do so. When sourcing imported timbers designers should ensure that the material originates from a suitable source. especially if lime mortars are specified. Masonry construction can be considered green. I 2. A major criticism that could be levelled at such a system is that it would starve the construction industry of design flexibility. this could be overcome by introducing a scale of energy taxation.3.6. The Forest Stewardship Council and the Timber Trades Federation both supply lists of suppliers of timber from good UK sources (see Appendix B). With the increasing emphasis on energy conservation within the building regulations (which currently concentrate on energy consumed in use) it would be a simple extension of these regulations to lay down embodied energy maxima per square metre for various building types. Note: specifiers should exercise care with regards to the source of timber as all is not always as it seems. Section 6 (revised 10/01) Effective from 1/12/01 Page 7 .6.4 LEGISLATIVE CHANGES Armed with bench-marking data it would be possible for systems of regulation to be built into the existing regulations. those who produce buildings and achieve significant savings beneath the bench mark could receive aid in the form of grants as recognition for their efforts and ingenuity.

or even a 300 year design life.5 Whole Building Sustainability The matters discussed above help us to use resources and raw materials wisely and to produce better buildings in terms of energy consumed in construction and use. roofing materials and assorted ironwork are already available. An example of such practice is the current trend for the conversion of redundant 1960s office buildings into residential accommodation. this in itself is not sustainable construction. I 2. In order to achieve this. These are just a few examples of alternative material resources now available. Page 8 Part 2. SECTION 6 Insulation boards made from polyurethane.PART 2. There is a logic to the use of recycled materials (where the embodied energy can be utilized again) as being perhaps the greenest contribution to be made. There are many buildings of over 200 years of age that have found suitable alternative purposes beyond that for which they were originally designed. Section 6 (revised 10/01) Effective from 1/12/01 The Surveyors’ Construction Handbook . but suitable alternative uses have been found. although it is certainly a vital component in the process. rather than being constructed for a single use and then rendered redundant when there is no longer a requirement for the original purpose. Sustainable construction would only be achieved when the finished product can demonstrate usefulness and serviceability on an inter-generation basis. unfortunately at premium prices. timber. Recycled cellulose fibre (newspaper print) is now being specified more for loft insulation and wall insulation in timber frame construction. and in some cases foam glass or cork.6. It is therefore possible to establish with a reasonable degree of certainty what the vital component parts are in ensuring the success of a building for say a 200. this will cause problems in sourcing adequate quantities to satisfy demands. glass fibre. expanded polystyrene. attention must be turned to wise material usage and reduction of waste as well as to producing a building of the highest possible quality and with maximum adaptability. extruded polystyrene and phenolic foams have given way to mineral wool. However. with the minimum of additional cost in terms of energy and raw material resource input in order to convert and use it for their own purposes. One of the key issues in building sustainability is to ensure that what is originally constructed from the resources becomes a similar resource for the future generations. design and construction. One such product is known as ‘warm cell’ and is available from Excel Industries (see Appendix B). The building created must continue to serve future generations well for whatever purpose they wish to put it to. which have for many years been seen as suitable residential conversion opportunities. It is of course interesting to consider that as these materials gain popularity and become specified as a matter of course. as well as warehouses and barns. The uses to which these buildings are now being put were never originally envisaged at the time of their planning. Second-hand bricks.

PART 2. as proposed. and the social impact and benefits that the construction is likely to have for future generations. Transport and the Regions (DETR) published A Better Quality of Life – A Strategy for Sustainable Development for the United Kingdom. but also the environmental resource value invested in the construction.6. the timescale over which a building is considered a viable proposition would need to be reviewed and an alternative method of valuing the asset would need to be established. The planning process could be slightly extended such that alternative uses are identified and documented and form an integral part of the planning process. This document endeavoured to set out a framework and priorities for achieving sustainable development which included: • more investment in people and equipment for a competitive economy. The other components to ensure that a building is suitable for inter-generation use is to get the detailing. is sufficiently flexible for the alternative uses to be achieved with minimal additional input. Section 6 (10/01) Effective from 1/12/01 Page 9 . This would reflect not just the economic value. • improving towns and cities and protecting the quality of the countryside. product selection and construction quality right such that the building does not wear out before the inter-generation uses can be realised. Whilst some technologies have changed very significantly the base skills have not and nor have the materials. and • contributing to sustainable development internationally. I 2. • sharing the benefits of growth more widely and more fairly. It may be necessary for us to re-learn some old skills in order to produce buildings of a long life expectancy but it is now necessary for us to change from being a disposal society to a considerate and conserving one. The Government also felt that the construction industry can contribute to achieving the sustainable development aims by: The Surveyors’ Construction Handbook Part 2.6 The Government Line In May 1999 the Department of Environment. This would require the procurers and designers of the building to demonstrate how it could be used for identified alternative purposes and to ensure that the design. • achieving higher growth whilst reducing pollution and reuse of resources. SECTION 6 The methods of funding and. in particular.

think about using recycled materials. waste elimination. value for money. • design for minimum waste – specify materials with care. • aim for lean construction – aim for continuous improvement. SECTION 6 • being more profitable and more competitive. • respecting and treating its stakeholders more fairly. well-being and value to customers and users. high quality management of the projects and supply chain and good communication.) This document shows that the Government now feels that the main themes for action in achieving ‘more’ sustainable construction can best be served by adopting the following action points: • reuse existing built assets – meeting functional requirements may not require new buildings and refurbishment and renovation may work better. customer focus. • delivering buildings and structures that provide greater satisfaction. design out waste at all phases in the construction and occupation process and involve the supply chain. Adopt ‘green’ travel policies. • preserve and enhance bio-diversity – look for opportunities throughout the construction process to provide and protect habitats.PART 2. Page 10 Part 2. • enhancing and better protecting the natural environment. • minimize energy in construction – be aware of embodied energies and transportation of construction projects. • minimize energy in use – consider more energy efficient solutions and energy production from renewable sources. and • minimizing its impact on the consumption of energy (especially carbon-based energy) and natural resources. Section 6 (10/01) Effective from 1/12/01 The Surveyors’ Construction Handbook . (It should be noted that the inclusion of the word ‘more’ is now associated with a sustainable development strategy which perhaps indicates a slight rethink of absolutes. • respect people and their local environment – be responsive to the community and consider your workforce. • do not pollute – understand environmental impacts. In April 2000 the DETR published Building a Better Quality of Life – A Strategy for More Sustainable Construction. • conserve water resources – design for increased water efficiency in building services and within the built environment. and • set targets – measure and compare your performance with others and set targets for continuous improvement.

the facilities managers and the future owners. and how they are used. In other words the principles of sustainability must be fully embraced by every participant from the supplier of the raw material. The way in which raw materials are extracted and processed at source can have the most direct impact upon the environment and must be closely examined as well as the actual material manufacturers themselves.6. The sustainable building should be a piece of procession engineering. SECTION 6 I 2.PART 2. the method by which buildings are funded. The Surveyors’ Construction Handbook Part 2. The professionals would have to put new demands upon the material producers in the production of more sustainable materials. This will require an overhaul of the planning process and regulatory frameworks within which the construction industry operates. requiring funders. The materials and resources that are used in construction activities and the buildings that are created will require fresh justification against sustainability objectives. New materials and techniques would need to be developed and adapted into sustainable construction. material technologists. This would require new demands and disciplines in relation to the construction form and the standard of construction itself.7 What Might the Future Hold If sustainability is going to be the way forward in the next millennium many existing conceptions of development have to be reviewed and overhauled. The sourcing of the materials and the methods employed in conversion and production of building products must be the first priority in making progress towards sustainable constructions. the procurement and design functions right up to the occupation of the completed building where the responsibility passes to the occupiers. Section 6 (10/01) Effective from 1/12/01 Page 11 . occupiers and managers of the building to each play their part in making the most of what we have. material manufacturers and suppliers to re-examine and justify their methods. but above all they must build for longevity and flexibility with minimum re-investment by way of adaptation and maintenance if the goals and targets are to be met. Thirdly. The way the environment and resources are valued. building users. The second area for examination would have to be the philosophy behind procuring buildings and meeting user requirements. The finished product would have to be a monument to sustainable construction and inter-generational equity making the optimum use of the energy and materials invested. the professions responsible for the design and construction of buildings to meet the requirements of funders and users must respond to the challenge of sustainability in order to deliver the required product. have to be re-examined and justified against a policy of sustainability. simply constructed but to the very highest of quality standards with good detailing and nothing left to chance. the method of valuation and justification. the contribution that those actually constructing the building have to make would need to be considered. through the material manufacturing process. Finally. together with the demands for greater longevity and flexibility.

A PPENDIX A Page 1 Source: The Architects Handbook 8 June 1995 . Section 6 Appendix A (10/00) Plaster Plastic Glass Steel Effective from 1/12/00 Aluminium 0 kWh/m3 PART 2.Appendix A: Embodied Energy Content of Building Material Lightweight blocks 625 417 The Surveyors’ Construction Handbook 694 833 1222 1806 9300 15000 63000 195000 5000 10000 15000 Concrete Timber Lightweight concrete Bricks Material Part 2. S ECTION 6.

PART 2. Section 6 Appendix B (revised 10/01) Effective from 1/12/01 Page 1 . APPENDIX B Appendix B: Useful Addresses Timber Trade Federation Clareville House 22/27 Oxenden Street London SW1Y 4EL Centre for Sustainable Construction Building Research Establishment Garston Watford WD2 7JR Department of Transport. Local Government and Regions (formerly Department of Environment. SECTION 6. Transport and Regions) Sustainable Construction Team Eland House Bressenden Place London SW1E 5DU The Forest Stewardship Council Unit D Station Building Llanidloes Powys SY18 6EB Excel Industries 13 Rassau Industrial Estate Ebbw Vale Monmouthshire NP3 5SD Construction Resources 16 Great Guildford Street London SE1 0HS The Building Centre 26 Store Street London WC1 The Environment Information Service PO Box 197 Cawston Norwich NR10 4BH The Surveyors’ Construction Handbook Part 2.

the development of procurement strategies (3. therefore. the key issues are addressed together with the characteristics of a variety of procurement strategies: the aim is to match client needs. The strategy developed for the purpose of project procurement should result from an objective assessment of client needs and project characteristics. SECTION 1 PART THREE: CONSTRUCTION PLANNING AND PROCUREMENT SECTION 1: DEVELOPING AN APPROPRIATE BUILDING PROCUREMENT STRATEGY Introduction This section is intended to provide both clients and their advisers with procedures which will assist them in the selection of an appropriate procurement strategy for a building project. Section 1 (01/03) Effective from 1/3/03 Page 1 . resulting in cost and time overruns and poor building performance. The selection of an appropriate procurement strategy is identified as a key decision in terms of achieving client objectives. however. The selection process should.1.1).1. The implementation of strategies is considered in 3. This section looks at the client’s role (3.PART 3.2). Conversely.1 informs clients as to their involvement as it relates to key stages in the process. consultant or constructor appointment. an inappropriate choice can be a key factor in performance failure. provide a best-fit solution based on good judgement and which is acceptable in terms of the identified criteria and the acceptable distribution of risk. Appendix A outlines procurement options.3).1. result in a failure to meet client objectives. The Surveyors’ Construction Handbook Part 3. the selection of the most appropriate procurement route (3.1. the particular project’s criteria and the chosen strategy. since it is considered that there will be no single procurement strategy suitable for all projects and all clients.4). In 3. It also stresses the importance of appropriate professional advice.2–3.1. Choice of an inappropriate strategy can.1. disappointment and potential litigation. and the implementation process (3.1.4 where reference is also made to standard contracts for the designer. 3.

However. value for money is a key criterion.1. Although it is written for building projects. through the form of a checklist. Section 1 (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook . Attempts to categorise clients in various ways may be helpful in the early stages of developing procurement strategy.1. certainty of completion date may be a key issue.1. each client is unique and will be more or less experienced in the process of building procurement depending on company size and stage of development. Nor is it fair to suggest that developers are unconcerned about building performance or cost.1. There are market conditions where both of these issues may become important. Owner-occupiers are usually primarily concerned with building performance in terms of functionality and costs in use. a process to aid selection. depending on their knowledge and expertise. will need help from their Page 2 Part 3. It is important to consider those factors which will affect client satisfaction as well as the level of knowledge and experience of the client in the process of building procurement. Indeed.1. This is not to say that owner-occupiers are unconcerned about time.1 3. on the other hand. clients. may be driven by market conditions which enable the project to be let or sold at maximum advantage. They may be predominantly concerned with speed rather than performance.1 The Client’s Role (It is recommended that this be read in conjunction with Part 1. SCOPE The section and the processes included should be used as a prompt and a focus for the issues to be addressed during the development of procurement strategy. Section 1) G G 3. much of the advice is applicable to other types of project. SECTION 1 EFFECT OF CLIENT TYPE ON SATISFACTION CRITERIA The type of client will affect the criteria which must be met if the client is to be satisfied with the project. 3. In carrying out their role. These factors should have a major influence on procurement strategy and whether the client should take an active role in the procurement process.PART 3. This Section addresses these issues and provides. It is not intended that the section will be used as a substitute for judgement. They may also be concerned with image and building style. In this sense.1 INTRODUCTION This subsection explains the client’s responsibilities through the life of a project. Developers.

To perform effectively all parties should have timely access to all information relevant to their tasks and the project’s objectives and status. This subsection aims to assist both current and future clients in setting policy and formulating strategy. Each project is. It is unlikely that the same team will work together again. providing specified benefits at accepted cost. unique constraints – the cost and time parameters for the project. its construction involves major expenditure over a comparatively short period of time. The Surveyors’ Construction Handbook Part 3. therefore. but will also assist experienced clients and their advisers. and a unique end product – the finished building.PART 3. whose roles are also explained in this section. who will manage the whole project on behalf of the client.4 (a) Effective management is vital in any construction project. that clients obtain advice from an objective and independent adviser who will then not be involved as a consultant on the project. The client’s prime role is to define the project and to establish a structure for the management of the project to make sure that it works. is built up of many standard parts assembled in accordance with a series of standard rules and practices. project managers and other advisers. Section 1 (01/03) Effective from 1/3/03 Page 3 . and if it does. although itself unique. It is unlike any other manufactured product because it has: • • • • G 3.1.1.1. a prototype and involves a learning curve. The success of any project will depend on the motivation given by the client. It has three other particular characteristics: • • • the final product. G 3. SECTION 1 consultants. This team will normally only be formed for this unique project and then be disassembled. Where projects are of a large or complex nature it may be advisable to consider the appointment of a project manager. It has been written with the lay client in mind. It is advisable. the project is likely to be different. Experienced clients may take a leading role in the procurement process.1. Project testing is rare.3 a unique demand – the client’s specific need for accommodation (but future adaptability and possible disposal must not be ignored).2 A building project represents a discrete piece of work with clear start and finish dates. a unique location – the site available for the building. wherever possible. less experienced clients will need to seek advice or to appoint an adviser to assist them.1. and the construction of a new building requires a large team of individuals and firms with particular expertise to work together to complete the project satisfactorily.1. It outlines their task and explains how it should be carried out. G 3. (b) A crucial part of any effective management structure is effective communication.

As can be seen the client’s role is significant with a wide range of activities to perform and implement before both the design and the construction processes.PART 3. ensure that the requirements of the users are accommodated. and. has to take particular care to: • develop a business case for the project identifying primary needs and analysing costs and benefits • understand fully the purpose of the building. The selection of the right people is emphasised as a key to success. and communicate those requirements to the designers. (e) The diagram on the next page indicates the primary activities in the procurement process and when activities are performed. In the performance of these activities clients can expect to be supported and advised by their advisers or (if appointed) the project manager. therefore. (d) This subsection sets out the role and responsibilities of the client through all stages of the project. • appoint architects and engineers with the proven ability of designing buildings which satisfy users’ requirements and harmonise with and contribute to the quality of the built environment. SECTION 1 (c) The client can have substantial influence on the design of the project in respect of both functional efficiency and of overall appearance. Section 1 (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook . Page 4 Part 3.

13) Time control overview (3.1.13) Whole-life costs (3.1.4.1.1.4.1.1.4.4.1.5 PRIMARY ACTIVITIES IN THE PROCUREMENT PROCESS Pre-design phase The Surveyors’ Construction Handbook Contractual arrangements (3.1.9) Confirming the business case (3.9) Design overview (3.6) Contractual arrangements* (3.1.1.1.7) Project definition (3.4.1.12) Appointment of PM (if appropriate) (3.G Pre-construction phase Procurement strategy (3.1.1.1.4.1.4.1.1.4. SECTION 1 ( ) Indicates the subsection of this document referring to the activity Page 5 .4.4.1.1.4.18) Change control overview (3.1.1.3–5) (Client) Organisational structure (3.7) Appointment of design and cost consultants (3.14) Quality control overview* (3.14) Quality control overview (3.1.1.4.1.10) Systems and controls* (3.1.1.1.1. Section 1 (01/03) Procurement strategy Procurement strategy development (3.19) Commissioning (3.17) Time control overview* (3.1.11) Diagram to indicate the activities in the Procurement Process Client’s role Appoint adviser (3.17) Occupation and takeover (3.13) Value management (3.1.1.4.4.1.4.4.1.1.1.10) Project briefing (3.4.1.2) Effective from 1/3/03 * Indicates the activity will continue into the next phase PART 3.12) Cost control overview* (3.9) Define client’s responsibilities (3.16) Part 3.6) Develop the business case for the project* (3.4.13) Design overview* (3.1.1.4.15) Value engineering (3.4.18) Construction Post-construction 3.1.4.1.10) Systems and controls (3.1.12) Cost control overview (3.4.1.11) Implementation policy (3.18) Appointment of constructors (3.1.8) Procurement strategy* (3.1.4.1.11) Systems and controls (3.2) Implementation Resources (3.

(d) A best practice guide is available to assist in this process1. all but the most experienced client may need advice.7 CLIENT’S RESPONSIBILITIES (a) The client should set policy and outline strategy including: • setting and prioritising the project objectives.1. Briefing the Team. G 3. Page 6 Part 3.PART 3.1. and • evaluating the completed project against the objectives. 1 Construction Industry Board. (e) Possible sources for independent client advice include a suitably qualified and experienced construction professional such as a chartered surveyor. Section 1 (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook . (b) This advice can be offered by a member of the client’s design team or can be a separate function. London.6 INDEPENDENT CLIENT ADVICE (a) With the potential for the involvement of many consultants and/or constructors in a project. This function may encompass: • • • • • Assistance in preparing the business case underpinning the project Identifying the needs and requirements of the client Defining the project Matching needs and project characteristics with appropriate procurement strategy Facilitating the associated selection and contractual processes and policies (the business case) (briefing) (project definition) (procurement strategy) (implementation) (c) The decision as to which procurement strategy to select should be based upon information from the client and information about the project. 1997. • establishing procurement strategy.1. the type and character of the project and the range of appropriate strategies available. SECTION 1 G 3. The advice offered should be informed and unbiased and it should be based upon a logical analysis of the needs of the client. It may be more difficult for a design team member to remain impartial in carrying out this process and it is recommended that any expertise retained should be retained solely for this purpose.1. Thomas Telford Publishing. • clarifying client attitude to project risk. • arbitrating between conflicting demands. and the range of contracts associated with their employment.

time and change control. • substantial sensitivity analysis and ‘what if’ studies have been carried out to assess the effect of possible changed criteria on the viability of the project. realistic and achievable. • land will be purchased and available for the commencement of the work. Section 1 (01/03) Effective from 1/3/03 Page 7 . • finance and accounts – who will plan and control expenditure and pay bills as they arise.PART 3. • specialist groups – responsible for technical systems within the building. (d) The client should also co-ordinate and resolve conflicts between all interested sections of the client organisation including: • user groups – who will work in the building.g. SECTION 1 (b) The client also has a threefold management function: • to provide financial resources and land for the project. The Surveyors’ Construction Handbook Part 3. • advisers have developed cost estimates which are comprehensive and include all capital and resources costs. and that health and safety has been adequately addressed. • allowances made in the feasibility and viability assessments to cover possible risks are sufficient (contingency allowance). • facilities management – who will manage the completed building including maintenance and security. • legal advisers – who will advise on and monitor the client’s formal relationships with outside parties. to make decisions when needed. that: • the project brief is clearly defined as far as possible and linked back to the client’s business case for the project. to co-ordinate functional and administrative needs. • to manage the client input. • plans are in place for adequate project management including systems for cost. and • to supply the technical expertise. computers. communications. procure. as far as possible. to resolve conflicts. (c) In particular the client should be satisfied. • the project brief is comprehensive and clear and has the full support of the users. • the critical assumptions made in preparing the initial estimates and programmes are valid. • any constraints demanded by the project funder(s) are known and their impact understood. e. • an adequate risk analysis has been completed. monitor and control the external resources need to implement the project (throughout the procurement process). to act as the formal point of contract for the project. to assess.

In terms of the project development. total development time and taxation issues may also be influential on the decision process. (b) The client will need to review project feasibility in terms of time and cost against benefits which will stem from the proposed project. This will include: • scheduling the key decisions to be made. (d) Further influences in the case of a development project may include likely annual rental. operating and maintenance costs and the opportunity cost of money. SECTION 1 (e) The client is responsible for ensuring that all necessary decisions are made on time. In doing so he/she will have to consider the returns expected.1.8 KEY CLIENT ACTIVITIES Notwithstanding overall responsibility for the whole of the project.1. period between rent reviews. G 3. (c) The importance of each of these issues will be relative to the objectives of the client and to the extent to which the client is able to cope with risk. G 3. and • promptly communicating decisions made to the parties affected by them. cost of fees. • following up submissions throughout the decision making process. Section 1 (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook . Page 8 Part 3.1. construction costs. • establishing a formal programme for decisions. A chartered surveyor will be able to assist the client in these matters.PART 3.1. the client will have an active personal involvement in the key activities explained in the following subsections. • pre-warning decision makers of forthcoming submissions – making sure ‘items are on the agenda’. and growth of rental value. • identifying the decision makers and their required procedures. • ascertaining the time required for making decisions. (e) It is important that the client seeks advice in terms of investment appraisal of the planned project and that any appraisal considers ‘what if’ questions to ensure that the impact of changes of key components in the appraisal are clearly understood. • preparing on time fully detailed submissions and/or presentations in full compliance with procedural requirements. the value (in use) of the projected asset against projected land costs. Timely decisions are necessary to avoid delays and increased costs.9 DEVELOPING THE BUSINESS CASE FOR THE PROJECT (a) The client’s purpose in initiating a building project may be driven by the need for the project as a functional unit or long-term investment. fitting out and commissioning costs. the decision-making process requires as much planning and management as any other activity.

and site. Section 1 (01/03) Effective from 1/3/03 Page 9 .1.10 PROJECT DEFINITION The importance of a clear project definition to the successful completion of the project and in ensuring appropriate performance of the project cannot be over emphasised. (b) Since there can be a tension between the long-term objectives set for the project in the business plan and the short-term objectives set for the project by the project team. For example: Function Completion Cost % 50 20 30 100 Each of these can be subdivided to produce clarity. cost can be divided into capital and running costs.PART 3. SECTION 1 G 3. time into speed or reliability of delivery date and function into layout. target programme.11 project description.1. (c) One way to achieve this is to consider ‘what if’ scenarios to establish the importance of key factors: • what if the project does not meet its functional requirements? • what if the project is delivered late? • what if the cost of the project exceeds the budget? (d) By carrying out an analysis in this way relative importance can be given to each aspect by weighting that aspect against a total. environmental quality and specification. it is better to issue it in an incomplete form and progressively update it.12 BRIEFING (a) Once the project definition has been completed the briefing process will be carried out. equipment and special services/requirements. e.1. function of building.1. The project definition is a comprehensive statement of the client’s objectives and parameters for the project based on close consultation between the client and users covering: • • • • • G 3. G 3.1. without it little constructive work can be done. ESTABLISHING PRIMARY OBJECTIVES (a) In establishing the primary objectives for the project it is necessary to prioritise these objectives to ensure that when developing a procurement strategy appropriate emphasis is given to the most important objectives. the identification of priorities is very important. (e) This is the initial control document for the early planning of the project. The inexperienced client will need professional help from the advisers or design team in the preparation of the definition. If all the information required for the project definition is not readily available.g. This is when the design team and cost consultants are able to flesh out The Surveyors’ Construction Handbook Part 3.1.

Section 1 (01/03) . (b) While it may be difficult for inexperienced construction clients to visualise the descriptions outlined during the briefing process it is worth spending time seeking consensus on its content to avoid waste in the later design process. and planning the administration of the contracts underpinning the implementation of the strategy. • management contract – design by consultants. Effective from 1/3/03 The Surveyors’ Construction Handbook Page 10 Part 3. implementing the strategy. as ‘management contract’ but detailed design by the management contractor. The process commences with concept design building upon project definition and progresses through to a project brief which should encompass the client’s aesthetic. The client may need to take consultant advice on which strategy is most appropriate considering the prioritised objectives and attitude to risk. design and construction overlap.13 DEVELOPMENT OF PROCUREMENT STRATEGY The client is responsible for selecting the procurement strategy most suited to the project and deciding how it is to be administered. and • construction management – design by consultants.14 (a) Strategies may include: • traditional – design by consultants completed before lump sum tenders are obtained.PART 3. • design and manage – outline design by the consultants.4 – Implementation). G 3.1 (d) Following the development of the brief for the project the design process will commence (see 3. G 3. The processes of procurement strategy selection and implementation are dealt with in 3. • design and build – detailed design and construction by the contractor for lump sum. design and construction overlap. This is a three-stage process which may be key to project success: • • • selecting the strategy. (c) The Construction Industry Board (1997) have produced an excellent guide called Briefing the Team which summarises the processes involved. SECTION 1 the project prior to extensive design work.1. design and construction overlap. design and construction may overlap. management contractor appointed early and work package contracts let progressively in the contractor’s name. construction manager appointed early to produce and manage trade package contracts made directly with the client.4.1.3 and 3.1.1. Where a concept design is produced by the consultants before the contractor is appointed.1.1.1. the strategy is called develop and construct. spatial and service requirements.

evidence is beginning to emerge of real all-round benefits being achieved particularly by regular and experienced construction clients. Partnering in the Team. There is also a focus on achieving the best outcome for the client as well as a satisfactory outcome for each participant. The Surveyors’ Construction Handbook Part 3.16 (a) Where direct consultant appointments are made each will be subject to a separate form of contract. simple approaches to dealing with disputes and a focus on continuous improvement which can be measured. (d) The principles associated with Partnering are based on inclusiveness and depend upon a trust being established within the team. but where a design and build strategy is selected.15 (a) The extent of collaboration possible between those who design the project and those responsible for delivery will vary with the strategy adopted. In the case of construction management. the client will be required to enter into many individual trade contracts. Thomas Telford Publishing.1.PART 3.1. G 3. (b) Contract implementation can be complex and may encompass the additional appointment of consultant advisers or the novation of designers from the client to the contractor. London. 1 Construction Industry Board. forms of warranty and collateral contracts may be involved. (c) Partnering is not so much a contract strategy as a way by which the project team can be drawn together for their mutual benefit. The primary principles include developing mutual objectives. (e) This approach represents a change in the culture traditionally adopted by the UK construction industry which has previously been based on price-bid approaches and will need to be carefully managed. Partnering is usually most advantageous where the client has a range of projects to procure but can be adopted for single projects. SECTION 1 G 3. The consultant advisers can assist the client in the selection of appropriate contracts and the documentation associated with them. (g) The number and style of contract documents will depend on the contract strategy selected.1. In addition.1. However. (f) The Construction Industry Board have published a most useful guide to partnering1. designers may be appointed by the contractor. 1997. or by negotiation. (b) Selection strategies may include selection by competition for price. In some cases a high level of collaboration is possible enabling those responsible for delivery to adopt a ‘Partnering’ approach to project delivery. Section 1 (01/03) Effective from 1/3/03 Page 11 . on the basis of the quality of the bid as well as price alone.

Section 1 (01/03) . (d) Guidance on the appointment of consultants and contractors is included in 3.1. although it will affect it.PART 3. or the client him/herself. a contract administrator. resource and cost implications which should be incorporated into the overall project plan. 3.1. Where buildings have sophisticated systems controlling the internal environment or facilitating staff movement or safety. • the hand-over and acceptance of the building from the contractor(s). This activity is separate from the design and construction process. and may fall upon the design team.1. G 3. (c) However commissioning is facilitated.17 COMMISSIONING (a) Once the building work is complete the systems which will support comfort must be commissioned to ensure they are working effectively and reliably.18 OCCUPATION AND TAKE-OVER (a) The client is responsible for addressing the issues of occupation. • the progressive final fitting-out (if any) and physical occupation of the building with minimum disruption to the client’s operations. staffing and subsequent operation and maintenance of the building. the project manager. The client should seek advice to ensure that the administration process is appropriately planned and delegated.1. The way in which the client and the various designers.1. (b) In relatively simple buildings the client can insist that this is a function which the contractor must perform.2 Procurement Strategy G 3. (b) For large projects. SECTION 1 (c) The responsibility for contract administration will depend upon the procurement strategy selected. commissioning can be established as an independent activity carried out by specialists.4 (Implementation).1.1 Designing and constructing a new building is rarely straightforward. It is subject to a series of risks and uncertainties and involves a number of organisations especially assembled for the project. and will have its own time. it must be achieved before any building can function effectively.1. G 3. the client may wish to arrange for the nomination of a member of the department to act as occupation manager to manage this activity or may appoint a facilities manager. contractors and suppliers work together as a team is determined by the procurement strategy and forms of contract entered Effective from 1/3/03 The Surveyors’ Construction Handbook Page 12 Part 3. Occupation plans should be established during the design stages of the project and should cover: • the operation of the building on a regular on-going basis.2.

Procurement strategy has a major impact on the timescale and ultimate cost of the project. before contract strategy is decided and before construction contracts are let. construction. Where the development of design does not maintain the pace anticipated. The final cost of the project may only be accurately forecast when all packages have been let. then carry out.PART 3. They can either integrate the design and construction processes or segregate them.1.1.2. Risks are also allocated by means of the associated contracts.3 G 3. Approaches to the selection of processes enabling collaboration are referred to in 3. Section 1 (01/03) Effective from 1/3/03 Page 13 The Surveyors’ Construction Handbook . All contracts are between the client and the trade contractors.1. clients can choose from several different strategies. The main types of procurement strategy are summarised below (they are covered in more detail in Appendix A). the selected strategy must be reviewed. It is most important that the strategy is reconsidered at key times in the progress of the project such as when planning approval is given. management contracting: design by the client’s consultant and construction overlap. G 3. G 3.2. Part 3. Generally. The chosen strategy influences the allocation of risk. or the programme is otherwise affected by unexpected occurrences.2 Procurement strategy is the outcome of a series of decisions which are made during the early stages of a project.2. A successful strategy is one which leads to a completed building which meets the client’s objectives. The contracts are between the management contractor and the works contractors.2. The preferred aim is for contributing parties to work together for a quality result rather than competing against each other. A management contractor is appointed early to let elements of work progressively by trade or package contracts (called ‘works packages’). It is one of the most important decisions facing the client. The procurement strategy should be consistent with the objectives of the project and should enable the risks to be controlled to achieve a successful outcome. SECTION 1 into between the project participants and the client. construction management: design by the client’s consultants and construction overlap.4 (Implementation).4 G 3.1. A fee-earning construction manager defines and manages the work packages.1. the design strategy and the method of employment of consultants and contractors. As with construction management. DEFINITION OF TERMS Different procurement strategies provide different ways of allocating risk and responsibility to the organisation contributing to the project.5 • • • traditional: design by consultants is completed before contractors tender for. the final cost can only be accurately forecast when the last package has been let.

2.PART 3. To minimise such risks the client should select the procurement strategy which matches the objectives of the project. and design and build: detailed design and construction are both undertaken by a single contractor is return for a lump sum price. To avoid the need for fresh legal drafting each time. This increases the importance of accurate cost forecasting and the risk to the client.2.2.6 On some projects it may be necessary to use more than one strategy to meet the project’s objectives. The greater the overlap between the two.1. For example. both for the appointment of consultants and contractors. the strategy is called develop and construct. Construction professionals re usually experienced in understanding these contracts and can advise on the implications of their adoption. construction management. carpets.1.e.1. may be used to fit out the building with ceilings. When the choice of procurement strategy has been made.10–11 – Project Definition.1. partitions and electrical fittings. The range of contracts available is referred to in 3. various standard forms of contract are available. G 3. A separate strategy.7 G 3. for example. SECTION 1 • • design and manage: similar to the management contract.1. These must be clearly established and prioritised before any design or other work begins (see 3. This is known as a shell and core contract. a traditional approach may be used for completing the building structurally with main services installed.8 Page 14 Part 3. cost and performance: • time: earlier completion can be achieved if construction is started before design is finished. • cost: with the exception of simple ‘standard’ buildings and certain ‘design and build’ strategies. the less time will be required to complete the project.1. Section 1 (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook . the terms and conditions of the contract). raised floors. The use of two strategies allows the client more time to finalise the user’s detailed requirements. the resultant contract strategy and forms of contract should be chosen (i. and G 3. a final construction contract sum cannot be established until the design is complete. (b) The client must decide the relative importance of the three main types of criteria – time. Any overlap between design and construction means that construction starts before the cost is fixed. with the contractor also being responsible either for detailed design or for managing the detailed design process. Where a concept design is prepared before the contractor is appointed. Establishing Primary Objectives). PROJECT OBJECTIVES (a) Construction (and refurbishment) projects are often complex with potential for cost and time overruns or the finished building performing less well than planned. without delaying the start of construction.4 (Implementation).

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• performance (design): the quality and performance characteristics required from the completed building determine both the project time and cost. Some strategies reduce the client’s ability to control and make changes to the detailed building specification after the contracts have been let.
(c) Performance includes the function of the building, its quality and appearance and other factors such as durability, cost in use and flexibility. The relative importance of each objective must be given careful consideration because decisions throughout the project will be based on balances between the other objectives (see Figure 1). In any project these three criteria will be interdependent and decisions affecting one will affect one or both of the other criteria. The appropriate procurement strategy will recognise this interrelationship and reflect the client’s objectives and the characteristics of the project. It is uncommon for a project simply to emphasise one criterion alone and most projects would emphasise time and cost, time and performance or cost and performance. The project strategies most commonly adopted reflect this characteristic. The strategy should also reflect the client’s technical ability and resources and the amount of control over the process which he/she wishes to exert directly or through the project manager (if appointed).

FIGURE 1 THE RELATIONSHIP BE TWEEN P RIMARY CRITERIA

Time aspects (speed to completion, programme certainty)

As the emphasis on one or two of these criteria increases the other(s) will be affected

Cost Issues (level of price, certainty of price)

Performance Issues (quality, functionality, design)

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G

3.1.2.9

RISK AND RESPONSIBILITY (a) There is a finite amount of risk and responsibility associated with any project and this should be an influencing factor on the selection of the procurement strategy. The uncertainties of time, cost and performance are the three main risks that are present in every project. Risks are usually considered as uncertain future events, which may have significant effects, e.g. extra cost, delay or damage to the performance of the finished project. Having set the priorities for the project’s objectives, the client should consider the effect of those objectives not being met and the resulting risks to which he/she could be exposed. Although the project is subject to a wide variety of risks, it is important to note that only a few have a major effect. This is a powerful argument for concentrating attention during cost estimating and management decision-making on the few largest sources of uncertainty and risk and for developing strategies for managing out risk and for setting up contracts in such a way that the allocation of the major risks is clear. (b) The risks which are considered to have potentially the greatest impact on construction projects include: • a project which will not function in accordance with the client’s needs; • a project which is of inadequate quality; • a project which is completed later than required deadlines; and • a project which costs more than the client’s budget or ability to pay. In each case, the strategy can be to transfer the whole risk to another through the medium of contract. This is possible but will attract high price premiums or will expose the transferee to risks which they may not be able to ‘own’ or insure and therefore the party transferring the risk will remain exposed. Risk may alternatively be retained in part by the client, or reduced by adequate pre-design or pre-price investigation. (c) As has been already suggested, an adequate brief will reduce risk and ensure functionality and quality standards. Equally, adequacy of programme will reduce the risk of overrun and adequacy of cost estimates should ensure a resultant cost which is within budget. Both construction time and construction cost estimates depend upon sufficient design development, which itself will depend upon an adequate brief and parallel investigation of ground conditions and the particular requirements of statutory controls. In ensuring that the brief is adequate, and that design is appropriately developed, the client can successfully reduce some risk in a way that will not result in high price premiums. (d) Ideally, risk and responsibility should go together, so that the party responsible for performing a task is accountable. Each risk should be allocated

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to the party with the greatest ability to own the risk and to manage its effects. If, for example, the client considers it critical that the price for the building is fixed before construction commences, the risk of meeting that objective could be passed to contractors, making them contractually responsible for completion to an agreed design and specification for a lump sum price. G 3.1.2.10 PASSING ON RISK (a) Responsibility for risk and the ability to control a project interact. The more the client chooses to allocate risk to other parties, the less control the client has over the way in which the project is executed. In the example above, if the contractor has to meet the agreed specification within the budget and time, the client has little influence over the way in which these objectives are met. In practice, risk allocation is determined by the chosen strategy and allocated by means of contracts between the client and those responsible for managing, designing or constructing the project. The way in which risk and responsibility are allocated by different contract strategies is indicated below and shown in Appendix A. (b) In all cases where risks are transferred in contractual terms, it is necessary to ensure the ability of the transferee to own the risk. In the case of design failure, for example, this is usually passed to the design team including the architect and engineering consultants. Because of the nature of their professions they should have insurances of sufficient capacity to meet the maximum possible cost of correcting the design failure. The client should ensure that such insurances are in place, adequate and paid for; where a project manager or consultant adviser has been appointed, this is a role that may be performed by him/her. (c) Some design work may be carried out by subcontractors who may or may not continue to pay design liability insurance premiums and usually will have limited liability status. Liability for their design work is commonly passed by warranties but these are less secure. Equally, where time risks are passed to contractors their attempts to transfer them to small subcontractors may fail where the capacity to own or accept the risk is limited. In situations such as these it may be possible to pass risks contractually but the lack of security associated with the transfer may result in the risk being borne by the party attempting to pass it. It is difficult to allocate blame in team situations. The client should be aware of this weakness in terms of risk allocation. (d) While the transfer of risk provides an incentive for the receiving party to minimise its impact, the client should avoid transferring risks when the receiving party has no control over them or no capacity to absorb them. Generally, the more the risk of cost and time slippage is allocated to other
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parties, the higher the tendered cost. In pricing the project, tenderers may over-estimate the size of the risk or add a high safety margin to an accurate estimate and thereby increase the project’s costs unnecessarily. G 3.1.2.11 RISK AND PROCUREMENT STRATEGY (a) Risks are inherent in the data used by the client in the preparation of the brief, they are inherent in the characteristics of the project, and they are inherent in the procurement strategy which is selected. The identification of primary risks and an analysis of the client’s ability to be a risk taker, or need to be risk averse, should affect procurement strategy. With this information in mind steps should be taken:

• •

to inform the client of the extent of the risks involved; and to prepare a strategy for managing risk.

Since the latter will have a cost the client should also be advised of the expense of managing risk. (b) Appendix A refers to the characteristics of each procurement strategy and indicates the levels of risk associated with time, cost and performance in each case on the assumption that the procurement strategy is properly utilised and in no way abused. (Thus, for example, in relation to the traditional system it has been assumed that design completion is achieved before measurement and documentation is carried out.) These primary risks are summarised (by simple examples in Figure 2) by procurement method in the categories time, cost and performance. Where design is by the client’s consultant, design risk is placed by the appointment agreement. Where design is by the contractor, design risk is placed by the building contract agreement. Where lump sum price is fixed by the contract the responsibility rests with the contractor. Where a contract sets standards of specification, meeting these standards is the contractor’s responsibility (risk). Thus by contractual agreement primary risks can be distributed between client, designer and constructor. It is impossible to dispose of all risk inherent in construction projects and some will inevitably remain with the client. For example, the risks listed here tend to be client risks and although they may be of varying likelihood they should be understood.

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FIGURE 2 S U M M A R I S I N G T H E P R I M A RY R I S K S , B Y E X A M P L E
Time Traditional Fixed but extension of time possible due to client and designer initiated changes Cost Fixed but subject to change where design changes are made, where inflation occurs or where contractor is alleged to have grounds for contractual claims As traditional Performance Designed by client’s consultant. Quality set by contract documents

Design and Build Contractor

As traditional

Design by contractor but with varying levels of input by client – quality set in same way As traditional

Separate management function

Time not fixed by contract

Cost not fixed before commencement

(c) This short list segregates residual risk by procurement method. The extent to which risk remains with the client can be established by a detailed analysis of contractual agreements.

Traditional – building suitability – risk of contractor insolvency – risk of delay by consultant or the causes allowed by contract Design and Build – building suitability – design functionality and usability – design insurance if contractor moves away from this type of business, goes out of business or fails to pay premium Management Contracting/Construction Management – as traditional procurement plus: risk of cost overrun risk of time overrun

G

3.1.2.12

SUMMARY (RISK) Risk can be reduced, retained, transferred or distributed. To transfer risk successfully the risk taker should have the capacity to take the full extent of the risk or the risk placer will have failed. Where there are so many relatively small firms, as in the UK construction industry, this can be problematic because many contracts place risks with risk takers without sufficient capacity. They may be limited liability companies or may be unable or unwilling to insure.

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Thus, for example, attempting to enforce large scale liquidated damages for late completion on a small-sized domestic subcontractor may fail for lack of financial capacity within the small company. Procurement strategy should therefore reflect the ability to place risk, and where possible risk should be managed out. G 3.1.2.13 PROCUREMENT STRATEGY AND THE PROJECT CYCLE The development of procurement strategy follows the stages in the life of a project. Initially, a preliminary strategy is determined. It is based on a broad definition of objectives and is an essential step in establishing the way forward for the project. It encourages the client to consider strategy early. The preliminary procurement strategy is usually developed with help from the client’s adviser and possibly other consultants. Procurement strategy development has three components:

• • •

analysis – assessing and setting the priorities of the project objectives and requirements; choice – considering possible options, evaluating them and selecting the most appropriate; and implementation – putting the chosen strategy into effect.

During strategy preparation, it may be necessary to seek specialist advice from other consultants, for example, in relation to expected costs for the project. The adviser should advise the client on this. Specialist advice should be sought when developing the strategy for novel or especially difficult projects. Until construction contracts are let, the client, with help from his adviser, must systematically ensure that the strategy is on course to meet the project’s established objectives. This is important because objectives sometimes change. G 3.1.2.14 IMPORTANT CONSIDERATIONS The factors listed below should be considered in analysing project objectives, requirements and their relative priorities (each is then considered in detail) and may have an effect on the choice of procurement strategy:

• • • • • • • •
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factors outside the control of the project team; client resources; project characteristics; ability to make changes; risk management; cost issues; timing; and quality and performance.
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Inevitably, some of these requirements will be in conflict and priorities need to be decided. The choice of strategy should ensure that control is maintained over those factors which are of most importance to the client. The way in which this choice can be made is covered below and in 3.1.4. (a) Factors outside the control of the project team Consideration should be given to economic, technological, social, political and legal factors which influence the client and the project team or are likely to do so during the lifetime of the project. These may include forecast and actual:

• • • •

interest rates; inflation; changes in output of construction industry affecting tender price levels and the availability of skilled labour; and legislation, particularly legislation affecting the design and construction of projects. In many cases the client will have responsibility for legal compliance, particularly in relation to health and safety matters and should seek the advice of his/her advisers (including the design team) on such issues as a matter of importance.

(b) Client resources The client’s knowledge and experience of the company’s organisation and the environment in which it operates are vital in assessing the appropriate procurement strategy. Project objectives are influenced by the nature and culture of the company, external influences and the expectations of individuals affected by the project. The extent to which the client is prepared to take a full and active role is a major consideration. (c) Project characteristics The size, complexity and location of the project should be carefully considered and particular attention given to projects with novel elements. For example, if the building is especially large or complex there may be a bigger risk of cost or time overrun. Novel projects present special risks. The novelty potential factor means that estimates of time, cost and performance are all subject to greater error with an increased probability of one or more of the project’s objectives failing. (d) Ability to make changes It is preferable to identify the total needs of the project during the early stages but this is not always possible. Rapidly changing technology often means late changes. Changes in the scope of the project very often result in increased costs, especially if they arise during construction. Changes introduced after the design is well advanced or construction has commenced often have a disproportionate effect on the project, in terms of cost, delay and disruption, compared with the change itself. The design process goes through a progressive
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series of ‘freezes’ as it develops but the client should set a final design freeze date after which no significant changes to requirements or design are allowed. Some procurement strategies such as construction management are better than others at handling the introduction of changes later in the project without having to pay some form of specific premium. (e) Cost issues Price certainty – influences the project timing and the procurement strategy which should be used. Generally, design should be complete if price certainty is required before construction commences. Cost of changes – if cost certainty is to be maintained during the course of construction changes should be avoided. Changes often have cost and time implications on the project well in excess of the change itself. It is therefore important for the client to fix a date after which no significant changes should be introduced. (f) Timing The programme of the project is influenced by many of the above factors. A particularly large and/or complex project is likely to require more time for design, specification and construction than would be required for a simple small building. It is of vital importance to allow for adequate design time in terms of the total project. If design is required to be complete before construction commences (where perhaps cost certainty is required) this is particularly the case. In the process of the appointment of the design team assurances should be obtained about resource levels and the ability to meet key dates or programmes. It is not usual to impose contractual dates upon designers, although their progress is probably the key to the overall completion date. Decisions to progress with a project may be influenced by the gaining of planning approval, by the successful operation of compulsory purchase order, by land purchase or by some other non-specific but critical factor (such as obtaining funding approval). Depending on whether these factors occur earlier or later, they may be an influence upon the planned or desired time available for design. Procurement strategies such as management contracting, construction management, and design and build provide an overlap between the design and construction stages, so construction can start earlier than sequential strategies and offer the potential for earlier completion. It may be necessary to review planned procurement strategy in the light of design progress at the point where restraints to constructions are removed, bearing in mind the stage of design and the consequence in terms of risk.
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F IGURE 3 CON STRUCT ION T IME S
The following times are based upon historical data and are only a guide. Projects of relatively simple design may be constructed more quickly and more complex designs may take longer. New purpose built cost (£millions) 30 25 20 15 10 5 New purpose built cost (£millions) 30 25 20 15 10 5 Retail facilities weeks 90 80 75 70 65 55 Office facilities weeks 120 110 100 90 85 70 New speculative cost (£millions) 30 25 20 15 10 5 New speculative cost (£millions) 30 25 20 15 10 5 Retail facilities weeks 100 95 90 85 80 70 Office facilities weeks 135 130 120 110 100 85

(g) Construction times Total construction time is a consequence of design. Insufficient time allowance can result in apparent delay when in fact the targets were unachievable. Design is a time-consuming process and often will take as long as construction itself (sometimes longer). More complex structures will take longer given the same cost or size, and may require more resources. Although it is possible to work on site for extensive hours or to increase resources, it is not always possible to achieve directly resulting productivity. The law of diminishing returns will have an influence because of the limited space and the nature of traditional construction methods (such as concreting and bricklaying). Indications of construction times are shown in Figure 3. These are only a general guide and should not be relied on without careful review. The data on which these are based was available only for commercial and industrial projects. This data was used to confirm, enhance and update that published by NEDO (1988), Faster Building for Commerce and the construction costs have been updated by index to the year 2002. If possible (as in the case of
The Surveyors’ Construction Handbook Part 3, Section 1 (01/03) Effective from 1/3/03 Page 23

as each will address the various influencing factors to a different extent.2. (h) Design times There is no reliable data available to indicate the time to be allowed for design. Section 1 (01/03) . The impact that this will have on the overall programme will depend upon the choice of procurement strategy and whether any overlap of design and construction is allowed. In developing strategies.2.1. (i) Performance The required performance of the project measured both in terms of its response to the needs of the client and the quality of individual elements must be clearly identified. thereby affecting the cost objective.16 Common strategies differ from each other in relation to: • • • • the financial risk that the client is exposed to. Conversely. Other projects are likely. If performance is over-specified. It is likely that there will be more than one way to achieve the requirements of the project. If quality and performance are particularly important the client will probably want to keep direct control over the development of the design. to be more complex and may therefore take longer. as they are more likely to be aware of the logistical consequences of particular designs. in most cases. It is important to consider carefully each option. the information required at the time construction contracts are let.15 PROCUREMENT OPTIONS When all the factors influencing the project have been identified and the project requirements analysed. As a general rule it will take between two thirds of construction time to one and a half times construction time to design a building. the final strategy for the project must be developed. This can be achieved by employing the design team directly. the extent of involvement of the contractor in the design stage when the contractor may be able to influence the ‘buildability’ of the project. Effective from 1/3/03 The Surveyors’ Construction Handbook Page 24 Part 3. G 3.PART 3. Over-specification will also lead to time overruns. failure to recognise the true performance objective leads to an unsatisfactory product. the degree of control that the client has over the design and construction processes.1. a premium will be paid for exceeding actual requirements. SECTION 1 management contracting and construction management) those who will be involved in the construction process should also be involved in the planning process. a potential danger is that only the most obvious course of action may be considered – this is not necessarily the best in the longer term. G 3.

the project type and the client’s exposure to risk. SECTION 1 • • G 3. Each diagram has a consistent format to indicate: • • • • the contractual relationships (showing administrative responsibility in most cases). cost and performance (design) forms a key criterion in the selection mechanism as does inherent risk and its apportionment. the advantages and disadvantages. The relative importance of time. In Appendix A each of the most commonly used procurement strategies is described and is also illustrated by diagram.1. A procurement selection checklist is provided here to assist the client and advisers in the identification of an appropriate strategy. Professional judgement is a reliable way of selecting an appropriate procurement strategy although some procurement strategies can be inappropriately adopted because of individual preference.3.1. internal management structure.3. G 3. resource and funding facility. not to replace judgement.17 the organisational arrangements which distribute responsibility and accountability.2 PROCUREMENT SELECTION CHECKLIST This process has been designed to establish a range of information about client needs and about the particular project being considered.1. and feasible in the light of the client’s expertise. the sequential nature of the process. Section 1 (01/03) Effective from 1/3/03 Page 25 . The selected strategy should be: • • suitable in the light of the client’s needs.3 Selection of Most Appropriate Procurement Strategy G 3. The Surveyors’ Construction Handbook Part 3.PART 3. and the sequential nature of the process. based upon advice from the project team and principal adviser. medium or low).2. and the dominant risks categorised broadly (as high.1 The ultimate responsibility for selection of appropriate procurement strategy will rest with the client. 3.1. It is intended to inform judgement. and to develop this information in parallel with the characteristics of procurement strategies and associated risk.

2 find temporary accommodation? 7.1 stay in existing premises? 7. Define the reason for the identified completion or ‘move in’ date: 4. CHECKLIST 1: TIME The following should be considered: 1. How long is it in months from the date of completion of this protocol until the desired ‘move in’ date? 4. Does the answer to question 1. and the associated risk so that an informed decision can finally be made.1 suggest a faster than ‘normal’ total project time in the judgement of the adviser? 3.1 Is completion needed by a specific date? 1. to the client of the building or facility in terms of contribution.3 new business opportunities 4.2 Is the need for completion by a specific date or within a specific time more important than spending an extended time on design? 6. If the building is completed later than the specified or desired time will the client: 7.3 close down? 7.1. The analysis can then be compared with the characteristics of each procurement method. 2 and 3 should be carefully completed in consultation with the client.1 Is the need for completion by a specific date or within a specific time more important than certainty of construction cost before work starts? 5. SECTION 1 G 3. 5.3.2 Is completion needed in the shortest possible time? 1.PART 3.4 don’t know. Section 1 (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook .3 METHOD Checklists 1. Page 26 Part 3.4 unsuitability of present premises 4.1 end of lease 4. The resultant information should then be transferred to Checklist 4 which will enable the information to be analysed and evaluated. in sterling.2 sale of premises 4.3 Is the client prepared to pay more for earlier completion? 2.5 company restructuring 4. What is the approximate value.6 other. rental or cost savings per month? 7.

Does the building type suggest emphasis upon functionality? 5. Is it anticipated that extensive changes to design may be required during the construction phase? 7. electrical or engineering installations? 6. and 2(e) whether the client has a long-term view about the cost of the building. and 1(f) what action the client may take if the dates are not achieved. 2(c) whether the building design is complex. 1(c) whether required completion time is relatively fast. Does the building type suggest relative design complexity? 4. CHECKLIST 2: DESIGN/PERFORMANCE 1. The Surveyors’ Construction Handbook Part 3.PART 3. 2(d) whether functionality is particularly important.1 shape or topography? 2. Does the client wish to particularly emphasise product quality at a higher potential cost? Upon the completion of this part of the process. Does the client wish to particularly emphasise low maintenance costs? 9. SECTION 1 Upon the completion of this part. Does the building type suggest highly complex mechanical. Section 1 (01/03) Effective from 1/3/03 Page 27 . Does the site (if selected) pose any particular problems for the designer in respect of: 2. the following information should have been established and should be transferred to Checklist 4: 2(a) whether the client has clear ideas about his/her needs. 1(b) reason for completion time. 1(e) the potential financial implication of earlier or later completion.3 storage space? 3. the following information should have been established and should be transferred to Checklist 4: 1(a) specified completion time.2 access? 2. 2(b) whether the site poses complex design problems. 1(d) whether time is seen as the predominant client need. Has the client clear ideas about building functionality and its desired design? 2. Does the client wish to particularly emphasise low running costs? 8.

2 construction. a method of achieving cost certainty relatively quickly may be through negotiation. 2d. the completion date can be contractually fixed. If relative speed is required can the client accept less cost certainty? See 1c. 2b. • Does the information provided indicate that the project is complex in terms of design or in terms of site-related problems? See 2b. is the project feasible in terms of time and viable in terms of cost on the basis of the information in 1a. including fees 2. 3a. What is the client’s maximum budget? 2. and 3(c) need for pre-construction cost certainty. 1d. If no. 3. 3c? If yes. this may mean that fast-track approaches may be suitable. 2b. Can the budget be allocated as below? 2. the following information should have been established and should be transferred to Checklist 4: 3(a) total maximum spending capacity. adequate time should be allowed for a design process to occur which will provide the client with an acceptable design solution.PART 3. proceed. 3c. 2c. Design and construction should be planned.5 other (define). the project has to be carefully planned from a reasonably advanced design. Will the client need to have a fixed contract price for the construction element of his budget or will a reasonably accurate budget be adequate? Upon the completion of this part of the process. CHECKLIST 4: ANALYSIS • • As an overview. Where design is completed. Section 1 (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook . 2a. or can slippage be coped with if cost is considered? See 1b. advise client and seek other solutions. If yes. 2a. Is the reason given as to why it should be completed by the specified date vital to the project’s success in terms of client needs. 2c.4 contingencies 2. 3b. Page 28 Part 3. 3c. SECTION 1 CHECKLIST 3: COST 1. 2c. If so. fast-track systems can achieve relative speed by overlapping design and construction. If vital. If no.1 land purchase and fees 2.3 fittings and plant 2. Where design cannot be completed. 3(b) total construction spending capacity.

cost and design has now been reviewed. SECTION 1 • Some fast-track solutions will enable the design process to be extended into the construction phase where pre-construction time is not available. There is always an interrelationship between these three primary criteria and procurement systems selected should reflect this.1. Notwithstanding the role of consultants or a project manager. whereas the potential capacity for design shortcomings may rest with production-led systems. Is the need to ensure that the project can be built within a budget a priority? See 3c.3. G 3. the client should ensure that he/she puts in place the necessary resources. organisational structure. Section 1 (01/03) Effective from 1/3/03 Page 29 . contractual arrangements.1.1. The latter will not give cost certainty and may result in a less balanced project in financial terms. the strategy should be successfully implemented. Design-led projects usually reflect the characteristics of procurement systems where the client appoints his/her own design team. whereas production-led projects enable the constructor to take on some or all of the design function. Projects can probably be broadly categorised into those which will be design-led and those which will be production-led. System selection should consider whether the project is design or production-led but should also consider the client’s need to manage and/or distribute risk. the importance of time.PART 3.4. This will reduce cost certainty. Design-led projects have the greater capacity for cost and time overrun.4 Implementation G 3.4 CHECKLIST SUMMARY Having established whether the project is both feasible and viable. In this event. design should be complete before construction is commenced or a sufficiently large contingency should be allowed. The Surveyors’ Construction Handbook Part 3. 3. systems and controls necessary for a successful project outcome. The client should implement the strategy but may do this with the advice of consultants or a project manager. In many cases they will carry out most or all of the necessary functions in achieving implementation and the client’s role will be to formally approve their actions.1 Having selected a procurement strategy for a project.

the funding function has been assumed to be a matter for the client.4 HUMAN RESOURCES In terms of client organisation. staff and cost. In most cases. (b) Design and construction resources must also be appropriately selected and in place at the right time. It is possible to take account of each contractual agreement and to plan expenditure in the form of a cash flow. rather than cost being the major influence in selection. it is self-evident that the client should ensure their availability in a suitable form at the right time. the client should be prepared to allocate appropriate in-house personnel to the project or should be prepared to appoint consultants for this purpose.4.4.2 IMPLEMENTATION POLICY Implementation of procurement strategy is a key role for the team and warrants sufficient thought and review.1. with value for money. competence. Both of these team members should be in place at an appropriate time to ensure that funding arrangements are appropriate.5 PHYSICAL RESOURCES (a) Where physical resources such as land. sufficient funding should be available at appropriate times in the pre-construction and construction process.1.4.4.3 FINANCIAL RESOURCES (a) In this section.1. Useful advice in this context can be provided by the project manager or the project cost consultant. consultants are appointed to design and cost a project. Section 1 (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook . It is a vital function and by the time the procurement strategy is set. The policy developed to ensure appropriate implementation should be clearly communicated to all the key players. Page 30 Part 3. (c) The criteria for the selection of the design team are outlined below and are based upon the factors of capability. By ensuring that implementation policy is maintained. G 3. this is a matter for the client and/or the client’s organisation although these are matters which can be handled by a project manager.1. the client has a greater chance of obtaining the right project at the right time at the right cost with the minimum of conflict. but a client will have his/her own staff member who will provide liaison and a focus for decisions. G 3. Where this is not possible the appointment of a project manager is desirable. plant and machinery have to be provided by the client.PART 3. G 3. Only one individual should have the authority to instruct those carrying out the design or construction on behalf of the client. to design or to construct. whether they be agreements to purchase land. (b) Funding requirements are usually a consequence of contractual agreements. or where specific arrangements for decanting are necessary. SECTION 1 G 3. Where alternative accommodation is required.

(b) This will require the creation of an organisational structure for the life of the project to enable communication to occur and to facilitate effective decision-making. (e) A number of Codes of Procedure for the selection process are available and are referred to in sections 3. G 3. selection The Surveyors’ Construction Handbook Part 3. specialists.4. legal advisers and security personnel can all have input to the project through the created organisational structure by invitation. The project manager may be a member of the client organisation who is given sole. part of which is to manage the client input.1. facilities managers. Section 1 (01/03) Effective from 1/3/03 Page 31 .1. Project management practices also exist to enable appointments to be made on a consultancy basis.4. or predominant. as well as to act as the formal point of contact for the project. Selection can also be by negotiation with one or two constructors. based upon a fixed design and specification or can. the designated member must have sole authority to communicate decisions to the project design and/or construction team.1. SECTION 1 (d) The criteria for the selection of contractors are referred to below and are broadly the same. The basis for selection of constructors can be price competition. but this tends to be a much more complex process and the criteria are dependent upon the procurement strategy selected. finance and accounts personnel.6 ORGANISATIONAL STRUCTURE (a) The client has a dual management role. time and cost requirements are achieved. but decisions are reserved to the in-house executive or the project manager. or to require changes. Whichever choice is made.4. to co-ordinate functional and administrative needs.1. be based upon competition for design solutions too. Where more than one individual is empowered to instruct. Suitable documentation for the selection process must be prepared and the client should seek the advice of consultants or the project manager who may also be required to manage the process. extreme confusion can take place. In this case.7 APPOINTMENT OF A PROJECT MANAGER (WHERE APPROPRIATE) (a) Due to the complexity of modern building and the potentially large number of parties involved in the process the client may wish to appoint a single person to draw the process together and manage it to ensure that the overall performance. can meet with designers or constructors to ensure effective communication. or can be based upon a two-stage process. in the case of design and build options.8 and 3. responsibility for the project. and. maintenance staff. (c) The organisational structure created may be headed by a key member of the client organisation or may be headed by an imported project manager. G 3. (d) Building users. or right. to resolve conflicts.9.PART 3. as appropriate.4.

PART 3. (c) The client’s role upon the appointment of a project manager should include: • explaining the project objectives and their priorities. defining the project and outlining parameters associated with time. SECTION 1 should be based upon resources. • ensuring that the project manager receives decisions on time. performance and risk. cost. the client will retain ultimate authority and therefore must have adequate knowledge and information about the project to be able to exercise the authority properly. (b) It should be emphasised that the role of the project manager should be to act as part of the client organisation. though taking the project manager’s advice should lead. reputation and price. • assisting the project manager in the resolution of problems. • establishing with the project manager a common approach to major issues which arise. • defining the criteria for control and management of the project. Page 32 Part 3. and • maintaining with the project manager at all times an overview of the project status in relation to the established objectives. • receiving and reviewing detailed reports on the project from the project manager. the client should publicly support the project manager and avoid any actions which could undermine that manager’s authority over the consultants and contractors. • no matter how much responsibility is delegated to the project manager. not follow. • monitoring the implementation by the project manager of control and management systems. although the contracts will be direct with the client. Section 1 (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook . • where a project manager has been appointed the client should not formally communicate directly with consultants and contractors employed on the project – such communications will always be routed through the project manager. (d) The client’s relationship with a project manager will be crucial to the success of the project and will require careful development and nurturing within the following guidelines: • the client. and duties should be clearly identified. • no matter what may be said in private. • the client should agree with the project manager the precise extent of any delegated authority together with those decisions reserved for the client. • managing the project manager’s performance of delegated responsibilities.

unless large differences exist between offers from competing firms this should not be critical. efficient performance by design consultants cannot be taken for granted. should be the aim in the selection of design team members.) (b) The following alternatives exist in selecting the design team: • single appointment – either of a multi-discipline firm which can itself provide the full range of architectural and engineering design services required. • competence – the performance of the firm on past projects. one firm being appointed design team leader with the responsibility for co-ordinating the work carried out by the others.PART 3. Section 1 (01/03) Effective from 1/3/03 Page 33 .1. (The client is also required under the Construction (Design and Management) Regulations 1994 to appoint a competent planning supervisor to ensure that the design team have met their responsibilities under these regulations and to advise the client and the constructors how they can comply.4. (d) Value for money.8 APPOINTMENT OF CONSULTANTS (a) The process of selecting and appointing the design team and the cost consultant is carried out by the client but he/she may seek the advice of his/her adviser. The final selection will depend on the particular features of the project. • staff – the personal capability and experience of the key staff whom the firm proposes to employ on the project. the demands of the project programme may be particularly important. or • separate appointments – for each of the design disciplines required. The terms and conditions of these appointments are governed by the procurement strategy adopted for the project. The latter offers the chance of selecting the best firm in each discipline but makes communication more difficult. The former has the benefit of administrative simplicity and of single source responsibility for design. SECTION 1 G 3. or of a lead consultant. normally the architect on building projects. confidential references from past clients. who will subcontract design of other disciplines to independent professional firms and be responsible for their work and its co-ordination. (c) The selection of the design team and the cost consultant (and other consultants as appropriate) will require the client to make a balanced judgement on the following factors: • capability – the experience of the firm in projects of similar size and function and the availability within the firm of sufficient uncommitted resources for it to meet the demands of the project. not lowest price. The Surveyors’ Construction Handbook Part 3. to be ascertained by detailed. and • the cost – quoted by the firm.

PART 3. 2 Construction Industry Board.1. London. • as a lump sum. Selecting Consultants for the Team: balancing quality and price. London. (i) Where time charge fees are to be paid. or • a permutation of all three. G 3. There are a number of codes of procedure to assist in this process. documentation for tender and advice in relation to contract issues can be obtained by the client from professional advisers and particularly the principal adviser. SECTION 1 (e) Guidelines for the value assessment of competitive tenders in the procurement of professional services are available1. • on a time charge basis. of particular assistance is the Code of Practice for the Selection of Main Contractors2 which has been approved by the National Audit Office. 1996. (g) Percentage fees based on the out-turn construction cost are not generally recommended as they increase when cost overruns occur. the final amount of fees payable is not fixed and there is a substantial risk that this amount may exceed initial estimates. Thomas Telford Publishing. Thomas Telford Publishing. (b) The timing of the need to appoint constructors (whether contractors or trade contractors) will be dependent upon the procurement strategy which is selected. (c) Assistance with the selection. Where lump sum fees are to be paid. the client will need to establish systems for monitoring the consultants’ performance to ensure that they provide the full. The client’s role will include selecting those constructors with whom he will negotiate or who will be invited to tender. the factors which affect the Construction Industry Board. it will be the client who formally selects the constructor(s) to carry out the work and then contracts with this company. Code of Practice for the Selection of Main Contractors. but the client will have a formal role in this process.9 APPOINTMENT OF CONSTRUCTORS (a) The client is responsible under the Construction (Design and Management) Regulations 1994 to be reasonably satisfied that the constructors appointed are competent and have adequate resources. value and timescale of the project can be established with reasonable accuracy before the appointments are made and that the services to be provided by the consultants can be accurately defined. In the case of the latter. (h) Lump sum fees may be the most satisfactory form of remuneration provided only that the scope. In broad terms.4. Section 1 (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook . 1 Page 34 Part 3. (f) Fees payable to professional consultants may be expressed in one of the following ways: • as a percentage of the construction cost of the project. 1997. specified service and do not skimp their services to save money.

This may mean delegating elements of the process to the project manager (if appointed) or ensuring that existing company systems are specifically adapted. This is outside the remit of this handbook.1. this strategy should be implemented by a range of contractual arrangements. G 3. (b) These systems should include: • financial systems to ensure that payments are made in accordance with contract agreements. • decision systems to ensure that decisions made are communicated at the appropriate time and with appropriate authority. Most clients will need specialist advice on contract selection. the client should see that systems are put in place to ensure that the procurement process can be implemented in fact. organisational and contractual arrangements are in place.4. rather than lowest price should be the aim in the selection of constructors. Usually this relates to projects over about ¤5 million and requires appropriate tender advertising and selection.1. Clients from the public sector must be aware of the existence of and the procedures demanded by such regulations. (d) European Union legislation has an effect on the procurement of public works and the supply of services in the public sector. The Surveyors’ Construction Handbook Part 3.1. The distribution of major project risks results from the wording of the contract selected.15. Many of these arrangements will be based upon standard forms of agreement in common use in the construction industry. SECTION 1 selection of design and cost consultants shown above (capability. value for money. • design change systems to implement and monitor change as it becomes necessary. there may be a case for considering a special arrangement with a construction firm as indicated in 3.PART 3. competence.4.1. G 3. and • cost and time monitoring systems to inform the client of the current position at any point in time. but the documents on which selection is made (particularly for cost) can be extensive and very complex.11 SYSTEMS AND CONTROLS (a) Once resources. (e) As with the selection of design and cost consultants. Section 1 (01/03) Effective from 1/3/03 Page 35 .10 CONTRACTUAL ARRANGEMENTS (a) Having selected an appropriate procurement strategy and methods of consultant and constructor selection. staffing and cost) will affect the choice of constructors. Where clients regularly build.

Equally. This is particularly the case in specialist buildings or buildings which have sophisticated mechanical and/or electrical installations. pace is controlled within programme. (c) No one person has all the design skills for any but the very simplest project and therefore the collaboration of many designers will be necessary.) by low maintenance costs. Good design can contribute to economy and efficiency – by efficient layout and economical use of space. Section 1 (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook . (d) The formulation of an accurate design brief and the development of design in strict accordance with that brief are key processes for the client (or the project manager) to oversee. quality is controlled within standards set.PART 3. etc.4. SECTION 1 (c) Controls are also important to ensure that cost is controlled within budget.12 DESIGN OVERVIEW (a) While responsibility for achieving a successful design solution to the client’s requirements lies chiefly with the designer. Programming can be provided by a project manager or developed with the advice of the principal adviser. (f) Quality can be controlled through the provision of a sound contractual specification.1. (e) Pace can be monitored against a programme or time plan and can be controlled by the imposition of contract completion dates. mechanical services. by energy efficiency (in heating. (d) Cost control can be achieved by ensuring appropriate pre-construction cost planning and an adequate system of regular cost reporting. A well-designed building is a good investment. a well-designed building reflects credit on those who commissioned it as well as on the designers who conceived it. (b) Design is an important factor in ensuring good working conditions for staff and convenience for members of the public who need to visit the building. and systems are properly employed. These services can be provided by the cost consultant. The blame for a poor building is likely to be ascribed to the client as well as to the designer. and by ensuring flexibility to meet changing requirements. G 3. insulation. In practical terms. It may be appropriate to appoint a clerk of works to inspect the works during progress and to ensure that work is satisfactory and matches the specification. the client will require: Page 36 Part 3. the responsibility rests with the client both for ensuring that his/her needs are met and for the impact of such development on the local environment. (g) Controlling the client systems to ensure that they are appropriately applied and not abused is a matter for the client’s management team – perhaps this is the key management input from the client.

Notwithstanding this progressive improvement in accuracy.1. The client should feel able to say ‘no’ and ‘try again’ and to expect alternatives within the fee. Estimates cannot be expected to be proved accurate unless they are based upon reliable data and cost control is exercised.4. Section 1 (01/03) Effective from 1/3/03 Page 37 . and • a sensitivity analysis – a statement of the comparative effects on the total estimate of changes to principal data and assumptions on which the estimate is based. (Computer aided design [CAD] may enable three dimensional presentation. the requirements of the design brief. G 3. The Surveyors’ Construction Handbook Part 3. (e) It will also prove valuable for the client to indicate clearly his/her intentions in respect of the programme and for the design team to respond in terms of their strategy for meeting this programme. SECTION 1 • close collaboration between users and the design team in the development of the design.) (a) It is essential that the client understands the difference between: • estimating – giving an informed opinion at a particular time of what the final cost of the project is likely to be. (b) The techniques used to produce estimates vary according to the type and level of data available when they are prepared. but does not exceed.13 COST CONTROL OVERVIEW (It is recommended that this be read in conjunction with Part 1. (c) For estimates to be effective. Methods for updating progress should also be sought by the client. and indeed the client. and • cost control – managing the consequences of the design and construction processes so as to achieve value for money and ensure that the final cost does not exceed the budget. Section 1. provided that cost control is being exercised. it is important to ensure that the design team present their proposals in a form that can be readily understood. (f) As the majority of users. and • formal presentation of developed designs to the users and formal sign-off by the client. • formal checking that the developed design meets. The general level of estimating accuracy improves as the design of a project develops. the general level of accuracy of early estimates can be stated with sufficient precision for them to be valid parameters for decision making and for the management of the project.) The setting of the design and not just the design in isolation should be taken into account. their probability and the associated time and cost consequences if they should occur. the client should require that all estimates are supported by: • a risk analysis – an assessment of the potential risks. are likely to find the reading and interpretation of design drawings a difficult task.PART 3.

By way of simplistic illustration: • cost varies with (but not in direct proportion to) size: once the size of a building is fixed. in simple terms. (f) The earlier cost control procedures are instituted. external cladding and roofing. is of far greater cost significance than the types of finishings. SECTION 1 (d) The amount included in estimates to cover the uncertain cost of risks based on the analyses described above is known as the contingency. reserves for changes in market prices and the like. the excess can only be corrected by: • redesigning the element to reduce its cost. It is important that contingencies are sufficient to cover risks and are not eroded to facilitate any lack of cost control. The term ‘cost-in-use’ is used to describe how these costs can be estimated. or • transferring money into that element from contingencies or from another element yet to be designed.PART 3. enabling the client to take these matters into account when considering total project costs and building design. during the latter it is a function of effective management and avoidance of change after commitment. so is the general level of cost. (g) The methods used for cost control differ radically between the pre-construction and construction stages of a project. with allowances for contingencies. and • cost checking each element as it is designed against its allowance in the cost plan. the more effective they will be. If the cost of an element as designed exceeds its allowance in the cost plan. In some cases higher initial costs will result in lower running or maintenance costs during the life of the building. Section 1 (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook . Cost control during the former depends partly on formulating an appropriate procurement strategy but more on controlling the design process within that strategy. • the selection of the most economical design for basic elements such as foundations. (e) A primary concern may be the cost of running and maintaining the building. Page 38 Part 3. comprises: • preparing a cost plan – an allocation of the control budget into cost centres which match readily identifiable elements of expenditure. structural frame. (h) Pre-construction cost control. and • the overall cost of mechanical and electrical systems and the effectiveness of the cost control procedures which can be applied to them is largely governed by early decisions as to the type of system selected.

and • late cost savings are inefficient as any amount saved will be reduced or may be negated by the costs of disruption inherent in making the changes needed to generate the savings. comparatively swift. that is largely in the visible finishings and fittings. (k) All estimates and cost control procedures should take account of inflation. i. for any reason. In simple terms. It is unwise to base early estimates on an assumption of favourable market conditions at the time of tender as the construction industry is subject to wide. with the resultant possibility that the requirements of the brief will not be met. and • minimising changes to the design. the increase in construction cost from the date when the estimate is prepared to the date when the work will be carried out. after construction has started. contractors adjust their tender prices by reducing or increasing their target profit margins in accordance with their need to obtain new work. and • a clear policy and method for drawing down inflation reserves be established and observed. (i) Successful cost control during the construction stage depends on: • ensuring that all design work is completed and fully co-ordinated before any commitment to construct is made (this applies in a progressive way when design and construction overlap). • the assumptions on which inflation allowances are calculated be reviewed as each new estimate is prepared and the allowances corrected in accordance with such reviews. The client should.PART 3. • administering the contract efficiently and promptly in strict accordance with its terms and conditions. (m) Things will go wrong on the project. (j) Regular cost reports can be produced throughout the construction stage from which potential overspending can be identified before it occurs with the intent that corrective action should be possible. The unexpected will happen. recognise that such corrective action is not always beneficial. changes in workload in accordance with economic conditions. Section 1 (01/03) Effective from 1/3/03 Page 39 . however. the control budget will be exceeded. (l) The client should distinguish between inflation and the effect on construction prices of market conditions at the time of tender. • these allowances for inflation should be clearly identified within the estimates and not be allowed to be used to correct other overspending. since: • cost savings can be made only by reductions in standards or by omissions of part of the work remaining to be finalised. It is essential for effective cost control that: • allowances should be made for inflation in all estimates and that the assumptions on which such allowances were calculated be stated. Such unforeseen happenings are covered in the cost control system by the The Surveyors’ Construction Handbook Part 3.e. SECTION 1 If neither is done.

Time for the approval processes should be included as specific activities in the time plan for the project. This programme will form the time framework within which the designers and the constructors should complete their activities. Section 1 (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook .PART 3. SECTION 1 contingency. which may involve abandoning low priority restraints and/or phased transitions from earlier activities to later activities logically following them. Thus a time control system can embrace: • time budget – the overall project duration as fixed either by specific constraints or by the selected procurement strategy. once fixed. funding and planning permission should be completed. and within which other key stages. the remaining contingencies match the remaining risks. (c) The client should be aware of those tasks which are vital to completion on time and those tasks where some flexibility may be available. becomes a key parameter for management of the project. at all times in the project. the period which. not disclosed to the consultants or the contractors. to cover late changes in user requirements and unforeseeable third party events. (b) The programme of activities should be feasible and realistic. such as land purchase. These are invariably vital as the need to obtain approval is likely to be a prerequisite to further work on the project proceeding.1. G 3. reporting divergence as soon as it is observed. The client should develop a policy for management of contingency funds to ensure that. (d) The process of time control is in many ways analogous to that of cost control. Page 40 Part 3. the overall project programme.4.14 TIME CONTROL OVERVIEW (a) The overall programme of activities which will constitute the project should be developed at a very early stage in the procurement cycle. • time plan – the division of total time into inter-linked time allowances for readily identifiable activities with definable start and finish points. Insufficient design time will have an effect upon client risk as will insufficient time allowed for construction. (e) If the time taken for an activity exceeds its time allowance there are essentially only two forms of corrective action available: • the re-sequencing of later activities. and • time checking – monitoring closely actual time spent on each activity against the allowance in the time plan. The client may also establish and control a client reserve. or • shortening the time allowance for future activities by increasing the resources to be made available for them.

(h) The client should take account at all times of fundamental relationships between time. quality and cost: • any extension of the overall timescale for a project always generates additional costs to either constructor or client. for example. G 3. Designers should work to a series of deadlines at which different elements of the design should be agreed (i. or where planned maintenance or energy consumption. it is likely that some of them will be borne by the client. (b) The techniques associated with whole-life costing are often complex and predictive. such as mechanical or electrical equipment. the overall time budget will be exceeded and the project will finish late. G 3.4. Section 1 (01/03) Effective from 1/3/03 Page 41 . Such considerations may review higher initial costs against lower running costs or longer life to replacement or maintenance. with strict procedures for allocating the reserve to specific events.1. The project manager or project cost consultant will be able to advise the client of the availability of their application in each case. and • making up lost time by re-sequencing later activities may be achievable but often only at the risk of compromising quality or cost control.PART 3.15 WHOLE-LIFE COSTS (a) In addition to considering project cost purely in terms of initial capital costs the client may wish to consider costs over the projected life of the building. It is The Surveyors’ Construction Handbook Part 3. are being considered. (g) The client should consider developing (with the help of the project manager if appointed) a time contingency (reserve).e.1. SECTION 1 If neither is done. where a building has to be available for occupation before the lease on another building expires. This concept is essential on projects which are subject to external time constraints. Value management provides a structured framework for the examination and discussion of these requirements to reach a consensus before the project brief is finalised.4. (f) The client should recognise that time control is as important during the design stages of the project as the construction stage. In general. any project seeks to satisfy the differing requirements of several parties. This may be of particular impact where shorter-life inherent assets.16 VALUE MANAGEMENT (a) Value management is usually reserved for relatively complex projects where value for money is important and concerned with defining what ‘value’ means to the client in meeting a particular need. every project contains time-related costs whether these are openly stated or not. Who carries such additional costs depends on the detailed contractual arrangements between the parties. frozen) if costs and the overall programme are to be kept under control.

• specification – the conversion of the quality standard demanded by the project brief into precise requirements for both the supply and the installation of materials. Section 1 (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook . great care is needed to ensure that this standard is unambiguous. The aim is to establish a clear statement of a project’s objectives matched to their relative values.17 VALUE ENGINEERING (a) This occurs later in the development of the project and is concerned with how value is achieved rather than what the relative values are as defined in the project brief and objectives. They are sometimes carried out by firms or individuals not connected with or employed on the project and are short exercises intended to review the detailed design solutions against the objectives and to establish whether they can be achieved in a more cost effective manner. the integration of mechanical and electrical systems into the overall design. The aim is to ensure that: • a project is commissioned in response to a careful analysis of balance of needs.18 QUALITY CONTROL OVERVIEW (a) The final quality of the project is governed. G 3. (b) Value management is usually carried out at the concept and feasibility stages of a project.PART 3. the completeness of design before construction starts. (c) The client may wish to appoint a professional adviser experienced in these techniques and who will provide support in writing the objectives and subsequent brief. by reference to standards. progressively. the setting out of criteria against which the standard of the finished work will be judged.4. the interface between related components and systems. G 3. formal reviews of the design philosophy and the detailed solutions at one or more stages of the design development.1.4.g. and • the project objectives are made explicit and are commonly understood by all parties. such phrases as ‘the highest quality attainable within the control budget’ should be avoided. • the original design – the adequacy of the components selected for the building. • a wide range of options and alternatives to meet that need is considered.1. e. (b) Value engineering studies are pre-planned. components and systems. codes of practice or the like. Page 42 Part 3. by: • the project brief – a clear statement of the standards of quality required. SECTION 1 used to ensure that the need for and scope of any construction is thoroughly analysed before any further commitment to proceed is made.

and to monitor closely. or are in the process of adopting. the cost can be contained to that of the changed feature itself. or • the client after the design brief has been agreed. and • inspection – the independent inspection and verification of the contractor’s work by the design team. or can have major cost implications. to a design feature which. it can disrupt the contractor’s work and invariably gives rise to a higher cost than if the change had been included in the contract as let. or altered to overcome design errors and inconsistencies. (c) Client changes can be relatively minor. (b) The client may choose to appoint a clerk of works whose function is to act as an inspector of work done to ensure quality. G 3. it has been decided. they should be dealt with as described in the paragraphs below.1. or ‘improved’. Section 1 (01/03) Effective from 1/3/03 Page 43 . such as adding a few extra power points.4. for commissioning plant and systems. (d) The cost of client changes depends on when they are made: • before the construction contract has been let. The most significant of these are changes to the scope of the works. with the approval of the client.PART 3. the procedures for rectifying any defective work. the programmes for testing. and perhaps some relatively small resource cost. (c) Many construction companies and firms of consultants within the building industry have adopted. SECTION 1 • quality control – setting up control mechanisms to apply to the execution of the work on site. procedures for witnessing tests. for pre-completion inspection for defects lists and defect rectification and for final hand over. Many minor changes The Surveyors’ Construction Handbook Part 3. but who should recognise that inspection and verification is the last line of defence. If changes are unavoidable. the detailed. The avoidance of change should be a prime objective of the project strategy. and • after the construction contract has been let. the cost will be disproportionate to the value of the change. the quality control activities carried out by the contractor while work is being done. The key to quality control on site is to specify clearly. on-going supervision by the contractor.19 CHANGE CONTROL OVERVIEW (a) Clients should aim to make no changes once a particular design feature has been decided because these are one of the more significant causes of cost and time overruns in construction projects. should be frozen. formal quality assurance systems for their own work or services in accordance with ISO 9000 or equivalent standard. such as the addition of an extra storey. (b) Client changes (as distinct from design development) are changes which are made either by: • the design team.

with the assistance of an experienced project team and designers. client cost reserves. compensating savings elsewhere. (j) When changes do occur. If they are optional they should be approved if it can be demonstrated that they offer good value for money (or a saving) and that there are sufficient funds available to pay for them. the client. 1997. Examples of such changes are: • compliance with changes in legislation. RICS Guidance Note. (e) Some client changes are unavoidable. • those required by unforeseen ground conditions. Section 1 (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook . • taking into account any proposed new legislation. contingencies. (h) Changes proposed after the construction contract has been let can have major time and cost implications and should be avoided if at all possible. e. SECTION 1 can have a cumulative and serious effect. Page 44 Part 3. If they are unavoidable. • the source of the change. 1 Stock Condition Surveys. (g) Changes proposed prior to construction may either be unavoidable or optional. should authorise a transfer from the contingency in the budget to cover them. the client should call for: • the reasons for the change. and • imposing discipline on users to finalise and sign off their requirements in strict accordance with the project programme.g. • the full cost and time consequence of the change. • having early discussions with outside authorities so as to anticipate their requirements. Coventry.PART 3. • undertaking adequate site investigation or condition surveys1 if existing buildings are to be renovated. • requirements of the health and safety or fire prevention authorities. Disruption claims caused by a large number of small changes are common. if satisfied that they are. and • previously unforeseen users’ requirements. If they are not essential they should be deferred until the project is complete and then reviewed to see if they are necessary and economically justified. • ensuring that designs are fully developed and co-ordinated before construction contracts are committed. and • source of funding of any cost overrun. RICS Books. (f) The contingency in the project budget should be sufficient to take account of the likelihood of such changes based on risk assessments. • proposals for avoiding or mitigating time overrun. that the project brief is as comprehensive as possible and the users have ‘signed it off’. (i) The need for changes should be minimised by: • ensuring.

the client could possibly seek to recover these costs from the design team members responsible. Section 1 Appendix A (01/03) Effective from 1/3/03 Page 1 . Where a traditional strategy is chosen because of its particular advantages. Therefore. piling and foundations) to proceed to construction whilst the design for the rest of the building is completed. (e) It is possible to have an accelerated traditional procurement strategy where some design overlaps construction. (c) Clients are able to influence the development of the design to meet their requirements because they have direct contractual relationships with the design team. construction costs can be determined with reasonable certainty before construction starts and a completion date can be fixed. The Surveyors’ Construction Handbook Part 3. and the construction tendered separately. often including a bill of quantities which describes the extent of work to be done. (d) The strategy is unfortunately open to a level of abuse if any attempt is made to let the work before the design is complete. This can be achieved by letting a separate. the temptation to let the work begin before the design is complete should be strongly resisted. In most cases the price is established on the basis of tender documentation. they usually have a single contractual relationship with a main contractor and are therefore able to influence (but not control) the construction process through a single point of contact. if the contractor’s works are delayed by the failure of the design team to meet their obligations. by allowing ground works (site clearance. More importantly. the contractor may claim against the client for additional costs and/or time to complete the project. advance works contract. As a result. Such action may result in many post-contract changes which could delay the progress of the works and increase the costs. SECTION 1. This reduces the total time to complete the project at the risk of losing certainty of cost before construction starts. and assuming no changes are introduced.PART 3. for example. (b) The contractor assumes responsibility and financial risks for the building works as described whilst the client takes the responsibility and risk for design team performance. APPENDIX A Appendix A: Procurement Options A1 TRADITIONAL (SEQUENTIAL) (a) Under a traditional procurement strategy. In turn. (f) Another alternative is to let the work by a two-stage process or by negotiation thus reducing the pre-construction time involved and enabling the contractor to have some (limited) involvement in the design and planning stage. a substantial risk is created in that the contractor who builds the superstructure will take no responsibility for the foundation works carried out by another contractor. When construction begins. if negligence can be proven. design should be completed before tenders are invited and before the main construction contract is let.

PART 3. • reasonable price certainty at contract award based upon market forces. (h) The main advantages of a traditional contract strategy are: • competitive fairness. Section 1 Appendix A (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook . and • changes are reasonably easy to arrange and value. SECTION 1. • design-led. facilitating high level of quality in design. Page 2 Part 3. • the strategy is satisfactory in terms of public accountability. • the procedure is well known. APPENDIX A FIGURE A1 PROCUREMENT ARRANGE MENT – TRADITIONAL CONTRACTUAL RELATIONSHIP CLIENT CONSULTANTS (fee contracts) MAIN CONTRACTOR (standard lump sum contract) SUPPLIERS (various contracts) SUBCONTRACTORS (standard lump sum) ARCHITECT (fee contract) administrative responsibility on behalf of the client ADVANTAGES competitive fairness satisfactory public accountability procedures well known changes reasonably easily arranged and valued SEQUENCE brief design DISADVANTAGES slow to start on site (no parallel working) open to abuse where design incomplete (resulting in less certainty) contractor not involved in design or planning (no buildability) adversarial potential competition construction Risk Low cost risk due to lump sum contract Medium time risk due to fixed contract date (but contractor has right to claim extensions) Low quality/design risk where the majority of the work is designed by insured consultants working directly for the client (g) The organisational structure of a traditional strategy is shown in Figure A1. Standard forms of contract are available.

PART 3. the approximate price and a programme should be clear at contract stage. • the strategy enables changes to be made easily. (b) The organisational structure of a measurement contract strategy is shown in Figure A2. a tender based on drawings and a bill of approximate quantities will be satisfactory. Here. The most effective use of a measurement contract is where the work has been substantially designed but final detail has not been completed. and • there is some parallel working possible. • the procedure is well known. Standard forms of contract are available for this strategy. • average public accountability. and • there is a potential for adversarial relationships to develop. A2 MEASUREMENT CONTRACTS Measurement contracts are used when the work required cannot be accurately measured for the tender bill of quantities. The contract sum is only established with certainty on completion of construction. The scope of the work. when re-measurement of the quantities of work actually carried out takes place and is then valued on an agreed basis. APPENDIX A (i) The main disadvantages are: • the strategy is open to abuse. (d) The main disadvantages of the strategy are: • the strategy offers poor certainty of price. • no ‘buildability’ input by contractor. Measurement contracts are sometimes referred to as re-measurement contracts and are based upon the prices tendered by the contractor. • there is no contractor involvement in the planning or design stage. Section 1 Appendix A (01/03) Effective from 1/3/03 Page 3 . SECTION 1. They are typically used with civil engineering works where there can be significant uncertainty about ground conditions. • competitive prices. The Surveyors’ Construction Handbook Part 3. Measurement contracts allow a client to shorten the overall programme for design. (c) The main advantages of the measurement contract strategy include: • pre-construction time-saving potential. and • the strategy often results in adversarial relationships developing. resulting in less certainty. Measurement contracts provide more risk than lump sum contracts for the client but probably with programme advantages. • the overall programme may be longer than for other strategies as there is no parallel working. tendering and construction but usually with the result of some lack of price certainty at contract stage because the approximate quantities reflect the lack of information on exactly what is to be built at tender stage.

APPENDIX A FIGURE A2 PROCUREMENT ARRANGE MENT – ME ASUREME NT CONTRACTUAL ARRANGEMENT CLIENT CONSULTANTS (fee contracts) MAIN CONTRACTOR (standard measurement contract) SUPPLIERS (various contracts) SUBCONTRACTORS (standard contracts) ARCHITECT administrative responsibility on behalf of the client ADVANTAGES pre-construction time saving potential competitive prices average public accountability procedures well known easy to arrange changes some parallel working DISADVANTAGES low certainty of price potential no contractor involvement in planning or design potentially adversarial SEQUENCE design competition Risk Variable cost risk as the final figure will be uncertain until the design and often construction is complete Medium time risk as the extent of work will vary and contractors can claim extensions to the period for construction Medium quality/design risk in the sense that design may not be complete at the outset construction brief A3 CONSTRUCTION MANAGEMENT (a) Under a construction management strategy.PART 3. Section 1 Appendix A (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook . Instead. The construction manager. the client employs the design team and a construction manager is engaged as a fee-earning professional to programme and co-ordinate the design and construction activities and to improve the buildability of the design. The construction manager supervises the construction management process and co-ordinates the design team on behalf of the client. Construction work is carried out by trade contractors through direct contracts with the client for distinct trade or work packages. SECTION 1. who has no contractual links with the Page 4 Part 3. the client does not allocate risk and responsibility to a single main contractor.

Key dates are normally inserted at which client decisions will be required. Section 1 Appendix A (01/03) Effective from 1/3/03 Page 5 . (d) The Latham Review1 recognised that construction management has been used predominantly for large and/or complex projects. SECTION 1. and is liable only for negligence by failing to perform the role with reasonable skill and care. HMSO. The Surveyors’ Construction Handbook Part 3. A package is made up of work for which one of the trade contractors is responsible. and relationships for all participants. Constructing the Team: Joint Review of Procurement and Contractual Arrangements in the United Kingdom Construction Industry: Final Report. APPENDIX A design team or the trade contractors. price certainty is not achieved until the design and construction have advanced to the extent that all the construction work (trade) packages have been let. The client needs to maintain a strong presence through a project management team that is technically and commercially astute. • buildability potential is inherent. M. These packages are tendered individually. therefore. where the client wants ‘hands on’ involvement. unless some greater liability is incorporated into the contract. • the breakdown of traditional adversarial barriers.g. provides professional construction management expertise without assuming financial risk. London. • parallel working is an inherent feature.. electrical installation or decorating. • clarity of roles. This strategy is not. e. design and construction can overlap. the construction manager will take over any preliminary schedule and costing information already prepared and draw up a detailed programme of pre-construction activities. (f) The main advantages of a construction management strategy are: • the strategy offers time-saving potential for overall project time due to the overlapping of procedures. (c) With this contract strategy. 1 Latham. suitable for the inexpert or inexperienced client. (b) On appointment. for a lump sum price. As this speeds up the project. Indeed. foundations. concrete. usually on the basis of drawings and specification. The client should have administrative or project management staff with the time and ability to assess the recommendations of the construction manager and take the necessary action. 1994. (e) The organisational structure of a construction management strategy is shown in Figure A3. Sir. The construction manager should therefore have a good track record in cost forecasting and cost management. Although the time for completion can be reduced. design development of later packages can affect construction work already completed. it is particularly recommended for projects where there is a high degree of design innovation. construction management is known as a ‘fast track’ strategy. the client will be closely involved in each stage of design and construction. Also.PART 3. but suggested that there is no intrinsic reason for this. In adopting the construction management system. risks.

SECTION 1.) Page 6 Part 3. able to take an active part needs a good quality brief relies on a good quality team needs time and information control SEQUENCE brief design construction Risk Medium cost risk since the actual cost is unknown until the last package is let Medium time risk since no one organisation carries the risk for timed completion Low quality/design risk because there is a close link between client. risks and relationships for all participants late changes easily accommodated DISADVANTAGES no cost certainty at outset needs informed client. Section 1 Appendix A (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook .PART 3. designers and constructors • changes in design can be accommodated later than some other strategies. APPENDIX A FIGURE A3 PROCUREMENT ARR ANGEMENT – CON STRUC TION MAN AGEM EN T CONTRACTUAL ARRANGEMENT CLIENT Fee contracts CONSULTANTS including Lump sum contracts CONSTRUCTION MANAGER WORK or TRADE CONTRACTORS ADVANTAGES time saving potential for overall project time trade packages let competitively buildability potential breaks down traditional adversarial barriers parallel working inherent clarity of roles. (There is some evidence that this results in lower prices because of improved cash flow certainty. without paying a premium. and • the client has direct contracts with trade contractors and pays them directly. provided the relevant trade packages have not been let and earlier awarded packages are not too adversely affected.

(e) The organisational structure of a management contract is shown in Figure A4. SECTION 1.PART 3. The Surveyors’ Construction Handbook Part 3. or where this fee is inadequate. The management contractor therefore bears the responsibility for the construction works without actually carrying out any of that work. pays the works contractors. proactive client is required in order to operate such a strategy. (b) Management contracting is a ‘fast track’ strategy. • buildability potential. such as office accommodation. The management contractor is responsible for all the construction works and has direct contractual links with all the works contractors. All design work will not be complete before the first works contractors start work although the design necessary for those packages must be complete. (d) Where the management construction team is not of the highest quality. It is therefore vital to select the management contractor carefully and to ensure that the fee is appropriate bearing in mind market conditions. • the strategy relies upon the client having a good quality team. tower cranes. hoists and security. The client employs the design team and therefore bears the risk of the design team delaying construction for reasons other than negligence. The client reimburses the cost of these work packages to the management contractor who. in turn. The management contractor may provide some of the common services on site. and • time and information control is required. (c) With the agreement of the client. resistance to works contractors’ claims can be affected by the same circumstances. a management contractor is engaged by the client to manage the building process and is paid a fee. the management contractor selects works contractors by competitive tender to undertake sections of the construction work. Cost certainty is thus not achieved until all works contractors have been appointed. APPENDIX A (g) The disadvantages are: • price certainty is not achieved until the last trade packages have been let. As design is completed subsequent packages of work are tendered and let. The management contractor co-ordinates the release of information from the design team to the works contractors. A high level of cost management is therefore required. • the client must provide a good quality brief. • an informed. which are shared by the works contractors. Similarly. (f) The main advantages of a management contracting strategy are: • time-saving potential for overall project time. Section 1 Appendix A (01/03) Effective from 1/3/03 Page 7 . A4 MANAGEMENT CONTRACTING (a) With this contract strategy. the management contractor can be less than proactive and the system can become a reactive ‘postbox’ approach.

• parallel working is inherent.PART 3. APPENDIX A FIGURE A4 PROCUREMENT ARR ANGEMEN T – MA NAGEMENT C ON TRAC TING CONTRACTUAL ARRANGEMENT CLIENT MAIN CONTRACTOR (standard fee contract) CONSULTANTS (fee contracts) WORKS CONTRACTORS (standard lump sum contracts) ADVANTAGES time saving potential for overall project time buildability potential breaks down traditional adversarial barriers parallel working inherent late changes easily accommodated work packages let competitively DISADVANTAGES need for good quality brief poor certainty of price relies on a good quality team may become no more than a ‘postbox’ system in certain circumstances removes resistance to works contractors’ claims SEQUENCE brief design construction Risk Medium cost risk since the actual cost is unknown until the last package is let Medium time risk since total construction time is a consequence of package selection Low quality/design risk because there is a close link between client. • poor certainty of price is offered. (g) The disadvantages are: • need for a good quality brief. • changes can be accommodated provided packages affected have not been let and there is little or no impact on those already let. SECTION 1. Page 8 Part 3. Section 1 Appendix A (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook . and • works packages are let competitively. designers and constructors • breaks down traditional adversarial barriers.

not only for the works contractors. (c) The disadvantages are: • price certainty is not achieved until the last work package has been let. Changes are usually more expensive to introduce after the contract has been let. Construction can start before all the detailed design is completed. • the client deals with one firm only. but also for the design team. and • the client has no direct contractual relationship with the works contractors or the design team and it is therefore difficult for the client to recover costs if they fail to meet their obligations.PART 3. compared with other types of strategy. Often this strategy is associated with a process where the contractor takes over the client’s designer (architect) contract in a form of ‘contract switch’ or novation. (b) A variant. A5 DESIGN AND MANAGE (a) A design and manage strategy is similar to management contracting. SECTION 1. A6 DESIGN AND BUILD (a) Under a design and build strategy. and • the contractor assumes the risk and responsibility for the integration of the design with construction. Section 1 Appendix A (01/03) Effective from 1/3/03 Page 9 . Any client requirement which is not directly specified in the tender documents will constitute a change or variation to the contract. • the client loses direct control over the design quality. the contractor is paid a fee to manage and assume responsibility. • it may become no more than a ‘postbox’ system in certain circumstances. Under a design and manage contract. and • removes resistance to works contractors’ claims.1. • it can be applied to a complex building. APPENDIX A • relies on a good quality team. (c) Design and build is a fast-track strategy. in return for a fixed-price lump sum.1. the client loses some control over the project. a single contractor assumes the risk and responsibility for designing and building the project. known as ‘develop and construct’. The designer is then employed for the rest of the contract by the contractor who is usually responsible for all of the design including that done prior to the switch. The Surveyors’ Construction Handbook Part 3. (b) The main advantages of a design and manage strategy are: • early completion is possible because of overlapping activities. but at the contractor’s risk. (d) As explained in 3. by transferring risk to the contractor. describes the strategy when the client appoints designers to prepare the concept design before the contractor assumes responsibility for completing the detailed design and constructing the works.

(i) Consideration may need to be given to the inclusion of a special clause in design.PART 3. type contracts to ensure that the responsibility for design performance is properly shared. (m) Non-availability of insurance to cover a higher than normal risk should be weighed against the financial ability of contractors to meet design default claims. the client should provide contractors with a performance specification at tender stage. SECTION 1. Sometimes the successful contractor will assume responsibility for this design team and use them to produce the detailed design. (f) The contractor develops the design from the specification submitting detailed proposals to the client to establish that they are in accordance with the requirements of the specification. (h) The client will often employ a design team to carry out some preliminary design and prepare the project brief and other tender documents. If requirements are not specific. (k) To be effective. (g) Specification is a dangerous area for inexperienced clients: over-specification can cut out useful specialist experience. then the basis of the appointment of the design team should reflect this possibility. therefore. that the brief and performance/quality specifications for important requirements in the project are fully and unambiguously defined before entering into this type of contract. the client may have to pay a termination fee to the design team. that do not require the designer to be an expert in the client’s business and. (j) Current forms of contract for design and build vary their treatment of design liability. If it does not. The client may wish to retain the independent services of a cost consultant throughout the contract for early cost advice involvement in the bidding process and cost reporting during construction. in a strong position to ensure that their interpretation of the specification takes preference over the contractor’s. or design and build. APPENDIX A (e) It is very important. under-specification can be exploited. the client’s requirements will need to be stated clearly and accurately and delivered on time. Clients are. It will normally be preferable and represent better value for Page 10 Part 3. Such a clause should identify specific obligations that are absolute. (l) The imposition on contractors of fitness for purpose in design is usually expressly excluded in standard forms of contract and it is a matter of judgement for clients and their professional advisers. as a consequence. If a design and build strategy is identified as a possibility at an early stage. are reasonably insurable. even though tenderers in recessionary markets are likely to agree to undertake such risks. therefore. Section 1 Appendix A (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook .

Client involvement Contractor involvement The Surveyors’ Construction Handbook Part 3. a complete hands off approach). Turnkey Package deal Design and build (competitive) Design and build (negotiated) Develop and construct The range of options enables the procurement arrangement to be used for a wide range of client types. rather than an insurance fitness for purpose requirement on a contractor of limited financial assets. Most importantly the client should ensure that adequate design liability insurance is in place and maintained for the period of liability. but this will be at a cost. which will be the subject of an insurance payout in the event of a design fault. These range from a package deal or turnkey where the client has little involvement in the design development or building procurement process (effectively. showing proportional involvement in the design proces by client and contractor between package deal.PART 3. yet insurable. Section 1 Appendix A (01/03) Effective from 1/3/03 Page 11 . and for clients to be involved to a greater or lesser extent. to develop and construct where the client appoints designers to develop the brief to a level of sophistication which will leave the design and build contractor to develop detail or specialist design elements. In addition. liability. APPENDIX A money to impose a lesser. SECTION 1. (o) A range of options is available as illustrated in Figure A5. This is a matter for specialist advice. (n) Increasingly. collateral warranties are being used to place additional responsibility on designers or subcontractors. the client may take out insurance to cover post-construction liability. FIGURE A5 P ROCUREMENT ARRANGEMENT – DESIGN AND BUILD Some options available. and develop and construct.

SECTION 1.PART 3. (q) The main advantages of a design and build strategy are: • the client has only to deal with one firm. or may more usually subcontract these to one or more professional firms whilst retaining control. APPENDIX A (p) The project organisation structure for design and build is shown in Figure A6. • inherent buildability is achievable. Section 1 Appendix A (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook . FIGU RE A6 PROC UREMENT ARRA NGEMEN T – D ESIGN A ND BU ILD CONTRACTUAL ARRANGEMENT CLIENT DESIGN AND BUILD CONTRACTOR (standard lump sum contract) SUPPLIERS (various contracts) SUBCONTRACTORS (standard lump sum contracts) ADVANTAGES single point contact and responsibility inherent buildability early firm price possible reduced total project time DISADVANTAGES client needs to contract before design is complete no design overview unless consultants appointed difficult for clients to prepare adequate brief bids difficult to compare design liability limited by standard contract client driven changes can be expensive SEQUENCE brief competition design construction Risk Low cost risk since most contracts will be let on a lump sum basis Low time risk since the contractor will usually fix the time and be committed to it High design/quality risk where the contractor controls design there are risks related to both design suitability and to the capacity of the design-build firm to own such risks Page 12 Part 3. Contractors may use their own firms’ resources for undertaking the design (in-house design and build).

and • client changes to project scope can be expensive. (r) The disadvantages are: • the client is required to contract before the detailed designs are completed. The Surveyors’ Construction Handbook Part 3. Section 1 Appendix A (01/03) Effective from 1/3/03 Page 13 . • design liability is limited by the standard contract. • bids are difficult to compare since each design. SECTION 1. and • reduced total project time due to early completion is possible because of overlapping activities. programme and cost will vary. APPENDIX A • price certainty can be obtained before construction starts provided that the client’s requirements are adequately specified and changes are not introduced.PART 3. • difficulties can be experienced by clients in preparing an adequate brief. • there is no design overview unless separate consultants are appointed by the client for this purpose.

Table 1: Elemental Breakdown as a Percentage of Total Construction Cost Group element Highly-serviced factories Air conditioned offices 8 44 11 2 35 100 General hospitals 1. Substructure 2.1). It is aimed at clients. quantity surveyors and commercial managers who are involved in the procurement of building services. ‘The Procurement Guide’ provides both clients and their advisers with a code of procedure to assist them in the selection of an appropriate procurement strategy for a building project. It is therefore important that guidance is given to all professionals who provide advice in this field.PART 3. Finishes 4.2 Introduction The guidance in this section is intended to improve the way in which the procurement of building services is handled by all building professionals active in this field. The Surveyors’ Construction Handbook Part 3. It is intended to provide guidance to clients on the production of clear appointment criteria and the benefits that will manifest through the whole procurement process. The value of building services can represent anything up to 50 per cent of a project’s total cost (see table 1) and a considerable proportion of the construction risk. It is also intended for use by project managers advising on the procurement strategy for both consultant services and construction work. SECTION 2 PART THREE: CONSTRUCTION PLANNING AND PROCUREMENT SECTION 2: BUILDING SERVICES PROCUREMENT 3. and for quantity surveyors/commercial managers involved in the selection of a procurement route. It is hoped that this guide will lead to a more consistent approach throughout the construction industry. project managers. production of tender documentation and the management of the tender process. Fittings 5. Services Total Data source: BCIS 19 62 4 – 15 100 6 33 8 4 49 100 This guide should be read in conjunction with ‘The Procurement Guide’ (see Section 3. Section 2 (07/01) Effective from 1/9/01 Page 1 . Superstructure 3.

Consideration should be given to the guidance provided here.1 calls for radical changes to the process through which the construction industry delivers its projects. and not just the principal contractor. together with the demand from clients for a more pro-active approach to cost and value management at every stage of a project. This guide is intended to provide a framework to supplement the reader’s own skill and judgement when advising and implementing the procurement of building services. it will be incumbent on both clients and their advisers to take a more pro-active approach in the procurement of every element of a building. with the increased complexity and cost sensitivity of this element. this approach cannot always ensure that the client’s requirements in terms of cost. This may be historic in that principal contractors would traditionally be held responsible for procurement of sub-contractors. HISTORICAL DEVELOPMENT Cost and procurement advice for building services has historically been provided by building services consulting engineers and the provision still exists within the Association of Consulting Engineers (ACE) standard conditions of engagement to provide such a service. This often leads to inappropriate procurement methods manifesting in poor quality. The report of the Construction Task Force. guidance on good practice is essential if consistent standards are to be Page 2 Part 3. It is common for clients and their advisers to put enormous effort into developing overall procurement solutions and the role of the principal contractor within these solutions and yet. However. and more specifically partnering through the supply chain. and therefore the guide is written with the most commonly used procurement strategies in mind. It is now generally accepted throughout the industry that building services cost and procurement advice requires input and guidance from technically trained specialist quantity surveyors. entitled ‘Rethinking Construction’. Section 2 (07/01) Effective from 1/9/01 The Surveyors’ Construction Handbook . Supply-chain partnering is one such change. claim-ridden projects. Without a technical background quantity surveyors have struggled to provide such cost and procurement advice. rather than definitive guidance for any one of the many routes available. they do not take an active role in procurement further down the contractual chain. has led to an increase in the demand for specialists. With many more specialist quantity surveyors practising in this field. SECTION 2 The fundamental difference between these sections is that this section examines in greater detail the key aspects of building services procurement. as it will have an influence on the selection of the principal procurement strategy. With this move towards partnering. This. It is not the intention within the framework of this guide to cover every procurement option. quality and time are always as high on the principal contractor’s agenda as they are on the clients.PART 3. However. the role is now more commonly placed in the hands of a specialist quantity surveyor. and one that is increasingly more evident within industry today. very often.

1. and in doing so obtain greater value for money. Section 2 (07/01) Effective from 1/9/01 Page 3 .2 3. sizing and selecting pipes. In practice it means different things to different people.1 Appointing the Building Services Designer 3.2.1 INTRODUCTION Most construction projects contain building services. The question surrounding this appointment is. Design is a series of choices and decisions. therefore. This process usually begins with the appointment of a building services engineer or a building services designer/contractor. and consideration of spatial. As a starting point for investigating where design liability rests asking the question. The designer can be: (i) An independent design-only consulting engineer engaged by the client. A common denominator would be a useful guide. G 3. The Surveyors’ Construction Handbook Part 3. Choice is exercised as to the way in which a problem is to be solved or requirements are to be met. design advice is required. irrespective of the procurement route. A good word to represent that common denominator and the essence of design is ‘choice’. SECTION 2 maintained.2 THE MEANING OF DESIGN Once the client’s brief on a construction project is clearly established the process of design proceeds. The process of designing the building services elements within a construction project is complex.2.2.PART 3. or set of problems or requirements. with detailed design often being undertaken by specialist manufacturers and/or installers. ‘who made the choice?’ is a good one. This includes the calculation of loads for heating.1. ventilation power. structural engineer and other specialist designers).1. it is important to know who is responsible for what within the various elements and stages of design. ducts and plant and equipment. In order to incorporate these services successfully. both in terms of who is required to make the choices and decisions and accepting responsibility for them. architectural and structural requirements. It is unusual for a single party to do all the design work and. and so on. Design is the exercise of providing a solution to a particular problem or requirement. ‘who is best placed to provide design advice and at what stage should it be sought?’ Before answering this question the meaning of the word ‘design’ needs to be explored. cooling. 3.3 THE IDENTITY OF THE BUILDING SERVICES DESIGNER The building services designer is a member of the client’s design team (which also includes the architect. It is hoped that by following this guide clients and their advisers will be better placed to avoid the many pitfalls that have historically been associated with building services. Good practice in procurement necessitates a consistent and logical approach.2.

1. great care must be taken to clearly describe the allocation of different parts of design to different parties in the building contract. Allocation of Design Responsibilities for Building Engineering Services provides practical guidance on the issues involved in the assignment of design responsibility to the various parties to a contract.4 ALLOCATION OF DESIGN RESPONSIBILITIES The concept of single-point responsibility makes it easier to establish where liability lies. If conflict at later stages of the project is to be avoided. The Building Services Research Information Association’s (BSRIA) technical note TN21/97. • required standard of the product. or (iii) A hybrid of (i) and (ii) above. it would be necessary to create a single table for each sub-system of the complete building services installation. • size. and • financial constraints. However. complexity or specialist nature of the project. The decision on which option to use should be based on important factors such as: • clarity and certainty of the client’s brief.2. with each being responsible for their respective elements or stages of design. Unless a client works solely with a design and build contractor from the outset. The use of a table clearly stating the design activity and the assignment of that activity to the party with contractual responsibility is likely to be the most efficient way of avoiding conflict. Page 4 Part 3. In this example only one sub-system is considered and other consultants are included. the best engineering expertise for different parts of a design may not rest. Section 2 (07/01) Effective from 1/9/01 The Surveyors’ Construction Handbook . with a single party.PART 3. 3. • time available to deliver the project. as design responsibility may vary from sub-system to sub-system. Table 2 is an example of how the pro formas for allocating responsibility produced by BSRIA in their technical note can be configured. In practice. Using a table in this way is infinitely flexible and should be configured on a project-by-project basis to suit the particular demands of a particular project. in practice. it is almost inevitable that design responsibility will be split between the client’s design-only consultant and the building services contractor(s). SECTION 2 (ii) A general contractor or building services contractor who either engages a consulting engineer or employs an in-house design engineer.

0 Feasibility report 3.4 – Specification 4.1 – Sketch drawings 4.3 – Installation drawings 4.7 – Record drawings 5.0 Plant selection: PART 3. Section 2 (07/01) 4.0 Surveys: 1.1 – Specify plant performance Page 5 .0 Confirmation of client brief 4.Table 2: Allocation of Design Responsibilites Allocation of design responsibilities This example is based on the contractor being appointed as part of the design team Project manager Building services engineer Structural consultant Contractor Other (stated) Comments Area type: Main building Service: Chilled water installation Activity Employer The Surveyors’ Construction Handbook ✔ ✔ ✔ ✔ ✔ ✔ Prepared in conjunction with the contractor Brief to be issued by project manager ✔ ✔ ✔ ✔ ✔ ✔ ✔ Architect ✔ 1. SECTION 2 5.1 – Existing system 1.0 Design: Part 3.2 – Schematics 4.6 – Manufacturers’ drawings 4.5 – Builders work information Effective from 1/9/01 4.2 – System wide 2.

1 – Format 6.2 – Review installation proposals and amend schematics The Surveyors’ Construction Handbook 7. including any revised calculations . Section 2 (07/01) 5.2 – Propose procurement route 5. SECTION 2 Area type: Main building Service: Chilled water installation Activity Employer Part 3.0 Spatial coordination: 7.0 O&M manuals: Effective from 1/9/01 6.3 – Agree plant manufacturers 5.3 – Sign off 7.3 – Re-select plant accordingly.Page 6 Allocation of design responsibilities This example is based on the contractor being appointed as part of the design team Project manager Building services engineer ✔ QS ✔ ✔ QS To be done in conjunction with the QS Structural consultant Contractor Other (stated) Comments ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Table 2: Continued PART 3.2 – Production 6.4 – Pre-tender plant (if required) 6.1 – Coordinate all services and routes 7.

0 Monitor the specialist design for compliance with the design intent 9. commissioning and provide certification 9.0 Design team coordinator/contract administrator PART 3.3 – Accept/witness commissioning 10. SECTION 2 12.0 Lead designer Page 7 .0 Cost advice and monitoring Effective from 1/9/01 11.1 – Commissioning specification Part 3.Table 2: Continued Allocation of design responsibilities This example is based on the contractor being appointed as part of the design team Project manager Building services engineer ✔ Structural consultant Contractor Other (stated) Comments Area type: Main building Service: Chilled water installation The Surveyors’ Construction Handbook ✔ ✔ ✔ QS ✔ ✔ Activity Employer 8.0 Test and commission the works: 9. Section 2 (07/01) 9.2 – Carry out testing.

with responsibility being allocated to the person within the team best suited to manage the risk.5 APPOINTMENT OF AN INDEPENDENT DESIGN-ONLY ENGINEER The first allocation of design responsibilities usually concerns the appointment by the client of an independent design-only consulting engineer. the completion of the tables in terms of timing will be dependent on the procurement route chosen. produced by the Association of Consulting Engineers. The 1981 conditions have been replaced by the 1995 conditions (2nd edition. The consultant does not warrant that his or her design will be fit for the intended purpose. Page 8 Part 3. The responsibilities of the consultant under full duties and performance duties are easier to understand than abridged duties. The tables should then be included as part of the tender documents and included as a contract document in both the employer’s contract with the principal contractor and its contract with the building services engineer. are widely used to make this appointment.2. under a ‘partnering’ situation the tables could be compiled jointly between the parties. a pre-designed single stage competitive tender would require the tables to be created as a basis for appointing the building services engineer. 1988).1. which would include the principal contractor. For example. SECTION 2 The tables should be compiled at the outset of a project by the employer or his or her project manager and should be included as a contract document. In practice.PART 3. Alternatively. or (iii) performance duties. the completed tables should be included as a contract document in all contracts between the employer and his or her design team. as undoubtedly the level of design responsibility will affect his or her fee. care and diligence in the discharge of his or her duties. (ii) abridged duties. The ACE conditions of engagement. (a) 1981 ACE conditions of engagement The 1981 conditions include agreement 4A which offers a choice of the following forms: (i) full duties. 3. Section 2 (07/01) Effective from 1/9/01 The Surveyors’ Construction Handbook . All three forms require the consultant (building services engineer) to exercise all reasonable skill. However. the 1981 conditions are still in use on some projects and therefore need to be considered here. The responsibilities under abridged duties rest between the relative extremes of full duties and performance duties. Again.

when it comes to engaging a design-only consultant. BSRIA technical note TN21/97 provides practical guidance on deliverables. it is very important that the extent to which the consultant will produce coordination documentation is clear. The forms are not formatted into full. From this point of view. Although the consultant is not required to produce coordination drawings (as defined in the 1981 ACE conditions) under abridged duties. (b) 1995 ACE conditions of engagement The 1995 conditions comprise a range of forms. the meaning of the words ‘major re-routing’ should be discussed with the designer so that the implications of what they might mean could be risk assessed at an early stage and clearly communicated through the contract documentation. an equivalent of performance duties may be agreed by listing in A19 those services which are not to be included as normal services. The 1995 conditions include the following guidance.PART 3. Additional services is a list of services from which the client must choose and add on to the normal services. Abridged duties have been the source of argument and dispute between building services contractors and design-only consultants for many years. Section 2 (07/01) Effective from 1/9/01 Page 9 . normal services are significantly less than full duties under the 1981 conditions. ‘In connection with the duties of building services engineers it should be noted that agreements A(2) and B(2) list as normal services a level of services which corresponds roughly to the abridged duties in the 1981 agreements 4A(ii) and 4B(ii). His or her duties under abridge duties are intended to harmonize with those of the architect up to a certain point and this would require some element of design coordination by the building services engineer. ‘it should be possible to produce coordination drawings and installation drawings without a major re-routing of those services’. The Surveyors’ Construction Handbook Part 3. particularly to the building services contractor who will rely on the information. Therefore. It is open to the client and building services engineer to agree an equivalent of full duties by importing some of the additional services into the normal services. In practice. they must request the inclusion of these drawings.’ It is important to note that coordination drawings are not part of normal services. This is especially important where abridged duties are used. the extent of this is unlikely to be clear. one of which is called agreement B(2). he or she will almost certainly coordinate design to some extent in conjunction with the other members of the design team. Similarly. However. Under normal services. the designer is required to prepare ‘detailed design drawings’ from which. If the client or the project manager want the designer to produce coordination drawings under the 1995 conditions. abridged and performance duties. SECTION 2 One very important difference between full duties and abridged duties is that the latter do not require the building services engineer to produce coordination drawings. Agreement B(2) divides the duties into normal services and additional services.

the engineering services element will be less detailed. this can lead to disputes. • If allocation of design responsibility between the parties is not clearly described in tender documentation. This is because the architectural and structural design will impact on the building services design and vice versa. • The use of abridged duties from the 1981 ACE conditions agreement 4A or their current equivalent needs very careful consideration. it is equally important to appoint him or her at the same time as appointing the architect and the structural engineer. Complete design expertise rarely lies with a single party.PART 3. • It is important to appoint the building services engineer at the same time as the architect and the structural engineer. Bringing the building services designer into a project at a later stage will mean that the building services design is less advanced than the main structural and architectural elements leading to possible conflicts as the design process catches up. SECTION 2 The main differences between the 1981 and 1995 ACE conditions of engagement are outlined in table 3. Page 10 Part 3. Table 3: Main Differences Between Appointments in the 1981 and 1995 ACE Conditions of Engagement 1981 ACE Conditions Performance duties As agreements A(2) and B(2) Least detailed design services Abridged duties No requirement to produce coordination drawings Less detailed design duties (How is coordination of design to be achieved?) Full duties Includes coordination drawings Most detailed design duties 1995 ACE Conditions List in A19 what is to be excluded from normal duties to equate to performance duties Normal duties Roughly equivalent (Coordination to be addressed separately) Additional services List of additional services to be agreed with the consulting engineer Should facilitate coordination drawing ‘without major re-routing’ Independent of who the designer is and how the appointment is made. Section 2 (07/01) Effective from 1/9/01 The Surveyors’ Construction Handbook .2. 3. When engaging a design-only building services engineer under abridged duties.1.6 SUMMARY • The designer is the party who is required to make the choice. it is very important to have a clear definition of deliverables expected from him or her. It will also mean that at a time when the client needs an accurate estimate of the project cost.

PART 3. it is generally considered to be the principal contractor’s responsibility and is therefore not covered here. as such. • re-ordering of materials.2 Design Coordination 3. G 3. Failure in the coordination of the building services design can create problems with the building services installation and may have a serious impact on the following areas. The Surveyors’ Construction Handbook Part 3. However. its potential impact on a project and the importance of recognizing appropriate procurement strategies to deal with this impact. • preparation of a drawing/sketch. may only become evident when the installation of the works is being carried out. may appear to be fairly straightforward for many elements of a building. The roles of the various parties.2 THE IMPORTANCE OF DESIGN COORDINATION Disputes involving design coordination and installation responsibilities are a major cause of conflict in the building services industry and. Whilst coordination of the installation (which is concerned with the planning and sequencing of the works on site) is extremely important. and • re-programming. which are not recognized during the drawing process. this is rarely the case when procuring buildings where the building services element is of significant value and complexity. 3.2. are one of the main reasons for delay and disruption on construction projects. time may be needed for a design solution to be found and implemented. the next part of this section deals more specifically with the coordination of design. • approval by others of the re-design.2. It is important to recognize the distinction between ‘design coordination’ and ‘coordination of the installation’.2. Section 2 (07/01) Effective from 1/9/01 Page 11 . SECTION 2 Having established where the responsibility for design can lie.2. The solution may require: • preparation of revised calculations. and the extent of their design responsibilities. • re-installation of the ductwork.1 INTRODUCTION This section deals with design coordination. For example. if the ductwork was found to clash with a structural element of the building. (a) Installation time Design coordination problems.2.

inevitably leading to conflict and delay. • incidental items such as retaining the scaffolding in place for a longer period. Page 12 Part 3. Section 2 (07/01) Effective from 1/9/01 The Surveyors’ Construction Handbook . It must be recognized that design coordination is an inherent part of the overall design process and. the solution can necessitate a compromise of the quality of the installation. misunderstanding can still arise if reliance is placed on custom and practice rather than liabilities under the contract. In this situation it is unlikely that any party will accept liability for the problem since the consequences. whoever is responsible for design should ensure it is undertaken. as such. a ductwork problem may prevent the ceiling installation from being completed to programme. SECTION 2 (b) Installation cost Remedying a design coordination problem often involves working out of sequence and can give rise to additional costs. This can give rise to parties defending their positions. are unclear. and • the costs associated with a variation to the works which may additionally involve loss of productivity and prolongation costs. Furthermore. (e) Standard of workmanship When a building services contractor experiences a problem due to lack of design coordination.PART 3. • drawing time – if the works are done out of sequence. Design coordination should be an objective and measurable process that is transparent to all concerned. and their associated costs.2. including those arising out of: • engineering time. 3. (c) Effect on other trades The time needed to resolve the design coordination problem might cause a critical delay to other trades or activities.3 OBJECTIVE OF DESIGN COORDINATION The process of design coordination should have a clear goal: to ensure that the many different elements of construction fit together effectively to provide a workable and economic solution. (d) Cooperation between the parties Invariably.2. even when duties and responsibilities are defined in the contract. coordination problems arise as a result of incomplete design or poorly-defined design duties which result in gaps in the design. For example.

the number of copies and the scale to be used. the complexity of their work and the likelihood that these trades may have different design responsibilities.1. These are: • The documents should contain a clear and unambiguous definition of design coordination and define the coordination responsibilities of the various parties. a number of key issues need to be addressed. (a) Terms of appointment for the designer Special care must be taken to understand the terms of appointment of the designer. In these circumstances it is beneficial to select the relevant specialists early in the procurement process to enable them to commence their designs and advance the completion of a fully coordinated design. Whatever method is used the contract should address the duties of the parties as follows. to establish responsibility for coordination of design. On projects containing a significant amount of building services. the results of which would be transferred into the contract (see table 2). It should be clear if the designer is responsible for producing The Surveyors’ Construction Handbook Part 3.4 RESPONSIBILITY FOR DESIGN COORDINATION It is essential. • The production of documents associated with coordination should be clearly allocated to the various parties to the contract. However. This could be scheduled into a simple table with tick boxes indicating the various parties’ responsibilities. SECTION 2 This may appear to be self-evident. Therefore.2. 3. Therefore. • Coordination of design should be included as a key activity in the planning stage of the project and should be a measurable activity with achievable milestones on the programme(s). Section 2 (07/01) Effective from 1/9/01 Page 13 . be two stages associated with it for the reasons outlined in 3.PART 3. before contracts are entered into.2. The contract should also specify the type and number of documents/drawings.2. the functions of design and design coordination are not always clearly defined. and • Recognition should be given to the impact which specialists have on design coordination and the importance of appointing early enough in the procurement process. there could be a number of specialists responsible for the design of their own systems. design coordination takes on particular importance because of the large number of trades involved. effectively. This may leave the contractor with a substantial amount of design coordination to complete after the building services design engineer has fulfilled his or her design obligation. a fully coordinated design would not be achieved until these designs are complete. or there could. the level of detail. For example. when drafting appointment and contract documents.

(b) Building services contractor’s contract It should be clear if the building services contractor has a duty to coordinate its work and/or the work of others into the overall design. Page 14 Part 3. If the building services engineer has design coordination liability and he or she intends to delegate to the building services contractor(s). it should be clear if the building services contractor is the lead coordinator. Whatever form of agreement is used. The contract should state whether the building services contractor has any design responsibility (see 3. the following factors need to be clear: (c) Delegation under the contract The designer needs to be sure that the terms of appointment allow this or that the client is in agreement with them.2.2. (d) Tender/contract documentation Documents need to be clear on the extent of coordination to be undertaken by the building services contractor and sufficient time must be allowed in the programme to perform the task.1). Ambiguity can lead to a dispute. Also.PART 3. An express definition of the quality and quantity of information to be provided by the designer should be included.1). Section 2 (07/01) Effective from 1/9/01 The Surveyors’ Construction Handbook . SECTION 2 Figure 1: Design Coordination coordination drawings during the design and construction stage of the project (see 3. design responsibilities should be clear and unambiguous.

Ideally this should be a project team member who has no design responsibility in order to avoid a potential conflict of interest. the building services contractor should have a compatible system.2. (f) Computer Aided Design (CAD) Where the scheme is designed on a CAD system. The design coordinator’s duty is to manage the design coordination process. (g) Programme There should be sufficient time within the overall programme of the works for the building services contractor to properly undertake coordination of the design. (iii) The design coordinator is responsible for the programme and method of implementation of design coordination. (ii) The design coordinator must establish a clear understanding of each party’s responsibility for coordinating the design and should ensure that they have the capability to perform their obligations. a process should be established to ensure that design coordination is being carried out. SECTION 2 (e) Ability Checks should be made to ensure that the building services contractor has sufficient experience and resources to undertake coordination duties.PART 3. Section 2 (07/01) Effective from 1/9/01 Page 15 .5 PROCESS FOR IMPLEMENTING DESIGN COORDINATION Once the responsibilities of the parties involved in the project are identified. This appointment should be made as early as is practical in the design process. It is unwise to have a fragmented contractual arrangement with several contractors undertaking design coordination work.2. An example of good practice is detailed below: (i) The client appoints a member of the project team as ‘design coordinator’. detailing how the building services contractor will undertake the process of design coordination. The Surveyors’ Construction Handbook Part 3. none of whom are liable for the overall design coordination. a lead coordination contractor should be appointed. 3. A method statement should also be obtained. This should be prepared with the input of all parties to ensure that it is in harmony with the overall construction programme. (h) Establishment of the lead coordination contractor Where possible.

the building services contractor may propose an alternative manufacturer for equipment to that chosen by the building services engineer. but usually it is because the building services contractor receives more favourable commercial terms from certain suppliers than others.1). The provisional selection of plant is also necessary for information in preparation of cost advice. a provisional selection of certain equipment is often made.2. unless it is agreed as an additional service. Does it lie with the building services contractor who proposes it or the building services engineer who approves it? The answer in law appears to be that the person on whom the client relies to make the decision must ultimately be responsible (see 3. this work is often not included as a duty in the terms of appointment for the building services engineer or in the building services contractor’s contract. In the event that the building services engineer does not undertake the re-evaluation process. (a) Selection of plant and equipment Where the building services engineer is responsible for the selection of plant and equipment. SECTION 2 (iv) The design coordinator should review the coordination process on a regular basis to ensure compliance. Section 2 (07/01) Effective from 1/9/01 The Surveyors’ Construction Handbook . Under the 1981 and 1995 ACE conditions of engagement. Questions often arise over design liability for the proposed equipment ‘meeting the design requirements’.2. the building services contractor Page 16 Part 3. This is in order to plan layouts and to provide information on space requirements/loadings to the architect/structural engineer. Therefore. if necessary. shape and manufacturer may not only lead to coordination problems. In tendering for the works.2. the contract administrator should issue instructions to overcome any problems.PART 3. Reports should be issued to the client and. The reasons for this can be varied. because either it is not in the terms of appointment or the client is not willing to pay additional fees. However. 3. Changes in size. On a practical level it is often better for the building services engineer to undertake a re-evaluation of the design to ensure that the equipment complies both in terms of specification parameters and coordination of the services. the building services engineer should be paid an additional fee to undertake this work. It can also result in problems with functionality if the equipment does not meet the specification.6 SPECIFIC PROBLEMS RELATING TO BUILDING SERVICES INSTALLATIONS The following examples are typical problems that can give rise to coordination difficulties. The client may be in favour of this alternative if the selected equipment achieves cost savings and/or improved delivery times without the quality of equipment being reduced. the building services engineer is not responsible for re-evaluation.

One of the problems with this. If a specialist cannot be appointed at an early stage. (c) Variations/changes to the works Variations and changes to the works can have a significant impact on the design coordination depending on their scope and timing. Such alterations should be carefully considered. however. refrigeration and sprinklers. SECTION 2 should be responsible for the design and coordination associated with the change. Ideally. is that the amount of coordination required may vary substantially from specialist to specialist. If the building services contractor suddenly takes on this design responsibility it must be reflected in its terms of contract. a large element of the building services works may consist of many specialist installations.7 LEGAL POSITION The legal position with regard to design coordination cannot be considered in any depth within this section. where the specialist company’s input is significant to the project. (a) Express terms of the contract The appointment of the building services engineer should clearly establish whether there is a responsibility for design coordination. the cost of these changes may prohibit the proposed change of equipment.2. However. Such assumptions can often turn out to be incorrect. Examples of such installations include medical gases. The client should be advised that the disadvantage with this option is that there is no independent check that the equipment complies with the specification. BMS. However. (b) Appointment of specialist installers Depending on the type of project. lifts. and for this to be coordinated with the overall design. the law related to coordination is considered briefly below. The associated changes to warranty agreements must also be made. 3.2. It is recommended that the appointment of the building services engineer should be under the appropriate ACE form of agreement. in sufficient The Surveyors’ Construction Handbook Part 3. they should be appointed at a stage which avoids assumptions being made regarding the specialist’s requirements.PART 3. allowance should be made within the programme for the specialist to develop its design. Section 2 (07/01) Effective from 1/9/01 Page 17 . Many of the standard forms of building contract deal adequately with materials and workmanship requirements but fail to address. It is usual for the specialist companies to provide design information and this information must be incorporated into the works to ensure a properly coordinated design is achieved.

the CDM (Construction (Design & Management)) regulations 1994 do not differentiate between building services engineers and building services contractors who undertake any design duties. The disputes usually relate to payment for additional work rather than damages for defective work. It is essential that when a building services contractor is not specifically responsible for design (as. the courts are still likely to imply an obligation on to the building services contractor to warn the client of any problems known to it. This is because latent defects do not generally originate from coordination problems. Therefore. Therefore it is important to insert clear express terms in contracts.2. a clear understanding of liability for design is essential for those taking on coordination work. Section 2 (07/01) Effective from 1/9/01 The Surveyors’ Construction Handbook . • Documentation responsibilities. Most coordination disputes arise during the course of the works and are dealt with under the contract. statute or by custom. design coordination issues. for example. 3. express terms are included to cover design coordination duties and responsibilities. (c) Tort There is much less likelihood of an action in tort for coordination problems than there is for more general design errors.2. (d) Criminal implications Negligent work and breach of statutory duty are normally considered as torts. However. Consequently. particularly where injury is caused to others. Where a building services contractor has no express design liability. (b) Implied terms of the contract Where the contract is silent on an issue. the law of tort can increase the liability of the building services contractor in terms of its duties. they can also have criminal penalties. the number of parties it is liable to and the length of time it has a liability for. The application of implied terms is limited and uncertain. common law. In fact. irrespective of the parties’ intentions. even if only restricted to design coordination. SECTION 2 detail.PART 3. For example.8 SUMMARY • Recognize the importance of design coordination within the procurement strategy. terms may be implied by the courts. in design and build contracts). the application of tort is limited but should not be ignored. should clearly identify design coordination Page 18 Part 3.

The earlier the building services contractor is appointed. • take the lead in design coordination.2.2. The client may prefer to appoint a building services contractor who can: • build to the quality and standard required.2. or • provide a lower whole-life cost. Section 2 (07/01) Effective from 1/9/01 Page 19 . and different clients will put different emphasis on each criterion. SECTION 2 • Ensure there is a clear process and adequate time for design coordination. The prioritization of the criteria to suit the client’s overall objectives ultimately influences how the appointment of the building services contractor is conducted. • coordination.PART 3.1 INTRODUCTION There are many criteria to be considered in the appointment of a building services contractor. the appointment of the building services contractor in the correct manner is crucial to the success of a project.3 Appointing a Building Services Contractor 3. The lowest tenderer may not always provide the client with the best value for money and there may be more important priorities to consider than simply the initial build cost. • provide the resources to condense the contract programme. • Appoint specialists early where design input is key to coordination. G 3.3. The more complex the project.3. Section 3.3 deals with appointing a building services contractor and examines the common approaches and the pitfalls. the greater the influence it can have on: • design.2 TIMING OF THE APPOINTMENT The timing of the appointment of the building services contractor depends on the selected procurement strategy and/or the cost effectiveness of introducing the building services contractor to the design process at an early stage. the longer the lead-in period prior to instruction will need to be. • provide a design service. It also depends on the size and complexity of the project.2. Having established an appropriate procurement strategy and terms of appointment. 3. The Surveyors’ Construction Handbook Part 3.

and • maintenance – post completion. These influences should however be balanced with the disadvantages of early appointment: • limited price competition. SECTION 2 • plant and equipment selection and procurement. • value engineering. These are as follows. (a) Inception and feasibility stage The building services contractor should only be appointed at this very early stage if one or more of the following criteria is satisfied: • the project is predominantly building services.PART 3. There are several key considerations relative to appointment at the various stages of design. and • difficulty comparing tenders effectively. • commissioning advice. Section 2 (07/01) Effective from 1/9/01 The Surveyors’ Construction Handbook . may have been produced by the client’s appointed building services engineer. The appointment would generally take place at outline and scheme design stage when the building services contractor would be required to develop the initial design into a full design. or • advice on the programme is required due to long lead-in times for equipment. together with an accompanying preliminary outline specification. At this stage an outline design. • safety – in terms of maintenance and accessibility. • programming. • very early design or design coordination input is required due to the complexity of the project. • the cost plan. Page 20 Part 3. • the building services contractor’s work is of a very specialist nature. • buildability. • limited pool of building services contractors able to develop and finalize the design. (b) Outline and scheme design stage Appointment at this stage usually leads to a lump sum or a guaranteed maximum price.

Tables 3 and 4 summarize these advantages and disadvantages. 3. The building services contractor is appointed at this stage if it has little or no design input. The client’s and team’s view on the benefits of the various appointments discussed earlier will also influence this. In this approach the building services engineer and the building services contractor work alongside each other to produce the design and coordinated working drawings.1 (‘The Procurement Guide’). The project team should try to ensure that the terms of the appointment are no more onerous than those of the main contract. The appointment of the building services contractor under the main contract procurement routes is considered below.2. The building services contractor is generally appointed under a domestic sub-contract or package arrangement under a principal contractor.3 PROCUREMENT OPTIONS This section reviews how the building services contractor’s appointment fits within the various project procurement strategies.PART 3. some clients may consider these to be of importance. to work alongside the client’s design consultants in a ‘concurrent engineering approach’. (c) Full design stage Appointment at this stage of the project usually follows a lead-in period allowing design to be virtually completed by the client’s building services engineer prior to appointment. one level of drawings is deleted from the process and the responsibility of design coordination rests with the contractor. In this example. A comprehensive review of the overall project procurement options can be found in section 3.3. the building services engineer could produce performance criteria and schematics which are worked up into fully detailed working drawings with any survey work and the coordination being done by the contractor. SECTION 2 Alternatively. Section 2 (07/01) Effective from 1/9/01 Page 21 . the building services contractor’s expertise can be utilized by appointing it. (a) Traditional procurement: where the building design is complete before the principal contractor is appointed The most commonly used procurement route is the traditional route of complete design prior to tender with either bill of quantities or pricing schedules tendered The Surveyors’ Construction Handbook Part 3. The timing and contractual basis of the building services contractor’s appointment largely depends on the overall project procurement route. Some contractor design may still be required at this stage for specialist systems. For example. for a fee. In addition to these key considerations there are various minor advantages and disadvantages. It generally leads to a lump sum tender being sought based on the client’s consultant’s design drawings and comprehensive specification. However.

and very obviously. The advantage is limited however as the BQs may not reflect the way the contractor prices the work involving additional work for the contractor. Tender period shorter together with reduced tendering costs and risk for the building services contractor. The client will benefit from the building services contractor’s expertise in the selection of the most competitive equipment and systems. Also. Optimum competition. The measurement process will also provide a check against the adequacy of the design information. SECTION 2 Table 4: Advantages of Appointment at Design Stage Design stage Inception and feasibility stage Outline and scheme design stage Full design stage Advantage The client would have complete access to the building services contractor’s specialist knowledge. Early appointment generates a good understanding of the client’s objectives and an accurate brief. ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Page 22 Part 3. A variety of solutions may be provided allowing the client and his or her project team to assess the best solution for the project. The overall project programme could be shortened due to the time saving in the pre-tender period.PART 3. A shorter tendering period compared to the traditional route. unless the design is fully coordinated a BQ reflecting the final design cannot be produced. Bills of quantities (BQs) or detailed pricing schedules can be readily produced by the quantity surveyor with the inherent advantage of tender cost comparisons. The quality control of the installation can be monitored by the consultant against the original design. Section 2 (07/01) Effective from 1/9/01 The Surveyors’ Construction Handbook . Simplification of the tender documentation. cost control and use in the valuation of variations. provided the design is practically complete and the bills are correctly described and accurately measured.

Delay in appointment may affect the coordination of the services and delay builders work details. The client and the client’s design team have less control over final design The client may be forced to make compromises between price and quality depending on how comprehensive the initial enquiry document was. Clear tender proposals are not always possible due to variations in the tender design proposals. ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ The Surveyors’ Construction Handbook Part 3. and so on during design process. equipment and building services contractor selections during the pre-contract stage. equipment and building services contractor selections. Late tendered cost information may cause budget problems. Extensive tender preparation time and costs for the building services contractor. costing. No use made of the contractor’s expertise in terms of buildability. The building services contractor will tend to view the capital cost as the priority rather than the quality and through life costs of the building. programming. The pre-contract stage will tend to be longer due to the time taken to produce the design and the tender documentation. Incorrect allocation of coordination responsibilities may lead to cost escalation. SECTION 2 Table 5: Disadvantages of Appointment at Design Stage Design stage Inception and feasibility stage Outline and scheme design stage Full design stage Disadvantage Limited number of building services contractors with the required design expertise to develop and finalize the design.PART 3. The cost of the building services consultant’s fee may be more than the contractor’s cost for developing the design. Limited use made of the contractor’s expertise in terms of buildability programming. Section 2 (07/01) Effective from 1/9/01 Page 23 .

However. particularly if the main contractor follows appointment procedures similar to those set down in the Code of Practice for the Selection of Sub-Contractors. it can be done after letting the main contract. (iii) Naming a single building services sub-contractor as sub-contractor in the main contract This method allows the employer to appraise building services tenders and select a building services contractor using his of her own criteria. This is done prior to letting the main contract and inserting a name into the main contract. However. It also prevents the principal contractor from working with sub-contractors with whom it has a good relationship or partnering arrangements that may reduce conflict. The employer has little control over the building services contractor’s appointment. (iv) Nomination This arrangement allows even greater control by the employer and usually provides a degree of comfort to the building services contractor. the criterion used by the principal contractor to appraise tenders is likely to be price. It would only be utilized if the employer is the most appropriate person to shift risk too. This method would be used where the employer wishes to maintain an element of control. This method has the disadvantage of higher costs when compared to traditional domestic arrangements. SECTION 2 on a lump sum basis through a main contractor. in which case. appointing a building services contractor can be achieved in a number of ways: (i) The principal contractor selects the building services contractor This traditional domestic sub-contracting arrangement is usually most appropriate when the project is small or the building services elements are not complex. It also reduces the overall cost of tendering by restricting the number of building services tenderers. where for example the building services contractor is required to assist the building services engineer with design and coordination. a prime-cost sum is inserted into the main contract. It is extremely rare to see this method in use today. However. Page 24 Part 3.PART 3. a two-stage selective tendering method is appropriate. Section 2 (07/01) Effective from 1/9/01 The Surveyors’ Construction Handbook . However. the principal contractor’s choice is usually price led and this method can lead to ‘Dutch auctioning’ by the principal contractor. (v) Two-stage selective tendering If early appointment is required. and the building services contractor is not required to have any design input. This does not necessarily result in an inappropriate appointment. It provides some competition with a degree of control maintained by the employer.3 (ii) Naming a number of alternative building services sub-contractors This arrangement avoids some of the problems associated with domestic sub-contracting. part of the burden of risk is shifted to the employer. Alternatively. To achieve this the building services sub-contract will either be negotiated or tendered by the employer.

PART 3. in relation to the principal contractor’s appointment. the choice depends on the amount of control the employer wishes to maintain. Personal preference for a particular building services contractor may also be a factor. (ii) Timing in relation to the principal contractor appointment Pre-tender the building services sub-contract(s) This allows selection to be made prior to the appointment of the principal contractor. the principal contractor must be prepared to enter into a domestic sub-contract arrangement with the successful building services tenderer. This method usually results in a higher contract sum than other methods. The employer’s choice usually depends on the amount of input and the size of the building services contract. However. It is particularly useful when the building services contractor is required to take on design liabilities and its early input is required. Tender the building services packages after the principal/main contract This allows the principal contractor to comment and. (i) Number of sub-contracts: tender mechanical and electrical works as separate sub-contracts In order to tender the mechanical and electrical sub-contracts (or even sub-divisions of these) the contract must be of sufficient size to negate the efficiencies that would be gained by having a single sub-contract. if necessary. The building services contractor is then required to enter into a domestic sub-contract with the principal contractor. it may be more appropriate to appoint the building services contractor as the principal contractor where it has the necessary management skills to undertake this role. It is particularly useful to allow time for the building services engineer to complete work on the building services design prior to tendering where this is not as advanced as the main works design. A prime-cost sum could be included in the contract documents for the building services installer at tender stage to provide the principal contractor with the opportunity to price its overheads and profit and preliminaries. If the building services element is very large. Section 2 (07/01) Effective from 1/9/01 Page 25 . The Surveyors’ Construction Handbook Part 3. balanced with the cost. However. problems occur when a sum at stage two cannot be agreed. a number of options should be considered in relation to the number of sub-contracts required and the timing of the appointment. object to the design team’s proposed tender list prior to the works being tendered. This method allows the principal contractor to be appointed ahead of the building services element. SECTION 2 At stage one a schedule of rates and preliminary costs is agreed. These are then used at stage two to build up the contract sum. If the employer wants to retain control over the tendering process and selects the building services contractor. To summarize.

However. will be produced by the building services engineer. Performance specification or design and build may involve novation of the design team to the chosen building services contractor. mechanical and electrical. (b) Design and build When the principal contractor is under a design and build contract it is more usual. The pricing document produced by the quantity surveyor is very important in this situation.2. Also. named building services contractors can be used if the employer has a particular preference.3(a) should be applied. ductwork.PART 3. a performance specification. for the principal contractor to select its own building services contractor.3. This could consist of two packages. This is because a higher degree of cooperation and integration is required between them. SECTION 2 However. i. there is the possibility of a less competitive overall cost as the principal contractor is incorporating the works after being awarded the building contract rather than it forming part of its tendering strategy. The tenderers under consideration would be required to submit a quantified schedule of rates to allow post-contract cost management. The quantity surveyor must have an understanding of the final design in order to provide appropriate headings within the pricing document. This should be done prior to the contract being awarded to them. and so on. Joint ventures are often used where the building services element is significant. When the main contract is traditional and the building services element is to be designed by the building services contractor. The design coordination responsibilities discussed earlier in 3.2 take on even greater significance with an increasing number of interfaces. particularly on larger contracts. There are three main reasons for introducing packages into a construction project: Page 26 Part 3. It is recommended that the employer maintains an element of control over the building services element where complex or prestigious building services design is involved. plant. the criteria in section 3. the delay in appointment may adversely affect the coordination of the services and delay builders work details. or it could be further subdivided into pipework. (c) Management contracting or construction management route This route involves the building services being subdivided into works packages. plumbing. This will enable a meaningful analysis of the tender return to be achieved. If this method is chosen it is vital that the coordinating contractor has the requisite experience in coordinating the various trades involved and fully understands the project. The building services tenderer is then required to complete the design.2. It is usually only beneficial to package the work when the project is large and complex and/or dependent on current market forces. Section 2 (07/01) Effective from 1/9/01 The Surveyors’ Construction Handbook . If the building services contractor is to design.e. and possibly outline drawings.

SECTION 2 (i) It allows the management contractor/construction manager to retain greater control of the project. the greater the cooperation required between the design team and the building services contractor. The selection of the principal contractor on complex projects should also be considered carefully to ensure that it provides the necessary building services The Surveyors’ Construction Handbook Part 3. or eliminating.3. the amount of confrontation and allowing the parties to concentrate their efforts on the needs of the project instead. and (iii) It allows design development to proceed in parallel with construction. When one package contractor becomes too dominant on any project the site management can lose its hold on the project. Each of the possible procurement routes must be objectively considered in conjunction with the project as a whole. • Design coordination responsibilities become more difficult to control as the number of individual interfaces increases. Partnering or new strategies such as ‘supply-chain management’ and ‘concurrent engineering’ which lead to closer relationships between the various construction parties can also benefit the project by reducing.PART 3. • If risk is not evenly distributed between packages this may lead to difficulties in obtaining tenders for some packages. better communications and lower preliminary costs for the project. • Could cost savings be obtained by reducing the number of work packages? Fewer packages result in lower cost due to less tendering.4 SUMMARY OF PROCUREMENT ROUTES When deciding on the appropriate procurement route the most important point to remember is that the more prestigious and complex the project. Under these circumstances there is a greater need for the client to control the appointment of the building services contractor. Every route has its own distinct advantages and disadvantages and its inherent risks which have to be related to the client’s objectives and the project characteristics. • If the number of packages any one contractor is allowed to win is limited then competition on the final packages may be limited as the number of competent tenderers is reduced as the tendering progresses. To balance these points the following issues should be considered: • Does the project easily divide itself into the separate work package? If not. 3. additional interfaces are being introduced which must be balanced with any potential loss of control.2. Section 2 (07/01) Effective from 1/9/01 Page 27 . (ii) By tendering the project in packages additional competition may be introduced dependent on market conditions.

The ability of the quantity surveyor to have a positive input into this process so that an appropriate selection is made is very important. and are sufficiently committed to offer a competitive price. required to form the contract. SECTION 2 Figure 2: Appointing a Contractor: Impact of Procurement on Design Responsbilities experience and input to ensure that the installations are properly controlled. have the work capacity to undertake the project. It is also important to ensure that the contractors considered at an early stage are financially sound. Section 2 (07/01) Effective from 1/9/01 The Surveyors’ Construction Handbook . the client would only have to invite the first contractor professing to have the required skills to start work as and when it was convenient to proceed. However. The selection of building services contractors for interview.PART 3. The aims of the tendering procedure can therefore be summarized as follows: • to assess the skills of the contractor. including the client’s objectives. (a) Short listing building services contractors The following options can be considered when drawing up the short list of tenderers: Page 28 Part 3. coordinated and programmed. are of appropriate size and status. this is not the only objective.2. tender or negotiation is often made by committee. and • to obtain a competitive quote.5 TENDERING The main objective of any tendering process is quite simply ‘to employ a contractor’.3. If it were. • to translate to the contractor through the tender documentation all the project information. 3.

On larger contracts. Small contracts may allow subdivision of particular trades. formal interviews should be undertaken with the proposed potential tenderers.e. (b) Interviewing Once a tender list has been drawn up. However. (iii) Open advertising arrangements Advertisements in the European Journal or similar recognized publications can be arranged. The design team evaluation of approved contractor application forms can be used to assess references from other design teams. Interviewing can be costly and time consuming for both the building services contractor and the design team. it is also increasingly frequent for large and/or complex projects. (d) Selection criteria In all cases the following list represents the minimum information that should be collected about prospective tenderers: The Surveyors’ Construction Handbook Part 3. where coordination with other trades is a major priority. It is important to understand the capabilities of the particular building services contractor and whether there is a bias towards any one specialism. letting all the services to one contractor may prove to be an advantage.PART 3. but their integration into the overall services installation can lead to difficulties in the later stages of a contract. (ii) Project team recommendations Recommendations can be based on the past experience of building services contractor’s performance on similar projects. Therefore. The client may also have preferences for approaches such as partnering. SECTION 2 (i) Client preference An experienced client may have stated preferences for building services contractors of whom they have knowledge or who have performed well on previous comparable projects. particularly commissioning and the incorporation of life safety testing and linking with final commissioning of mechanical plant. This is a common activity in organizations that keep preferred or selected lists of contracting companies for regular construction activities. i. Section 2 (07/01) Effective from 1/9/01 Page 29 . mechanical or electrical. Companies who qualify in this way may then be invited to tender for the works. (c) Pre-qualifying In some cases it may be desirable to investigate the companies under consideration prior to including them on the project tender list. the length of interviews and the number of contractors interviewed should be related to the size and complexity of the project.

the fewer tenderers are required. The complexity does not cover just the construction work but also any design and/or design coordination responsibilities which are devolved to the building services contractor. Page 30 Part 3. • size of company (a company’s turnover should be scrutinized in relation to the proposed contract value and programme). and • what trades the building services contractor has in-house and which will be sublet. • company location. the individual tenderers should be issued with a scope of work and project programme. • insurance cover. (f ) Length of tender list The number of building services contractors finally asked to submit a tender should relate to the type of project. commissioning. planning. They should then be asked if they are willing to tender. This should establish the current workload. the more complex the contract. Section 2 (07/01) Effective from 1/9/01 The Surveyors’ Construction Handbook . • necessary specialist skills – e. This gives the whole team a final chance to assess the building services contractors prior to the tender documents being sent out. SECTION 2 • quality of work. • financial stability.g. the complexity of the project and the contractors’ responsibilities under the proposed contract. (e) Preliminary enquiry Once a preliminary list has been collated. • size of previous projects and the outcomes. Guidance on selecting a building services contractor can be found in the Code of Practice for the Selection of Sub-Contractors. • previous record of performance – preferably supported with a client recommendation. • previous experience. • health and safety experience/record. who is likely to carry out the work and the likely enthusiasm of the qualified tenderers. It is wise to have a pre-tender meeting with the selected tenderers at this stage. Generally.PART 3. • CVs of the key personnel.

(ii) the complexity of the project. The amount of influence the design team has on the selection of the building services contractor will increase the longer the project team retains control of the tendering process. 3. an appropriate design period should be allowed for within the project programme to minimize potential site problems. (b) Tender documentation The tender documentation should be clear.3. comprehensive and unambiguous. and (iii) the size of the project. it is important to have a single point of contact within the design team through which the information flow to the building services contractor can be monitored. an appropriate tender period must be allowed so that the building services contractor can return a fully considered tender. At what stage the principal contractor takes control of the appointment should be carefully considered by the design team and may depend on a number of factors (see section 3. SECTION 2 (g) Tender period Regardless of the procurement route chosen. Tender periods can range between three weeks for a design-only contract to ten weeks for a design and build project. If the design and build route is chosen.3).3. This would normally be undertaken by a quantity surveyor. This enables the building services contractor to fully understand the obligations under the contract and to price for these within its tender. The tender period will mainly be dependent on three factors: (i) the procurement route. The Surveyors’ Construction Handbook Part 3. Building services contracts should have a tender period of four to eight weeks.6 AVOIDING THE PITFALLS (a) Control of the appointment The control of the building services contractor’s appointment can be retained by the design team or it can be passed on to the principal contractor. Section 2 (07/01) Effective from 1/9/01 Page 31 . The control of the building services contractor’s appointment is a key role in the procurement strategy and one that must balance technical services knowledge with commercial and contractual acumen. Once the principal contractor takes control of the process.2.PART 3. depending on the parameters mentioned above. As long as the appointment is controlled by the design team it is also vital that this is managed by a professional who understands the commercial and contractual process.2.

The production of working drawings should not be confused with completing the design (see 3.2). alternative schemes. SECTION 2 Tender documentation which does not fulfil these criteria can lead to confusion and to a proliferation of claims once the contract is awarded. coordination. drawing requirements. (c) Coordination brief A coordination brief.3.2.2. commissioning.4). including a definition of terms from the project team to the building services contractor. In more complex installations.PART 3. etc. where the use of building management systems form a major element of the services. programming and value engineering (for guidance on early appointment see section 3. space planning. it should be understood at the outset as to how the building services contractor is intending to install/commission and demonstrate its work. it can advise on services loadings. An example of a method of identifying and allocating design and coordination responsibilities is illustrated in table 2 (see section 3. the more likely it is that problems related to coordination of services and the physical limitations of the structure can be avoided.2). Those managing the project require an understanding of coordination. Section 2 (07/01) Effective from 1/9/01 The Surveyors’ Construction Handbook . It is also important that an appropriate response is obtained from the building services contractor to ensure that it fully understands its role and responsibilities. (d) Duties and responsibilities The building services contractor’s responsibility for design. if the building services contractor is appointed early. interface with the building trades. Page 32 Part 3. This type of table should be included as part of the contract documents and professional appointments. In addition. must be included in the building services contractor’s contract.2. The use of detailed method statements and a signed-off coordination brief at tender stage on a service-by-service basis can often avoid many problems. The design team must plan the interface of the building services contractor with the other building trades. It is far cheaper to resolve these problems during the design period than run the risk of escalating variations and claims for delay and disruption.2. Section 3. The earlier the building services contractor is introduced into the design process.1. should be clearly defined in order to avoid disputes occurring later in the contract. They need to know which elements of which particular services are critical to the other building trades. starting at the initial design stage.4 explores tender documentation more fully. coordination.

In order to assess this it is useful to liaise with design teams with whom the building services contractor has worked on similar projects in order to assess its capability to undertake the work. A contract that is late will rarely have an adequate commissioning period. Therefore. with the exception of the final finishing trades. (g) Programming The lead-in period for the building services contractor must be sufficient to allow adequate time for the design. Far too often this period becomes compressed and results in an increase in coordination mistakes or design errors because there has been insufficient time to check the drawings properly. It is naive to cover up design delays and force the building services contractor to try to achieve impossible end dates. It is extremely important to ensure that the building services contractors being considered for selection are of a size. the pressure placed on a building services contractor to commence work on site too early creates the risk of cost escalation through potential abortive work on site or an inability to adequately pre-plan work areas. etc. This is vital for successful services installations. (f ) Design role It is often advantageous to pass specialist design responsibility over to the building services contractor. Section 2 (07/01) Effective from 1/9/01 Page 33 . and have the expertise. the design team should insist that the programmed commissioning period is maintained and that commissioning does not start until the site is ready. There are often services where difficulties arise with the interface between the building services engineer’s design and the building services contractor’s design and where liaison with third parties may have an influence on the final design.). Failure to do so will often result in abortive costs or lead to a dissatisfied client when the building provides an unsatisfactory environment. fire alarms. working drawing production and procurement of specialist plant. In addition. The Surveyors’ Construction Handbook Part 3. An example of such an area would be life safety systems (sprinklers. to undertake the project. (e) Track record The track record of the building services contractor should be closely scrutinized and an understanding gained of the type of contracts undertaken in the past. SECTION 2 The commissioning of the building services installation should only be undertaken when all the other trades are complete. Such behaviour can result in an adversarial situation and a ‘raised claims’ consciousness from an early point in the contract. Mismatching of contractors will lead to uncompetitive bidding or a complete lack of interest.PART 3. Good management of the project requires good programming techniques.

complexity and the degree of control required by the design team should be recognized.7 SUMMARY • Assess the principal contractor’s ability to manage the building services installation. • Decide at an early stage who will control the appointment of the building services contractor. The importance of design responsibility. Poor tender documentation will also give rise to inconsistencies between individual tender returns which makes initial comparison of the bids on a like-for-like basis virtually impossible. G 3. • The chosen procurement route should reflect the complexity of the project. When inadequate tender documents are produced it is evident that the tender submissions will be of an equivalent. • Only allow appropriate number of building services contractors to tender. SECTION 2 3. Page 34 Part 3. commercially and contractually. • Consider the elements of risk and consider who is best suited to take these (using recognized risk-management techniques). the tender returns are likely to be heavily quantified technically. It may be desirable to keep the decision-making process with the design team. including the design and coordination role. • Ensure adequate consideration is given to the scope of the building services contractor’s appointment. • Determine at a very early stage the timing of the contractor appointment to suit the client’s procurement objectives.4. Section 2 (07/01) Effective from 1/9/01 The Surveyors’ Construction Handbook .1 INTRODUCTION The aim of this section is to identify the problems associated with the production of tender documents for the procurement of building services and to develop potential solutions.2.2. • Ensure selection is made in a methodical way and that the building services contractor is of an appropriate size and ability in relation to the project requirements.PART 3. As a result.3.2. size. The ability to retain control over post-tender variations will also be lost if the provision for such control is not adequately covered in the tender process and defined within the contract. • All tenderers should confirm their willingness to tender. poor standard.4 Tender Documents 3.

For this reason the appointment of the building services contractor takes on added importance. It can be adapted to whichever procurement route is chosen.2. • set out the required programme. • identify the roles and responsibilities of the building services contractor in terms of design and design coordination. This is intended to be a general introduction. it is not possible to refer to specific circumstances here.PART 3.1 (‘The Procurement Guide’). • set out the procedures for making payments to the contractors and valuing variations. please see section 3. This person should have the authority to make decisions and influence the overall management of the project rather than be informed of the management’s decision. The building services contractor cannot be considered as simply another trade contractor because they interface with almost every other trade on a project. SECTION 2 This section provides a practical approach to document production. i. Section 2 (07/01) Effective from 1/9/01 Page 35 . It is important to understand that it is not only the ability of the building services contractor that requires assessment. This individual is the ‘linchpin’ of the construction process as far as the building services installation is concerned and perhaps the project as a whole. • establish the degree of proof required for any claims made and the required procedures.4.e. Due to the various forms of procurement available and the wide range of situations. and • inform the building services contractor if a clerk of works will be employed and what his or her duties will be. The ability to resolve interface problems and to successfully The Surveyors’ Construction Handbook Part 3. 3. • define the scope and standard of work. it is also the principal contractor’s ability to coordinate and manage the building services installation. • define the conditions under which the contract will be administered. post-contract cost management procedures. For more information on the various procurement routes available.2 OBJECTIVES OF THE TENDER DOCUMENTATION The aims of the tender documentation can be summarized as follows: • obtain a competitive quote. On all large projects it is advisable that the principal contractor employs an individual (or organization) to be directly responsible for the management of the building services contractor(s). • identify the risks under the contract and the works which the building services contractor is expected to include within the tender.

on-site equipment that cannot be allocated to a specific item. The design team’s responsibilities must be clearly identified within the tender documents.3 TENDER DOCUMENT FORMAT The contents of every contract varies depending on the procurement route chosen. employer’s requirements. the principal headings generally remain the same: • Preliminaries The preliminaries section of the tender documents contain similar information to that of the principal contractor in a traditional procurement strategy. • Specification The specification produced by the design engineer relates directly to the tender pricing document. materials. Page 36 Part 3.4. • Drawings Always list out the drawings the contract is based on. it is important that the tenders are analyzed in a professional manner. contractual issues and the contractor’s own general items.e. However.2. SECTION 2 coordinate the building services works with other trades is central to achieving a trouble-free contract. and so on. The other extreme occurs when only a performance specification is produced by the client-appointed building services engineer and the building services contractor is responsible for the design.5. This allows the contractor an opportunity to price items such as contract insurance. However. site staff. If the project is fully designed. special attendances required and any assumptions made while taking off the quantities. detailed design is generally still required. the building services contractor may have no design responsibility. • Preambles Preambles deal primarily with workmanship. hutting.4. and so on which require further design input. • Scope The scope should not only cover the construction work but also design and who carries the responsibility. The pros and cons of this approach are discussed in section 3. fire alarms. This switch in design lead usually occurs with specialist sub-packages such as the BMS. and so on. Section 2 (07/01) Effective from 1/9/01 The Surveyors’ Construction Handbook . Once all technical queries are satisfactorily resolved by the design team. i. If bills of quantities are not being produced this section may be incorporated into the specification. the quantity surveyor is the most suited team member to undertake a complete commercial appraisal of the submitted tenders and provide a clear recommendation to the client as to the successful tenderer.2. 3.PART 3. As the building services packages can provide the main arena for confrontation throughout the project’s life.

This is difficult for the employer to control. SECTION 2 • Conditions of contract The type of contract. MCWA/F or MCWA/P&T. COWA/F. purchaser and tenant • Bond/parent company guarantee (PCG) The preferred wording of any bonds/PCGs should be contained within the contract documents. P&T = Collateral warranty for funder. product liability insurance may be acceptable. • Warranties The wording of the preferred warranty should be provided within the contract documents.g. COWA/F. • Programme The overall project programme should be included within the tender documents to provide the building services contractor with an idea of how its works will be integrated with the other trades. The Surveyors’ Construction Handbook Part 3. Likewise. • Attendances If the building services contractor is to provide any attendances on other trades this should be quantified and described within the tender documents. This will help relieve some contractual conflict. A design warranty may be required between the client and the sub-contractor. this should be stated. • Form of tender The form of tender. incorporating any required amendments. Where the sub-contract conditions are to be negotiated between the principal contractor and sub-contractor these can have a significant effect on price. • PI insurance requirements PI insurance is only required if design responsibility lies with the building services contractor. e. COWA/P&T. The tenderer should be asked to produce an outline programme to be submitted with the tender. Along with the programme a key date schedule should be included. Section 2 (07/01) Effective from 1/9/01 Page 37 . for example JCT 98.PART 3. purchaser and tenant MCWA/F. With packages such as lifts. it should be checked that any attendances required by the building services contractors from other trades are detailed in the appropriate documentation. If a standard wording is to be used. P&T = Main contractors collateral warranty/funder. • Precedence of documents Somewhere within the tender documents the hierarchy of the documents should be stated.

a draft pricing document can be produced and agreed with the building services engineer. By creating the pricing schedule in this format everyone knows and agrees the scope of work which is included within each heading.4.4. the building services contractor has a close relationship with the building services engineer. a breakdown should be requested. It should be detailed within the pricing document how long the tenderer will have to provide the fully quantified schedule of rates. submit a fully completed pricing schedule which breaks down their lump sum tender into various headings that should correspond to the sections of the specification. The pricing schedule splits the specification into various headings under trades or elements. If this is not clear. It is critical that any recommendation takes proper recognition of the tenderers schedule of rates (see section 3. It is good practice for the quantity surveyor to get an early draft of the specification and edit out the contradictions between the building services engineer’s specification and the pricing documents/project preliminaries.2. This can still occur and so each consultant’s scope must be analyzed to assess who is to provide the pricing documents. Section 2 (07/01) Effective from 1/9/01 The Surveyors’ Construction Handbook . Once this has happened. It is imperative that each contractor being considered achieves parity of tender to enable a clear and unambiguous recommendation to be made to the client.2. This occurs when all engineering aspects have been verified by the building Page 38 Part 3. This breakdown must show the build up to the contract price including all tender adjustments. By discussing the format of the pricing document openly with the building services engineer confidence is generated between the parties that everything will be covered. Mechanical contractors usually sub-contract a larger proportion of their works than electrical contractors and therefore more lump sums can be expected within the pricing schedule. a fully quantified schedule of rates should be requested from each of the tenderers under consideration. The tenderers should. This avoids the risk that two different pricing documents (or worse none) could be contained within the tender documents. The schedule of rates should always add up to the headings in the pricing document in order to avoid doubt at a later date if disputes arise. SECTION 2 3. with the building services engineer producing all the tender documents inclusive of a pricing document. a fully quantified schedule should be available since the number of sub-contractors will be minimal.PART 3. therefore. When the analysis of the submitted pricing schedules has identified the tenderers who are likely to be considered further. This will depend on the programme available and is usually two to seven days from a request being made by the quantity surveyor. The pricing schedule should also contain a statement of the contractors rates used within the tender inclusive of overheads and profit.9). If the project is packaged.4 PRICING DOCUMENTS (a) Pricing schedules Historically.

If the design varies greatly during the contract period the building services contractor could have a case for a re-rate or claim. Assumptions may often be forced on a quantity surveyor producing the bills to a deadline where this is not clear. (b) Bills of quantities Bills of quantities should only be used when a fully coordinated design and specification has been prepared by the designers and a fixed lump sum cost for the works is required. • The production of bills introduces the need for detailed design coordination between the various consultants and. through the negotiations. necessitating variations as soon as the tender process starts. anything has changed from the tender documents. There are so many different rates that could be used within the building services trades that it is recommended the quantity surveyor asks the contractor to submit the latest trade rates that will be employed on the contract. The specific problems associated with the procurement of building services does not exclude the use of bills of quantities. This would again require variations to be issued. An example of a typical pricing document is given in appendix A. the potential for errors and omissions. A bill description can contain so much detail that the price is developed separately in the contractor’s The Surveyors’ Construction Handbook Part 3. • Design development may still be in progress when the bills are started. Section 2 (07/01) Effective from 1/9/01 Page 39 . Once all this has occurred. Bills of quantities are the traditional method of procuring construction work within the UK where time permits. the client can be made aware of the final decision through a combined report from the full design team. In situations where there are complex interfaces in existing structures it is beneficial to request a schedule that only identifies quantified material costs. In this case bills of quantities should not be considered. consequently. A section dealing with the tenderers overheads and profit and daywork rates is required in the schedule. This enables post-contract costs to be controlled in an alternative manner while also providing a management tool to monitor on-site resources. but the following are some of the issues that should be reviewed to ascertain the benefit of producing bills: • The package may only be partially designed to allow the building services contractors to be responsible for the detailed design. If. The cost certainty intended by the use of bills is immediately lost when variations start. SECTION 2 services engineer and the quantity surveyor is satisfied with the pricing and all other commercial aspects of the tender.PART 3. If this procedure is not followed there is the potential for post-tender problems regarding supply and performance under the contract. • It should be considered whether the building services contractor actually benefits from the production of bills. with labour rates and a labour histogram provided separately. each tenderer must be made aware of this change to maintain parity of tender.

2. bracket details.4. The building services contractor must measure and price the electrical circuit inclusive of conduit and apportion the cost to each light fitting. i.e.2.4(a). This results in the descriptions being priced in a number of sections then drawn together for the bill. light fittings may be described within the bill as ‘to include for all necessary conduit and cabling for the light fitting’. This may result in more competitive prices being obtained as risk is more evenly distributed with the client taking a greater burden or the building services contractor may exploit errors within the document. Section 2 (07/01) Effective from 1/9/01 The Surveyors’ Construction Handbook . In the body of the pricing document the diffusers could be priced as powder-coated steel but as an option. • As each tenderer has the same document to price the tender analysis should be easier.PART 3. • As discussed in section 3. If so. This is inappropriate information for quantity surveyors to prepare bills of quantities from. the building services contractor will need to offer a design solution to meet the performance criteria established in the specification. (ii) Options that the tenderer may put forward Directions should be given at tender stage as to whether or not contractors options are required. This could well be as time consuming as doing all the measurement. history has dictated that the building services design is not far enough advanced within the procurement timetable to provide the quantity surveyor with sufficient information to produce bills of quantities. Also. the extra over-costs for a stainless steel finish can be provided. The tenderers do however have discretion as far as rate build up is concerned. and so on which limits the information available for billing. the building services contractor generally has responsibility for detailed design work such as final cable routes. This can result in areas of the design being described only in terms of its performance. SECTION 2 own estimating system. For example. • The use of bills results in the risk being retained by the client as far as quantities are concerned. building services contractors and suppliers have traditionally had a closer relationship with the building services engineer than the quantity surveyor. A summary of the advantages and disadvantages of bills is given in table 6.5 PRICING OPTIONS When dealing with pricing options there are two basic possibilities that can occur: (i) Options that are included in the tender This often takes the form of a different finish to an exposed part of the services installation.4. the tenderer can identify these options within Page 40 Part 3. To briefly conclude this section. This relationship has developed because the building services engineer may rely on the expertise of the building services contractor or its suppliers to design some individual systems. 3.

The Surveyors’ Construction Handbook Part 3. This can be a cheaper supply or where the after-sales support services in an area is better provided for by an alternative supplier. The easiest method of obtaining this is by assuring that each tenderer prices what will be called the base option. If addendums are required they can be either sent out during the tender period or provided to the two lowest tenderers to price after tenders have been returned.2. reducing cost certainty. It is for the building services engineer to ascertain if the alternative achieves the specification. Any option must include the full cost of ensuring design compliance. Both of these must be catered for in any tender document while still maintaining a like-for-like comparison for tender analysis purposes.4. 3. since design can often progress during the tender period. This could be in the form of additional fees or additional coordination costs. However. Section 2 (07/01) Effective from 1/9/01 Page 41 . reduced programme or variations on the contract clauses. SECTION 2 Table 6: Advantages and Disadvantages of Bills of Quantities Advantages Provides a fixed price lump sum Conformity of tender returns Disadvantages Time consuming The measurement risk is retained by the client Fully coordinated design is required prior to building Specific items of plant may have to be uniquely specified which will reduce competition A design freeze is required which increases the tendering period The tenderer’s design skills are ignored Specialist systems will be either provisional or prime-cost sums.6 HOW TO TACKLE ADDENDUMS The most obvious way to deal with tender addendums is not to have any. Clear direction should be provided within the tender document on how and where options should be priced.PART 3. this is an unlikely occurrence. Each alternative can then be given as an adjustment to the base scheme. Integration of these systems can be a problem A small skill base exists within the quantity surveying profession for measuring mechanical and electrical services The design is checked while the measurement is being carried out More even spread of the risk the document which may take the form of alternative suppliers.

regardless of when they are issued. If the quantity surveyor believes that addendums provide non-essential design changes. Each addendum should be individually referenced. SECTION 2 If the design changes occur during the tendering period. A single point for receiving. The response from the relevant consultant should be returned to the quantity surveyor who distributes to the tendering companies.8 ADDITIONAL INFORMATION REQUIRED FROM THE TENDERERS The following information should be provided by all tenderers regardless of their contractual status. and so on. A master record of whom asked what question should be kept in order to provide an audit trail for later reference.e. as it will form part of the contract. This allows proper comparison and demonstrates an understanding of the project and tendered scope: • completed pricing schedule. By providing a separate price for non-essential alterations. As the manager of the tender documentation. 3. • agreement to all the documents – i. so an audit trail is apparent. If mid-tender interviews have been arranged.4. the addendum can be handed over and explained at this time.2. The addendum should state if the tender period is extended and each tenderer must acknowledge receipt of the addendum. clearly identifying the changes and scope. The addendum must still be a precise document. answering and managing the queries is advisable. 3. addendums to the documents should be sent out to each tenderer. Each question from the building services contractor should be sent to the quantity surveyor for distribution to the design team.4. The quantity surveyor should read each query and assess if another tenderer has asked it previously. • programme and agreement to the tender programme.PART 3.7 TENDER CLARIFICATIONS Tender clarifications can result in additional information being supplied to the building services contractor. the client and design team have the option of whether to accept the addendum. • health and safety information. the name of the organization asking the query should be removed and the question given a reference. • quantified schedule of rates. warranties. Page 42 Part 3. bonds. Queries can then be forwarded on to the appropriate consultant for comment. • list of main suppliers used – where choice is with the building services contractor. Section 2 (07/01) Effective from 1/9/01 The Surveyors’ Construction Handbook . All tenderers should receive all the tender questions so that each is tendering on the same information. On receipt of a query. these should be priced separately.2. the quantity surveyor is best placed to manage queries.

• corresponding reference numbers of the local standards when offering options of products from a foreign standard.9 EVALUATION OF TENDERS To ensure parity of tender. • acceptance of the conditions of contract – the tenderers. • management histogram – this illustrates the resources the building services contractor has allowed for managing the project and should relate to their preliminaries section of the pricing document. SECTION 2 • list of any sub-contractors. A comparison of the pricing schedules supplied by each tenderer must be completed in conjunction with the tender’s technical information. as before. there is an opportunity to use this as a valuation tool provided the programme is adhered to. with alternatives given separately. The building services engineer should check each submission to establish the tenderers compliance with the specification while the quantity surveyor should establish their compliance from a commercial viewpoint. including all addendums and clarifications. • labour histogram – the total labour resources required to complete the project. The quantity surveyor must take a view on the competitiveness (or otherwise) of the submitted schedules as they may not bear comparison with the competitiveness of the tenderers’ lump sum. should forward a full list of any contractual qualifications. and • cash flow – the cash flow translates the project programme into the client’s anticipated financial commitment. This shows both the building services contractor’s understanding of the project and provides for a monitor once on site. Detailed analysis prior to award is also essential if the schedules are to be bound into the contract as a contract document. Evaluation should not be completed without reference to the building services contractor’s schedules of rates. An agreed cash flow can be invaluable when the client’s project funds are similarly time related. • details of membership of trade bodies. If this can be agreed with the successful tenderer early on in the project. This should be done through the quantity surveyor. 3. • method statements. During the review process it will probably be necessary to clarify points with the tenderers.PART 3. prior to tender return.4. This is particularly relevant if there are large value provisional sums that will be measured and valued using the schedules. This enables the client to take legal advice and minimize the potential delay to the tender period. The Surveyors’ Construction Handbook Part 3.2. Section 2 (07/01) Effective from 1/9/01 Page 43 . the specification should be priced in its original form.

10 SUMMARY • Make sure there is only one pricing document which directly relates to the specification.PART 3. An up-front pro-active attitude on the building services contractor’s part will result in potential problems being identified early providing the design team with an opportunity to find a beneficial resolution.4. Once all the information has been gathered it will be necessary to establish a comparable price. not solely on price but also considering the tenderers’ understanding of the project and their ability to complete in time and to budget. • a fully quantified schedule of rates. The final appointment decision should be made. • Careful analysis of the return tenders to obtain a clean unqualified bid on which a clear recommendation can be made. • Ensure documentation is clear as to the method for managing tender queries. identifying a single point of responsibility. SECTION 2 Post-tender interviews are to be encouraged so that the tenderers’ grasp of the project can be established. • an all-in man hour rate.2. • Ensure the pricing schedule covers all the information required such as: • overheads and profit. Section 2 (07/01) Effective from 1/9/01 The Surveyors’ Construction Handbook . and • opportunity to price for alternatives. • A clear procedure for managing addendums should be agreed by the design team. Page 44 Part 3. In this final analysis it is recommended that the tenderers’ procedures for cost control and reporting are also examined. • daywork rates inclusive of percentage uplifts. 3.

2) Clinton. (Paper for seminar: ‘The Answer to your Problems – Design & Build’). London: DETR. Legal Liabilities. Code of Practice for the Selection of Sub-Contractors. M. Rethinking Construction.PART 3. London: Thomas Telford Publishing. SECTION 2 Notes 1) Department of Environment. The Surveyors’ Construction Handbook Part 3. (1995). Section 2 (07/01) Effective from 1/9/01 Page 45 . Transport and the Regions (1998). 3) Construction Industry Board (1999).

The building services contractor is referred to the tender drawings. APPENDIX A Appendix A: Typical Example Preliminary Items In the following typical example all general and preliminary items would normally be detailed in the main preliminary documentation. The building services contractor is to include in its rates for all necessary fixings. fittings. The building services contractor is to take into account all the requirements of the contract documents and should price accordingly within the relevant section of the tender summary. Section 2 Appendix A ( 07/01) Effective from 1/9/01 Page 1 . The following clauses are suggested in relation to the inclusion of a pricing schedule and can appear either in the main preliminaries or as part of the sub-contract tender documents. bolts. plant. The following descriptions are not necessarily complete. The building services contractor is to include in its rates for any temporary works considered necessary. General Items a) It is a pre-requisite that the following pricing summary is completed in full with every item priced. For details of the scope of works refer to the specification. k) The Surveyors’ Construction Handbook Part 3. connections. No extra payments will be considered through the building services contractor/quotes failure in this respect. equipment and labour whether or not specifically mentioned or shown in order to carry out the necessary works in accordance with good practice and procedures. quotations and all other details. periods of time. The calculations shall show weekly rates. areas. detailing the build up to all the preliminaries items priced in the pricing document.PART 3. b) c) d) e) f) g) h) Calculations of Preliminaries j) The contractor shall detail below. The building services contractor is deemed to have included in its tender for all items of materials. etc. SECTION 2. Failure to do so will invalidate the tender submission. specification and accompanying documents for a full scope of work. or provide a separate document. unless otherwise stated in this document.

administration. SECTION 2. If the contractor does not complete any of the above percentages or rates. All prices included in respect of equipment and building services contractors must be supported by the appropriate quotations. off-site services and all items of expenditure related to off-site management and profit. they will be deemed to be priced at NIL. APPENDIX A Schedule of Rates a) The contractor shall within 3 days of being requested. b) c) e) f) g) Page 2 Effective from 1/9/01 Part 3.PART 3. if different from b) above _____ % All-in man-hour rates inclusive of overheads. Section 2 Appendix A (07/01) The Surveyors’ Construction Handbook . The contractor is to detail its rates and percentages required for the following: Percentage for overheads and profit on building services contractors _____ % Percentage for overheads and profit on plant and equipment if different from a) above _____ % Percentage for overheads and profit on general materials. expenses. The sum total of the schedule shall equal the price of the form of tender. The percentages and labour rates above will be the same as used in the preparation of the tender sum and schedule of rates. The schedule of rates shall be used for the purposes of pricing any future variations and assisting in the calculation of interim valuation payments. establishment costs. submit a fully priced schedule of all items and quantities involved in the make-up of its tender. and profit £ ___ (Expand to include all trades) Extra over the above rate for any non-productive overtime work £ _____ (Expand to include all trades) d) The percentages and labour rates entered above will be deemed to include for all contractor’s overheads.

including all necessary hoisting/craneage Generator flue installation. switchroom and metering (supplied and installed by utility) 11KV supply cable and switchgear terminating in the 11KV switchgear to the transformer room Lighting and small power installation associated with HV switchroom Include for obtaining design and construction information coordination and necessary meetings associated with the utility provider Utility switchroom. APPENDIX A Pricing Schedule The following is a typical example of a pricing summary for a commercial office development. It is intended to depict the detail required in the pricing summary and will require amendment so as to be project particular. Section 2 Appendix A (7/01) Effective from 1/9/01 Page 3 . SECTION 2. including acoustic treatment. supply and install necessary earth rods. future tenants generator flue and all necessary silencers Item Item _________ To Collection £ The Surveyors’ Construction Handbook Part 3. cabling and earth bars Low voltage switchboard. transformer room and generator earthing. supply and install packaged sub-station comprising two main sections as specified Allow for adjusting all protective device settings and carrying out discrimination study Switchboard reference Item £ p Item Item Item Item Item Item Item Standby Power Life safety generator installation incorporating skid mounted heat exchanger installation and fuel system. ELECTRICAL SERVICES INSTALLATION Electrical Incoming Provide electric incoming supply.PART 3.

including dimming Toilets and shower rooms Staircase lighting Lift shaft lighting Plantroom and circulation space External lighting Emergency lighting installation Item Item Item Item Item Item Item Item Item _________ To Collection £ Page 4 Effective from 1/9/01 Part 3. louvres. final circuit wiring and cable containment system as necessary to the following: Office area lighting Lift lobbies Entrance hall. lamps. including luminaires.PART 3. APPENDIX A ELECTRICAL SERVICES INSTALLATION (Continued) Test generator at full load inclusive of inductive loads at manufacturers works Test and commission generator installation on site complete with resistive and inductive load banks Item £ p Item LV Distribution Sub-mains power distribution cables Rising bus bar installation Riser A Rising bus bar installation Riser B Rising bus bar installation Riser C Automatic transfer switches to all life safety MCCS and fire fighting controllers and fire service plant Earthing and bonding Item Item Item Item Item Item Lighting Installation Lighting installations. Section 2 Appendix A (07/01) The Surveyors’ Construction Handbook . SECTION 2.

PART 3. SECTION 2. Section 2 Appendix A (7/01) Effective from 1/9/01 Page 5 . APPENDIX A ELECTRICAL SERVICES INSTALLATION (Continued) Small power installation Small power distribution Item Item £ p Electrical Power for Mechanical Electrical work associated with mechanical services Item Protection Fully automatic addressable analogue fire detection and alarm system Generator room fire protection system Security installation comprising the following: Door entry control system Alarm system Closed circuit television system Lightning protection system Ancillary equipment installations: Fix only free issue warm air hand dryers Fix only free issue hair dryers Disabled persons assistance call system Shaver outlets Item Item Item Item _________ Item Item Item Item Item Item To Collection £ The Surveyors’ Construction Handbook Part 3.

including compliance with the commissioning manager’s requirements As installed documents. drawings and O&M manuals in the required format as specified by the document production manager Client instruction and operation training Provision of samples and mock-ups as required Provision of tools and spares Any other items not listed above (the sub-contractor to state) Item Item Item Item Item Item Item Item _________ To Collection £ Page 6 Effective from 1/9/01 Part 3. Section 2 Appendix A (07/01) The Surveyors’ Construction Handbook . including any necessary manufacturer’s shop drawings Testing and commissioning the complete electrical installation. APPENDIX A ELECTRICAL SERVICES INSTALLATION (Continued) Electrical heating installations: Lift plantroom installation Utility switchroom Temporary electrical heating installation Item Item Item £ p Data Installation Telecommunications and data communications incoming ducts and cable tray systems Item General: Buildings work drawing Electrical sub-contractor’s design and installation drawings. SECTION 2.PART 3.

Main entrance overdoor heaters Staircase fan convectors Thermal insulation to LPHW installation Water treatment. coordination associated with the new supply Water storage tanks Cold water packaged booster set Water supplies for window cleaning Electric showers Hot water heaters Overflow systems Domestic hot and cold water pipework. APPENDIX A MECHANICAL INSTALLATION LPHW heating installation: Central boiler plant and associated equipment Boiler flue installation LPHW pressurization units LPHW circulation units LPHW pipework installation. valves. Section 2 Appendix A (7/01) Effective from 1/9/01 Page 7 . dosing and flushing Hot and cold water installations: Allow for all negotiations/liaison. etc. SECTION 2. fittings.PART 3. fittings and valve installation Final connection to sanitaryware Potable water booster pump set Thermal insulation to hot and cold water services Item Item Item Item Item Item Item Item Item Item Item Item Item Item Item Item Item Item Item Item £ p _______ To Collection £ The Surveyors’ Construction Handbook Part 3.

fittings and valves installation Item Item Item Item Item Item Item Item Item Item Item Item Item Item Item Item Item £ p __________ To Collection £ Page 8 Effective from 1/9/01 Part 3. Section 2 Appendix A (07/01) The Surveyors’ Construction Handbook . APPENDIX A MECHANICAL INSTALLATION (Continued) Hot and cold water installations: Eye wash facilities Water chlorination. SECTION 2. dosing and flushing Condenser water system: Cooling towers Filter system Packaged water softener Condenser water circuit. water treatment equipment Chilled water installations: Main A/C condenser water pumps and water make up pumps Cooling tower make up water storage tanks Condenser water system pipework fittings and valves installation Condenser water system installation Chilled water system Centrifugal refrigeration machines Cooling system plate heat exchangers Chilled water circulation pumps Water treatment. flushing and dosing Chilled water system pressurization unit Chilled water system pipework.PART 3.

etc. Section 2 Appendix A (7/01) Effective from 1/9/01 Page 9 . External louvres Ductwork thermal insulation Fire and smoke rated ductwork Grilles and diffusers Flexible connections Air handling units fans. APPENDIX A MECHANICAL INSTALLATION (Continued) Chilled water installations (Continued): Chilled water system insulation Refrigeration leak detection system Water leak detection system Fan coil units: Fan coil units Air conditioning and ventilation: Ductwork installation. SECTION 2. including all duct mounted accessories and fittings Ductwork cleaning requirements Independent ductwork cleanliness inspection.PART 3. etc. Duct mounted heater batteries Humidifiers Acoustic connections/attenuation Louvre connection plenums Duct mounted control items Item Item Item Item Item Item Item Item Item Item Item Item Item Item Item Item Item Item £ p _________ To Collection £ The Surveyors’ Construction Handbook Part 3.

fittings and valves Gas meters Gas detection system Sprinkler installation New fire main allow here for all negotiations. coordination associated with the new supply Dry riser and falling mains installation Hosereel system Condensate system: Condensate drains from various equipment Building management system and automatic controls central processing unit and field processing units: Control valves. sensors and detectors Interfaces with other systems and equipment New motor control centres. life safety MCC and control panels Fireman’s ventilation control panel. SECTION 2. actuators. APPENDIX A MECHANICAL INSTALLATION (Continued) Natural gas service: New gas service – allow here for all negotiations. trunking. Section 2 Appendix A (07/01) The Surveyors’ Construction Handbook . BMS/automatic controls software Item Item Item Item Item Item Item £ p Item Item Item Item Item Item Item Item Item _________ To Collection £ Page 10 Effective from 1/9/01 Part 3. pressurization panel. sprinkler panel and wiring All control wiring. conduit. etc.PART 3. coordination associated with the new supply Allowance for selection of ‘gas shipper’ as described in the specification Gas distribution pipework. liaison. liaison.

fittings and valves Oil fill station General: Trace heating to pipework system as necessary Item Item Item Item Item Item £ p Item Item Allow for all works/factory tests and demonstrations of plant and equipment as specified Item Preliminary items Allow for mock-ups and samples specified Test and commission the complete mechanical and public health services installation in accordance with the commissioning manager’s requirements Item Item Item _________ To Collection £ Mechanical and public health contractor’s design and installation drawings including manufacturers/suppliers shop drawings as necessary Item Builders work drawings Item The Surveyors’ Construction Handbook Part 3.PART 3. APPENDIX A MECHANICAL INSTALLATION (Continued) Building management system and automatic controls central processing unit and field processing units (Continued): Attendance on other trades during commissioning of their systems Attendance during demonstration to fire brigade. the engineer and building control on separate occasions Setting to work. client’s maintenance staff. SECTION 2. testing and commissioning including trend logging. etc. Generator oil storage and distribution system: Bulk oil storage tank Fuel oil transfer pumps Pipework. Section 2 Appendix A (7/01) Effective from 1/9/01 Page 11 .

SECTION 2. Section 2 Appendix A (07/01) The Surveyors’ Construction Handbook . the sub-contractor to state £ p Item Item Item Item __________ To Collection £ Page 12 Effective from 1/9/01 Part 3.PART 3. drawings and O&M manuals in the required format as specified by the document production manager Client instruction and operation training Provision of tools and spares Any other items not listed above. APPENDIX A MECHANICAL INSTALLATION (Continued) General (Continued): As installed documents.

PART 3. Section 2 Appendix A (7/01) Effective from 1/9/01 Page 13 . SECTION 2. APPENDIX A PUBLIC HEALTH INSTALLATION Rainwater installation Above ground drainage installation (note under-ground drainage may not be part of this sub-contract) Fire fighting lift drainage installation Item £ p Item Item _________ To Collection £ The Surveyors’ Construction Handbook Part 3.

there is an almost universally accepted procedure adopted for both building and civil engineering with regard to the actual practice carried out on site. • the changing law concerning final certificates. SECTION 1 PART FOUR: CONSTRUCTION ADMINISTRATION AND MANAGEMENT SECTION 1: THE PROBLEMS OF PRACTICAL COMPLETION Introduction The law and practices in relation to the completion of building and engineering projects are complex issues that often give rise to conflict. however. G 4. Whilst the title of this section refers to practical completion the subject has been approached at a more generic level.1. • the law concerning latent defects and its inter-relationship with contractual defects liability provisions generally. Surprisingly. Thus. not addressed: • the acceptance of defective work either before or after practical completion.1. there are a variety of methods by which some of the problems could be dealt with (see 4. • closer examination of the issues surrounding early completion (although analysis of the general scheme of the subject under JCT forms is included). Similarly. • the significance of practical completion in relation to performance bonds. The Surveyors’ Construction Handbook Part 4.1 What Happens in Practice There is a considerable number of approaches adopted for the certification of completion in standard forms of contract used in the UK construction industry (see 4. Section 1 (revised 10/02) Effective from 1/12/02 Page 1 .1. The following related and subsidiary topics are. and • the concept of temporary disconformity in building contracts. and standard forms other than JCT variants have been considered. however.3). for example. the concepts of ‘substantial completion’ and ‘taking over’ have been included and commented upon. • the operation of fluctuation provisions after practical completion. • wider consideration of the matter of adjudication upon practical completion.PART 4.2).

engineer or contract administrator. for example. and that the making good of any remaining works or removal of snags will not unduly impede that occupation.PART 4. Page 2 Part 4. (c) Clearing the Snagging List • The contractor will endeavour to reduce the length of the snag list.1. perhaps motivated by substantial levels of liquidated damages. despite the contract demanding otherwise. the professional team. and the contractor. with the architect or engineer producing a new list each time he or she revisits the site. Although not defined as such in the majority of standard forms (see 4. • The process is also influenced by the relationships which exist between the client. Many points will be argued by the contractor to be unreasonable quality demands. and indeed the pressures brought by the contractor.1. • This may be accompanied by the contractor’s own list of uncompleted works. where outstanding information. but not always. or the commencement of fit-out works. (e) Influences upon Certification • Inevitably. but here is where the disputes will start. Confusion and distrust is often generated. or employer’s direct works may be preventing completion of a specific element of the contractor’s work. the client often strongly influences the certification process. the architect. or work constituting a variation. statutory authorities.5). (d) Certification • Eventually a point will be reached where completion can be certified in the opinion of the architect. • Such an approach is supported by case law (see 4. engineer or contract administrator will prepare a list of defects and outstanding works which will be issued to the contractor.2). the most commonly held belief is that this should occur when the employer can enjoy beneficial occupation and use of the building or facility. (b) Snagging List • Either in advance of the contractor’s notice mentioned above. SECTION 1 This may be described as follows: (a) Contractor ‘Offering Up’ • The contractor writes to the employer’s representative/contract administrator suggesting that works will be (or are now) ready for handover by a particular date. or prompted by it. • Often. The strength of this influence may be dependent upon the demands or otherwise for use or transfer of the building or facility. • The management of this process is often poor. this list is prepared during a joint inspection with the contractor. especially. Section 1 (revised 10/02) Effective from 1/12/02 The Surveyors’ Construction Handbook .

if relevant.2 to 17. Clause 17. the architect must issue separate certificates of practical completion for each nominated sub-contractor when. shrinkages or other faults which shall appear within the Defects Liability Period … .2. shrinkages or other faults appearing within the defects liability period.10 If the Sub-Contractor notifies the Contractor in writing of the date when in the opinion of the Sub-Contractor the Sub-Contract The Surveyors’ Construction Handbook Part 4.2 NOMINATED SUB-CONTRACT NSC/C Under clause 35.2 commences: (Clauses 17.5).11 of NSC/C state the following: ‘2. – Performance Specified Work). a defect which was apparent at practical completion cannot be a defect for the purposes of clause 17.2. in his or her opinion.1’ Clause 17. this distinction is often ignored by architects and contract administrators.1 provides the following ‘When in the opinion of the Architect Practical Completion of the Works is achieved and the Contractor has complied sufficiently with clause 6A. Section 1 (revised 10/02) Effective from 1/12/02 Page 3 .’ (b) Clause 17. This is because the duty of the contractor to rectify defects during the defects liability period is limited to those defects appearing after practical completion. the nominated sub-contract works have reached practical completion.1 is inextricably bound with the provisions relating to defects.’ These provisions therefore support a view that practical completion cannot be certified under JCT 98 unless all known (patent) defects have been resolved. and.3 (Interpretation.1.4.1 JCT 98 ‘PRACTICAL COMPLETION’: (a) JCT 98 does not define practical completion.1. the architect cannot require the contractor to make good such items of work. he shall forthwith issue a certificate to that effect and Practical Completion of the Works shall be deemed for all the purposes of this Contract to have taken place on the day named in such certificate.10 and 2.9 (Supply of as-built drawings etc.) the following unhelpful entry is made: ‘Practical Completion: see clause 17. Definitions.16 of JCT 98. or frost damage. etc.1.PART 4. However. strictly speaking. 4. ‘Any defects. Thus. the Contractor has complied with clause 5. At clause 1.2 and.2 Standard Form Approaches 4. SECTION 1 G 4. Clauses 2.

3A DOMESTIC SUB-CONTRACT 2002 EDITION (a) This form of sub-contract generally maintains the provisions of DOM/1. (b) Clause 2.4 he shall forthwith issue a certificate to that effect.5).1.11 of the Main Contract Conditions. practical completion is deemed to have occurred on the date notified by the sub-contractor. the date must either be established by agreement or determined by an adjudicator.’ (c) Clause 2.2. Practical Completion of the Works shall be deemed for all the purposes of this Contract to have taken place on the day named in such certificate.13 requires the sub-contractor to notify the main contractor of the date on which the sub-contractor considers the domestic sub-contract works have reached practical completion.4 JCT INTERMEDIATE FORM (IFC 98) (a) The Intermediate Form closely follows that described above for JCT 98. on the date of Principal Completion of the Works certified by the architect under clause 17.6.11 provides for partial possession.11 Practical Completion of the Sub-Contract Works shall be deemed to have taken place on the day named in the certificate of practical completion of the sub-Contract Works issued by the Architect under clause 35. Section 1 (revised 10/02) Effective from 1/12/02 The Surveyors’ Construction Handbook .16 of the Main Contract Conditions or.2.14 requires that if the main contractor does dissent.1.1. 2. as provided in clause 18. The effect is similar to the partial possession provisions of JCT 98 (see 4. (c) If the main contractor does not dissent from that date within 14 days of receiving the sub-contractor’s notice.7.1 of the main contract. (d) Clause 2. 4. In the absence of such agreement or determination. A copy of any such observations must immediately be sent by the Contractor to the Sub-Contractor.9 provides: ‘When in the opinion of the Architect/the Contract Administrator Practical Completion of the Works is achieved and the Contractor has complied sufficiently with clause 5. Page 4 Part 4. the date will be that stated by the main contractor in his/her notification of dissent under clause 2. SECTION 1 Works will have reached practical completion.’ 4. where clause 18 of the Main Contract Conditions applies. (b) Clause 2.PART 4.1.5. the Contractor shall immediately pass to the Architect any such notification together with any observations thereon by the Contractor and the Sub-Contractor has complied sufficiently with clause 5E.13 or if earlier or no date is stated in the notification of dissent.

1 or has complied sufficiently with clause 6A.’ (c) It should be noted.6 JCT MINOR WORKS: MW98 (a) The JCT Minor Works form provides a crisp.5 JCT 98: WITH CONTRACTOR’S DESIGN (a) Under this form there is no architect to enable a certificate of practical completion to be issued. • in clause 2. Accordingly.5 the words ‘any defects. excessive shrinkages or other faults which appear within three months of the date of practical completion …’ extend to defects which appear before practical completion. (b) Clause 16. (d) It has been held2 that the MW80 form (predecessor to MW98): • does not require a written schedule of defects and. however. the responsibility passes to the employer.2. that whereas the mechanism for certifying practical completion is the same as JCT 98. extend to an existing structure. which statement shall not be unreasonably delayed or withheld. clear statement which has the same effect as the provisions for the main JCT forms.4 provides: ‘The Architect/The Contract Administrator shall certify the date when in his opinion the Works have reached practical completion and the Contractor has complied sufficiently with clause 5.PART 4. whichever clause is applicable. • the words ‘defects. excessive shrinkages. The Surveyors’ Construction Handbook Part 4.9.2.2 refers to ‘shrinkages’.1 provides: ‘When the Works have reached Practical Completion and the Contractor has complied with clause 6A. Section 1 (revised 10/02) Effective from 1/12/02 Page 5 . or other faults’ are not qualified by any reference to the ‘works’ and so would.2. the Employer shall give the Contractor a written statement to that effect.5.1.5. (b) Clause 2. therefore. the provisions for defects liability differ. and Practical Completion of the Works shall be deemed for all the purposes of this Contract to have taken place on the day named in such statement.1. whereas MW98 refers to ‘excessive shrinkages’. SECTION 1 4. therefore. 4.’ (c) Any dispute as to the issuing or withholding of a practical completion certificate must be referred to adjudication for an interim binding decision or to arbitration. oral notification is sufficient. Note: JCT 98 clause 17.

inspection and testing the client representative shall issue a notice that either: (i) confirmed that the project has achieved Project Completion.8 JCT MANAGEMENT CONTRACT 1998 EDITION The Management Contract also uses similar wording to the Intermediate Form.4. obliged to obtain the architect’s consent under clause 8. excessive shrinkages or other faults notified by the client. reached practical completion.2.1. (d) At Clause 21. (b) Therefore.9 JCT WORKS CONTRACT/2 (a) Under clause 2.1. The management contractor is. See 4.2. may have appeared either before project completion or within the Defects Liability Period.2 requires that within two (working) days of completion of such attendance.2. (ii) indicates any aspect of the project which is not in accordance with the Partnering Documents after which the constructor will again present the Project in accordance with Clause 21.14 of the WC/2.3.2.1.3 there is provision for Part Project Completion by agreement between the client and constructor using a procedure equivalent to that described in Clauses 21.4 of the Management Contract. 4. Page 6 Part 4.1 and 21.1.2.1.1 requires the constructor when it considers that the project has achieved Project Completion to give the client representative not less than five working days notice requesting the client representative to attend.10A THE ACA STANDARD FORM OF CONTRACT FOR PROJECT PARTNERING PPC2000 (a) The ACA form of Project Partnering adopts a different approach. SECTION 1 4. inspect and test as appropriate.1. Section 1 (revised 10/02) Effective from 1/12/02 The Surveyors’ Construction Handbook . however. 4. See 4.1.4 which requires the constructor to make good any defects.2. It is important to note that these defects etc.2.PART 4.2.4.2) than the procedures found in the domestic sub-contract DOM/1.7 JCT PRIME COST CONTRACT 1998 EDITION The Prime Cost Contract uses the same wording as the Intermediate Form. signifying that the relevant works have. in the architect’s opinion. 4. (b) Clause 21. these provisions more closely resemble the nominated sub-contract provisions of the JCT main forms (see 4. (c) Clause 21. (e) Rectification of defects after Project Completion is provided for in Clause 21.1. the management contractor is required to issue separate certificates of practical completion for each works contract.

Section 1 (revised 10/02) Effective from 1/12/02 Page 7 .2 requires that within four working days of completion of the attendance. This defect rectification can include defects arising either before Specialist Completion or during the defects liability period for the specialist works. and a process is provided for dealing with outstanding works and defects. (e) With regard to defect rectification clause 21.2.3 again provides for Part Specialist Completion of any part of the specialist works using a procedure equivalent to clause 21. although the time frames are a little longer.1.1.1.2. (c) Clause 21. the contractor ‘offers up’ the works.PART 4.1 requires the specialist to give the constructor seven working days notice to attend. (b) Clause 48 provides: (1) When the Contractor considers that: (a) the whole of the Works or (b) any Section in respect of which a separate time for completion is provided in the Appendix to the Form of Tender has been substantially completed and has satisfactorily passed any final test that may be prescribed by the Contract he may give notice in writing to that effect to the Engineer or to the Engineer’s The Surveyors’ Construction Handbook Part 4.10) it may well be said that the ICE 7th edition provides a framework for completion which reflects better than the JCT forms what actually happens in practice. 4.4 requires the specialist to attend site whenever notified by the constructor of any defects. In this form.10B THE ACA STANDARD FORM OF SPECIALIST CONTRACT FOR PROJECT PARTNERING SPC2000 (a) The provisions of the Standard Form of Specialist Contract SPC2000 are similar to those on PPC2000. inspection and testing the constructor and other appropriate Partnering team members should issue a notice either: (i) confirming that the specialist works have achieved Specialist Completion: or (ii) indicating where any aspect of the specialist works is not in accordance with the Specialist Documents. (b) Clause 21.1. inspect and test as provided for in the Specialist Working Brief. The specialist is required to rectify non-compliance and thereafter present the specialist works in accordance with clause 21. (d) Clause 21.11 ICE 7TH EDITION: ‘SUBSTANTIAL COMPLETION’ (a) Though not as fully developed as the ACA form (see 4.2. excessive shrinkages or other faults. SECTION 1 4.2.1 and 21.

(d) Clause 48(3) provides: ‘If any substantial part of the Works has been occupied or used by the Employer other than as provided in the Contract the Contractor may request in writing and the Engineer shall issue a Certificate of Substantial Completion in respect thereof. The difficulty of this provision. who is authorized to issue the certificate. Section 1 (revised 10/02) Effective from 1/12/02 The Surveyors’ Construction Handbook . If no such times are specified any outstanding work shall be completed as soon as practicable during the Defects Correction Period. notwithstanding that it reflects common practice. SECTION 1 Representative.PART 4. (c) Clause 49(1) deals with outstanding work and defects as follows: The undertaking to be given under clause 48(1) may after agreement between the Engineer and the Contractor specify a time or times within which the outstanding work shall be completed. as in other forms. his or her decision may be reviewed by an adjudicator or arbitrator. Such certificate shall take effect from the date of delivery of Page 8 Part 4. The clause gives the engineer a discretion and. If the Engineer gives such instructions the Contractor shall be entitled to receive a Certificate of Substantial Completion within 21 days of completion to the satisfaction of the Engineer of the work specified in the said instructions. or (b) give instructions in writing to the Contractor specifying all the work which in the Engineer’s opinion requires to be done by the Contractor before the issue of such certificate. Such notice shall be accompanied by an undertaking to finish any outstanding work in accordance with the provisions of clause 49(1). (2) The Engineer shall within 21 days of the date of delivery of such notice either: (a) issue to the Contractor (with a copy to the Employer) a Certificate of Substantial Completion stating the date on which in his opinion the Works were or the section was substantially completed in accordance with the Contract. It should also be noted that the ICE 7th edition form caters expressly for the circumstances where the employer uses or occupies the works or part of the works prior to a 48(2) certificate being issued. This will be of considerable importance when large liquidated damages are potentially claimable. not his representative. Note: It is the Engineer. is that there is often a dispute as to the extent of outstanding works permitted.

2. (c) Clause 4. Section 1 (revised 10/02) Effective from 1/12/02 Page 9 . (2) Similarly practical completion of part of the Works may also occur but only if it is fit for such part to be taken into use or possession independently of the remainder.1.2.12 ICE 6TH EDITION: In respect of substantial completion. 4. (b) Clause 4. however. (b) It is to be noted. the same as ICE 7th Edition. SECTION 1 the Contractor’s request and upon the issue of such certificate the Contractor shall be deemed to have undertaken to complete any outstanding work in that part of the Works during the Defects Correction Period. The Surveyors’ Construction Handbook Part 4.2.13 ICE DESIGN AND CONSTRUCT FORMS (a) These provisions are identically worded to the corresponding clauses of the ICE 7th edition.PART 4.1. (3) The Engineer shall upon the Contractor’s request promptly certify in writing the date upon which the Works or any part thereof has reached practical completion or otherwise advise the Contractor in writing of the work necessary to achieve such completion.1.7 deals with the completion of outstanding works or defects after practical completion has occurred.15 FCEC ‘BLUE FORM’ OF SUB-CONTRACT The FCEC sub-contract form approaches completion of the sub-contract works quite differently from completion under the building sub-contracts.14 ICE MINOR WORKS (a) The ICE Minor Works is unique amongst standard forms in that it defines completion against the readiness of the works to be used by the employer. that there is an express requirement under clause 48(3) for the contractor to provide operation and maintenance instructions prior to the issue of any certificate of substantial completion. 4. 4. except that reference to the engineer or engineer’s representative is replaced by the ‘Employer’s Representative’.5 states as follows: (1) Practical completion of the whole of the Works shall occur when the Works reach a state when notwithstanding any defect or outstanding items therein they are fit to be taken into use or possession by the Employer.1. 4.’ Note: The ICE Design and Construct Clause 48(3) provisions in respect of operation and maintenance instructions are not present in the 7th edition.2.

Otherwise the Employer takes over the Works not more than two weeks after Completion. Therefore. As if completion was not vexed enough already. he takes over the part of the Works when he begins to use it except if the use is: Page 10 Part 4. clause 13(1) of the FCEC ‘blue form’ places the sub-contractor with an absolute obligation to maintain the sub-contract works until substantial completion of the main works. 35. (c) The NEC provisions are found in the core clauses as follows: • Part 1 – General – Clause 11. SECTION 1 Under this form. The schedule could provide that such a period is to end prior to substantial completion of the main contract works. If he does so. 35.PART 4.2 (identified and defined terms) (13) states: Completion is when the Contractor has • done all the work which the Works Information states he is to do by the Completion Date and • corrected notified Defects which would have prevented the Employer from using the works.1. 4. the sub-contract does not provide an effective means to establish when completion of the sub-contract works has been achieved.3 The Employer may use any part of the Works before Completion has been certified.1 Possession of each part of the Site returns to the Employer when he takes over the part of the works which occupies it.16 THE NEW ENGINEERING CONTRACT (NEC) 2ND EDITION (a) The NEC eschews the system set out in the ICE form which reflects current practice. • Part 3 – Time – Clause 35 (Take over) states: 35. the sub-contractor must complete within the period for completion specified in the Third Schedule (clause 6. Section 1 (revised 10/02) Effective from 1/12/02 The Surveyors’ Construction Handbook . ‘taking over’ and ‘termination’.2. namely the contractor offering up the works and completion/handover occurring together with clear provisions for dealing with outstanding works and defects.2 The Employer need not take over the Works before the Completion Date if it is stated in the Contract Data that he is not willing to do so. However. (b) Instead it may be thought that the NEC is in some respects closer to JCT: completion takes place when the project manager decides so. the NEC gives the project manager three terms to deal with: ‘Completion’.1). If the sub-contract works are completed prior to main contract works completion. unless the parties otherwise agree. Possession of the whole Site returns to the Employer when the Project Manager certifies termination. it is probable that completion of the sub-contract works may not be acknowledged until substantial completion of the main contract works and only then by the implication that the main works have completed.

’ (c) Requirements for a completion certificate are to be found in clause 39: ‘The PM shall certify the date when the Works.17 GOVERNMENT CONTRACTS – GC/WORKS/1 (1998) (a) GC/Works/1 (1998) provides that the works are to be completed to the satisfaction of the Project Manager. Such completion shall include sufficient compliance by the Contractor with Condition 11(7) (Statutory notices and CDM Regulations). at all times. Section 1 (revised 10/02) Effective from 1/12/02 Page 11 . by the due date.PART 4. or any completed part within the meaning of Condition 37 (Early Possession). In addition. remove from the Site all Things for incorporation in the Works or any relevant Section which are unused. together with all things not for incorporation. or (b) any other part of the Works in respect of which the parties agree. The Contractor shall.4 The Project Manager certifies the date upon which the Employer takes over any part of the Works and its extent within one week of the date. or any Section. the Employer may choose to take partial possession of a part of the works. to take possession of any part of the Works (in this Condition referred to as a “completed part”) which is certified by the PM as having been completed in accordance with the Contract and is either – (a) a Section. are completed in accordance with the Contract.1. or the PM has given an instruction. shall no longer form part The Surveyors’ Construction Handbook Part 4. litter and rubbish and shall. he shall issue a certificate when the Contractor has complied with Condition 21 (Defects in Maintenance Periods). that possession shall be given before the completion of the Works or the relevant Section. SECTION 1 • for a reason stated in the Works information • to suit the Contractor’s method of working.2. After the end of the last Maintenance Period to expire. 35. and the completed part. keep the Site tidy and free from debris. (b) Condition 34(2) (commencement and completion) states the following: ‘34(2) The Contractor shall. before the completion of the Works.’ (d) Clause 37 deals with partial possession before completion: ‘The Employer shall be entitled. The Contractor shall comply at his own cost with any Instructions relating to the removal of any things and rubbish. on and after the date on which the certificate is given. clear and remove all rubbish and deliver up the Site and the Works in all respects to the satisfaction of the PM. who is required to certify completion. not later than the Completion of the Works. 4.

As soon as all the procedures have been successfully carried out. These are reflected in the contractual procedures provided in the IChemE forms.4. • The purchaser normally takes over responsibility for the plant just before any raw materials are to be fed into the plant to undergo the designed process change. the project manager and contractor sign the construction completion report.1 (Red Book). When the plant has satisfactorily completed tests set out in the specification and the contractor has adequately demonstrated completion in accordance with the specification. • Once all the construction completion reports have been signed by the project manager. The IChemE forms. (c) Five points in the completion process are thus recognized. the project manager issues a certificate of completion of construction. The purchaser is thereafter Page 12 Part 4. therefore. as may be specified within the contract schedules. (b) The IChemE forms recognize that on large process plant projects or similar. There are three aspects of significance which are considered: • compliance with the specification with the description of works • time finishing tasks according to programme or with reference to financial incentive • transfer of responsibility. There may.18 INSTITUTION OF CHEMICAL ENGINEERS FORMS: ICHEME (a) ‘Red Book’ for lump sum contracts. including tests.1 (Green Book) requires the contractor to notify the project manager by means of a construction completion report when he or she is of the opinion that the plant is substantially complete. and where the contract schedule specifies a date for completion of construction. of course. Section 1 (revised 10/02) Effective from 1/12/02 The Surveyors’ Construction Handbook . clause 32. The procedures.’ 4. If the project manager is not satisfied he or she may endorse the report accordingly and the contractor must repeat the procedure described in clause 33. be a number of these reports related to different elements of the plant. from both contractual and safety points of view.1. SECTION 1 of the Works for the purposes of Condition 19 (Loss or damage) and 30 (Vesting). the concepts of completion and taking over have distinctly separate ramifications. are closer to a true contractual definition of completion than can be found in any other standard form. • Clause 33. ‘Green Book’ for reimbursable contracts.1.2. to follow on from construction completion. the project manager issues a take-over certificate to be signed by the purchaser and delivered to the contractor under clause 34.PART 4. under clause 33. therefore. provide for the carrying out of take-over procedures.7.

5). 17.2. (b) possession of the site returns to the employer and the risk of security and damage to the works and third party liability transfers back to the employer (but not damage to the works caused by the contractor during the defects liability period). (c) commencement of the defects liability period. and (e) no further instructions may be issued for variation works or the rectification of works other than those appearing during the defects liability period. or unliquidated). operation. and The Surveyors’ Construction Handbook Part 4.3 and 17.1.2). (c) liability for frost damage is transferred from the contractor to the employer (clauses 17. The IChemE forms provide for acceptance certificates in respect of the satisfactory operation of the plant in accordance with these tests (clauses 35 and 37). (b) the commencement of the period of the final adjustment of the contract sum (clause 30. The following issues are however common to most forms: (a) liability to pay damages for delay ceases (whether liquidated and pre-ascertained. • The contract may prescribe performance tests embodied by specific guarantees of the contractor. servicing and maintenance of the plant.1. certain other factors are conditional upon the certificate of completion.3 Effects of Practical Completion The various standard forms differ in their treatment of the transfer of rights and obligations between the parties at completion. under JCT 98: (a) the employer may assign the right to bring proceedings in his or her name (clause 19.6).PART 4.3 G 4. SECTION 1 responsible for the care. Section 1 (revised 10/02) Effective from 1/12/02 Page 13 . (d) payment to the contractor of one half of the retention fund. Dependent upon the form of contract. For example. • Finally. the IChemE forms lay down procedures for the certification of the correction of defects at the end of the defects liability period where the project manager must issue to the purchaser and contractor a final certificate (clause 38) which provides conclusive evidence that the contractor has completed the works and made good all defects therein. safety.

G 4.4. the sub-contractors’ protection under the main contract all-risks’ policy ends. that to define completion similarly for universal application in building or civil engineering projects would be extremely difficult. however. (c) Definition of Standards Inclusion within the contract of a definition of the tests or standards which the contractor will be required to meet in order to achieve practical completion. This is the model used in DOM/1. It is suggested.PART 4. This option is used in the traditional JCT contract. The remedy available to the employer or contractor in the event they consider the certificate has been wrongly issued or withheld is to adjudicate.1. The following are seen as the main options available: (a) The Contract Administrator’s Opinion Under this method there is no contractual definition of practical completion.3. the issue of a certificate of completion may have direct impact upon third parties. by prescribing tests and standards to be achieved by the installed plant prior to completion.4 of JCT 98. For example.3). (b) Contractor’s Initiative The contractor notifies its own completion which becomes contractually binding unless dissented from by the recipient within a set number of days. The primary area of difficulty lies in aspects of subjective evaluation Page 14 Part 4. this being left entirely to the architect/engineer or contract administrator’s opinion to certify when practical completion has been achieved. In addition to mechanisms under the construction contract. further developed to deal with the ‘dissent’ of the recipient under a main contractor and sub-contractor relationship. Section 1 (revised 10/02) Effective from 1/12/02 The Surveyors’ Construction Handbook .4 Methods for Dealing with Practical Completion There are a number of principal methods which might be used to reduce the problems associated with practical completion. These factors also impact upon sub-contractors. SECTION 1 (d) the period for final review of extensions of time expires 12 weeks from this date (clause 25. (d) It is possible that this could be dealt with as a ‘code of practice’ bound within the contract document and expressly referred to in the conditions. (e) The IChemE forms come closest to this option. such as for example. in similar fashion to the code of practice for opening up and testing under clause 8. to bring an end to obligations of a surety in respect of a guarantee or performance bond.

it is difficult to see how this reduces the incidence of disputes: it is merely shifting the point at which arguments will be made.1. Section 1 (revised 10/02) Effective from 1/12/02 Page 15 . (b) Nonetheless. yet the standards required by the employer may not have been met. SECTION 1 such as finishes.4.1. (c) The first stage may be denoted by the issue of a ‘provisional certificate’ and. an option is to add a rider to the effect that the rectification of outstanding works and defects are capable of being carried out in such a manner and within such a time that the employer’s beneficial occupation will not be impeded.4. (c) As a qualification to this approach. (b) This is not a favoured option in the UK.1 READINESS FOR OCCUPATION (a) Many commentators have agreed that practical completion should be defined in the contract as that point when beneficial occupation may be obtained by the employer. by example. and it is doubtful whether this would be lessened by a definition which called for ‘100% fault free works’ (see 4. and an increase in the use of latent defects or ‘build’ insurance (such as the mandatory decennial type liability in France) may bring a move towards ‘fault free’ buildings at completion. Nonetheless it is closer to the model applied in other European countries.3 TWO-STAGE COMPLETION (a) Various models have been suggested for a two-stage process for the certification of completion. and the Courts have given credence to the view that it is a difficult.PART 4.3).2) since there will always be disputes on quality issues. The decided cases have tended towards a preference for this approach in any event. The building may be capable of being occupied. (b) Clearly. 4.4.2 PERFECT COMPLETION (a) Here completion would not be granted until all outstanding works are completed and defects rectified. 4.1.1. may be due when beneficial occupation is achieved or achievable. the intent is to divide into two the numerous benefits and obligations which fall upon the contractor and employer at completion (see 4. if not impossible. Employers have argued that this represents a weakening of their position. yardstick to apply.1. (f) Appendix A offers a number of practical tests for judging the state of completion.4. and the ICE Minor Works form is an example of appropriate wording. 4. The Surveyors’ Construction Handbook Part 4.

1. however trivial and unimportant.2. but Practical Completion suggests that is not the intended meaning and what is meant is the completion of all the construction work that has to be done. be an obligation to complete the works in the sense in which the words ‘practically completed’ and ‘practical completion’ are used in clause 15 and clause 16 of the contract. (a) Fault Free Completion Various definitions are available from decided cases and the principal textbooks on construction law. no such certificate would have been issued. then clause 22 would be a penalty clause and as such unenforceable. SECTION 1 (d) At this point. the standard forms of contract do not provide definitions of what constitutes practical completion. (e) The second stage would be perfect completion of the works. i. in my view.e. If completion in clause 21 meant completion down to the last detail. the employer would re-take possession and insurance risks are transferred. Some definitions lean towards perfect.5 (b) Completion for All Practical Purposes The above quotations need to be compared with the opinion expressed by Salmon LJ when the same case had earlier been heard by the Court of Appeal: The obligation on the contractors under clause 21 to complete the works by the date fixed for completion must.4 And in the same case: … The defects liability period is provided in order to enable objects not apparent at the date of practical completion to be remedied. It is thought that the first release of retention would also not occur until this point.6 Page 16 Part 4. as can be seen in 4. This would also mark the commencement of the defects liability period. If they had been apparent.5 Definitions Generally. I take these words to mean completion for all practical purposes.1. although the ICE Minor Works form contains a useful development of the term by stating it is contingent upon the works being ‘fit to be taken into use or possession’. Section 1 (revised 10/02) Effective from 1/12/02 The Surveyors’ Construction Handbook .PART 4. fault free completion: One would normally say that a task was practically completed when it was almost. Only at this point would the contractor be released from liability for liquidated and ascertained damages. but not entirely finished. for the purpose of allowing the council to take possession of the works and use them as intended. G 4.

shrinkages and other faults have been remedied in accordance with clauses 17. Section 1 (revised 10/02) Effective from 1/12/02 Page 17 . and not ‘completion’ but they mean the same.8 And in the same case. SECTION 1 (c) The De Minimis Rule This idea of practical completion being permitted despite the existence of minor defects has been expressed elsewhere: I think the word practically … gave the architect a discretion to certify that [the contractor] had fulfilled its obligation under clause 21(1) (of JCT 63) where very minor de minimis work had not been carried out.2 and 17. completion is something which occurs only after all defects.4. but that if there were any patent defects in what [the contractor] had done the architect could not have given a certificate of practical completion. It must be a rare new building in which every screw and every brush of paint is absolutely correct. Because a building can seldom if ever be built precisely as required by drawings and specification.9 (e) Substantial Performance These arguments applied to practical completion have been used in explaining the doctrine of substantial performance. If. the contract realistically refers to ‘practical completion’.PART 4. It would be wrong to say that the Contractor is only entitled to payment if the defects are so trifling as to be covered by the ‘de minimis’ rule. it would make the liquidated damages provision in clause 24 unworkable and in practice would require the defects liability period to be added to the time initially negotiated by the parties for the carrying out of the works.7 (d) Impossibility of Perfection The development of this argument has involved contrasting the construction industry with other forms of manufacture: Probably the most important background fact which I should keep in mind is that building construction is not like the manufacture of goods in a factory. This doctrine is concerned with establishing when payment will be due of an amount payable under an ‘entire’ contract: In considering whether there was substantial performance I am of the opinion that it is relevant to take into account both the nature of the defects and the proportion between the cost of rectifying them and the contract price. contrary to my view.10 The Surveyors’ Construction Handbook Part 4. use of many materials and employment of various types of operatives make it virtually impossible to achieve the same degree of perfection as can a manufacturer. site conditions. The size of the project. Judge John Newey said: In my opinion there is room for ‘completion’ as distinct from ‘practical completion’.3 and a certificate to that effect has been given under clause 17. The construction industry recognizes a difference between the carrying out of new works and ‘snagging’ that is to say dealing with minor defects in them.

There is no reason to limit it to work that has not been carried out. The defendants were held liable for the sum claimed less a deduction based upon the cost of making good the defects: The question here is whether in a contract for work and labour for a lump sum payable on completion the defendant can repudiate liability under the contract on the ground that the work though ‘finished’ or ‘done’ is in some respects not in accordance with the contract … I think on the facts of this case the work was finished in the ordinary sense. the work contracted for was. Section 1 (revised 10/02) Effective from 1/12/02 The Surveyors’ Construction Handbook . This term (or equivalent words) used in clause 48(1) of the ICE 7th Edition form ‘… substantially completed …’ now appears consistently throughout the Conditions. We return to the issue of practical completion which we cannot distinguish from substantial performance.13 The judge reached his conclusion that practical completion had not been achieved in circumstances where. Isaacs. however. SECTION 1 In the same case.PART 4. The term is not defined. though in part defective …12 It has recently been held by the Court of Appeal in Hong Kong that practical completion should be interpreted in a similar manner to the doctrine of substantial performance. It may include work which is Page 18 Part 4.14 The direct connection between cases dealing with substantial performance and the definition of practical completion is. the key element for defining a failure to achieve substantial performance was emphasized to be: the general ineffectiveness of (the work) for its primary purpose …11 Substantial performance has been held to have occurred even though the works were in part defective. but the expressed reference to ‘outstanding work’ to be completed within the Defects Correction Period indicates a state plainly falling short of literal completion.15 (f) Substantial Completion Definitions of the term ‘substantial completion’ appearing in the ICE forms have been similar to those applied to practical completion. neither ‘finished’ nor ‘done’ in the ordinary sense. in clauses 43 and 47. to be treated cautiously. inter alia. in the words of Somervell LJ in Hoenig v. It may be doubted whether cases concerned with substantial performance are relevant to the determination of practical completion as the term is used in the standard form contracts where the event is not directly related to payment obligation (as in the contract considered by the Hong Kong court) but rather with consequences such as liability for liquidated damages. by reason of the failure to modify the sprinkler system. Neither is there any definition of ‘outstanding work’. repossession and the release of retention.

Section 1 (revised 10/02) Effective from 1/12/02 Page 19 . There is surprisingly little English authority on the point.17 4. The words ‘practical’ or ‘substantial’ in the English standard forms probably do no more than indicate that trivial defects not affecting beneficial occupancy will not The Surveyors’ Construction Handbook Part 4.5.1 KEATING’S ANALYSIS Practical Completion is perhaps easier to recognize than to define. It is at least clear on the one hand that the fact that the works are or are capable of being used by the employer does not automatically mean that they are substantially complete (‘any substantial part of the Works which has both been completed … and occupied or used’) and on the other hand that the engineer may not postpone his or her certificate under this clause until the works are absolutely completed and free from all defects. No clear answer emerges from the authorities as to the meaning of the term. are of doubtful relevance. The Defects Liability Period is provided in order to enable defects not apparent at the date of Practical Completion to be remedied. the Architect is given a discretion under clause 17. and to say that substantial completion allows for minor deficiencies that can be readily remedied and which do not impair the structure as a whole is probably an accurate summary of what is a question of fact in each case.1 to certify Practical Completion where there are very minor items of work left incomplete.18 4.1. a different legal problem.PART 4.5. but is to be re-executed or remedied in accordance with the Contract. (4) However.16 The Concise Oxford Dictionary equates ‘substantial’ with ‘virtual’ which is defined as ‘that is such for practical purposes though not in name or according to strict definition’. on ‘de minimis’ principles. Obviously both the nature and extent of the uncompleted work or defects are relevant. SECTION 1 defective. The many reported cases on the question of ‘substantial’ completion in relation to payment under an entire contract.1.2 HUDSON’S APPROACH It is desirable to be clear as to the precise meaning of ‘completion’ in a time obligation. (3) Practical Completion means the completion of all the construction work that has to be done. (2) A Certificate of Practical Completion may not be issued if there are patent defects. It is submitted that the following is the correct analysis: (1) The Works can be practically complete notwithstanding that there are latent defects. Usually it will mean bona fide completion free of known or patent defects so as to enable the owner to enter into occupation. but it is clear that the requirement will be less rigorous than in other contractual contexts.

(b) The defendant argued that financing charges. could not be recoverable after practical completion. As I read the clauses.1.19 In the last resort the degree of required completion needed to discharge the contractor’s obligation to complete to time will be a matter of interpretation. (c) This contention was rejected by the Court.21 G 4.6 Subsidiary Issues 4.3 REMEDYING DEFECTS Another ingredient which it is suggested affects practical completion is the extent of disruption an employer would incur in allowing access to a contractor to remedy defects or complete works outstanding after the issue of a practical completion certificate. It is submitted that this will. since the causative events complained of must. an employer must wish to reduce to the very minimum the disruption that is caused by the presence of works going through a snagging list and an architect should not issue a certificate of practical completion until all such work has been completed – unless the employer waives the right to insist upon it being done. of course.PART 4. mean when the work reaches a state of readiness for use or occupation by the owner. SECTION 1 prevent completion (the more so.1. Section 1 (revised 10/02) Effective from 1/12/02 The Surveyors’ Construction Handbook . which were to be considered as a component part of the loss and expense claimed by the contractor as a result of events occurring during the construction of the works. have come to an end. and free from any known omissions or defects which are not merely trivial. given that (on the clauses in the form which they take in the contract now before us) successive applications are made at Page 20 Part 4. in the absence of contrary indication. this is often expressly described as ‘practical’ or ‘substantial’ completion.1 FINANCING CHARGES AFTER PRACTICAL COMPLETION (a) A specific question was raised in the Rees & Kirby case22 as to whether financing charges incurred by a contractor upon primary elements of loss and expense would cut off at the certificate of practical completion. but there is no reason to suppose that these expressions mean anything very different from the word ‘completion’ simpliciter when used or implied in the context of completion to time.6. In English standard forms of contract employing liquidated damages clauses for delay.1. but can be expected to differ from other aspects of the contractor’s obligations to complete. Furthermore. and the contractor is willing to continue to work in an occupied building and suitable arrangements have been made for the insurance.5. if the contract provides for a maintenance or defects liability period).20 4. by that stage.

to commence fit-out works. in order to enable the contractor to effectively finish the works.2 INSTRUCTIONS ISSUED AFTER PRACTICAL COMPLETION (a) Often practical completion is certified in an extremely hurried manner to allow the employer occupation. However. under which clauses of the contract is this power given. or (2) that the certificate has not been honoured on the due date. become the subject of a supplemental contract.PART 4. for example. a variation. this causes considerable difficulty to architects or contract administrators who find they must issue instructions after practical completion. (c) The Practice and Management Committee of the RICS published an answer to this question in 199023 as follows: Q Under JCT 80. (b) This brings about the absurd situation of contractors’ claims for extension of time after practical completion. Where substantial outstanding works remain. or arguments that time is ‘at large’ in order to defeat the imposition of earlier delay damages. until the date of the last application made before the last issue of the certificate issued in respect of the primary loss or expense incurred by reason of the relevant variation. after the issue of the certificate of practical completion. SECTION 1 reasonable intervals.1. But I can for my part see no good reason for holding that the contractor should cease to be involved in loss or expense in the form of financing charges simply because the date of practical completion has passed. I can see no reason why the financing charges should not continue to constitute direct loss or expense in which the contractor is involved by reason of. in effect.6. other than for rectifying defects. The Surveyors’ Construction Handbook Part 4. The Architect is not so empowered. the additional work will. A (d) It is considered that whether or not payment is made through the machinery of the contract. If the answer is yes. the right to receive payment in respect of the primary loss or expense merges in the right to receive payment under the certificate within the time specified in the contract. so that from the date of the certificate the contractor is out of his money by reason either (1) that the contract permits time to elapse between the issue of the certificate and its payment. Section 1 (revised 10/02) Effective from 1/12/02 Page 21 . as a matter of convenience. is the architect empowered to issue instructions. for example. At the date of issue of the certificate. 4. the parties may agree that further work is to be carried out and paid for through the machinery of the contract (Ref.Q/89/136).

(c) ICE 7th edition. (d) In another case25 a consultant was held liable under a collateral warranty to a future owner. as it had purported in a letter to the architect that the mechanical and electrical works were complete.PART 4.6.6. Even though the employer was alleged to have instructed the consultant to issue an early certificate. when in fact they were not. (b) Certain standard forms of contract contain clauses that expressly state this to be the case. which induced the purchase of the property.24 the Court did not accept the consultant’s defence that because it had qualified its issued completion certificate by a list of ‘reserved matters’. Although the representation to the architect was made upon the employer’s request. the consultant should have declined the request as it was in conflict with the future owner’s interests (i.1. although it is qualified by ‘substantial part’: Page 22 Part 4.1. (c) In one case. However. the effect it would have of depriving the employer of the benefit of the performance bond.1. (b) It is not uncommon for consultants to be pressured by both client and contractor. the owner/occupier could be exposed to considerable financial risk if practical completion is certified when in fact the works are not practically complete (i.e. clause 48(3). for issue of the completion certificate. It may also be envisaged that a prospective future owner of a newly-built property may decide to proceed with the purchase upon the issue of a practical completion certificate.4 OCCUPATION BY EMPLOYER PRIOR TO PRACTICAL COMPLETION (a) A question often raised is whether occupation by the employer will be deemed to constitute practical completion. the consultant had not properly advised its client of the relevance and importance of its issue including.e.3 CERTIFICATION OF PRACTICAL COMPLETION WHEN WORKS NOT COMPLETE (a) As can be seen in 4. more than minor ‘de minimis’ works remaining) and by reason of subsequent insolvency. that this issued certificate should not have been taken to be the completion certificate required by the terms of the contract. the interests of the beneficiary of the warranty that the consultant had agreed to) and the consultant did not have the future owner’s express written agreement in this regard. for breach of a term to ‘exercise all proper professional skill and care’. SECTION 1 4. 4.3 the issue of a practical completion certificate transfers rights and obligations between parties to a construction contract and furthermore often releases a surety from its obligations in respect of a guarantee or bond. albeit for differing reasons. The architect subsequently certified practical completion. The consultant might be held liable for such a loss in these circumstances. incomplete and defective works remain just so. amongst other things. Section 1 (revised 10/02) Effective from 1/12/02 The Surveyors’ Construction Handbook . is an example.

On the contrary. by entering into possession and using the fitted furniture. (f) The JCT forms of contract. the Court held that it could not distinguish practical completion from ‘substantial performance’. do not expressly provide for ‘automatic’ practical completion upon use or occupation by the employer of a part or whole of the works. the Court held that practical completion had not been achieved. (h) A somewhat different view was held in Hoenig v. he takes over the part of the works when he begins to use it … (e) It has been argued that since some standard forms expressly deal with this subject as above. (g) A number of cases have looked at this question. the Court held that occupation did not amount to completion. On the facts of this case. Skink.3.26 although the owner’s occupation of the building was not argued as key to the determination of the issues. the express requirements of the contract should be considered to be exhaustive of the circumstances whereby practical completion can be established.3: The Employer may use any part of the works before Completion has been certified. Isaacs. SECTION 1 If any substantial part of the works has been occupied or used by the Employer other than as provided in the Contract.6. the employer was held to have waived a condition precedent of entire performance and could no longer rely on it. then those forms of contract which do not include similar express provisions should be interpreted to the effect that no assumption of deemed practical completion may be made upon occupation or use of part or all of the works.5(a)). the court of first instance and The Surveyors’ Construction Handbook Part 4.1. clause 23. George Wimpey28.27 where Lord Denning said: It is always open to a party to waive a condition which is inserted for his benefit.2 of JCT 98 provides for use or occupation in circumstances where practical completion or partial possession will not occur (see 4. clause 35. In other words. There. despite the fact that the defendants had been in occupation of the building. If he does so. (i) In English Industrial Estates v. including JCT 98. (j) In spite of the employer’s tenant installing and using machinery and storing large quantities of paper in parts of the works. Section 1 (revised 10/02) Effective from 1/12/02 Page 23 .PART 4. In Big Island Contracting v. the Contractor may request in writing and the Engineer shall issue a Certificate of Substantial Completion in respect thereof … (d) The New Engineering Contract (NEC) is also clear on this point.

this must be by the consent of both parties. Section 1 (revised 10/02) Effective from 1/12/02 The Surveyors’ Construction Handbook . Clause 23. Clause 23. SECTION 1 the Court of Appeal found that partial possession had not occurred and held the contractor and his insurers liable for damage caused by a fire occurring during the employer’s occupation. which the contractor must not unreasonably withhold. with the consent in writing of the Contractor. use or occupy the site or the Works or part thereof whether for the purposes of storage of his goods or otherwise before the date of issue of the certificate of Practical Completion by the Architect. and would fail as being an unenforceable penalty.5 PARTIAL POSSESSION/SECTIONAL COMPLETION Under JCT 98 it may be seen that there are four levels of ‘occupation’ which can be attained by the employer. Clause 18. (k) In an Australian case29. (l) The Court summarily rejected this argument.3. The contractor argued that as the liquidated and ascertained damages provision gave no credit for this benefit.1 provides: If at any time or times before the date of issue by the Architect of the certificate of Practical Completion the Employer wishes to take possession of any part or parts of the Works and the consent of the Page 24 Part 4.3 provides that any increase in the insurance premiums which results must be added to the contract sum. Again.2 states: Notwithstanding the provisions of clause 23.3. (a) The first level is use or occupation of the site or a part thereof generally for storage or fit-out. The contract contemplated staged completion.6.1. it could not be a genuine pre-estimate of loss. 4. Before the Contractor shall give his consent to such use or occupation the Contractor or the Employer shall notify the insurers under clause 22A or clause 22B or clause 22C.1 the Employer may.2 or . and any occupation of the premises prior to practical completion for fitting-out was a contractual right and not a ‘benefit’ conferred on the employer by delayed completion.4 whichever may be applicable and obtain confirmation that such use or occupation will not prejudice the insurance. (b) The second level is partial possession.3. Subject to such confirmation the consent of the Contractor shall not be unreasonably delayed or withheld. It can be seen that such a mechanism is consensual and that the insurers also must confirm their consent to the occupation.PART 4. the contract allowed the employer to have access before practical completion for the purpose of fitting out the building.

The contractor is under an obligation to complete the works under each section on or before the dates set down in the contract appendix. The Architect shall thereupon issue to the Contractor on behalf of the Employer a written statement identifying the part or parts of the Works taken into possession and giving the date when the Employer took possession … The effect of partial possession under clause 18 is quite different from use or occupation described under clause 23. The architect’s written statement is used to compile the value of the part taken into possession. (d) Finally. such that retention (clause 30.4. Section 1 (revised 10/02) Effective from 1/12/02 Page 25 . With partial possession.1). Thus.3). The contract documents may prescribe predetermined sections of the works.1. The contract will also state the separate amounts of liquidated damages which are to be applied to each section in respect of any separate delays. practical completion is deemed to have occurred in respect of that part with all the consequences of a practical completion under clause 17 (see 4. The Surveyors’ Construction Handbook Part 4.4).1. SECTION 1 Contractor (which consent shall not be unreasonably delayed or withheld) has been obtained. the Employer may take possession thereof. whether or not the whole of the works is delivered up by the overall date for completion.PART 4. then notwithstanding anything expressed or implied elsewhere in this Contract. and separate practical completion certificates (sectional completion) in respect of each part. since it is not consensual in nature. The architect or contract administrator must certify completion of the whole of the works according to clause 17 (see 4.2. with separate dates for completion for each. Reference is also made to insurance which must be dealt with in the event of any partial possession (clause 18. the architect or contract administrator must administer the project having regard to these dates. (c) The ‘third level’ is sectional completion.3. including allocating separate extensions of time where these apply.1.1. This again is different from partial possession.2) and liquidated damages (clause 24) will be reduced pro rata to the contract sum. there is practical completion.2 above.

Emson Eastern Ltd v. Multiplex Construction Pty Ltd v. 4th edition. 19. at page 160. 27. at page 1130. Max W Abrahamson. CA [1969] 1 WLR 1448. Commentary by Editors of Building Law Reports. Tarmac Roadstone Ltd (1997) 87 BLR 96. at page 590. George Fischer Holding Ltd v. 10. Hilson Moran [2000] CA (unreported to date). 20. EME Developments Ltd (1991) QBD. Clause 18. 52 BLR 110. Matthew Hall Ortech Ltd v. 24. J. 2. Ibid. 55 BLR 114. at page 115. Commentary by Editor of Building Law Reports. SECTION 1 Notes 1. at page 122. Keating’s Building Contracts. v. 12. Swansea City Council (1985) CA 30 BLR. George Wimpey & Co Ltd (1973) CA 7 BLR 122. Issacs (1952) 2 All ER 176. 52 BLR. Environment Agency v. 4. Ibid. William Tomkinson & Sons Ltd v. 28. English Industrial Estates Corporation v. Multi Design Consultants Ltd and Davis Langdon & Everest & others (1998) CILL 1362. Abgarus Pty Ltd (1992) APCLR. 13. Ibid. Ibid. at page 1109. 6th edition.1 refers to partial possession. 7 BLR 64. 15. Hoenig v. at page 1013. at page 1015. Big Island Contracting (HK) Ltd v. Hoenig v. at page 112. 14. 5.PART 4. Chartered Quantity Surveyor June 1990 (ref Q/89/136).. Jarvis & Sons Ltd (1970) HL. 52 BLR 110. 23. at page 111. 22. 7. Madheva (1972) 1 WLR 1009. William Press & Sons Ltd (1982) 20 BLR 78. Issacs (1952) 2 All ER 176. 26. Ibid. 52 BLR. Section 1 (revised 10/02) Effective from 1/12/02 The Surveyors’ Construction Handbook . at page 75. Page 26 Part 4. 6. 9. 21. 17. 3. Skink Ltd (1990) CA of Hong Kong. 8. Rees & Kirby Ltd.1. Ibid. 11. H W Neville (Sunblest) Ltd v. Engineering Law and the ICE Conditions. at page 1458. 16. Hudson’s Building and Engineering Contracts. at page 179. 11th edition. Skink Ltd (1990) CA of Hong Kong. Big Island Contracting (HK) Ltd v. 18. City of Westminster v. Bolton v. 25. The Parochial Church Council of St Michael and Others (1990) 8-CLD-08-01.

(Note: Particular attention should be paid to this when considering sectional completion for any part of the works. for example. A2 A2.3 A3 A3.PART 4. safety. A1 A1. for some reason this has not taken place. Under normal circumstances. CLADDING The building should be wind and watertight and the cladding should be properly secured.) ENTRANCES It is normally expected that the entrance to the premises and access way would be clear and complete. roofs and claddings would be tested by the elements. SECTION 1. Normally. then the specification should include for water testing or.1 A6 A6.2 A2.1 A4 A4. THE SITE External works should be substantially complete so that the occupier has unfettered access.1 A2. test certificates for pressure vessels as well as for hoists (whether they be for equipment or people) should be produced. etc.g. refuse collection and postal address confirmation. STRUCTURE Structural works should be complete and no part of the structure should be unsafe. means of escape and the requirements of the statutory supplies. including confirmation that all planning conditions and building control matters have been satisfactorily resolved. an instruction should be given to so test these elements.1 The Surveyors’ Construction Handbook Part 4. including all appropriate requirements for health. all building impediments such as skips and site huts should have been removed from the site. Where appropriate (e. Certificates confirming safety of the various installations should be provided. In addition. Section 1 Appendix A (4/98) Effective from 1/6/98 Page 1 . If. sufficient for the client to operate for all intents and purposes in a normal fashion. Electrical test certificates and confirmation of compliance with relevant statutory requirements for fire alarm or smoke-detector installations should be available. COMPLIANCE WITH STATUTORY REQUIREMENTS All relevant statutory requirements should have been complied with. alternatively. under design and build arrangements) the contractor shall have satisfied all local authority requirements with regard to. such that no potential safety hazard remains present.1 THE CONTRACT DOCUMENTS The works should have been undertaken as intended by the specification and drawings.1 A5 A5. APPENDIX A Appendix A: General Objectives to be Achieved at Practical Completion for Small to Medium-sized Building Projects The following are a number of practical tests by which it is considered an architect or contract administrator can judge whether or not practical completion has been achieved.

1 Page 2 Part 4. Particular attention will be required to be paid to the CDM regulations which call for the ‘Safety File’ to be produced prior to practical completion. However.1 A10 A10. External works should be complete. For such elements as air conditioning. For example. the internal areas. A7. external planting is included and it is acknowledged that practical completion may take place during a period when undertaking planting may be impractical.2 A7.3 A7. then the documentation should state this to enable such works to be undertaken without detriment to the parties. MANUALS The requirement for the provision of operating and maintenance manuals and as-installed drawings should be considered closely. APPENDIX A A7 A7. as should in general terms.4 A8 A8. the reception area and staircases should be finished. including car-park lining. a definition which allows for balancing to take place following occupation should be considered. PLANTING If.PART 4. in the specification.1 A9 A9.1 FINISHES This is the area of works where most reasons for delay in the issue of a certificate of practical completion tend to arise. decorations incomplete to a store room in the depths of the basement would not necessarily be considered as important. Manufacturers’ warranties may well be nullified if mechanical plant is not maintained in accordance with their instructions during the warranty period. MECHANICAL AND ELECTRICAL SERVICES The origins of all the appropriate commissioning and test certificates should be issued to the architect or contract administrator. Section 1 Appendix A (4/98) Effective from 1/6/98 The Surveyors’ Construction Handbook . SECTION 1. signage and the like. As suggested above. either a detailed view needs to be taken or potentially a more lenient stance adopted. All the decoration works should be complete.

11. Excess Insurance Co (Scotland) (1988) Performance bond survives practical completion. Hoenig v. Isaacs (1952) Substantial performance was held to have occurred even though the works were in part defective. University of Glasgow v. 10. London Borough of Islington (1986) The architect’s certificate was not conclusive (for rating purposes) – substantial completion being a broad question of fact. Multiplex Construction Pty v. William Whitfield & John Laing (1988) Continuing duty of architect for negligent design after practical completion. If (defects) had been apparent (at practical completion) no such certificate would have been issued. Section 1 Appendix B (revised 10/00) Effective from 1/12/00 Page 1 . July 92) – common law claim. S ECTION 1. 5. EME Developments (1991) A building can seldom be built precisely. Bolton v. Rees & Kirby v. 12. Swansea City Council (1985) Financing charges continue after practical completion. Abgarus (1992) Occupation prior to practical completion is a right not a benefit. George Wimpey (1973) Fire is the contractor’s risk after possession if clause 16 of JCT 63 is not observed. Jarvis & Sons Ltd v. 7. Mahdeva (1972) Substantial performance – it would be wrong to say that the contractor is only entitled to payment if the defects are so trifling as to be covered by the de minimis rule. A PPENDIX B Appendix B: Table of Cases 1. HW Neville v. 4. William Press (1982) The word ‘practically’ gave the architect a discretion to certify … where very minor de minimis work had not been carried out. 3. English Industrial Estates v. The Surveyors’ Construction Handbook Part 4. 6. Skink (1990) Occupation did not mean practical completion. Emson Eastern v. 8. London Merchant Securities v. 9. City of Glasgow District Council v. No set-off for remedial works after practical completion where main contractor insolvent (JCT(80) pre-amendment 11. Occupation before practical completion without certificate does not amount to partial possession. Big Island v. Completion in determination provisions is equal to practical completion.PART 4. City of Westminster (1970) What is meant by completion is the completion of all the construction work that has to be done. 2.

PART 4. 1995 Keatings Building Contracts. Applied Science Publishers. (6th Edition). Sir Anthony May. IN Duncan-Wallace. Sweet & Maxwell. Sweet & Maxwell. 1979 Hudson’s Building and Engineering Contracts. A PPENDIX C Appendix C: Further Reading Books Engineering Law and the ICE Conditions. S ECTION 1. (11th Edition). Max Abramson. 1995 The Surveyors’ Construction Handbook Part 4. Section 1 Appendix C (revised 10/00) Effective from 1/12/00 Page 1 . (4th Edition).

It is not an attempt to impose a penalty on an employer or design team for failing to live up to obligations or expectations. It cannot be emphasised too strongly that the ascertainment of loss and/or expense is an exercise in calculating as precisely as possible that which is incurred by the contractor directly and solely due to the matters listed in the contract. 4. The level of such damages has been established by a number of Court cases. as being at the opposite end of a tug-of-war rope to the contractor. SECTION 2 PART FOUR: CONSTRUCTION ADMINISTRATION AND MANAGEMENT SECTION 2: ASCERTAINING THE AMOUNT OF LOSS AND EXPENSE INCURRED IN BUILDING PROJECTS Introduction The purpose of this Section is to provide practical advice to those who are required to ascertain the amounts due in reimbursement of direct loss and/or expense incurred in building projects. This is incorrect. Surveyors are particularly reminded that their role in these matters is set out in their building contract and is normally limited to determining quantum.1. it is not the quantity surveyor’s role (to whom the task of ascertainment is usually given) to seek to get away with as little a payment as he can. Reference has been made to the contract administrator throughout this document. The Surveyors’ Construction Handbook Part 4.2. Section 2 (10/02) Effective from 1/12/02 Page 1 .PART 4. his ultimate task is to determine a proper ascertainment in accordance with the conditions of contract and the circumstances that have prevailed. if one party to a contract is in breach then that party is liable to the other for damages. Too often the quantity surveyor is seen. it does not usually extend to determining liability. Equally. for his part. The contractor. Whilst the quantity surveyor is perfectly entitled to probe such submissions by weighing all the contrary evidence. This reference includes architects where that function exists under the contract.1 Under common law. or even sees himself.2. may understandably press hard for a significant figure and on occasions overstate his case either in words or money or both.1 General Principles G 4.

2.8 An element of judgement and even conjecture is almost always inevitable in answering the second question. Baxendale2 it was established that damages ought to be of a kind which “should be such as may fairly and reasonably be considered either arising naturally. and judgement may indeed be involved in answering the first question.850 Hadley v.1.1.1.1. Harman (1848) 1 Ex. in respect of the aggrieved party. The provisions of the loss and/or expense clauses are generally without prejudice to any other rights and remedies which the contractor may possess. There are important distinctions to be drawn between the express provisions in a form of contract on the recovery of direct loss and/or expense. as if the contract had been performed”.1 Nor are such damages intended to recompense the aggrieved party for all losses whatever their nature. for even if there are verified cost records of the 1 2 Robinson v. to be placed in the same situation with regard to damages. “he is.2.2. the level of damages payable at common law has never intended to act as a penalty or deterrent but simply to ensure that. Baxendale (1854) 9 Ex. In the case of the former the requirements laid down in the contract must be rigidly adhered to. To determine the contractor’s entitlement one must calculate the difference between the costs arising from the application of the following two questions: (a) What is the reasonable cost of carrying out the particular element of work in the delayed or disrupted circumstances that were created directly as a result of the matter under consideration (for example late instructions)? (b) If that delay or disruption had not been so caused what would those costs have been? G 4. then reimbursement is a contractual entitlement and does not require judgement of the Court or an arbitrator. 341 Page 2 Part 4.7 G 4.PART 4.2. as the probable result of the breach of it”. Section 2 (10/02) Effective from 1/12/02 The Surveyors’ Construction Handbook .1. however. and which he may wish to pursue through arbitration or the Courts. that is. according to the usual course of things. and recovery of damages at common law.1. In the case of Hadley v. This consideration is. Where building contracts contain clauses dealing with the entitlement of the contractor to recover direct loss and/or expense for any delay or disruption to the regular progress of the Works caused by the client or his team or other designated causes. such clauses have been developed against this general background. if they are.1.6 G 4.3 G 4.2. from such a breach of contract itself. so far as money can do it.2. or such as may reasonably be supposed to have been in the contemplation of both parties.5 G 4.2. at the time they made the contract.4 G 4. SECTION 2 G 4.2 However. outside the scope of this Section of the Handbook.

11 G 4. Following the terminology used in the JCT forms.2. Indeed. for example the Works Contracts used in association with the JCT Standard Form of Management Contract and the JCT Standard Form of Building Contract with Contractor Design. Readers therefore should in all cases check the precise wording used in the particular form with which they are involved in practice.1.1. The wording used in the form is either identical. The principles referred to are generally applicable to all cases where a contractor is entitled. The primary purpose of this guidance is not to provide a legal treatise on the matter of claims but to provide practical comment on how to go about determining.1. careful study of the conditions of the relevant contract and an understanding of their legal application.15 The Surveyors’ Construction Handbook .10 G 4.1.14 G 4. This entitlement is provided in most. as reliably as possible.2. whereas an event or failure which Part 4. as outlined elsewhere in this Section. although a JCT Standard Form has been used.1.2. It should be noted that in this text extracts from printed forms are frequently paraphrased. detract from the critical importance of ensuring that proper and reasonable records are maintained by the contractor and contract administrator. the contractor’s monetary entitlement. It may even be that. by the conditions of contract.2.1. The correct ascertainment of the amount of any direct loss and/or expense to be reimbursed to the contractor requires sound knowledge and experience of building practice. published by the Joint Contracts Tribunal – referred to as JCT 98.2. SECTION 2 work that was carried out it does not follow necessarily that all such costs were properly incurred.PART 4. particular clauses have been amended. In addition.13) – complete proof in the way of invoices or verified cost records is unlikely to be available. however.1. together with knowledge of the relevant and up-to-date case law. This should not.2.2. This guidance is based predominantly upon the provisions of the 1998 edition of the Standard Form of Building Contract. to reimbursement of his direct loss and/or expense. to that adopted in many of the other forms published by the JCT. particularly where the form is not one of those promulgated by the JCT.9 Thus. G 4. the person undertaking the evaluation requires access to the best records and other information that is available on that particular contract. even if the form of contract refers to ‘ascertaining’ the loss – as does the JCT form (see G 4. or very similar.1. Section 2 (10/02) Effective from 1/12/02 Page 3 G 4.12 G 4.13 G 4. even where the expression ‘direct loss and/or expense’ may not be used. an event or failure which gives the contractor grounds for seeking reimbursement of any resultant loss and/or expense is referred to as a ‘matter’. the surveyor is not required to establish ‘complete proof’ but is instead required to use professional judgement. but not all.2. forms of building contract.

is a very restricting one and disqualifies all costs and/or expenses that do not arise as a direct result of the matter under complaint.2). Given that judgement is almost always called for (see G 4.2. Thus.2 Definitions G 4.3 Entitlement G 4.3. Section 2 (10/02) Effective from 1/12/02 The Surveyors’ Construction Handbook . The Secretary of State for Air (1922) 2KB 328 Saint Line Ltd v.2.2. 4. 4. G 4.2.2.3 ASCERTAINMENT The definition of this word should be seen in the context of the subject of the ascertainment. SECTION 2 gives the contractor grounds for seeking an extension of time for the completion of the works is referred to in this Section as an ‘event’ (also see G 4. losses arising from any such underpricing are not usually reimbursable.2.2.PART 4. without other intervening cause”.2 DIRECT “The direct consequence of the act giving rise to the claim”.2.2.2. to mismanagement. 1 2 A & B Taxis Ltd v. to other causes not recognized as matters by the wording of the contract or to other concurrent delays should be excluded from those reimbursable to the contractor as they are not the direct result of the matter under consideration.2 Clearly this word ‘direct’.1 LOSS AND/OR EXPENSE Any monies which a contractor has a proper expectation of receiving but has not received and/or monies properly expended or to be expended by him. when used in conjunction with the words ‘loss and/or expense’. Richardson Westgarth & Co (1940) 25 BLR 140 refers to the case only in passing Page 4 Part 4.2.5 and G 4.2.6) it follows that ‘to ascertain’ can rarely mean to prove comprehensively with invoices and records but rather to establish by the use of such facts as are available and by the use of expert judgement. Thus. G 4.1. Such matters do not usually extend to the contractor underpricing the rates to be used in valuing variations.1 LIMITATIONS Appendix D provides a checklist of items on which entitlement is allowed under JCT 98. The contractor’s entitlement to reimbursement under the terms of the contract should be determined as set out below: (a) The loss and/or expense must arise directly as a result of one of the matters referred to under the terms of the contract. for example.1 or “that which flows naturally from the breach.3. any costs due.1.

The contractor has to make day-to-day decisions in developing situations that may. say. None of these costs should therefore be duplicated in an ascertainment of loss and/or expense under clause 26.6).e. in retrospect. at tender stage the contractor might have anticipated removing some element of plant by.1. the twentieth week. Even where such an act was not entirely successful the contractor would be entitled to the reimbursement of the costs incurred provided that he acted reasonably in so doing. the quantity surveyor may have good cause to reject certain costs put forward by the contractor. or preliminaries associated with variations. This requirement to mitigate requires the contractor to act reasonably in all the circumstances. It may be reasonable. For example. For example. he is entitled to additional reimbursement for those four weeks. the fifteenth week. fluctuations in prices. for example.e. In this respect the link between cause and effect is a vital factor.2. costs not arising directly as a result of the matter under consideration – should be excluded. The Surveyors’ Construction Handbook Part 4. For example.PART 4. (e) It is important to consider the mitigation of loss and/or expense. Section 2 (10/02) Effective from 1/12/02 Page 5 . i. for a contractor to bring additional plant or labour to a site in order to reduce the overall effect of a matter on the project as a whole. In the event he may be beating this target and be destined to be able to remove it by. For the contractor to be able to obtain reimbursement in accordance with the contract he must first have complied with that provision (see G 4. JCT 98 requires the contractor to make an application in writing to the contract administrator as soon as it is reasonably apparent that disruption will occur as a result of a matter referred to in clause 26 of that contract (or under clause 34 in the case of loss and/or expense arising from the discovery of antiquities). therefore. say. The test must be: “Was the action reasonable in the circumstances prevailing at the time?” (f) On the other hand. To the extent that any part of the loss and/or expense incurred could reasonably have been avoided by the contractor taking reasonable steps.2. the payments made to the contractor may include allowances for working under changed conditions. (c) Costs incurred in respect of which the contractor has not compelled with the conditions laid down in the contract in relation thereto cannot be dealt with under the terms of the contract (but see G 4. SECTION 2 (b) Indirect costs – i. If a delay caused by a matter recognized by the contract occurs which requires that plant to be retained for a further four weeks.3 for more detailed advice on the validity of written applications). that in reviewing with hindsight what was reasonable. that amount would not be reimbursable.3. a contractor who through good management is destined to increase the profit he anticipated making at tender stage cannot be denied this prospect by the incidence of a matter giving rise to a loss and/or expense claim. until the nineteenth week. It is important. be shown to be wrong. (d) Reimbursement is restricted to loss and/or expense which the contractor is not entitled to recover under any other provision of the contract.

County and District Properties Ltd (1982) 23 BLR 1 Page 6 Part 4. in contrast to those made to the contract administrator. in ascertaining the contractor’s entitlement to reimbursement of loss and/or expense.2. In addition. or references to ‘delays’ which do not mention loss and/or expense. On the other hand.1 (c) Reference to loss and/or expense in site meetings or the like. G 4. are not valid unless specific authority has been given by the employer. the contractor may have an entitlement to such reimbursement even when there is no extension of time.3 WRITTEN APPLICATION Before the contractor is entitled to any reimbursement in respect of loss and/or expense he should first have made an application. do not constitute valid written applications to recover loss and/or expense. The purpose of this written application is to enable the contract administrator to form his opinion on whether or not there has been. Thus. (b) Applications to the quantity surveyor. Nevertheless.3.2. loss and/or expense incurred which would not be reimbursed under any other provision in the conditions of the contract. the expression ‘extension of time’ is replaced by the words ‘fixing a new completion date’ but the more traditional ‘extension of time’ is used in this Section. at the appropriate time. Each matter needs to be treated on its merits whether or not an extension of time is due or granted.4 ADEQUACY OF THE DETAILS JCT 98 requires that the contractor provides the contract administrator (or if so instructed. Section 2 (10/02) Effective from 1/12/02 The Surveyors’ Construction Handbook .2 EXTENSIONS OF TIME Under JCT 98 and other forms of contract in the same series. Extension of time does not necessarily mean that the contractor has an entitlement to reimbursement of loss and/or expense. to the appropriate party named in the conditions of contract. G 4. with reference to the matter of applications: (a) Applications must be made by the contractor as soon as it reasonably becomes apparent to him that the regular progress of the Works is likely to be materially affected by any of the relevant matters listed in the conditions of contract. under JCT 98 there is a requirement that the contract administrator declares the amount of any extension of time granted for any event which also constitutes a matter under clause 26 where such a declaration is necessary for the ascertainment of loss and/or expense. it should be noted that.2. the existence and amount of any attendant extension of time must be revealed where this is relevant to that ascertainment.3. the quantity surveyor) with all the documents necessary for 1 John Laing Construction Ltd v.PART 4. SECTION 2 G 4. or will be.3.

The quantity surveyor should also ask the contract administrator for all the data he has upon which he formed that opinion. clause 26.3 requires the contractor to supply to the contract administrator or quantity surveyor.PART 4. A checklist of steps required under JCT 98 is included at Appendix E. for such details to be of maximum use. and be specific as to the matters which are covered in such an instruction. However. to the latter’s mismanagement) which should be passed on to the employer.6. It must be recognized. Section 2 (10/02) Effective from 1/12/02 Page 7 .2. But note that these details have to be requested and clearly. County and District Properties Ltd (1982) 23 BLR 1 The Surveyors’ Construction Handbook Part 4. Where the contract administrator so instructs the quantity surveyor this instruction should be in writing. SECTION 2 adjusting the contract sum.3. such details as are reasonably necessary for the ascertainment of any reimbursable loss and/or expense.1.1).1 RESPONSIBILITY FOR ASCERTAINMENT Under JCT 98 the responsibility for ascertaining the amount due is the contract administrator’s.1.3. what is going to be adequate data will depend upon the nature of the disruption or delay.6 4. Thus.4.2.2. upon request.2 The quantity surveyor should be careful to ensure that the contract administrator undertakes this task of forming an opinion before embarking upon any ascertainment. however.4 Ascertainment G 4. for the quantity surveyor’s task is always one of determining quantum in respect of the items which in the opinion of the contract administrator are admissible in principle.2. to be copied to the contractor. the request for them should be made at the earliest opportunity. the task of forming an opinion on whether or not there is a case in principle for loss and/or expense to be ascertained. It is not for the quantity surveyor to usurp the role of the contract administrator in matters which the contract conditions specifically reserve for him. NOMINATED SUB-CONTRACTORS In general the same principles apply to ascertaining the loss and/or expense to be reimbursed to a nominated sub-contractor as apply to the main contractor. the request for the contractor to keep such details should not only be timely but should also be as specific as possible as to the data required. unless he instructs the quantity surveyor to undertake this task.5 In practice. or anyone else. G 4. This will include documents in support of ascertainments of the contractor’s entitlement to reimbursement of loss and/or expense (see clause 30.1 1 John Laing Construction Ltd v. Moreover. G 4. the contract administrator cannot delegate to the quantity surveyor. that a nominated sub-contractor may have an entitlement under the terms of the sub-contract to reimbursement by the main contractor (due. G 4.2.4. for example.

Additionally. In this respect the quantity surveyor need only be concerned with the points in G 4.9 GLOBAL OR INDIVIDUAL ASCERTAINMENT In recent years there has been much discussion on whether claims should properly be considered on a global basis or whether each item should be considered in isolation.2. wherever ascertainment can properly be made of part of a contractor’s entitlement it is important that this is done and the relevant amounts be certified for payment.1.4. Moreover.7 G 4.4.1. This is because what the contractor’s cost would have been had the relevant delay or disruption not taken place has to be estimated (see G 4. If part of a contractor’s entitlement can be wholly ascertained then it should be.5 G 4. once the quantity surveyor has been properly instructed to ascertain the amount due he should proceed with this task without delay.3 However.2.1 of JCT 98 requires that ascertainment is made from time to time. the general rule of damages is that the type or kind of loss payable is that “as may reasonably be supposed to have been in the contemplation of both parties. as the case may be.2.2. It is for the contract administrator or quantity surveyor.4.6 Clause 26. clause 30.6 and G 4.2. USE OF JUDGEMENT IN MAKING AN ASCERTAINMENT An element of professional judgement is often inevitable in ascertaining the contractor’s entitlement to reimbursement of loss and/or expense. Section 2 (10/02) Effective from 1/12/02 The Surveyors’ Construction Handbook . However. G 4. as the probable result of the breach of it” (see G 4. at the time they made the contract.2. COSTS VERSUS When ascertaining a contractor’s entitlement it is the actual loss or actual expense which is relevant. calculations and evidential records used in the ascertainment are recorded in writing.2.4.2.2.PART 4. This may be a mandatory requirement on public sector contracts. in forming that judgement the best evidence available should always be used in reference. SECTION 2 G 4. G 4.10 below. In general the surveyor should ensure that the basis. This means that ascertainment should be an ongoing process where the facts are sufficiently established to make a proper and finite calculation.3). where there is contiguous work that has not been affected by delay or disruption this might well provide good evidence of the progress that the contractor could have been expected to have made generally.1.2.8 G 4.7).4. to ascertain the amount and not to await a detailed submission from the contractor.4. Page 8 Part 4.2 of JCT 98 states that any amount ascertained under clause 26 should be included in interim certificates.2.2.4. but there is no provision in this form of contract for provisional assessment to be made. Thus.4 G 4.4. The prices in the contract bills or schedule of rates should not be used as the actual costs may be more or less than these.2. For example.

2.5. SECTION 2 G 4. it does not follow that all other matters on that project can be added in to make a global claim.2. i.. for example more supervision. More often than not the dominant items will be the first two from the above list.5. G 4.1 GENERAL A list of possible items admissible as part of an ascertainment of loss and/or expense (which is to be read as including those attributable to sub-contractors) is as follows: • extended and/or increased use of ‘preliminaries’. a series of variation instructions which create overlapping or contiguous disturbance. in writing. more plant etc. no contractor should be penalised by being denied reimbursement simply because extra costs were incurred which could not by their nature be particularised. • increased cost of head office overheads.e. (a) It is necessary that each application conforms fully with the rules written into the contract about them (for example timing. the facility of global ascertainment should not be used to mask facts and figures that could properly have been particularised and presented. Simply because there is. Section 2 (10/02) Effective from 1/12/02 Page 9 .10 It is important that a contractor makes proper applications on each and every occasion that an entitlement to make a claim arises.4. Thus.2. • extra waste or abortive purchase of materials. The Surveyors’ Construction Handbook Part 4.PART 4.5 Admissible Items G 4. 4. • loss of profit. inflation. On the other hand. • reduced labour outputs. and • finance charges. • increase in the price of resources. for example. (b) The contractor must keep such records as are necessary for the ascertainment of the amount due.2 PRELIMINARIES A representative list of the items normally comprising the preliminaries is given at Appendix A. sent to the contract administrator).2. (c) Only where the effect of a series of matters (for example the late issue of a number of instructions or the instructing of a number of variations) is such as to create extra costs which by their nature are indistinguishable from one another can an application on a global basis be entertained. A global approach to ascertainment should be restricted solely to events which create indistinguishable effects.

Clerk of works’ records and diaries can be invaluable evidence of this. Again the comparison is between the period that the item would have been in use had the matter not occurred and the period that it was reasonable to have been in use given that the matter did occur (see G 4. (c) Extra hire charges would be reimbursable if the particular item is required to be kept on site longer than otherwise would have been the case due to the relevant matter.2. SECTION 2 G 4. the particular item is required for a longer period than otherwise would have been the case.7).3 When ascertaining the extra cost of ‘preliminary’ items (but see G 4. However.1. the following general pointers should be of some assistance: (a) In all circumstances avoid the application of an overall percentage to global labour costs. (c) Have regard to whether any delay comprises a series of small recurrent delays or one large one. rarely if ever are the whole labour costs on a project disrupted. (b) Removal costs are admissible in the same way as setting-up costs. (b) Wherever possible request that contemporary records be kept. The comparison is between the period that the item would have been on site had the matter not occurred and the period that it was reasonable to have been on site given that the matter did occur (see G 4.4.2.2. Section 2 (10/02) Effective from 1/12/02 The Surveyors’ Construction Handbook . setting-up costs would rarely be admissible unless setting up has been delayed by a relevant matter and inflation has occurred which is not reimbursable under the fluctuations clauses. Page 10 Part 4.7).2. In the former case the proportional loss of output can be very high. (d) Extra running charges would be reimbursable if. whereas in the latter case the loss can be mitigated by redeploying resources elsewhere.PART 4. It is impossible to give precise and definitive advice as all will depend upon the circumstances in each case.2. Where the plant in question is owned by the contractor the measure of his loss is the amount (if any) that he could have earned by using the plant elsewhere had it not been tied up on the site for longer than would have been the case if the matter in question had not occurred. If plant is already on site.5. noting the output achieved in practice by the particular workmen who are disrupted. G 4. due to a relevant matter.8) it is important to break each item down into the following components: (a) Setting-up costs would be admissible where additional plant is properly brought onto the site.4 DISRUPTION OF LABOUR The ascertainment of the cost of disruption to labour is invariably a difficult process.1.5.

5. bricklaying or fixing pipework once under way may suffer little or no delay. Even where the contract contains a fluctuations clause. (f) Recognize that great economies can flow from a repetitive task.8 INCREASED COST OF HEAD OFFICE OVERHEADS Loss in the recovery of head office overheads is an admissible item but the amount of such loss may be difficult to substantiate. which would be reimbursable. EXTRA WASTE AND/OR ABORTIVE PURCHASE OF MATERIALS These may not be significant elements in an ascertainment but it may be that the constant moving of materials. The delay may be associated with becoming familiar with an unexpected or unplanned task.2.9 Wherever possible.2. SECTION 2 (d) Recognize that there is a learning curve in all activities. cannot be used. late instructions and so on. the interruption of which can result in far-reaching losses.2. it may be that materials purchased for the works have been omitted by a subsequent variation order. if it contains a non-adjustable element. Moreover. The advantage of this can be lost if a new gang of men is brought in to undertake work which has become familiar to others. Greater London Council & Another (1982) 1WLR 149 1 The Surveyors’ Construction Handbook Part 4. (e) Whatever the level of variation orders. As long as this has not resulted from a lack of proper management this cost will properly form part of any ascertainment. Overall percentages.7 INFLATION If work is executed later than otherwise would have been possible as a result of a relevant matter and if inflation has caused the cost to rise then. not related to the particular circumstances.5.6 Tate & Lyle Food and Distribution Co. The ‘coal face’ operation may not be affected at all.2.2. For example.PART 4. G 4. if additional labour has to be recruited at short notice it may be necessary to pay premium rates which would in principle be reimbursable. for example fixing partitions in a series of identical dwellings. provided that such costs are not reimbursable under the fluctuations clause. proof should be sought of such items as extra site visits by head office staff or the greater involvement of head office staff in managing G 4. G 4. Ltd & Another v.5.5 A list of items relevant to the calculation of reimbursable extra costs of disruption is given at Appendix B. Provided that such materials were not purchased prematurely the cost would again properly form part of any ascertainment. they will form part of the ascertainment. much of the work of labour will not actually be significantly affected.5. Alternatively. a delay in the execution of work might well increase the non-recoverable element. G 4.1 G 4. stores or compounds following a relevant matter will result in extra waste. the resultant extra cost will be reimbursable.5. Section 2 (10/02) Effective from 1/12/02 Page 11 .

The Courts have increasingly recognized that.2.1 As with the recovery of loss of profit.5.5. Moreover. but a debt which has interest charges as one of its component parts which have been paid by a contractor on money which was G 4.2.11 G 4.1 of JCT 98 now provides for the payment of interest. It should also be shown that.PART 4.5. be higher or lower than that contemplated in the contract sum. The level should be that prevailing in the market during the period immediately following the original date for completion or such earlier date at which the resources would have been released from the contract. This is in line with the statutory right now available to certain classes of businesses under the Late Payment of Commercial Debts (Interest) Act 1998. However.2.14 FINANCE CHARGES Clause 30. there is an entitlement to reimbursement of that profit. at 5% over the base rate of the Bank of England. Section 2 (10/02) Effective from 1/12/02 The Surveyors’ Construction Handbook .2. G 4.5. it is important that overriding consideration be given to the level of recovery that would have been possible on alternative work had the contractor been free to do so (see G 4. therefore. as a direct result of a matter referred to in the conditions of contract.1. loss of profit is suffered which could have been earned in the normal course of business elsewhere. SECTION 2 the project as a result of the matters giving rise to a claim.1. a formula approach to calculating this element maybe permissible. Bowmer & Kirkland Ltd (1996) 1996 CILL 1203 2 Peak Construction (Liverpool) Ltd v.5.10 Account should be taken of the extent to which extra costs are already being reimbursed through the pricing of the variation account.5. for any payments which are overdue.2. but for this delay and the consequent tying-up of head office resources for a longer period than would otherwise have been the case. finance charges are not an interest on a debt. G 4. however. McKinney Foundations Ltd (1970) 1 BLR 114 Page 12 Part 4.2 This amount should be calculated by reference to the level of profit to have been made by the use of the resources on other projects during the period of retention on site as a direct result of the cause of delay. Where there has been a delay as a result of a relevant matter but no consequent increase in value (thereby excluding some contribution to extra head office costs) some extra recovery is an entitlement provided that this does not extend to include costs that should have been mitigated. Appendix C gives further guidance on the components and methods of such an ascertainment.13). LOSS OF PROFIT If. providing all the pre-conditions are met. those resources could have been productively used elsewhere.12 G 4. The JCT form expressly notes that the payment of contractual interest may not be construed as a waiver by the contractor of his or her rights to proper and timely payments.13 1 St Modwen Developments Ltd v.2. where loss of profit is being calculated as a result of a delay caused by the execution of variations it is important that a deduction be made for any other profit reimbursed to the contractor for those variations priced at contract rates. It might.

unless specifically approved by the employer beforehand (see G 4.6. however. which included the payment of that loss and/or expense.15 Finance charges are recoverable from the date that the primary loss and/or expense was incurred up to the time that the certificate. delayed is to “use constantly his best endeavours … to prevent the completion of the Works being delayed”.2).PART 4. However.2.1 G 4.6. G 4.6.6.4 1F G Minter Ltd v. provided.5.1.3 However. it might be helpful to comment upon certain items which are occasionally claimed as being reimbursable when they are not.2.5 Where. Among these the most usual are: (a) The costs of acceleration. Section 2 (10/02) Effective from 1/12/02 Page 13 .3 the cost of so doing may be reimbursable. he provides the data which might be required by the quantity surveyor under clause 26. Such finance charges are reimbursable.5. that the conditions in the contract in that respect have been met (see G 4. G 4. the contractor’s obligation whenever he is. THE COST OF PREPARING A SUBMISSION FOR REIMBURSEMENT OF LOSS AND/OR EXPENSE There is no contractual requirement for a contractor to prepare details of the amount of loss and/or expense and thus there is no entitlement to any reimbursement for so doing.2. as always.2.3 (c)). was issued.2. It is generally thought that the use of ‘best endeavours’ is likely to be limited to the rescheduling of resources and the taking of such measures as may be appropriate to allow the works to proceed without incurring (significant) costs.2. G 4. G 4. or is likely to be. SECTION 2 borrowed (or interest that could not be earned on capital) in order to finance the prime cost of the loss and/or expense.16 4. Welsh Health Technical Services Organization (1980) 13 BLR 2 The Surveyors’ Construction Handbook Part 4. (b) The cost of preparing a submission for the reimbursement of loss and/or expense.2.2.3. G 4.6 Inadmissible Items G 4.6.2. If acceleration is required it should be achieved by means of a separate agreement.2 THE COST OF ACCELERATION In common with most lump sum contracts JCT 98 does not contain provisions for instructions to be given to accelerate the works.2. The rates and manner of interest payable should be those actually incurred (or being earned on capital).1 GENERALLY It is not possible to list all the items which are inadmissible.6.

stores – rental/repairs and maintenance. superannuation. drawing and copying. signs. A2 TEMPORARY ACCOMMODATION Consider: • • • • • • • • • • • • • • • • • • • • • • • • • • • temporary offices – rental/repairs and maintenance. canteen subsidy. SECTION 2. telephone/facsimile calls. • training levy. third party insurance. and progress photographs. canteen equipment. – employer’s contributions. computers. telephone/facsimile lines/system rental. rates on temporary buildings. fire-fighting equipment. first-aid equipment. • travel costs. and • agency staff where applicable. gas and electricity. office furniture. pensions etc. boards and notices. holidays with pay. APPENDIX A Appendix A: Ascertaining the Cost of Running a Site The items given below are intended only as a guide. • national insurance. general site wear. general cleaning and disposal. canteen consumables. Consider: • staff salaries (including subsistence. site welfare and safety. guaranteed bonuses and allowances where paid). including servers and data lines. the list is not comprehensive. The Surveyors’ Construction Handbook Part 4. office cleaning. • private health insurance – employer’s contributions. mobile phone calls. canteen – rental/repairs and maintenance. Section 2 Appendix A (4/99) Effective from 1/6/99 Page 1 . sanitary accommodation and welfare facilities. • redundancy fund. photocopiers – equipment and consumables. nurse/first-aider. including cars and fuel. A1 STAFF AND ADMINISTRATION Note: This includes security and welfare personnel and the supervisory time of trades foreman and the like. • employer’s liability insurance.PART 4. office consumables and stationary. postage/franking machine.

small plant and tools. and hoist drivers. general site equipment. A4 TEMPORARY WORKS/ACCESS Consider: • temporary roads – maintenance. internal site transport. including driver. mixers. pumps. and rubbish removal (skips). weighbridge. SECTION 2. and temporary weather proofing. attendance and distribution. site compound fencing. When long delays have occurred. A6 DISTRIBUTION Consider: • • • • • • service gang –cleaning. site/crane radio system. loss must be mitigated by use elsewhere or the termination of the hire contract. mobile cranes. site security (including guards if appropriate). forklifts and drivers. hoists. telescopic hoists. Consider: • • • • • • • • • • • • • • • tower cranes. There is often a guaranteed minimum period of hire which would have been paid for in any case. dumpers and drivers.PART 4. site surveying equipment. and • clean access and site roads. banksmen and slingers. Section 2 Appendix A (4/99) Effective from 1/6/99 The Surveyors’ Construction Handbook . wheel washing facilities. concrete testing. APPENDIX A A3 PLANT This covers plant owned by the contractor or hired from a subsidiary or specialist company. It is advised that the conditions of hire are examined. Page 2 Part 4. A5 FENCING AND SECURITY Consider: • • • • site boundary fencing/hoarding. compressors.

transformers etc.PART 4. and • maintenance.2.12 and Appendix C.5. Page 3 Part 4. and maintenance.5. fuel consumption. and • additional work – for example safety rails where scaffolding removed. See general comments at G 4.. A9 TEMPORARY WATER Consider: • water and sewerage – rates/metered consumption. A8 TEMPORARY ELECTRICS Consider: • • • • equipment – generators.2. professional indemnity. consumables. A10 INSURANCE Consider: • • • • contractor’s all risk. Section 2 Appendix A (4/99) Effective from 1/6/99 The Surveyors’ Construction Handbook . SECTION 2. • adaptations. APPENDIX A A7 SCAFFOLDING Consider: • extra hire. public liability. A11 HEAD OFFICE STAFF COSTS Consider: • that proportion of time spent on project which is only applicable if not booked directly to the project.8 to G 4. and performance bond.

1 THE EFFECTS OF DISRUPTION Labour Factors to be taken into account include: • loss of productivity (labour resources must have been available and able to have been used profitably elsewhere had the loss of productivity not occurred). written instructions and correspondence. Section 2 Appendix B (4/99) Effective from 1/6/99 Page 1 . other information that should be referred to includes: • • • • • • • contractor’s programme and amendments. • standing time. alterations or additions to scaffolding. and substitution of materials. site measures. QUANTITY SURVEYOR’S CONSIDERATIONS It is important to receive from the contractor proper. additional tools. SECTION 2. this information needs to be in diary form and should indicate: B3 B3. clerk of works’ reports. photographs. additional plant.PART 4. Ideally. Materials Extra costs can be incurred due to the: • • • • double handling of materials. and minutes of meetings.2 Plant Refer to invoices to indicate additional costs due to: • • • • • B1. B1.1 INFORMATION AVAILABLE TO THE CONTRACT ADMINISTRATOR/QUANTITY SURVEYOR Apart from issued drawings. APPENDIX B Appendix B: Disruption B1 B1. site reports. on or off site.1 The Surveyors’ Construction Handbook Part 4. • overtime. daywork records. and standing time. waste and damage of materials. B2. and • changes in labour strength on the site and in gangs.3 relocation of plant. return of materials to the store or supplier. detailed records of delays which disrupt progress.2 This information can assist in the ascertainment of the effects of instructions upon progress. B2 B2.

The quantity surveyor should give careful consideration to all this information and judge its relevance to the particular matters being examined (but see G 4.PART 4.2). or to otherwise mitigate the costs of construction and effects of disruption. B3. the effect upon allied trades working in the vicinity. • evidence of efforts made to divert labour to other contracts. and • the relationship with nominated firms and sub-contractors and records from them to substantiate the claim of disruption. and (ii) to other contracts. SECTION 2.2 There may be further items not covered above which the contractor could bring to the notice of the quantity surveyor. B3. Section 2 Appendix B (4/99 Effective from 1/6/99 The Surveyors’ Construction Handbook .2. and to examine data on which projections of progress were based in order to indicate the effect that changes have had upon the planning. The information may include critical path analyses and similar information. In making an assessment of disruption. particularly sub-contractors.3 Page 2 Part 4. the quantity surveyor may require the tender progress intentions of the contractor. the inability to divert labour elsewhere (i) on the site. the knock-on effect upon succeeding trades. APPENDIX B • • • • the immediate effect upon working trades.4.

directors’ and staff’s salaries.2 For a contractor to succeed. rents and rates. telephones etc. plant yards. and • head office staff costs have not been recovered elsewhere. emoluments and allowances (estimating and sales staff should not be included). • the extra costs have not been recouped in other ways (for example from set-off or other arrangements with sub-contractors). and • spread in rates of all items. • lump sum(s) (specify how compiled). • additional costs have not been recovered through rates for measured works.. • additional costs have not been recovered in dayworks.1 company offices. professional legal and/or accountancy fees. running costs/maintenance costs of these units. Section 2 Appendix C (10/02) Effective from 1/12/02 Page 1 . including allowances for company’s motor cars etc. it is recommended that the quantity surveyor is reasonably satisfied that: • time expended was additional to that reasonably to have been expected. postage. cost of travelling. • any loss and/or expense sought has not been avoided by re-deployment of resources on other contracts. and • details showing build-up of general head office costs at the relevant time or throughout any relevant period.Appendix C: Ascertaining the Cost of Head Office Overheads C1 HEAD OFFICE OVERHEADS A contractor seeking direct loss and/or expense in relation to head office overheads will probably include some or all of the following: • • • • • • • • C2 C2. and depreciation. C3. expenses. C3 C3. • proof of payment made on all admissible items.. The Surveyors’ Construction Handbook Part 4. ESSENTIAL BACKGROUND INFORMATION Consider the method adopted by the contractor as policy in incorporating these costs in his tenders: • percentage. including office equipment.1 ASCERTAINMENT OF THESE COSTS Check: • time records or diaries which may indicate additional time spent with consequential financial disbursements (this should be time arising from relevant events over and above that which would have been spent on ordinary administration of the contract).

C4 C4.3 C4. meetings etc.6 Page 2 Part 4. for example. What were the relevant events giving rise to delays under the conditions of contract? Were head office costs applicable to those events? To what extent was the head office involved in. the impact of the delay to progress on the business of the firm? C4.2 C4.1 FURTHER CONSIDERATIONS FOR THE QUANTITY SURVEYOR At what stage in the contract did delays occur and what was the impact on head office costs? (The costs are unlikely to have been incurred until the end of original contract period. Section 2 Appendix C (10/02) Effective from 1/12/02 The Surveyors’ Construction Handbook . site visits. the contractor will actually incur the additional costs at the time of the delay and since it is likely that overhead recovery will be delayed as a result of the later execution of original contract work then the additional overheads could be payable before the end of the original contract period.5 C4.? Was there a need to employ additional head office staff whether or not a delay had occurred? How effectively did the firm employ staff on this contract as against other contracts that they were undertaking? What was the size of the contract in relation to the size of the firm and.) While it is correct that the actual sum allowed in the contract price for head office overheads will not necessarily be expanded by the contractor until after the end of the original contract period. therefore.4 C4.

2.4 26.7 26.8 The Surveyors’ Construction Handbook Part 4.2.2. way or passage adjoining or connected with the site through or over land etc.2 26. SECTION 2.6 26.3 26.1 Item Tick The contractor not having received in due time necessary: instructions drawings.2. as last item as otherwise agreed between architect and contractor Instructions issued regarding expenditure of provisional sums except work being carried out as a PC sum by the contractor after submission of a tender for it. in accordance with the contract bills/contract drawings: through or over land. but excluding variations for which a clause 13A quotation has been accepted Execution of approximate quantity work where bills are not a reasonably accurate forecast 26. buildings. Section 2 Appendix D (revised 07/01) Effective from 1/9/01 Page 1 . failure by the employer to give ingress or egress in due time to the contractor from the site of the works or any part thereof in the possession and control of the employer.2.2. failure by these parties to execute such work Postponement by the architect of any work to be executed under the contract After receipt of any notice the contractor is required to give. details.2. APPENDIX D Appendix D: Checklist of Items for which Loss and/or Expense are Allowed The contract clause numbers referred to in this form are from JCT 98 Contract clause number 26.PART 4. and levels for which he specifically applied in writing provided the date of application was neither unreasonably close to nor distant from the date the contractor needed them bearing in mind the date of completion Inspection – tests under clause 8.2.5 26.3: opening up for inspection any work covered up and making good testing of any executed work and making good unless inspection reveals items not in accordance with the contract Discrepancy or divergence between the contract drawings and/or the contract bills Execution of work (not forming part of the contract) by the employer or by persons engaged by him.

3 25. Contract clause number 26.1. SECTION 2.1.1 The contractor has made application as soon as it was reasonably apparent that: the regular progress of the works/or part of the works has been/is likely to be affected the contract administrator has requested supporting details to enable an opinion to be formed 26.1.2 The contractor has upon request: supported the application with information to enable an opinion to be formed 26.3. not later than 12 weeks after receipt of this notice.1.4 A new completion date.PART 4. 26.1. set a date not later than completion date) The Surveyors’ Construction Handbook Part 4.3) to form an opinion has ascertained/requested the quantity surveyor to ascertain the amount of loss and expense The architect has stated in writing: the extension of time granted (if any) from time to time during the contract the relevant event(s) for which it is given (clause 25) and more particularly defined in clause 26. Section 2 Appendix E (revised 07/01) Effective from 1/9/01 Page 1 .3 The contractor has upon request: provided details of loss and/or expense to assist ascertainment The architect has: requested information from the contractor (26. APPENDIX E Appendix E: Checklist of Steps Required when Considering Submissions by Contractor The contract clause numbers referred to in this form are from JCT 98.2 26.2.1 Item Comments from the quantity surveyor Tick The contractor has applied in writing stating: he has incurred/is likely to incur direct loss and/or expense not reimbursed by any other contract provision progress has been/is likely to be materially affected by the items listed in clause 26. sufficient particulars and estimate (where completion is less than 2 weeks distant.

1995 Keating. Donald and May. Keating on Building Contracts. APPENDIX F Appendix F: Further Reading BOOKS Chappell. Michael. 1985 Powell-Smith. David. Sweet & Maxwell. 2000 LAW REPORT SERIES Building Law Reports Construction Industry Law Letter Construction Law Digest Construction Law Reports The Surveyors’ Construction Handbook Part 4. Sweet & Maxwell. 2nd Edition. Collins. Vincent and Furmston. 1998 Duncan-Wallace. John. BSP Professional Books. 2nd Edition. 3rd Edition. Anthony Sir. SECTION 2. The Presentation and Settlement of Contractors’ Claims. I N. 2001 Parris. A Building Contract Casebook. G G and Hackett. Powell-Smith and Sims’ Building Contract Claims. Section 2 Appendix F (revised 07/01) Effective from 1/9/01 Page 1 . 1990 Trickey. M.PART 4. Blackwell Science Ltd. E & FN Spon. The Standard Form of Building Contract JCT 80. 11th Edition. Hudsons Building and Engineering Contracts. 7th Edition.

regardless of cost or technical complexity. surveyors are well placed to undertake the role of risk manager. Risk management formalises the intuitive approach to risk which project teams often undertake. Risk management is concerned with establishing a set of procedures by which risk is managed.or part-time. rather than being dealt with by default. on how best to deal with risk. Section 3 (05/03) Effective from 1/7/03 Page 1 . The role of a risk manager is to facilitate input into the project management process such that risk is effectively dealt with. The role can be either full. Essentially. In addition. Major clients. already have formal procedures in place for managing risk. Surveyors who want to The Surveyors’ Construction Handbook Part 4. The procedures outlined should produce a framework that can be utilised on the majority of construction projects. By utilising a formal approach. SECTION 3 PART FOUR: CONSTRUCTION ADMINISTRATION AND MANAGEMENT SECTION 3: THE MANAGEMENT OF RISK Introduction Risk is present in all projects and surveyors are routinely involved in making decisions which have a major impact on risk.PART 4. This section of the handbook provides an overview of the principles of risk management. which includes surveyors. Other clients are likely to seek guidance from their professional advisers. including the client. This strategy should include how risk management will be integrated into the project management process on a project. there are three steps to perform: • identification – collect the information available which might affect the achievement of an objective. combined with other responsibilities on the project. With further training. • analysis – assess to what extent these aspects might affect the objective. The effective management of risk can only be achieved by the actions of the whole project team. The risk management process outlined in this section can be applied to any procurement route and to new build or refurbishment-based projects. risk may be managed in a more proactive manner. and • response – review what can be done to limit this effect. there needs to be an overall management strategy such that this three-step process is implemented in a co-ordinated fashion. such as Network Rail and BAA.

a construction project. analysis and response) to be adopted for a specific project or objective delivery and which states who should undertake it and when.3.3. brainstorming. Definitions for key terms used in this section are: 4. Risk management: A structured and auditable process for the benefit of all members of the project team which is dedicated to the sole purpose of controlling and mitigating uncertainty in a project.3. assessing and responding to risks associated with delivering an objective. I 4. interviews. and the focus is on commercial type risks.3 4.1. for example. should it occur.3.3. will have an effect on the achievement of the project’s objectives.3. Risk register: A document listing all the risks identified for the project.1 Risk: An uncertain event which.4 4.7 I 4.1. Risk identification: The utilisation of methods assessed as effective and appropriate (desk-top studies.2.PART 4.1. Risk analysis: An adequate and effective assessment of the individual and combined effect of identified risks on the successful delivery of the objective.1. SECTION 3 specialise in the application of risk management are advised to undertake further training in this area with a recognised training provider. Risk management plan: An auditable document which describes the risk management approach (identification.) to collate all the potential uncertainties in delivering an objective.3.3. Section 3 (05/03) . Risk response: An action to reduce either the probability of risk arising or the significance of its detrimental impact if it should arise. risk management is considered to be a process for identifying.3.6 4. Health and safety related risks are likely to need separate consideration and the Health and Safety Executive (HSE) provide specialist guidance in this area.1 Surveyors will invariably be called upon to advise clients as to whether they should undertake risk management on their project. 4.1 Definitions In the context of this section of the handbook.5 4. explaining the nature of each risk and recording information relevant to its assessment and management.1. etc.2 The rationale for risk management in the construction process 4.2 4. A risk can be measured in terms of likelihood (probability) and consequence (impact). While the benefits of risk Effective from 1/7/03 The Surveyors’ Construction Handbook Page 2 Part 4.1.1.3.

The extent of analysis necessary is related to the extent to which the cumulative effects of risks can be appreciated. The risk management process may not be at fault just because risks were realised. The Surveyors’ Construction Handbook Part 4. the direct costs of undertaking the process will be. Since risk management has a major emphasis on reducing potentially detrimental effects.3. A concern often voiced by clients is how to quantify the benefits of risk management. it is possible to ensure that clients appreciate just how sensitive their projects are to changing circumstances. such as cost and/or time overruns and/or forced compromises of performance objectives. 4.2. while moving closer to the boundaries of innovative design.PART 4. It is the very presence of risk that represents the opportunity for a building project to go ahead in the first place. There is a need for appreciation of risk not just its analysis.6 .2. together with other services provided. In this respect risk is good.3. These surprises usually result in ‘fire fighting’ and the ineffective application of urgent remedial measures.3. 15%. The desire to deliver projects cheaper and faster. should be flexible. However. if no risks were realised. without it there would be no opportunity. adapting to the circumstances of the client’s needs and the project.3.3 Risk management is not a panacea and there are likely to be times when it may not be effective to practise all its facets.2. This leads to: • increased confidence in achieving the project objectives and therefore improved chances of success.4 4. 4.3. SECTION 3 management may not be immediately apparent to clients.5 4.2. Other projects may require a full risk management service with risk being continually addressed throughout the project. THE RECOGNITION OF UNCERTAINTY By undertaking risk management. the actual impact of risk is unique to a project even though its presence may be commonplace. it is not usually politic to demonstrate its effective application as having minimised the impact of cost overrun to.2 The demands of delivering a construction project are extremely onerous.2. Some clients require a snapshot of the risks at the outset of the project. with an initial risk assessment. all increase the risk profile of a project. say. the delivery of any objective can be made more effective if the risks are fully appreciated. • ‘surprises’ being reduced. Indeed. Risk management. the effectiveness of risk assessment would be questioned because without risk there would be no opportunity. the provision of a one-off risk register and a quick estimate of the combined effect. Section 3 (05/03) Effective from 1/7/03 Page 3 4. Furthermore.

3. Section 3 (05/03) . certain principles should be understood and appropriately applied: • risk management is an awareness of uncertainty. • allocation of risk is to be gauged by the various parties' abilities to bear and control that risk. • the management of risk should not remove incentive. 4.2. SECTION 3 • identification of opportunities as risks are diminished.3. perhaps by relaxing overcautious practices such as duplicating insurances or seeking performance bonds unnecessarily. and • all risks change with time and any action (or inaction) taken (or not taken) upon them. should it be questioned.9 In summary. There are a wide range of techniques which can be utilised to facilitate effective decision making.7 JUSTIFIABLE DECISION MAKING Risk management allows decision making to be based on an assessment of known variables. this benefit alone can justify undertaking risk management. 4. Judgement can become far more objective and justification for action (or inaction) demonstrable both at the time and at a later date. • it is a communication tool. • it challenges preconceptions. rather than a single-point estimate (for example. • information about and perception of a risk are fundamental to its assessment and acceptance. Effective from 1/7/03 The Surveyors’ Construction Handbook Page 4 Part 4. • it opens up discussion on what could go wrong without fear of penalty.PART 4.2. The advantages are: • it facilitates team development. During the workshops the project team discusses its concerns and agrees a common way forward. 4. such as value management.8 TEAM DEVELOPMENT During risk management workshops a ‘snapshot’ of what might happen to the delivery of a project is taken. • risk management will add both direct and secondary benefits to the delivery of any objective.3. • awareness of uncertainty can lead to positive attributes if recognised early enough. and • it affirms the project procedures. • all ranges of parameters which might affect the project being incorporated.2. the cost for bricks can be between £200 and £300 per 1000 rather than £225). to fully realise the benefits of risk management. and • the team recognising and understanding the composition of contingencies. As with other types of facilitated workshops. • it acknowledges but transcends contractual restrictions. • complete transfer of risk is rarely wholly effective. The use of risk management provides an audit trail which can be used should problems occur during later stages of the project. thus avoiding duplicating any allowance already made.

It may seem obvious that ground 4.3. At the start of the process a risk management plan should be developed. Identification is not just undertaken at the start of the project and then simply monitored during construction. The risk management plan is similar in nature to the project execution plan and may form part of that document. RISK IDENTIFICATION The identification stage should commence as early as possible.3. This reactive response does not allow any time for identification and analysis and the right response may not always be implemented. These three steps are iterative in nature and it is this iteration which constitutes risk management. One of the key principles is that the identification of risks should be undertaken at various stages of the project life cycle.3 The risk management process There are three basic steps to the risk management process.3.3.3. The risk management process 4. most risk is still dealt with in a reactive manner where a response has to be devised and implemented as soon as the risk arises. The risk management process also needs to be integrated into the project management process.3. (a) Methodology (i) Structured identification of all sources of risk to the project The risk management process is based on the concept of providing a structured approach to dealing with risk. Since any risk management workshop or assessment is a snapshot in time. Although the process is linear it does allow for iteration and is designed to be proactive.3. preferably as part of any feasibility study for the project. the more time is available for analysis and the development of a suitable response.2 4. the process has to be undertaken on a repetitive basis.PART 4. Section 3 (05/03) Effective from 1/7/03 Page 5 .3 The Surveyors’ Construction Handbook Part 4.1 A risk cannot be managed effectively unless it is identified. analysis and response. identification. Essentially. SECTION 3 I 4. The earlier a risk is identified. Unfortunately. the risk management process should be commenced as early as possible in a project life cycle and each of the three stages repeated as necessary to effectively manage the risks associated with that project. The construction phase itself will generate new risks and the project team is expanded by new members in the form of trade contractors who can bring additional information to the risk identification process.

(b) Techniques (i) Research While exactly the same project will not have been executed before. Investigation into projects on neighbouring sites or projects previously undertaken by the client should be instigated. but how would this impact on other risks that might be identified on the project? It is this inter-relationship between risks that can only be drawn out through the use of a structured workshop and identification methods where the whole project team have the ability to contribute. Interviews allow a greater depth of understanding to be achieved than group discussions but do take up a lot of time. This is shown diagrammatically below. Several hundred risks could be identified and the team may not have time to analyse and develop responses to them all. effort is expended managing the risk rather than the effect. If the risk does occur it will affect the project. Risks are caused by background conditions which are essentially ‘givens’ e. Section 3 (05/03) Effective from 1/7/03 The Surveyors’ Construction Handbook . (ii) Structured interviews/questionnaires Interviews with key members of the project team (including client and suppliers) will elicit the greatest insight into risks to the project and how they are perceived by individuals. It is normal during the identification stage to begin by sifting and removing those risks which the team feel are not worth investigating further. something similar will have been.g. Cause. SECTION 3 conditions are one source of risk. risk and effect It is all too easy to mistakenly manage the effect rather than the risk itself. By identifying and managing the true risk. location of site. Page 6 Part 4. (ii) Preliminary analysis to establish probable major risks for further investigation The identification stage is designed to prompt team thinking and to bring out all possible risks that might impact on the project.PART 4. (iii) The true risk needs to be identified.

Section 3 (05/03) Effective from 1/7/03 Page 7 . This allows the information to be sorted into different categories. One important aspect of such workshops is that lateral thinking is encouraged. • Comments – allows notes to be kept on the risk. such as who is responsible for undertaking actions in response to the risk and by when. An example of a risk register is shown in figure 1. • Probability – how likely is the risk to occur. • Impact – what happens if the risk does occur. It enables risks to be logged and tracked through the life of a project. Finally the response to the risk can be shown. Typical column headings for a risk register are: • Risk number – a unique identifying number for the risk. (iv) Brainstorming in a workshop environment Bringing the team together in a focused workshop creates a powerful environment in which to discuss risk.3. The team can have a better understanding of how each member perceives risk differently. The example is very generic in nature and additional information may be shown. • Ownership – who is responsible for the management action in responding to the risk. The probability and impact of the risk can also be shown. An easy way to start a checklist is for each team member to write down all the variation orders on their last project. it is much more useful to use a computer spreadsheet package. • Status – the status of the risk can be shown as: – done: the risk has arisen and been dealt with.3. SECTION 3 (iii) Checklists/prompt lists A simple and effective way to stimulate the team into thinking about risk is to use a checklist. If the register is placed on a The Surveyors’ Construction Handbook Part 4. Specialist risk management software is also available which integrates the risk register with risk analysis tools. • Risk description – a written description of the risk. • Risk factor – probability multiplied by impact. (v) Risk register A risk register is probably the most useful tool in the risk management process.4(a). The risk register is a very useful format for showing a wide range of information in the risk management process. – active: the risk is currently being managed. • Response – what actions need to be taken to deal with the risk. and – monitor: the risk has been identified but no analysis or response has yet been developed for it.PART 4. The workshop gives the team an opportunity to experiment with different viewpoints which individuals might normally reject out of hand if working alone. the importance of these factors is discussed in 4. While a risk register can be maintained by hand. with the reasons for their issue.

PART 4. Section 3 (05/03) Effective from 1/7/03 The Surveyors’ Construction Handbook . SECTION 3 Page 8 Figure 1: Typical Risk Register Part 4.

The risk register allows risks to be logged but can also display additional information linked to the project management process. but these can be altered to suit the circumstances of each project. While the probability scale shown in figure 2 may be utilised for any project. In figure 1 six categories are shown. Before the risks can be entered onto the risk register. In figure 2 the cost and time impacts are shown as a percentage of the original cost and time. An indicative layout for defining scales is shown in figure 2.3.4 RISK ANALYSIS The analysis stage is concerned with trying to achieve a better understanding of the nature of the risks identified during the previous stage. a scale should be set for the probability and impact dimensions. SECTION 3 computer spreadsheet it is easy to sort the risks in a variety of ways. For each of the risks identified. for instance by category or magnitude of probability. and • impact – if the risk did occur what impact would it have on meeting the project’s objectives. for example.PART 4. but although it may save some time in the identification stage. its probability and impact should be assessed. normally in a workshop environment with key stakeholders present. Section 3 (05/03) Effective from 1/7/03 Page 9 .3. (a) Methodology (i) Analysis of risks to assess the severity of impact and the probability of occurrence Risks have two dimensions: • probability – this is the likelihood of the risk occurring and is generally expressed as a percentage. this stage cannot be completely omitted. It is also possible to place identified risks into categories. the impact scale should be set for each project. The use of categories allow risk to be bundled together and can help responses to be tailored to deal with a category. The Surveyors’ Construction Handbook Part 4. The historic database should be used as a starting point in the risk management process. ‘client control’. (vi) Database of historic risks Experience is a ‘great teacher’ and the provision of a risk register allows information to be stored in a convenient format ready for use on the next project. Setting a common scale will ensure a consistent approach to placing newly-identified risks on the matrix at a later stage in the project life cycle. rather than an individual risk. 4. Hence a very high impact would mean the cost of the project would increase by more than 50% of the original budget. The benefit of historical risk registers is that you know if a risk actually occurred and whether the appropriate response was set in place.

SECTION 3 Figure 2: Scoring of probability impact scales PROBABILITY Cost Very high High Medium Low Very Low 70% – 95% 50% – 70% 30% – 50% 10% – 30% 5% – 10% > 50% 20 – 50% 10 – 20% 5 – 10% < 5% IMPACT Time > 50% 20 – 50% 10 – 20% 5 – 10% < 5% Although time and cost impacts have been shown separately it is possible to combine them. So. This allows the right amount of resource to be Page 10 Part 4. The matrix allows each risk to be ranked and compared on an even basis. By assigning generic units to a matrix. Where resources are scarce it also allows attention to be focused on those risks which sit in the high-risk category of the matrix. Once set the scales should not be changed during the life of a project. Section 3 (05/03) Effective from 1/7/03 The Surveyors’ Construction Handbook . Once assessed. This allows risks to be compared on a common scale throughout a project and for the risk profile of a project to be accurately monitored. as shown in figure 4. as shown in figure 3. Figure 3: Example of weighting of probability and impact scales The method of having the probability scale linear and the impact scale non-linear emphasises the significance of low probability/high impact risks. indicates very quickly those risks which require detailed consideration and those which only need a cursory glance. would have a very high impact on the project and would require detailed consideration. Again. the scale should be set according to the needs of a project. or to use other criteria such as performance. A higher level of sophistication can be applied to the ranking of the risks on the probability/impact matrix.PART 4. which does occur. a risk with a high probability of occurring. the relative importance of each cell can be seen. plotting risks on to a matrix.

(b) Tools and techniques The probability/impact matrix is the easiest technique to use and allows all project team members to participate in the process via a risk workshop. The risk management strategy is to manage these risks proactively through the project life cycle. More sophisticated tools and techniques may be applied to provide a better understanding of the identified risks. Section 3 (05/03) Effective from 1/7/03 Page 11 . During later risk assessment exercises. (iii) Investigation of alternative course of actions Analysis allows for different scenarios to be developed to provide a high degree of confidence that the appropriate course of action has been chosen. the profile should show risks plotted more in the bottom right section of the matrix.PART 4. The risk ID numbers from the risk register in figure 1 have been plotted in figure 4 to demonstrate the principle more thoroughly. There are a wide range of such tools and techniques available. SECTION 3 used in managing risk. The alternative courses of action may be plotted on the probability/impact matrix to obtain a clearer understanding of their relative merits in relation to the risk profile. if most of the risks are plotted in the top left section of the matrix it indicates a high-risk project. many of which are supported by computer software packages: The Surveyors’ Construction Handbook Part 4. (ii) Synthesis of all risks to predict the most likely project outcome Risk tends to have a ‘knock-on’ effect and so it is important to consider not only the effect of individual risks but their cumulative effect as well. Figure 4: Mapping risks onto the probability/impact matrix The probability/impact matrix (figure 4) allows a risk profile for a project to be developed. For instance. This matrix is very useful for providing a graphical representation of the risk on a project.

The response will generally fall into one of the following categories: • • • • avoid.3. 4. It is not possible to provide an explanation of all the tools and techniques available. Page 12 Part 4. (a) Methodology (i) Choose the appropriate course of action The principle is to choose the right response based on available information. It might be that the response changes with time as more information becomes available. When a response is proposed. • cost movement forecast. • hard/soft money analysis. • spreadsheets. SECTION 3 • Monte Carlo simulation modelling of cost and time risks.PART 4. The next stage is to develop a response to those risks. further information can be obtained from one of the texts in the further reading section (appendix A). and • flowcharts. • linear regression. mitigate.5 RISK RESPONSE The analysis stage provides the team with a better understanding of the risks. • multiple estimate risk analysis (MERA). If the sum of the secondary risk plus the reduced risk (the original risk with the response in place) is greater than the original risk. then an appropriate response has clearly not been identified and an alternative should be found. • spider diagrams.3. • ‘what if?’ analysis. An important point to consider when developing responses concerns the generation of secondary risk. • decision trees. • multi-decision criteria analysis. Section 3 (05/03) Effective from 1/7/03 The Surveyors’ Construction Handbook . its full implications should be assessed to ascertain if a secondary risk arises out of implementing the response. • simulation packages. • influence diagrams. However. transfer.. and control. • sensitivity analysis.

the risk may still occur. For instance. resource levelling. All responses to risks that are put in place should be managed. forms of contracts. special cost schedule allowance. contingency plans. This should form part of the project management system. for example: • contract acquisition plan. and • project controls. although most surveyors would consider it to be common project procedure. regardless of how well it has been identified and analysed. Unless responses are effectively managed. Until a response is actioned. SECTION 3 Figure 5: The creation of secondary risks (b) Tools and techniques The techniques available are primarily integrated with the project management process. The tools available are not usually related purely to risk management. the whole risk process fails. This is a risk management tool. Section 3 (05/03) Effective from 1/7/03 Page 13 . earned value analysis. This is a risk management response designed to reduce clients’ exposure to claims for damages if a particular incident were to occur. contingency drawdown models. most surveyors would recommend to their clients that the contractor has third party insurance for the project. The Surveyors’ Construction Handbook Part 4. Typical tools available are: • • • • • • • • insurances/bonds/warranties. and training. • contingency management.PART 4.

SECTION 3 I 4. the key components of a risk management strategy are: • identify staff and resources assigned to the risk management process. • assess cost involved. • include risk milestones in project plan. • link the risk management plan to other project tools such as safety (including CDM). • identify possible response strategies and programmes for each risk category including contingency plans and how to handle new or unresolved risks. quality and environmental management. Section 3 (05/03) Effective from 1/7/03 The Surveyors’ Construction Handbook .3. • define lines of reporting and responsibility for the risk management process. Page 14 Part 4. • state risk audit intervals and key milestones. • consolidate all risks identified into an appropriate and digestible response strategy in order that cumulative effects can be perceived. and • monitor success of responses strategies and produce feedback for reporting into future projects.4 Summary In conclusion. and planning and reporting systems.PART 4.

C. Risk Management and Construction. Practical Risk Management in the Construction Industry. Managing Risk in Construction Projects. et al. London. M. 1999 (ISBN 0 85406 990 9) Akintoye.. and Ward. Chichester... Laxton’s Guide to Risk Analysis and Management. London. Project Risk Management: Processes. CIRIA. et al. Blackwell Science. S. 1996 (ISBN 1 85609 120 1) BSI. 2000 (ISBN 0 580 33122 9) Chapman. Section 3 Appendix A (5/03) Effective from 1/7/03 Page 1 . Public Private Partnerships: Managing Risks and Opportunities. Oxford. APPENDIX A Appendix A: Further reading Akintoye. A. London. and Norman. SECTION 3. Thomas Telford. Guide to the Management of Business Related Project Risk (BS 6079–3:2000). British Standards Institute. 2003 (ISBN 0 63206 465 X) Boothroyd. Oxford. 1996 (ISBN 0 86017 441 7) Smith. P. C..PART 4. J. et al. 1993 (ISBN 0 63202 816 5) Godfrey.. A. 1998 (ISBN 0 63204 243 5) Taylor. 1996 (ISBN 0 75062 973 8) The Surveyors’ Construction Handbook Part 4. 1995 (ISBN 0 72772 064 3) Flanagan. L. Techniques and Insights. Royal Institution of Chartered Surveyors. Oxford. London.. Risk Management: a Practical Guide for Construction Professionals. 2000 (ISBN 0 63205 326 7) Tweeds. John Wiley and Sons. Blackwell. Blackwell Scientific Publications. R. et al. Avoiding Claims in Building Design: Risk Management in Practice.. Laxton’s/Butterworth-Heinemann. Project Management. Local Authority Risk Management and the Private Finance Initiative. London. Oxford. Blackwell Science. Witherby Publishing. Control of Risk: a Guide to the Systematic Management of Risk from Construction (SP125). S.. N. 1997 (ISBN 0 47195 804 2) Edwards.. G. Oxford.

Section 4 (05/00) Effective from 1/7/00 Page 1 . The purpose of valuations is to provide advice to the certifier on a construction project (usually the architect) for the issue of interim certificates.4. the method and procedure of the interim payment which the contractor receives is equally as important. I 4. employers and contractors must operate. The Surveyors’ Construction Handbook Part 4. whilst the completion and calculation of the value is important. works which may take many months or years to complete. not the work done since the last certificate was issued. The valuations should be treated almost as ‘mini final accounts’ as they generally reflect all the matters and items which appear in a final account. The certificates issued by the certifier to the contractor are then presented by the contractor to the employer who pays the contractor on an interim or instalment basis. This is in order to relieve the contractor of the burden of financing the whole of the works until completion. S ECTION 4 PART FOUR: CONSTRUCTION ADMINISTRATION AND MANAGEMENT SECTION 4: VALUATIONS FOR INTERIM CERTIFICATES Introduction Many construction projects require interim payments to be paid to a contractor. the timing of these payments and the administrative rules under which quantity surveyors. This section of the handbook provides guidance to surveyors carrying out such valuations.1 Valuations An interim valuation involves a revaluation of the whole work. Within each contract there will be clauses which set out the criteria under which interim payments will be made. A low valuation creates unreasonable financial problems for a contractor whereas a high valuation creates a risk to the employer of paying sums for which he or she obtains no benefit. In many contracts.PART 4. The valuation must be a realistic assessment. Interim valuations may now be subjected to the same scrutiny as final accounts as they may be the subject of adjudication provisions in contracts and per se are required to be compiled with care. architects.

Section 4 (05/00) Effective from 1/7/00 The Surveyors’ Construction Handbook . The quantity surveyor carrying out the valuation must be aware of the overall position of any valuation within a project. for example temporary works. This action is particularly valid towards the end of the contract. It is recognised that there are differing methods of procurement and differing forms of contract being used.2 Assumptions It has been assumed throughout this section of the handbook that the interim valuation by the quantity surveyor is provided for the benefit of an architect: the person who certifies the amount of the valuation to the employer. to assess what remains of the anticipated final contract value after each valuation and ensure that within the terms of the contract this will be adequate to complete the works. A basic checklist of actions necessary for practicing quantity surveyors is provided below. S ECTION 4 The quantity surveyor’s purpose is to assess value as distinct from cost. However. This contract is only intended for use where the client has engaged a professional consultant to advise on and to administer its terms. This section has been prepared from the standpoint of a quantity surveyor acting for an employer. Therefore.4.2. 4. 4. particularly with reference to prices of certain items. Page 2 Part 4. Under JCT contracts that person is normally the architect but could be referred to as the contract administrator. it should be noted that any specific directives within the quantity surveyor’s own organisation (such as those within quality assurance schemes) should supplement this advice. this section is based on the JCT Standard Form of Building Contract With Quantities 1998 (JCT 1998 With Quantities).2. However.1 JCT FORM OF CONTRACTS Most quantity surveyors carry out interim valuations under a JCT Form of Contract.4. The guidance in this section is equally relevant to a quantity surveyor acting for a contractor who will be required to produce valuations in similar circumstances to that of a quantity surveyor acting for an employer.2 ROLE OF A QUANTITY SURVEYOR PAYMENTS IN CARRYING OUT VALUATIONS FOR INTERIM This section of the handbook assumes that the quantity surveyor has normal terms of appointment and the relative roles of the quantity surveyor carrying out a valuation for an employer under a normal JCT contract. I 4.PART 4. the principles set out here will remain valid.4. assuming normal terms of appointment. Variations required for different contract terms will be noted later.

Clause 30. or circumstances in which. The client as used in JCT 1998. S ECTION 4 4. Section 110 of the Act states that every construction contract shall provide an adequate mechanism for determining what payments become due under the contract and provide for a final date for payment in relation to any sum which becomes due.4. In JCT 1998 With or Without Quantities the contractor is assumed to be a main contractor who may be asked to employ nominated sub-contractors or request permission to sub-contract portions of work to domestic sub-contractors. Architect Employer Contractor 4.1 states that.4. a contract administrator.4 LEGISLATION The requirement to provide stage or interim payments is now contained in the Housing Grants and Reconstruction Act 1996 where it is stated in Section 109 that. JCT 1998 With Quantities contains the right of the contractor to interim payments at clause 30 (Certificates and Payments).PART 4.2.. issue Interim Certificates The Surveyors’ Construction Handbook Part 4. if the local authorities version of the JCT contract is used.3 Valuation Under a JCT Contract: Background The current JCT contract (and the one referred to in this part of the section) is the JCT Standard Form of Building Contract With Quantities 1998 (JCT 1998 With Quantities). stage payments or other periodic payments for any work…’ Parties to the contract are free to agree the amounts of the payments and the intervals at which.3 DEFINITIONS Quantity Surveyor This refers to a valuer acting independently for an employer and carrying out a valuation under a JCT 1998 contract. ‘A party to a construction contract is entitled to payment by installments. I 4. In this section the quantity surveyor may be a quantity surveyor acting for an employer or a quantity surveyor acting for a contractor. ‘The Architect shall from time to time .2. Section 111 states that a party to a construction contract may not withhold payment after the final date for payment of a sum due under the contract unless an effective notice of intention to withhold payment has been given. Section 4 (05/00) Effective from 1/7/00 Page 3 . they become due.1..4. This generally refers to an architect acting for an employer or.1.

Under clause 30.’ Clause 30. Note whether there are any ad hoc amendments made to the standard form of contract that have a bearing on interim certificates. S ECTION 4 stating the amount due to the Contractor from the Employer specifying to what the amount relates and the basis on which that amount was calculated.2 states how the amounts due in an interim certificate are to be ascertained.4.PART 4. Clause 30. Clause 4.13 it is stated that the architect shall direct the contractor as to interim payments to nominated sub-contractors. The employer has to advise the contractor of the amount which he or she is due to be paid and the amount of.4.1. ‘shall make an interim valuation’. G 4.17 of the JCT 1998 Nominated Sub-Contract Conditions (NSC/C).4 Recommended Action at the Start of a Contract 4.4.1 states. (ii) (iii) Page 4 Part 4. in response to the contractor’s submission. Clause 30.1 CONTRACT REQUIREMENTS (i) Check that the architect requires regular valuations for interim certificates and refer to the contract for the frequency. Section 4 (05/00) Effective from 1/7/00 The Surveyors’ Construction Handbook .1 allows the contractor to submit an application for payment to the quantity surveyor which should set out what the contractor considers to be the amount of the gross valuation. The ascertainment of amounts due to nominated sub-contractors are calculated in accordance with clause 4. It follows that any interim valuation prepared by the quantity surveyor should follow the same method as that for an interim certificate.17 contains step-down provisions similar to clause 30.2.1. The quantity surveyor. and Prepare a job progress chart and cash flow forecast ready for checking against the value of work completed at successive valuations.1 also sets out a timescale for payment and the right of the contractor to interest if the timescale is not adhered to by the employer. any deduction to that payment.1.3 the dates for the first and subsequent interim certificates are set out in the Abstract of the conditions. In clause 35.2 of JCT 1998 With Quantities and the works of nominated sub-contractors are assessed in the same manner as that of the main contractor. Clause 30. and reason for.2. ‘Interim valuations shall be made by the Quantity Surveyor whenever the Architect considers them to be necessary for the purpose of ascertaining the amount to be stated as due in an Interim Certificate’. It is essential that the quantity surveyor makes and issues a valuation even if the interim payment calculation is zero.

establish which preliminaries are one-off expenditure items and which are related to time or to value of work done. Confirm the programme of valuations and certificates with the architect. Stipulate that the provision of the contract for submitting daywork records (clause 13.3 GENERAL ADMINISTRATION (i) Obtain a breakdown of preliminaries from the contractor (if not previously supplied). Note any adjustments to the contract price made in the summary of the bills of quantities or elsewhere.PART 4.4.5 Communications 4.4. and Check whether the employer requires valuations to be built up under various headings.3 of this section. S ECTION 4 4.4. If not already detailed.4. and Agree the basis on which preliminaries and sums in adjustments to the tender (and/or in the correction of errors) will be incorporated into valuations. Section 4 (05/00) Effective from 1/7/00 Page 5 . daywork sheets and other supporting information.5. and that your own records will be kept.5. and Calculations made in the course of the interim valuation should be set out in a clear form and retained for future reference. Where there are to be fluctuations. Any details which are applicable to the final account should be collected together as a running record. with the items in the summary of the bills of quantities. (ii) (iii) The Surveyors’ Construction Handbook Part 4. (ii) (iii) (iv) (v) G 4.9.1 PRELIMINARY DISCUSSIONS WITH THE CONTRACTOR (i) Agree with the contractor the programme of valuations decided with the employer.4. refer to 4.4.4) must be seen as representing the latest permissible time for submission. (ii) (iii) 4. similarly. Arrange a procedure for the receipt and verification of invoices.2 EMPLOYER’S REQUIREMENTS (i) Check that the programme of valuations and certificates matches the employer’s programme of payments. in line with the employer’s arrangements for payment.4. Remind the contractor that you will be keeping/organising a close watch in the monitoring and checking of daywork and labour returns.

contractor’s and architect’s requirements. Remind the architect that he or she (or authorised deputy) has responsibility for verifying daywork.PART 4. therefore.4.) that diligence and accuracy in checking on resources used is crucial and that. and Arrange with the clerk of works to receive his or her labour record (which is required for checking wages fluctuations).6. or by the consultant (vetted by you) in the case of specialist work where a specialist consultant is appointed). he or she must keep a reliable daily record. 4. Obtain the architect’s agreement that you set up this procedure.3 PRELIMINARY DISCUSSIONS WITH THE NOMINATED SUB-CONTRACTORS (i) Inform the nominated sub-contractors of the valuations programme and make arrangements for the valuation of their work (the evaluation to be made by you.4. ready for measurement.4 PRELIMINARY DISCUSSIONS WITH THE CLERK OF WORKS (i) Impress on the clerk of works (or site engineer or any person to whom the responsibility has been given to record contractor’s resources. time.5. grouping as that required for fluctuations). trades) may well determine the order of sections that best suits the contract basis (for example. Inform him or her that you will be visiting the site to make spot checks unannounced. and for measured works.5.2 PRELIMINARY DISCUSSIONS WITH THE CONSULTANTS (i) Provide the consultants responsible for preparing valuations for specialist work with details of the interim valuations programme and agree deadlines for the consultants submission to you. S ECTION 4 4. Request that you are notified of all items of work likely to become hidden so that you can ensure that records are made. (ii) 4.4. The format for the valuations will be suited to the particular project.4. and Arrange with the architect a detailed procedure for recording the contractor’s resources on site. separate buildings. Acquaint the clerk of works with the valuation dates programmed. materials.1 METHOD (i) The method of approach for preparing the valuations should be determined by the quantity surveyor after consideration of all the employer’s. (ii) (iii) G 4.6 Approach 4. plant. etc. Effective from 1/7/00 The Surveyors’ Construction Handbook (ii) Page 6 Part 4. elements.4.5. Section 4 (05/00) . including briefing and controlling the clerk of works in this respect. the format of the bills of quantities (for example.

6. and The quantity surveyor should ensure that backup information and documentation which he or she requires from the contractor is available in time for each valuation.PART 4. The format in which the contractor presents his or her valuation should be agreed in the same manner as detailed earlier in 4. When the valuation is complete. in normal circumstances. the quantity surveyor should note first in general terms the position of the particular valuation in relation to the overall project and the progress that has been made relative to the forecast of payments. and (iii) The contractor has the opportunity when submitting his or her valuation to include with it all the relevant documentation. However. it is necessary for the quantity surveyor to respond to the contractor’s submission in the same detail as that used by the contractor. (iv) 4. there is no requirement for the contractor to use an agreed format.4. It is also necessary to assess the materials on site for incorporation in the works. secondly. S ECTION 4 (iii) In approaching each valuation. The details and quantities should be checked.1 and 4.6.4. (ii) The Surveyors’ Construction Handbook Part 4. Section 4 (05/00) Effective from 1/7/00 Page 7 .4. First.6. sufficient calculations should be supplied to the contractor in order for him or her to understand how the valuation was calculated.4.2 CONTRACTOR’S SUBMISSION (i) The JCT 1998 With Quantities allows the contractor to submit an application for payment to the quantity surveyor. Agreement should be made with the contractor at the outset of the contract that he or she must submit this documentation at the same time as his or her valuation. to assess the various aspects of the valuation in detail. be pre-agreed. Whilst the format which the contractor uses will.5.3 SITE VISIT (i) It is important (and necessary) to visit the site of the works. It is good practice for the contractor to be in attendance when the quantity surveyor is carrying out the valuation so that most of this information will be known to him or her. (ii) 4.6.4.1 of this section.4 DETAIL OF VALUATION (i) It is important to detail the calculations made to assess the interim valuation and to retain these calculations for future reference. 4. to assess the overall progress of the works and.

This assessment will normally be carried out using rates within the bills of quantities.7.2.1 of the contract. allowing for the location of the work and for inflation if it is a fixed price contract. (iv) G 4.4. Include an assessment of the work properly executed using rates within the bills of quantities.4.4. S ECTION 4 (iii) It is important for the contractor to be aware of these calculations. where the item is only partially executed. Section 4 (05/00) Effective from 1/7/00 The Surveyors’ Construction Handbook .1. and If the contractor has made a submission under clause 30.7 Content of a Valuation 4. adjustment to the rates will be necessary having due regard to the location and circumstances of the work. particularly the calculation of the amounts in respect of work which he or she has sub-contracted. Consider whether an adjustment shall be made to the rates where the item is partially executed.PART 4. the contract as measured either in bills of quantity format or schedules.1 A valuation is likely to consist of the following elements (although not all of these elements will be found in every valuation): Work Executed Measured Work Approximate Quantities Preliminaries Sub-Contracts – Nominated Sub-Contracts – Domestic Suppliers Variations Dayworks Materials – On Site Materials – Off Site Fluctuations Loss and Expense Special Payments Deductions 4.7. or descriptions of work items. Page 8 Part 4. subsequently. However.2 WORK EXECUTED (a) Measured Work Work under this category relates to work included in the tender documents and. the quantity surveyor must respond to the contractor’s submission in the same detail as was supplied by the contractor.

(e) Sub-Contractors – Domestic Under JCT 1998 With Quantities the contractor is permitted to sub-contract with his or her own choice of sub-contractor (defined as domestic subcontractors in the contract). Section 4 (05/00) Effective from 1/7/00 Page 9 . S ECTION 4 (b) Approximate Quantities During the construction the quantity surveyor should take regular measurements in respect of work for which there is an approximate quantity in the bills. They should not be included with the main contractor’s value headings. the quantities for these items will be up to date and available for valuations. The quantity surveyor must ensure that the detail and information provided from this source is in the terms of the main contract and not the values which occur in the contract between the contractor and domestic sub-contractor as these values may be different. (d) Sub-Contractors – Nominated The work carried out by nominated sub-contractors should be assessed in the same way as the main contract works. work carried out in a project by domestic sub-contractors may comprise a substantial proportion of the whole of the works.4. Assess items which are related to value.PART 4. including those items which appear in the summary of the bills of quantities. running and removal costs where appropriate. The Surveyors’ Construction Handbook Part 4. The work represented in the categories Measured Work and Approximate Quantities. Consider adjustments where the contract is behind schedule. The rates for the work are contained in the bills and adjustments made in valuations as described in 4. If measurements are taken regularly.3 (i)) include one-off payment items as circumstances dictate.2 (a) for partially completed work. Preliminary items should be further divided into set-up. (c) Preliminaries From the detail of preliminaries items (see 4.4. The contractor will provide the quantity surveyor with documentation from the domestic sub-contractor as part of his or her substantiation of the valuation. or to check against the contractor’s submission.4.7. Assess time-related items in relation to the programme. However. together with Variations to Special Payments are equally applicable to nominated sub-contracts and should be considered as part of the nominated sub-contract work values.

Instructed to be carried out and to be evaluated in terms of the contract – the variation must be evaluated in terms of the contract (clause 13) and the rules are set out in that clause. can be dealt with as for pre-agreed items. • Agreed in terms of price but not in terms of effect on the contract.3 VARIATIONS It is not possible to cover all the required information on variations within this section.4. Items pre-agreed in all facets – for the purposes of valuations items in this category are easily dealt with by following the rules for valuation under Work Executed. In an ongoing situation the contractor will be basing his or her level of recovery on the amount which he or she is having to pay out and for an interim valuation the quantity (ii) (iii) Page 10 Part 4. having been agreed. Remember. Items agreed in terms of price but not in terms of effect on the contract – the price for work in this category. All variations should be identified in the quantity surveyor’s valuation in a separate section so that they can be easily identified. the contractor will be seeking to maximise his or her interim recovery in respect of the item until final agreement is reached. Invoices confirming the values should be obtained and the relevant discounts checked. • Instructed to be carried out and to be evaluated in terms of the contract. The quantity surveyor must seek agreement with the contractor for the way in which any variation is accounted for at an early stage. • Items identified by the contractor as variations but not instructed by the architect at the time of valuation. 4. S ECTION 4 (f) Suppliers The value of goods on site supplied by nominated suppliers should be included at the rates stated in the nomination.PART 4. Section 4 (05/00) Effective from 1/7/00 The Surveyors’ Construction Handbook .7. The valuation of variations is described in clause 13 of the Conditions of Contract. variations have been categorised in accordance with the following: • Pre agreed – where the variation has been agreed both in terms of content price and time before being instructed. However. The quantity surveyor has to seek further information from the architect and contractor regarding effect on contract. There may be no easy answer in respect of this item. It is relevant to keep the variation items separate even if the work within the variation is the same as that within Measured Work. For simplicity. the following simple rules should be followed: (i) Only variations properly instructed under the terms of the contract should be included in a valuation.

The quantity surveyor should be aware of the content of any price statement before including it in an interim valuation.5 MATERIALS – ON SITE Include materials on site in accordance with the provisions of clause 30. Value materials at current rates where it is a fixed price contract under clause 38.PART 4. (iv) Clause 13A quotation When the architect issues a variation instruction it is at the employer’s option to ask the contractor to submit a clause 13A quotation on the premis that after a suitable timescale the instruction may not be ratified and thus falls. a clause 13A quotation becomes an instruction with an agreed price for the scope of work represented by that instruction. 4.5 of the contract and then. which the contractor is free to adopt. If dayworks are to be included.1. A price statement may include loss and expense or the price may be accepted without an assessment of the effect on the contract. when the work related to the instruction is being carried out.4.2 of the contract. The Surveyors’ Construction Handbook Part 4. is for the contractor to submit a ‘price statement’ within a prescribed timescale. if the price statement is accepted.2.7. appropriate amounts will be included in interim valuations. invoices.4 of the contract and verified by the architect. check that the percentage additions to prime costs are in accordance with those quoted in the contract documents. the instruction is evaluated in the normal way. so that he or she can make a judgement using the same information. If accepted.4. Care should be taken by the quantity surveyor when including the value or part of the value of the clause 13A quotation in an interim valuation as it may include loss and expense as part of the evaluation of the variation instruction. etc.4 DAYWORKS Include dayworks only if they are prepared in accordance with clause 13. Contractor’s price statement – an alternative to evaluation of an architect’s instruction or of an approximate quantity. 4. If the price statement is not accepted. Section 4 (05/00) Effective from 1/7/00 Page 11 . The contractor’s price in this statement must be based on the provisions of clause 13.7. S ECTION 4 surveyor should seek from the contractor the same information. together with the cost of preparing the quotation.5.

1 of the contract states that the property in uniquely identified listed items must be demonstrated by the contractor to the architect to be vested in the contractor. Clause 30.3.8 LOSS AND EXPENSE Loss and expense may be included within an interim valuation. the quantity surveyor should ensure that all the relevant conditions have been met before including the value of the materials or goods in the interim valuation.7.10 (e)). Page 12 Part 4. 4. 4. 4. The quantity surveyor may be asked by the architect to view and assess the materials off site. The basis of the loss and expense in a contract must be established before any monies are included in an interim payment.4. The means by which the contractor supplies ‘reasonable proof’ of ownership is explained by a special note in the guidance notes which accompanied the publication of Amendment 18 to JCT 80 (see Appendix B of this section of the handbook). S ECTION 4 Value materials at base rates where it is a fluctuating price contract under clause 39. if appropriate (see 4.4.3 of this section of the handbook (or deducted. A bond (details of which are set out in Annex 1 to the appendix to the contract) is provided by the contractor if required by the contract.4. Value materials at current rates where it is a fluctuating price contract under clause 40.7. Section 4 (05/00) Effective from 1/7/00 The Surveyors’ Construction Handbook .4.7.7 FLUCTUATIONS Where there are to be fluctuations these should be added as described in 4.7.4.6 MATERIALS – OFF SITE The value of materials or goods intended for the works but stored off site are not included in interim valuations except those which were noted as ‘the listed items’ prior to the contract. Where the items listed are not uniquely identified the contractor must provide evidence of vesting. Clause 30.4 sets out the conditions under which the materials are to be stored before payment is included in a valuation.3.7. If so.PART 4.

1 insurance (which is a joint insurance indemnifying against injury or damage to adjoining buildings which are not the property of the employer) are included in interim valuations.2: Statutory fees and charges – fees and charges detailed in this clause shall be added to the contract sum only under the conditions outlined in clause 6. 4.1: Insurance – the premiums incurred by the contractor to affect 21. For retention at practical completion or partial possession see 4.4.PART 4. The Surveyors’ Construction Handbook Part 4.1 clarifies the items. S ECTION 4 4.7.9 SPECIAL PAYMENTS Within the terms of the contract there may be other costs which are required to be added into the valuation.10(c) below. assumes that all work completed is in accordance with the contract.7. Examples of special payments include: • Clause 6.2. (b) Work not properly executed The architect should advise the quantity surveyor in writing of work which. is not in accordance with the contract. Fluctuations is generally subject to retention. Retention is applied in terms of the contract. Clause 30.4 sets out the rules for ascertainment of retention and clause 30. although having been carried out. The items described in the categories Work Executed to Materials – Off Site are subject to retention.4.10 DEDUCATIONS (a) Retention Retention should be deducted from the gross valuation at the rate stated in the contract. together with making good. • Clause 8. in compliance with the architect’s instructions. • Clause 21. these royalties are added to the contract sum.4. Section 4 (05/00) Effective from 1/7/00 Page 13 .2: Royalties – where. Loss and Expense is excluded from the retention calculation. The value in the contract for this work should not be included within an interim valuation. It therefore follows that he or she must then deduct the value of work which is not. and the items detailed in Special Payments (statutory fees and charges) are not subject to retention.2. The quantity surveyor.2. • Clause 9. The gross valuation is calculated in the total derived in the categories referred to above (Work Executed to Special Payments). when compiling his or her valuation.2. is to be added to the contract sum if the tests show that the works or materials being tested are in accordance with the contract. the contractor is liable to pay royalties or other monies for patent rights.7.3: Inspection and tests – the cost for this work.

Retention held at interim valuations is partially released at practical completion of the works and where the employer takes partial possession of part of the works. etc. For additional information please see 4. The previous two paragraphs assume that. Clause 30.3. the amount previously certified should be deducted. and the quantity surveyor should ignore the amounts paid. Section 4 (05/00) Effective from 1/7/00 The Surveyors’ Construction Handbook . the amount of the advance will be stated in the appendix to the contract. shrinkages. However.1. a deduction may be made under clauses 17. However. (d) Advance payments (This item does not occur in the local authority version of JCT 1998 With Quantities) If an advance payment has been made to the contractor. (e) Fluctuations Where the operation of the fluctuations clauses and the subsequent calculation indicates a reduction. It is important to check the amount certified by the architect and not to assume that the amounts within the quantity surveyor’s previous valuation have been used.2 the work not in accordance with the contract may be accepted by the architect and a reduction in value allowed for it. the work will require to be redone or amended in accordance with the contract. under clause 8.4.9 below. in deducting for work which is not in accordance with the contract. (c) Amounts previously certified Although it may be obvious.3 of the contract refers to this. S ECTION 4 The quantity surveyor should compile a list of the work and values deducted and include the list with the notes passed to the contractor. The quantity surveyor’s valuation should refer to the total value to that proscribed date less the amount certified by the architect. if defects.4. payment to the contractor by the employer as distinct from certification by the architect is a different matter. Page 14 Part 4. a deduction will have to be made to the valuation. The amount of the advance will be reimbursed to the employer in the amounts and at the times stated (this is also stated in the appendix).2 and 17. In a similar manner.PART 4. Payment to the contractor is determined by the employer. This reduction will be shown as a deduction to the valuation. are not made good.4.

it is prudent for the quantity surveyor to provide additional detail of the valuation to the architect than is required by the contract terms. S ECTION 4 (f) Errors in setting out Under clause 7 of the contract. A deduction may be made to the contract in lieu. under clause 30.1 of the contract.4. the architect.2 COVERING LETTER When making his or her recommendation for payment.8. Section 4 (05/00) Effective from 1/7/00 Page 15 .4. if errors have been made in setting out. An appropriate deduction is made but kept separate from that of the main contractor. The Surveyors’ Construction Handbook Part 4. One way for the quantity surveyor to achieve this additional detail is for the quantity surveyor to use in his or her advice.3 above.17. As indicated in 4. The use of a standard form.6. Whilst the same wording is not used in the contract in the context of the quantity surveyor issuing a valuation to the architect. 4. G 4. the rules apply equally to the work of nominated subcontractors.8 Administration 4. if not detailed separately (as described in 4.4.8.3) Where work has not been properly executed.1. (g) Nominated sub-contracts (clause 4. the quantity surveyor should state the basis of his or her calculations in a covering letter to the architect.7.4. as stated in 4.4.1(b) above.1 above) or on the valuation form.1 GENERAL The quantity surveyor should ascertain the way in which the architect requires the valuation and whether any additional explanation and information is to be provided at the time of valuation. must specify to what the amount of the certificate relates and the basis on which that amount was calculated. a similar format that is used in the example in Appendix C of this guidance. The architect may well require this additional detail when explaining the content of the certificate to the employer.PART 4. such as that issued by the Royal Institution of Chartered Surveyors (RICS) for interim valuations is recommended. when issuing the certificate to the employer.4.1. these errors may not be amended (at the sole cost to the contractor). This covering letter would need to include a statement on the authority for part release of retention and details of defective works not included in the valuation.

but it is advisable to mention the matter in the letter. check that basic prices of materials goods.9. where there is a provision for liquidated damages to be applied at the rate included in the contract. the quantity surveyor may be required to advise of the amount of liquidated damages for which the contractor is liable.2 LIQUIDATED DAMAGES The application of liquidated damages affects payments to the contractor.1 DETERMINATION OF SUB-CONTRACTOR THE EMPLOYMENT OF A CONTRACTOR OR NOMINATED There are special provisions relating to valuations in the case of a determination of the employment of a contractor (or of a nominated subcontractor) under the Conditions of Contract. whether nominated sub-contractors have all received their payments under previous certificates.3 FLUCTUATIONS The contract will state the basis of adjustment: whether there is to be detailed cost recovery (clause 38 or 39) or the use of price adjustment formulae (clause 40). It is prudent to remind the architect that he or she is to adjust the recommended figure if there are further works or unfixed materials that are not acceptable to him or her. when issuing valuations the quantity surveyor should advise the employer and/or the architect of the amount of liquidated damages for which the contractor is liable and continue to advise thereafter. electricity and fuels have been agreed.4. Section 4 (05/00) Effective from 1/7/00 The Surveyors’ Construction Handbook . Note any imported Page 16 Part 4. for example.9.PART 4. 4. S ECTION 4 In a letter advise the architect whether all the work executed is included in the valuation (the quantity surveyor may have been instructed to exclude specific items).9 Special Situations 4. The detail of the requirements for valuations are to be found in clause 27 of the contract and will depend on the circumstances of the determination. advise the architect in respect of matters regarding previous valuations. G 4. • On there being an appropriate certificate issued under clause 24 of the contract.4.4. Where detailed cost recovery is to be the basis. 4.9. Where appropriate. Advice to the employer and the architect should include: • In a contract. but it is generally not an element of a valuation which should be included (or amounts deducted) by the quantity surveyor.4. each time stating the amount. The wording of the RICS standard form at note (iii)(a) refers to this point.

4. Section 4 (05/00) Effective from 1/7/00 Page 17 .10. This analysis may then be used for interim valuations.1 states how the value of work in an activity schedule is to be included in an interim valuation.4. The valuation of work instructed under this method may be dealt with by reference to the other sections.10. S ECTION 4 goods which will be subject to currency fluctuations. Clause 30. If stage payments were included in the contract for all or part of the works.2 PROVISIONAL SUMS Provisional sums are expended on the written orders of the architect.1.PART 4.10. 4. The contractor is required by the contract to supply an analysis of the portion of the contract sum to which the performance specified work relates.4.10 Other Contract Terms (relative to valuations) 4.10.2.4 STAGE PAYMENTS In clause 30. as this method requires. 4. 4.2 the contract allows the parties to agree to stage payments.1 PRIME COST SUMS Prime cost sums are expended on the written orders of the architect in respect of nominated sub-contractors or nominated suppliers.4.4. If fluctuations are to be dealt with by the price adjustment formulae method. A separate section of the quantity surveyor’s interim valuation should be created for all work carried out under the expenditure of prime cost sums. An example of an activity schedule issued by JCT is included in Appendix C of this section of the handbook. The stage payment will be included in valuations when the scope of work to which the stage payment relates has been completed and so indicated by the architect.5 ACTIVITY SCHEDULE An activity schedule may be included in the contract.3 PERFORMANCE SPECIFIED WORK JCT 1998 With Quantities allows for performance specified work which shall not be carried out by nominated sub-contractors or nominated suppliers. 4. agree with the contractor the allocation of bill items to categories. G 4. A separate section of the quantity surveyor’s interim valuation should be created for all work carried out under the expenditure of provisional sums. the values for these parts or sub-portions have been pre-agreed.10. The Surveyors’ Construction Handbook Part 4.4.

The guidance provided in this section will apply equally to the JCT Without Quantities edition. When using computers to transfer the valuation.11. the Local Authority editions. This is useful where invoices and the like require to be transferred.PART 4. The simplest form of electronic communication is by fax machine and the use of this is now widespread.6 ELECTRONIC DATA INTERCHANGE (EDI) Annex 2 of the contract allows for an agreement between the parties in respect of the exchange of communications by electronic means.1 OTHER JCT CONTRACTS In general terms other JCT contracts will have the principles set out here applied although the detail may be different.11 Valuations Under Other Forms of Contract The principles and procedures set out in this section for valuations carried out under JCT 1998 With Quantities will largely be pertinent to other forms of JCT contract. in general terms.11.2 OTHER FORMS OF CONTRACT Contracts issued by other bodies will. The transfer of information through computers does not generally provide ‘copies’ of material to the recipient unless the original material was scanned into the computer.4. have the principles set out here applied although the detail may be different. It would appear to be prudent that when EDI is being set up at the outset of the contract the ‘rules’ for interim valuations should also be set out clearly. Page 18 Part 4.4. Information is simply reproduced by a fax and the recipient receives a copy.4. 4.4. S ECTION 4 4. together with forms of contract produced by other bodies. I 4. Therefore. Section 4 (05/00) Effective from 1/7/00 The Surveyors’ Construction Handbook .10. backup care should be exercised where originals or copies of invoices and the like are required to be provided. The Code of Practice for Electronic Data Interchange states that parties proposing to contract on terms which expressly give administrative or other responsibilities to third parties should not adopt EDI in connection with that contract without the agreement of those third parties. and these forms used with the sectional completion supplement and with the contractors designed portion supplement. 4. interim valuations can be communicated by such means.

Contract Administration for the Building Team. Section 4 Appendix A (05/00) Effective from 1/7/00 Page 1 . A PPENDIX A Appendix A: Further Reading JCT. 1997 The Aqua Group. Macmillan Press Limited. S ECTION 4. Basingstoke. Practice Note 26 (’94) Valuation and Certification for Interim Payments including Variation. 1996 The Surveyors’ Construction Handbook Part 4. London.PART 4. I. RIBA. London. 1994 Seeley. Quantity Surveying Practice.H. Blackwell Science.

notwithstanding the provision of such reasonable proof. A PPENDIX B Appendix B: JCT Definition of ‘Reasonable Proof’ 1. Where the listed items are manufactured or assembled by any sub-contractor. the Contractor should give the Architect a copy of the written contract of sale applicable to the listed items. S ECTION 4. The statement of the supplier should also say that the supplier's property in the listed items is not subject to any charge or encumbrance which would prevent the passing of the property unconditionally to the Contractor after fulfilment of all the relevant terms of the sale contract with the Contractor. it transpires that the property in the listed items is not vested in the Contractor the risk of having paid for listed items for which the Contractor cannot give a good title to the Employer is with the Employer. Section 4 Appendix B (05/00) Effective from 1/7/00 Page 1 . the Contractor should give the Architect a copy of the written sub-contract with the sub-contractor which should expressly state the conditions that have to be fulfilled before the property in those listed items passes from the subcontractor to the Contractor. Clause 30.PART 4. 3. in the amount stated as due in an Interim Certificate. and a written statement from the sub-contractor that any conditions in that sub-contract that must be fulfilled before the property passes to the Contractor have been fulfilled.3 if the proof provided of the Contractors ownership is as water-tight as possible. and a written statement from the sub-contractor that any conditions in that sub-contract that must be fulfilled before the property passes to the Contractor have been fulfilled. 2. of the value of what clause 30. 4. The Contractor is only required to provide ‘reasonable proof’. Where the listed items are purchased from a supplier by the Contractor. Where the listed items have been purchased from a supplier by a sub-contractor the Contractor should give the Architect a copy of the written sub-contract with the sub-contractor which should expressly state the conditions that have to be fulfilled before the property in these listed items passes from the sub-contractor to the Contractor. that the Contractor has provided the Architect with 'reasonable proof ' that the property (ownership) in the listed items is vested in the Contractor. In practice however Employers will only pay pursuant to clause 30.3.3 defines as ‘listed items' before their delivery to or adjacent to the Works. Thus if. The Surveyors’ Construction Handbook Part 4. and a written statement from the supplier that any conditions in that sale contract that must be fulfilled before the property passes to the Contractor have been fulfilled.1 makes it one of the conditions of the inclusion. 5.

A PPENDIX C Appendix C: Example of Priced Activity Schedule A B C D E F G H J K L M N P Q R S T U V W X Y Z AA Preliminaries – see breakdown on page 2 Demolition Substructure including ground floor slab Structural frame Upper floor and staircase structures Roof structure and coverings External walls Windows and external doors Internal walls and doors therein Partitioning and doors therein Plasterwork Screeds Suspended ceilings Wall tiling Floor tiling Other floor finishings Metalwork Fittings and fixtures Decorations Sanitary installation and fittings Rainwater installation Mechanical services – see breakdown on page 3 Electrical services – see breakdown on page 4 Underground drainage External works 170.000.00 53.000.00 16.000. S ECTION 4.000.000.000.00 75.00 297.000.00 265.00 16.00 178.00 222.000.000. Section 4 Appendix C (05/00) Effective from 1/7/00 Page 1 .000.000.00 102.00 75.500.00 64.00 203.000.000.500.190.00 33.00 30.00 8.00 ___________ £ 2.00 48.000.000.000.000.000. provisional sums and provisional quantities.00 45.00 ___________ Note that the above excludes the prime cost sums and profit thereon.000. The Surveyors’ Construction Handbook Part 4.00 40.000.000.00 35.000.00 112.00 58.00 12.000.00 21.000.PART 4.00 11.

PART 4, S ECTION 4, A PPENDIX C

Preliminaries breakdown A B Site accommodation (offices, stores, toilets, etc.) Services (power, lighting, telephones, small plant, rubbish disposal, etc.) Mechanical plant Temporary works (roads, walkways, scaffolding, hoardings, etc.) Management and staff The contract, etc. (insurance premiums, cost of providing bond, etc.) 16,000.00

11,000.00 8,500.00

C D

5,000.00 122,500.00

E F

7,000.00 ___________ £ 170,000.00 ___________

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Mechanical Services breakdown A B C Heating installation Hot water installation Cold water installation including rising main and tank Gas installation Mechanical ventilation Controls and wiring Testing and commissioning As installed record drawings Operation and maintenance manuals 235,000.00 6,000.00

14,000.00 2,500.00 25,000.00 9,000.00 3,000.00 1,500.00 1,000.00 ___________ £ 297,000.00 ___________

D E F G H J

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Electrical Services breakdown A Distribution boards, switchgear and sub main cabling Power installation Lighting installation including fittings Fire alarm system Security system Earthing and bonding Testing and certification As installed record drawings Operation and maintenance manuals

28,000.00 72,000.00 92,000.00 14,500.00 6,000.00 5,000.00 2,500.00 1,250.00 750.00 ___________ £ 222,000.00 ___________

B C D E F G H J

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PART FOUR: CONSTRUCTION ADMINISTRATION AND MANAGEMENT
SECTION 5: EXTENSION OF TIME
Introduction
There are probably more disputes about extension of time and consequential cost issues than any other disputes under construction contracts. It is therefore imperative that extension of time issues are dealt with in a proper manner by the contract administrator. The majority of standard form construction contracts enable the contract administrator to grant extensions of time for completion of the work where delay occurs due to certain specified causes. Such provision is of benefit to both parties to the contract. The contractor will benefit because the effect of the provision, if operated, will be to reduce or avoid liability to pay liquidated or unliquidated damages in the event of the delay in question. However, the primary benefit is to the employer. This is because the absence of extension of time provisions can have the effect of preventing the employer’s entitlement to liquidated damages in cases where the delay, or even a small part of it, is due to some prevention or default of the employer or his or her agents, or any other matter for which the employer would be responsible. Therefore the primary purpose of extension of time is to preserve the effectiveness of the liquidated damages provisions for the benefit of the employer. Standard forms and bespoke construction contracts contain extension of time clauses setting out the criteria under which extensions of time will be awarded. This includes: • the provisions for the timing and content of delay notices by the contractor; • the parameters that a contract administrator needs to work within to assess a contractor’s entitlement to an extension of time; • the administrative procedure to be adopted in awarding an extension of time; • the events that entitle a contractor to an extension of time. However, most forms of construction contracts do not include practical guidance on how a contract administrator should carry out an assessment of an extension of time entitlement. Instead, practitioners have to look at guidance
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provided by case law as well as good practice as defined by legal commentators. This section of the handbook provides guidance to surveyors who are required to carry out assessments of extension of time entitlement under a construction contract by virtue of appointment under the contract as contract administrator. It is also for surveyors who are asked to advise either party to a construction contract on extension of time issues.

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4.5.1 Extension of Time Clauses
There are several forms of construction contract and each form will have its own procedure for dealing with extension of time. Whilst the principles to be adopted may be similar, the exact procedure and events that entitle a contractor to an extension of time may well be different depending on the form or edition of contract adopted or indeed the amendments made thereto. The practitioner should therefore always be primarily guided by the words contained in the relevant contract.

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4.5.2 Assumptions
This section has been prepared from the standpoint of the surveyor who has to assess extension of time entitlement under a construction contract by virtue of appointment under the contract as contract administrator. 4.5.2.1 JCT FORMS OF CONTRACTS This section introduces the principles of an extension of time. For illustrative purposes, it is based on the JCT Standard Form of Building Contract With Quantities 1998 (JCT 1998 With Quantities). It is recognized that there are other forms of contract being used. However, the principles set out here will remain valid. Extension of time procedures for different contract terms are briefly noted later (see 4.5.11 and 4.5.12). 4.5.2.2 DEFINITIONS Contract administrator This refers to the person undertaking the functions of the ‘architect’ on behalf of the employer under a JCT 1998 With Quantities contract. Employer Contractor The client as used in a JCT 1998 With Quantities contract. In JCT 1998 With Quantities the contractor is assumed to be a main contractor who may be asked to employ nominated sub-contractors or request permission to sub-contract portions of work to domestic sub-contractors.
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4.5.3 Extension of Time Under a JCT Contract
JCT 1998 With Quantities contains the provision for the contract administrator to award an extension of time at clause 25. Clause 25.2.1.1 provides that: If and whenever it becomes reasonably apparent that the progress of the Works is being or is likely to be delayed the Contractor shall forthwith give written notice to the [contract administrator] of the material circumstances including the cause or causes of the delay and identify in such notice any event which in his opinion is a Relevant Event. Clause 25.2.2 provides that: In respect of each and every Relevant Event identified in the notice given ... the Contractor shall, if practicable in such notice, or otherwise in writing as soon as is possible after such notice: (25.2.2.1) give particulars of the expected effects thereof; and (25.2.2.2) estimate the extent, if any, of the expected delay in the completion of the Works beyond the Completion Date resulting therefrom whether or not concurrently with delay resulting from any other Relevant Event... Clause 25.3.1 provides that: If, in the opinion of the [contract administrator], upon receipt of any notice, particulars or estimate ... (25.3.1.1) any of the events which are stated by the Contractor to be the cause of the delay is a Relevant Event and (25.3.1.2) the completion of the Works is likely to be delayed thereby beyond the Completion Date the [contract administrator] shall in writing to the Contractor give an extension of time by fixing such later date as the Completion date as he then estimates to be fair and reasonable. The contract administrator is required to state which relevant events he or she has taken into account and fix a new completion date within 12 weeks. This should not be later than the completion date that applies at that time, from receipt of the notice and of reasonably sufficient particulars or estimates. The contract administrator, by virtue of clause 25.3.3, also has the power to carry out a final review of the completion date not later than 12 weeks after the date of practical completion. This can result in the fixing of an earlier or later completion date than previously set under clause 25.3.1. (It should be noted that the contract administrator cannot set a completion date earlier than that stated in the appendix.) This final review is not subject to receipt of a notice or particulars and estimate from the contractor. Clause 25.3.4 provides the award of an extension of time is always dependant on the contractor using ‘constantly his best endeavours to prevent delay in the progress of the Works, howsoever caused, and to prevent the completion of the Works being delayed or further delayed beyond the Completion Date.’

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Clause 25.4 includes reference to relevant events. Each of these relevant events entitles the contract administrator to award an extension of time in the event, and to the extent, that they cause a delay. Whilst all relevant events may give rise to entitlement to an extension of time, not all of them entitle the contractor to be reimbursed for any loss and expense arising therefrom. (In any event it should be noted that JCT 1998 With Quantities contains separate provisions under clause 26 in dealing with the financial effect of delay to the Works. It specifically deals with the separate notice provisions required and a list of matters that may entitle the contractor to be reimbursed for any loss and expense incurred arising from the Works being delayed.) Whilst it is convenient to categorize relevant events which are not also set out in the list of matters under clause 26 as neutral events and those which are also set out under clause 26 as employer risk events, it should be emphasized that clause 25 does not provide for financial adjustment of the contract sum. If the contractor wishes to claim loss and expense arising from delay to the Works, he or she is required to make the necessary applications under clause 26.1. The granting of an extension of time under clause 25 is not a condition precedent to a right to direct loss and expense under clause 26.11.

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4.5.4 Notice by the Contractor of Delay to Progress
To receive entitlement to an extension of time during the contract period and before practical completion, the contractor is required to give notice ‘forthwith’ where ‘the progress of the Works is being or is likely to be delayed’. The contractor must give written particulars of the expected effects of the relevant events delaying the Works, estimate the expected delay and keep the particulars and estimates up to date. It is implicit that the contractor should provide information that the contract administrator reasonably requires in order to assist the contract administrator in his or her duty in relation to extensions of time. Whilst the contractor is required to give notice forthwith, the courts have held that such notice (in relation to the JCT 1963 form) was not a condition precedent to the performance of the contract administrator’s duties in respect of giving an extension of time2. Whilst this was in relation to an earlier form of contract, case law further indicates that for something to be a condition precedent a time for compliance must be given and the consequence of non-compliance stated3. Therefore, whilst it may well be that if the contract administrator is unable to take steps to reduce the delay as a result of the contractor not giving notice forthwith, then the contractor should only be entitled to the extension of time that would have occurred had the notice been given. The failure to give notice forthwith does not prevent the contract administrator from awarding an extension of time during the contract period and before practical completion if notice is given later. Further, it should be stressed that, by virtue of clause 25.3.3.1, the giving of notice per se is not a condition precedent to the granting of an extension of time after practical completion.

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4.5.5 The Award of an Extension of Time during the Contract Period and Before the Completion Date
Clause 25.3.1 requires the contract administrator to give extensions of time if he or she is of the opinion that the completion of the Works is likely to be delayed beyond the completion date by one or more of the relevant events notified by the contractor. The contract administrator has 12 weeks (subject always to a cut-off point of the completion date in place at that time) from receipt of the contractor’s notice and reasonably sufficient particulars and estimates. ‘Sufficient’ particulars and estimates are thought to be those that comply with clauses 25.2.2.1 and 25.2.2.2. Therefore it follows that, provided a contractor gives the best particulars and estimates it can in the circumstances that exist at the time of the notice, the contract administrator will not be able to delay granting an extension of time beyond the 12 weeks (or such shorter period if notice is given within 12 weeks of the completion date), on grounds that he or she cannot yet judge the effect that the cause of delay will have on the progress. Whilst the granting of an extension of time is subject to the opinion of the contract administrator, ultimately the opinion may be subject to review by an arbitrator or judge. Therefore, it important that the principles adopted by a contract administrator in assessing an extension of time entitlement are sound. When assessing an extension of time during the contract period and before practical completion, the contract administrator, by virtue of clause 25.3.1.2, can only take into account relevant events that occur before the original or previously fixed (in the event of further extension of time assessments) completion date. Relevant events that occur after the completion date are dealt with when the contract administrator reconsiders extensions of time after either the completion date or practical completion under clause 25.3.3. The contract administrator is required to award an extension of time that he or she estimates to be ‘fair and reasonable’. This reflects that the assessment of the extension of time entitlement will not be an exact science, but will have to be the result of a consideration of various factors such as: • the exact terms and application of the facts of the relevant event in question; • the amount of the immediate delay in the progress of the Works; • the effect of any delay caused by the contractor’s default; • the effect of concurrent causes of delay and whether one of them is an effective dominant cause; and • the extent to which the contractor has used its best endeavours to prevent delay in accordance with clause 25.3.4.

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The courts have held that a contract administrator, in assessing an extension of time, should conduct a logical analysis in a methodical way of the impact which events, whether relevant events or not, were likely to have on the planned programme4. A contract administrator is required to make a calculated, rather than impressionistic, assessment of extension of time entitlement. Therefore the contract administrator, having satisfied him or herself that an event is relevant, is required to assess whether the affected activities were on the critical path or not. In assessing delay the contract administrator could consider the effect of the causes of delay as a whole by carrying out a retrospective delay analysis. This will involve assessing the effect of each individual delaying event in conjunction with other delaying events. This will inevitably involve the preparation of an ‘as built’ record or programme to identify the delayed activities and a subsequent analysis of the causes of the delayed activities and assessment of whether the causes of delay are relevant events. A comment on the approach in dealing with the effect of concurrent delays and consequential entitlement is made later in this section (see 4.5.8 and 4.5.9). Further, if the contract is drafted to include sectional completion dates, the contract administrator is required to assess the effect of each delay in respect of each section and decide whether appropriate extensions of time need to be issued. There will be times where the records either do not exist or are inadequate to construct an ‘as built’ record. Further, an assessment of an extension of time entitlement may have to be considered before the effects of delays are known, thereby preventing a retrospective delay analysis. In these instances the contract administrator should undertake an objective analysis of the likely or probable impact on the critical path activities based on logical analysis and not an impressionistic assessment.

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4.5.6 The Award of an Extension of Time after the Completion Date
Clause 25.3.3. requires the contract administrator to reconsider any previous extension of time awards and/or deal finally with the question of extension of time within a period of 12 weeks from the date of practical completion. In reviewing the completion date, the contract administrator is required again to grant an extension of time that is fair and reasonable. The contract administrator is not limited to relevant events notified by the contractor and, in reviewing earlier extension of time awards, can fix an earlier completion date by taking into account any omissions justifying a reduction in any extension of time awards granted previously. Prior to 1993 it has been argued, in relation to the JCT 1963 form of contract, that if a variation was issued after the completion date, that is, after the date of any previous extension of time awards, the employer would be prevented from deducting liquidated damages for the period up to the date of the issue of the instruction to undertake the variation. However, it has been held that this

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principle does not apply to the JCT 1980 form and, by virtue of the same wording being adopted, its successor the JCT 1998 form. The correct position now is that if instructions for additional work are issued at a time when the contractor is in culpable delay, that is, the Works being incomplete after the latest extended completion date, the contractor is only entitled to a fair and reasonable ‘net’ addition (sometimes referred to as the ‘dot on’ principle) to the previously fixed completion date and not by fixing as the completion date the calendar date upon which the work would reasonably be expected to be completed having regard to the calendar date upon which the variations were instructed5.

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4.5.7 Relevant Events
The relevant events have been categorized as ‘employer risk’ (4.5.7.1) and ‘neutral’ (4.5.7.2) events. 4.5.7.1 EMPLOYER RISK EVENTS Clauses 25.4.5.1 and 25.4.5.2: Compliance with [contract administrator’s] instructions under clauses 2.3, 2.4.1, 13.2 (except for a confirmed acceptance of a 13A Quotation), 13.3 (except compliance with a [contract administrator’s instruction for the expenditure of a provisional sum for defined work or of a provisional sum for Performance Specified Work), 13A 4.1, 23.2, [34, 35 or 366] or in regard to opening up for inspection of any work covered up or the testing of any of the work, materials or goods in accordance with clause 8.3 (including making good in consequence of such opening up or testing) unless the inspection or test showed that the work, materials or goods were not in accordance with this Contract. A contract administrator will need to examine the cause of instructions being issued in the first place (for example, was it a result of defective workmanship?) before assessing the effect of its timing and scope of work on the progress of the Works. It will also be necessary to assess whether the contractor was already in culpable delay or if there are competing causes of delay for which the contractor is responsible. Clauses 25.4.6.1 and 25.4.6.2: Where an information release schedule has been provided, failure of the [contract administrator] to comply with clause 5.4.1 [or] failure of the [contract administrator] to comply with clause 5.4.2. If there is to be an information release schedule the contract administrator will be required to follow it. To the extent that it is not complied with and such non-compliance causes a delay, the contractor will be entitled to an extension of time. However, if there is no provision for an information release schedule, by virtue of clause 5.4.1 being deleted, or if the information release schedule

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does not cover the issue of information that is required, then the contract administrator is required to provide any other drawings and details to explain and amplify the contract drawings when they are reasonably necessary. It has been held that a contractor’s programme or document presented at the commencement of the Works could constitute a specific application for instructions or information provided that the date specified for delivery for each set of instructions met the requirement of not being unreasonably distant from nor unreasonably close to the relevant date7, subject to it being modified if the Works did not progress to plan. It has also been held (by analogy to a House of Lords decision in relation to a similar clause in JCT 1963) that whilst the withdrawal of a nominated sub-contractor may not come within this clause, delay by the employer in making a timeous re-nomination was covered8. Clauses 25.4.8.1 and 25.4.8.2: The execution of work not forming part of this Contract by the Employer himself or by persons employed or otherwise engaged by the Employer as referred to in Clause 29 or the failure to execute such work [or] the supply by the Employer of materials and goods which the Employer as referred to in clause 29 or the failure so to supply. This clause is also known as the ‘artists and tradesmen’ clause. Its scope includes work by a local authority or statutory undertaker under a contract with the employer. Clause 25.4.12: Failure of the Employer to give in due time ingress to and egress from the site of the Works or any part thereof through or over any land, buildings, way or passage adjoining or connected with the site and in the possession and control of the Employer, in accordance with the Contract Bills and/or Contract Drawings, after receipt by the [contract administrator] of such notice, if any, as the Contractor may be required to give, or failure of the Employer to give such ingress or egress as otherwise agreed between the [contract administrator] and the Contractor. This clause is not concerned with possession of the site itself, but with access to it over other land in the possession and control of the employer as stated in the contract documents. Clause 25.4.14: By reason of the execution of work for which an Approximate Quantity is included in the Contract Bills which is not a reasonably accurate forecast of the quantity of work required. What constitutes a reasonably accurate forecast will be a matter of fact. However, it is suggested that empirical studies of the accuracy of quantity surveyor’s estimates may give guidance, that is, +/– 5 per cent accuracy.
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Clause 25.4.17: Compliance or non-compliance by the Employer with clause 6A.1. Clause 6A.1 relates to the employer ensuring that the planning supervisor (and the principle contractor, where the contractor is not the principle contractor) carries out his or her duties under the CDM regulations. Clause 25.4.18: Delay arising from a suspension by the Contractor of the performance of his obligations under the Contract to the Employer pursuant to clause 30.1.4. Clause 30.1.4 relates to the contractor’s rights to suspend the Works as a result of failure by the employer to pay the contractor in accordance with the contract payment terms and procedure in compliance with the Housing Grants, Construction and Regeneration Act 1996. Therefore, if the contractor is entitled to suspend the Works under clause 30.1.4 it will be entitled to an extension of time in the event that the Works are delayed as a result. It is interesting to note that the corresponding matter clause (26.2.10) is more restrictive in that it only entitles the contractor to recover any direct loss and expense if the suspension was not ‘frivolous or vexatious’. 4.5.7.2 NEUTRAL EVENTS

Clause 25.4.1:
‘force majeure’ This term is used in reference to all circumstances independent of the will of humankind which is not in our power to control, such as war, inundations and epidemics. It is wider than ‘Acts of God’, but it is generally thought that in relation to standard forms of construction contracts it has a restricted meaning. This is because matters such as war, strikes, fire, weather and government action are expressly dealt with in the contract. Clause 25.4.2: ‘exceptionally adverse weather conditions’ The correct test to be applied by the contract administrator is whether the weather itself was exceptionally adverse9 so as to give rise to delay. This should be decided in light of the historic norm for the area and the status of the Works when the delay occurred. Therefore, the contract administrator should examine local meteorological and site records, looking at details and timing of rainfall, high wind speed, temperature and assess the effect on the labour, plant and work operations on site for the relevant periods.

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Clause 25.4.3: ‘loss or damage occasioned by any one or more of the Specified Perils’ These are defined by clause 1.3 and include: • fire; • lightning; • explosion; • storm; • tempest; • flood; • bursting or overflowing of water tanks; • apparatus or pipes; • earthquake; • aircraft and other aerial devices or articles dropped therefrom; and • riot and civil commotion. However, they exclude: • ionizing radiations or contamination by radioactivity from any nuclear fuel or nuclear waste from the combustion of nuclear fuel; • radioactive toxic explosive or other hazardous properties of any explosive nuclear assembly or nuclear component thereof; and • pressure waves caused by aircraft or other aerial devices travelling at sonic or supersonic speeds. The scope of the specified perils is very wide and could stem from acts of negligence by the contractor. Clause 25.4.4: Civil commotion, local combination of workmen, strike or lock-out affecting any of the trades employed upon the Works or any of the trades engaged in the preparation, manufacture or transportation of any of the goods or materials required for the Works. The terms strike and lock-out should be given their ordinary meaning. The courts have given guidance on the meaning of civil commotion in relation to insurance contracts to include a stage between ‘riot and civil war’10.
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Clause 25.4.5.1: Compliance with [contract administrator’s] instructions under clauses ... 34, 35 or 36... Clause 34 instructions relate to ‘fossils, antiquities and other objects of interest or value’ found on site during excavation. Clauses 35 and 36 relate to instructions connected with nomination. Whilst the contractor is seemingly not protected for recovering loss and expense monies by virtue of there not being a corresponding ‘matter’ listed under clause 26, with regard to a late nomination it would appear that a contractor could seek to rely on clause 26.2.1 for late instruction of the expenditure of a provisional sum relating to a nominated sub-contractor or supplier. Clause 25.4.6: Delay on the part of nominated sub-contractors or nominated suppliers which the contractor has taken all practicable steps to avoid or reduce. The effect of this clause is that if such a delay causes an extension of time, even if the delay is due to the default of the nominated sub-contractor, the employer is deprived of the right to deduct liquidated damages. However, it should be noted that if a nominated sub-contractor has completed its work and has to return to site to remedy defective workmanship which in turn causes a delay to the Works, then this clause does not apply11. In this scenario an extension of time would not be granted. Whilst the employer is not liable to the contractor for losses caused by nominated sub-contractors and nominated suppliers, the contractor may be able to recover its losses directly through its nominated sub-contract or supplier contract. Clause 25.4.9: The exercise after the Base Date by the United Kingdom Government of any statutory power which directly affects the execution of the Works by restricting the availability or use of labour which is essential to the proper carrying out of the Works or preventing the Contractor from, or delaying the Contractor in, securing such goods or materials or such fuel or energy as are essential to the proper carrying out of the Works. The effect of this sub-clause is to reduce the scope of the force majeure sub-clause (clause 25.4.1) to those events not contained within this wording. Clauses 25.4.10.1 and 25.4.10.2: The contractor’s inability for reasons beyond his control and which he could not reasonably have foreseen at the Base Date to secure such labour [goods or materials] as is [are] essential to the proper carrying out of the Works. These words limit the effect of the sub-clause in respect of shortage of labour, materials or goods that the contractor could have foreseen by reasonable enquiry were likely to continue or arise at all.
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Clause 25.4.11: The carrying out by a local authority or statutory undertaker of work in pursuance of its statutory obligations in relation to the Works, or the failure to carry out such work. This sub-clause is limited to situations where the relevant authority or undertaker carries out work using its statutory powers, as opposed to under a contract with either the employer or contractor, and such work hinders the Works and causes delay. Clause 25.4.13: Where clause 23.1.2 is stated in the appendix to apply, the deferment by the Employer of giving possession of the site under clause 23.1.2. Clause 23.1.2 enables the employer to defer possession of the site by six weeks without being in breach of contract. This clause enables the completion date to be extended accordingly without the employer losing his or her right to deduct liquidated damages for any delay for which the contractor is culpable. Clause 25.4.15: Delay which the Contractor has taken all practicable steps to avoid or reduce consequent upon a change in the Statutory Requirements after the Base Date which necessitates some alteration or modification to any Performance Specified Work. The effect of this clause is limited to legislative changes that affect performance specified work, the effects of which the contractor has made attempts to mitigate. There is no requirement for the contractor to have made reasonable enquiry at or before the base date. Clause 25.4.16 The use or threat of terrorism and/or the activity of the relevant authorities in dealing with such use or threat. The effect of this sub-clause is to reduce the scope of the force majeure sub-clause (clause 25.4.1) to those events not contained within this wording.

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4.5.8 Concurrent Delays
When assessing a contractor’s entitlement to an extension of time, the contract administrator will need to assess the effect of concurrent causes of delay. This is important for two reasons: 1) In relation to the granting of an extension of time: for example in assessing whether delay is caused in total or in part by an event for which the contractor is culpable under the contract. 2) In relation to clause 26 which deals with loss and expense: that is, some relevant events are paying and some are non-paying.

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The contract administrator may be faced with a scenario where there are concurrent causes of delay, each of which could have an equal delaying effect, or alternatively could have significantly unequal effect. The law is unclear on the correct approach. However, the generally accepted approach is that it is the dominant delaying event that should govern the award of an extension of time. Therefore, if a contractor seeks to rely on late instructions as entitlement for an extension of time and at the same relevant time the contractor is also delayed by events for which it is culpable, the contract administrator will need to satisfy him or herself that the delay caused by the late instructions was the dominant delay in order to award an extension of time. Which cause is dominant is a question of fact. This is not solved by the mere point of order of time but is to be decided by applying common sense standards12. The court had to consider the question of concurrent delays in 1999 and held that a contract administrator is entitled to consider the contractor responsible for concurrent delays when establishing whether or not a relevant event has in fact caused a delay13. Therefore, the question for consideration by the contract administrator when there are competing causes of delay, one of which is a relevant event and one which is not, is which cause was the dominant cause of delay. The courts also commented that where those competing causes were of equal causes, then if the contract administrator considers it fair and reasonable to do so, he or she is required to grant an extension of time14.

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4.5.9 Consequential Entitlement
Consequential entitlement is where a delay that is a non-paying relevant event could fall to be an ‘employer risk’ event or ‘matter’ under clause 26. For example, the Works could be delayed by the issue of contract administrator’s instructions that cause the Works to overrun into an ‘exceptional adverse weather’ or industry shutdown period. It is generally thought that the extension should be given under the primary cause.

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4.5.10 Administration
A notification granting an extension of time must be taken with great care. Use of the RIBA and/or RICS Notification of Extension of Time form is recommended. The notification should include: • the job title and number (if any); • the contractor’s name; • the date of issue; • the completion date; • a list of the relevant events for which an extension of time has been given;

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• the extent to which the omission of work has been taken into consideration; • the date of the contractor’s written notice of delay (if any); and • the revised completion date.

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4.5.11 Extension of Time under an ICE Contract
Although the specific contract clauses differ, the principles set out in relation to JCT contracts equally apply to the ICE contracts. The contractor can apply for an extension of time by giving notice, although such notice is not a condition precedent for the giving of an extension of time as the engineer can make an assessment in the absence of such notice. In assessing a contractor’s entitlement for an extension of time, the engineer is required to make an assessment of the delay suffered and consider whether that delay fairly entitles the contractor to an extension of time. The engineer is required to undertake a final review within 14 days of substantial completion.

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4.5.12 Extension of Time under a GC Works Contract
The project manager or supervising officer under GC/Works forms of contract has the power to award an extension of time. However, it should be noted that some forms do make the giving of a notice by the contractor a condition precedent of an extension of time being awarded.

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Notes
1. Fairweather v. Wandsworth (1987) 39 BLR 106 2. London Borough of Merton v. Leech (1985) 32 BLR at pp.89 et seq. 3. Bremer Handelgesellschaft MBH v. Vanden Avenne-Izegem [1978] 2 LLR 109 4. John Barker Construction Limited v. London Portman Hotel Limited (1996) BLR 83 5. Balfour Beatty v. Chestermount Properties (1993) 62 BLR 1 6. Instructions under clauses 34 (antiquities), 35 and 36 (nomination of sub-contractors and suppliers) are non-paying 7. London Borough of Merton v. Leach [1985] 32 BLR 51 at pp.85-89 issue 5 8. Percy Bilton v. GLC [1982] 1 WLR 794 (HL) 9. Walter Lawrence v. Commercial Union Properties (1984) 4 ConLR 37 10. Levy v. Assicurazioni Generali [1940] 3 All ER 427 at p.437 11. Jarvis J. & Sons v. Westminster Corporation [1970] 1 WLR 637 (HL) 12. Leyland Shipping v. Norwich Union [1918] AC 350, Yorkshire Dale Steamship v. Minister of Ware Transport [1942] AC 691 13. Henry Book Construction (UK) Limited (Manchester) Limited 1999) TCC 18.10.99 v. Malmaison Hotel

14. Henry Book Construction (UK) Limited v. Malmaison (Manchester) Limited 1999) TCC 18.10.99 at paragraph 13

Hotel

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2nd edition. (1997) Liquidated Damages and Extensions of Time in Construction Contracts. Section 5 Appendix A (12/01) Effective from 1/2/02 Page 1 . S. SECTION 5. Lloyds of London RIBA. (2000) Delay and Disruption in Building Contracts. V. I. 7th edition. K. (1994) Hudson’s Building and Engineering Contracts. Oxford: Blackwell Science Emden’s Construction Law. Butterworth Tolley Duncan Wallace. B. London: Sweet & Maxwell Pickavance. The Architect and Extensions of Time The Surveyors’ Construction Handbook Part 4. & Furst. London: Sweet & Maxwell Ramsey.PART 4. 11th edition.N. 2nd edition. (2000) Keating on Building Contracts. APPENDIX A Appendix A: Further Reading Eggleston.

Surveying safely Your guide to personal safety at work .

whatever part you play in the industry. travelling on business or being at a property or on site. and make our industry a safer place to work. It will also remind you of the many aspects of our industry that can be hazardous. we have to take personal responsibility to make it happen by eliminating or reducing risks. You have a critical role. sufficient resources and effective training will provide a better product more safely and more economically. partner. If we are to make a difference. being at a premises or on site.Surveying safely Your guide to personal safety at work Why is health and safety important? Because it affects you! We take significant risks in our jobs regularly. Ian Watson. FRICS MCIArb MaPS Chairman of RICS Health and Safety Forum 2 . innovation and best practice. You can make a difference by putting health and safety first. Serious accidents at work destroy and disrupt family and personal lives. and • Lessen the chance of having accidents or suffering illness. breadwinner. Adequate planning. This guide has been produced by the new RICS Health and Safety Forum to help you to put health and safety first when carrying out your duties and responsibilities. be it driving in connection with our work. especially if it could have been avoided. friend is devastating and trying to rebuild a life after an accident can be equally traumatic. The loss of a parent. to our colleagues and the public at large. Using effective health and safety procedures will: • Provide a safer environment for those involved in managing property and construction • Result in higher productivity. good design. Decisions taken in the boardroom can have as much influence on health and safety as working practices in the office. and planning and controlling the risks that remain for ourselves.

Contents General statement of employers’ and employees’ duties Safety of employees Your workplace Identifying hazards and undertaking risk assessments Before visiting premises/sites Upon arrival and during visits to premises/sites Safety of yourself and others Your legal duties Case studies For more information 4 4 5 6 7 9 11 12 14 15 3 .

Employers with five or more employees must: • Have written health and safety documents. audit and review the organisation’s health and safety performance on a regular basis. to provide and maintain equipment and systems of work that are safe and without risk to the health of employees. including their managers. and how the management system is planned and implemented (including hazard identification. Other regulations that are important to know and adopt include: • • The Workplace (Health Safety and Welfare) Regulations 1992 The Management of Health and Safety at Work Regulations 1999. In addition. both employers and employees have a duty of care in tort (particularly negligence) towards those who may be affected by their actions or instructions. risk assessments and control measures) • Measure. or others who may be affected by their undertaking. Safety of employees Make sure you comply with the provisions of the Health and Safety at Work etc Act 1974. 4 . The HSE document ‘Successful Health and Safety Management (HS(G) 65)’ provides guidance on how to satisfy the legal requirements of the regulations • Have a policy statement by the chief executive/managing director/senior partner outlining the organisation’s commitment to health and safety. Equally. employees need to take reasonable care of their own safety and that of others who may be affected by their acts or oversights. Employers must: • Provide information on health and safety • Have emergency procedures • Carry out risk assessments • Eliminate and control risks • Have insurance • Carry out health surveillance • Provide Personal Protective Equipment (PPE) • Provide for those with special needs • Control working hours • Provide regular health and safety training. with roles and responsibilities for managing health and safety • Make sure arrangements are in place that show the organisation’s approach to health and safety. and that it will be reviewed on a regular basis • Detail the organisation’s health and safety structure.Surveying safely Your guide to personal safety at work General statement on employers’ and employees’ duties The Health and Safety at Work etc Act 1974 places a statutory duty on all employers.

5 . face masks. records of hazards on particular sites. depending on the size and nature of your organisation: Welfare Smokers Rest room First aid Pregnant mothers Fire – The Fire Regulations Act 1991 and Fire Regulations 1997 need you to maintain adequate fire safety equipment. Finally. torches and batteries – these should be in your office as appropriate and in good condition Make sure your offices are safe: Are there fire precautions and means of escape? Washing facilities? Is electrical equipment up to date and safe? Do you prepare and store food and drink safely? Have you carried out Display Screen Equipment Assessments? Are you aware of the stress that some employees may be suffering? Assess the risks of manual handling in the office or look at the materials being used or stored and whether COSHH assessments are needed Provide guidance on driving on your organisations business or the use of hand held devices while driving. Your employees need to have training on how to use it. particularly those in training or who are inexperienced. • • • • • • • Make sure employees in your charge take the right equipment with them on visits. overalls. which allows personal details to be extracted from the book and placed in a secure location to comply with the Data Protection Act 1998. Helmets. Occupiers of premises must also carry out fire risk assessments.Employer’s actions You have a special responsibility for people in your charge. First aid – accident books – you should have the correct form of accident book. ear defenders. Check they know how to use it Make sure scrupulous records are kept of employees’ movements Keep available. Make sure all relevant people are notified Make sure a supply of the right equipment is available. the best way to make sure safe practice by people in your charge is to set a good example. Your workplace The Workplace Health Safety and Welfare Regulations 1992 provide information on what assessments you should be making and the facilities you should provide. steel capped shoes.

in your work. being those of hazard and risk. fire or manual handling. In the words of the Health and Safety Executive (HSE). by employing a WTC (Water Treatment Company) to carry out an assessment. A range of HSE and other guidance is available that will allow you to develop a system suitable for you and your business. Contractors – to protect yourselves. Portable Appliance Testing (PAT) – around 25% of reportable electrical accidents involve portable appliances. whether it be very hot water or fragile roofs. Disability Discrimination Act 1995 (DDA) – the DDA and the Disability Rights Commission Act 1999 requires anyone providing a service from their building and receiving visitors. Familiarity with the basis of risk assessment will make the process a natural part of your day to day work and will give you the mental skills to deal effectively with hazards on site. could cause harm to people so that you can weigh up whether you have taken enough precautions or should do more to prevent harm. Identifying hazards and carrying out risk assessments An underlying principle of effective management of health and safety is that of risk assessment. And get advice on how to reduce any risks and how to carry out your own checks. you should have safety signs displayed for any other significant risks. Hazard and risk Hazard is something with the potential to cause harm to someone. risk assessment is ‘nothing more than a careful examination of what. 6 .’ Risk assessment involves two key concepts. a risk assessment has been carried out and a safe system of work has been established. However. risk increases as both the severity or likelihood of the harm increases. Make sure you have them tested regularly (recommended annually) by an approved tester. it is important to write down a summary of the risk assessment process so there is a record of it and so that other people can refer to it. Working with risk assessments The principles of risk assessment are based on common sense. Risk is the likelihood (whether high or low) of the harm being caused. Asbestos – everyone in control of premises must proactively locate and manage any asbestos that exists. to suitably provide for people with disabilities. you should have procedures to make sure no one comes into your building to work without you knowing they are competent. Legionnaires disease – depending on the use of the building with which you may be involved. Importantly.Surveying safely Your guide to personal safety at work Signage – in addition to helpful Health & Safety signs on first aid. you should make sure you are not at risk.

vagrants.Managing risk Having identified a hazard and assessed the risk involved. identify likely hazards and carry out a risk assessment. You must make as full an assessment as reasonably possible. diabetes. what stage has been reached? hat are the site rules? • Are the premises known to be derelict or in poor condition. etc? Condition of site • If a construction site. well lit). secure. ie epilepsy. animals? • Are the occupants or neighbours likely to be aggressive or disaffected? 7 . easy to exit. Does the office have a record of employees’ mobile numbers? • Who has a record of where the lone worker is and when to expect them back in the office or at home? • Have procedures been made for regular ‘check-in’ calls? • How would access for rescue be achieved? • Does a lone worker suffer from any medical condition which could affect personal safety. The sorts of factors you need to take into account include: Travelling to and from site • Plan the journey to avoid driving too fast. and if so what is the extent and nature of the damage? • Are areas to be defined as unsafe for access? • Are security measures in force and how is access to be gained? • Is protective clothing or special equipment needed (see later)? Occupation • Is the property occupied? If so. eg children. squatters. consider how the risk might be reduced to a level as low as reasonably practicable by looking at: • • Removal of the hazard by re-planning the work process or activity Accepting the hazard will remain but re-planning of the work process or activity to reduce the likelihood of harm happening or to reduce the severity of the consequences if it does. Lone working • Is lone working a safe option and if so what provisions are made for communications in an emergency. for too long or when tired • Be aware of where to park (clear. does the occupant know you are coming and have they made any special access arrangements? • Who are you likely to encounter on the building or site. Either option will involve a consideration of the method of working and if necessary documenting a ‘Safe system of work’ or ‘Method statement’ for the activity. Before visiting premises/sites When you receive instructions to inspect a site or premises. consulting with others as necessary. make sure you get relevant information about the property.

e. etc. is there a ‘Construction phase health and safety plan’ including induction procedures to be followed? • Might toilet. it is safe to use? When it was last inspected by a competent person? • Are any towers. explosives etc? • Are records such as a Register of Asbestos Containing Materials or environmental reports available? What do they reveal and what special precautions need to be taken? Diseases • Is the nature of the site such that it could be contaminated with any form of clinical waste? • Are you likely to encounter used syringes/needles. vehicle movements. and what might you encounter. residential. security establishments. fumes. could be present in haired plaster? • Could legionella be present in disused water storage systems? • What hazards might arise from vermin (eg Weil’s disease)? Special access • Will special access arrangements be required (eg underground) and who will provide it and manage it? • Is special training needed? Special risks • Is the nature of the building or site such that it presents special hazards. condoms. eg railway premises.g. electronic equipment etc? Site rules and welfare • Does the client/premises manager have ‘house rules’? • Are there ‘Permit to work/enter’ procedures to be followed? • If a site. e. masts or tall chimneys involved? • Are they to be inspected. noise. and if so how will they be accessed? • Is a ‘cherry picker’ or other special access equipment needed and who is to provide/manage it? Dangerous substances • Is the inspection likely to bring you into contact with hazardous substances such as chemicals. what is the nature of that occupation. radiation. gas or other noxious atmosphere. for example. plant rooms. confined spaces. etc? Special equipment In certain circumstances any of the following equipment may be necessary: • Gloves • Respirator or face mask • Safety helmet 8 .Surveying safely Your guide to personal safety at work Activity • If a building/site is occupied. asbestos. warehousing. i. manufacturing. razor blades etc? • Could the site be a source of anthrax which. wash and first aid facilities be needed and how will these facilities be provided? High structures • If a scaffold exists.

Would lack of fitness present a hazard in itself? • Are special skills needed and do you have those skills? • Do you have any phobias or suffer from vertigo or claustrophobia that would impair judgement with regard to personal safety? The above lists are by no means exhaustive and the extent to which any of the items might be relevant in a particular circumstance will vary. you need to consider these in the light of personal and environmental issues: Environmental • Will weather conditions and/or light levels increase risk? (eg windy conditions and high structures) • Will temperature extremes present a hazard? Personal • Does gender or level of fitness have any bearing on the hazards which have been identified? Pregnant or nursing mothers need special consideration. broken glass Glazing in windows and partitions may be loose. bulged and unrestrained walls (including boundary walls) • Rotten or corroded beams and columns • Roofs and floors.• • • • Ear defenders Eye protection Boots Temporary lighting Having considered the ‘physical hazards’ that might exist. Review the risk assessment as necessary and be alert during the inspection to other hazards such as. you need to be alert to matters that are unknown until arrival at the premises or site. • • • • 9 . Arriving and during visits to premises/sites However well a survey or inspection is planned in advance. This may arise simply through a general lack of information about the site. decay or attack Projecting nails and screws. gable walls or parapets • Leaning. or because the condition of the property. Timbers and glass Rotten and broken floors and staircases. Structures • The chance of partial or total collapse of: • Chimney stacks. joists and buried timbers weakened by age. Glass panels in doors and winglights may be painted over. Flimsy cellar flaps and broken pavement lights Floorboards. its occupation or other factors have changed unexpectedly. hinges and sashcords weak or broken.

fuel and cleaning fluids • Hazardous substances. mortar droppings and birds’ nesting material and excrement in roof voids. moss or algae covered slopes) • Broken access hatches • Mineral wool dust. including those obscured by flimsy coverings. ducts and openings • Lift and services shafts. loose copings • Rusted. vagrants or guard dogs • Disease risks from discarded syringes and condoms • Structures weakened by vandalism or arson • Aggressive tenants or property owners. Hidden traps. 10 . sectional or fixed loft ladders • Concealed ceiling joists and low purlins • Ill-lit roof voids. water and steam supplies • Awkward entrances into sub-stations and fuel stores • Temporary lighting installations: mains connections and generators • Buried cables and pipes • Overhead electrical cables. gas. Cornered birds and vermin • Insects. Danger from live and unsecured services • Electricity. rotten or moss covered fire escapes. including toxic insecticides and fungicides • Gas build-up in subfloor voids. wells and septic tanks. stairwells and other unguarded openings • Manholes. including bee and wasp colonies • Water cooling plant may harbour legionella • Unguarded flat roofs • Broken.Surveying safely Your guide to personal safety at work Roofs • Fragile asbestos cement and plastic coverings • Fragile rooflights (often obscured by dirt or temporary coverings) • Low parapets or unguarded roof edges. ducts and sealed rooms • Rotting vegetation which may consume oxygen and give off poisonous fumes • Accumulation of poisonous of flammable gases in buildings on contaminated land • Stores containing flammable materials such as paint. roof voids. Cesspools. rotten and slippery crawling boards and escape ladders • Weak flat roofs and dust covered rooflights • Slippery roof surfaces • High winds during roof inspection • Ill-secured or flimsy. cellars. Intruders and others • Physical dangers from squatters. access ladders and guard rails • Rotten roof decking and joists • Slippery roof coverings (slates. loose. vaults. collapsible. adhesives. Unsafe atmospheres • Confined spaces with insufficient oxygen including manholes.

If you are a manager within an organisation you are also personally liable if you do not carry out the health and safety responsibilities associated with your duties. Securing the site and leaving • Upon completion of the visit. pits. Let them know as you leave and confirm when you expect to be back. under the health and safety legislation. Safety of yourself and others All employees of any organisation must. ditches. safety or welfare.Contamination • Asbestos. the property should be left secure • Inform any occupier or staff in site office that you are leaving • Someone in the office or at home should know where you are and when you are due to return. Safety of yourself • Make sure you are familiar with your organisation’s health and safety policy and arrangements for implementing safe working procedures • Comply with the office safety policy and ensure that any equipment you may use is in good and safe condition • Comply with your organisation’s safe systems of work. holes. etc Farm animals Chemicals in storage or in use. or ensure one is put in place prior to carrying out work. particularly where a risk assessment shows that a hazard exists • Refuse to condone unsafe working practices by yourself or others and distribute information on hazards • Make sure your advice to clients will minimise the risk to the health and safety of others 11 . As well as cooperating with their employer as necessary to help their employer to comply with their statutory duties. It is equally a criminal offence for you to intentionally or recklessly interfere with or misuse any thing provided in the interests of health. take reasonable care of their own health and safety and that of others who may be affected by their acts or omissions. • • • • Vermin and birds • Rats and mice (Weil’s and other diseases) • Bird droppings • Lice and fleas may be present in bedding. soft furniture and carpets. lead and other substances hazardous to health • Chemicals in storage or leaked • Contaminated water supplies • Contaminated air conditioning systems (legionella) Rural Environments Hazardous operations such as tree felling or tractor work Shafts.

An accident does not have to happen before action is taken against you for non-compliance. and also towards anyone who may be affected by your or their work. Finally. Your legal duties Criminal liability The wide ranging requirements of the Health and Safety at Work etc Act 1974 are implemented principally through the Management of Health and Safety at Work Regulations 1999. torches and batteries. 12 . control and review of safe working practices (identified through the risk assessment). the best way to ensure safe practice by people in your charge is to set a good example. together with any safe working instructions. These must be followed to make sure there are satisfactory and safe systems in place for the carrying out of surveying activities. safety shoes. make sure you follow your organisation’s lone working procedures. many of which by their very nature (particularly when working alone) must be regarded as hazardous activities. which have been issued by clients prior to carrying work at their premises If you are working alone. Not taking the necessary actions to protect people from avoidable dangers in the workplace is in itself a criminal offence and charges may be brought against both the organisation. ear defenders. organisation. overalls. particularly those in training or who are inexperienced. the directors/partners and individual managers for non compliance with any health and safety regulations. • • • • • • Make sure anyone in your charge takes the right equipment with them on visits. training and instruction on health and safety matters for the task in hand Check available records of hazards on particular sites and make sure that all relevant people are notified Make sure. Helmets.Surveying safely Your guide to personal safety at work • • Make sure you are aware of any hazards which may exist. You will find the key elements of such systems in HSE publication HS(G) 65 – Successful Health and Safety Management. follow the dictates of common sense. it is for you to prove everything reasonably practicable was done to comply with the relevant legislation. Do not use any equipment that is defective – report it to your employer. and a safe working method is in place that has been communicated to and understood before any field work taking place Make sure everyone has suitable and sufficient information. In other words. face masks. wherever necessary that precautions are put in place to safeguard anyone who may be in the vicinity of works and unaware of the possible hazards Make sure the right equipment is used. The regulations need you to have a health and safety policy and to have effective management systems in place for the planning. Check that they know how to use it and that it is safe to use Make sure a suitable and sufficient risk assessment has been carried out of the tasks to be performed. Safety of others You are responsible for anyone under your supervision. If action is taken.

Where in doubt get specialist advice. particularly in cases where the result is reasonably foreseeable (Barber v Somerset County Council see case studies). The employer or employee must seek out the relevant information themselves. Equally employees must be given sufficient training in hazard identification and reduction/ control techniques to ensure that any non-foreseeable hazards arising during the course of their work do not give rise to otherwise avoidable accidents occurring. and supply any implements which may be required. The duty to provide safe systems of work is illustrated by the judgement in General Cleaning Contractors v Christmas which stated: ‘It is the duty of the employer to consider the situation. Civil liability Employers and employees owe a duty of care to anyone who may be affected by their actions. Key regulations This publication sets down the background to health and safety legislation as it affects the work of surveyors.Employers may develop generic sets of safe working practices for each activity carried out. to devise a suitable system. code of practice or guidance notes published by the HSE. see case studies). individual managers/team leaders also have a further responsibility for making sure any generic safe working practices are either sufficient or expanded as necessary for any particular activity taking place within their area of responsibility (Armour v Skeen. where effects of their actions are reasonably foreseeable. to instruct his/her men what they must do. Bearing in mind the wide ranging nature of the profession it is not intended to specify every piece of health and safety legislation.’ An increasing area of liability in negligence is that of stress through work overload. 13 . However.

monitor his situation or reduce his workload. When he returned to work. causing him to let go. A routine inspection by environment health officers found damaged asbestos insulation boarding and asbestos debris on the floor. in the House of Lords. the half platform had no edge protection. Civil liability relating to stress at work Barber v Somerset County Council The House of Lords decision published in April 2004 is the leading case relating to stress at work.Surveying safely Your guide to personal safety at work Case studies Criminal offence caused by neglect of director. He climbed an unguarded ladder to a half platform from which he fell some 2. To carry out this work he stood on the sill on the outside of the window. It was decided. The second sash fell on to his fingers. Criminal offence caused by failure to ensure persons not in an organisations employment were not exposed to safety risks A heating engineer was working on a development in Fitzroy Square. its director of roads (being a manager or similar officer within the meaning of the Health and Safety at Work etc Act 1974) was found to have been negligent in not having a sound safety policy. that his employers were negligent in failing to devise a safe system for carrying out such operations on the properties their employees had to visit. And they ought to have instructed their employees how to avoid accidents and supply any implements that may be needed.5metres and suffered fatal injuries. using one hand on the window sash to steady himself. Criminal offence caused by employer’s failure to manage asbestos High street retailer Poundstretcher Ltd was ordered to pay £15 000 in fines and costs after exposing employees to asbestos fibres. nor had the area been declared an exclusion zone. manager or secretary of an organisation Armour v Skeen Strathclyde Regional Council and its director of highways were both prosecuted following the death of one of its employees due to lack of a safe system of work and failure to make notification of certain works taking place. While it was held that it was SRC (as the body corporate ) that had committed the offence. 14 . Civil liability for safe systems of work General Cleaning Contractors v Christmas A person was employed by a contractor to clean the outside windows of a club. his employers took no action to help. Employees had been exposed to asbestos fibres over a period of time during routine work activities. This resulted in his being forced to retire through work related stress and the court awarding him £100 000 damages. fall and injure himself. failing to provide information to his subordinates. in place for his department. Mr Barber was a teacher who was forced to take three weeks off work due to stress. developed from the authority’s overall policy. and failing to provide training and instructions in safe working practices. The principal contractor was found guilty of failing to make sure people not in their employ were not exposed to health and safety risks under S3(1) of the Health and Safety at Work etc Act 1974. London. The principal contractor on site had not carried out a risk assessment in the area in the engineer was working. which was known to his employers.

uk 15 .For more information www.gov.osha.rics.co.int/ www.org www.eu.rospa.com www.britishsafetycouncil.iosh.co.uk www.co.shponline.aps.com www.uk www.books.uk http://agency.hse.uk www.org.hse.

regulation and consumer protection for business and the community. It is the home of property related knowledge and is an impartial advisor to governments and global organisations.org www.rics.www. promoting best practice.org Oct 2004/5 000/40236/D.Freeman .org RICS is the mark of property professionalism worldwide.rics. The Royal Institution of Chartered Surveyors 12 Great George Street Parliament Square London SW1P 3AD United Kingdom T +44 (0)870 333 1600 F +44 (0)207 334 3811 contact@rics.

is a growth industry and is supported by a plethora of books. and CDM in particular. as well as the written word. not the least of which is the Library Service of the Institution.PART 5. Other eminent organizations. if this is required.2: CONSTRUCTION (DESIGN AND MANAGEMENT) INFORMATION Health and Safety. The list is not exhaustive and has been prepared impartially without inference or preference or ranking and no doubt there are many other equally suitable sources of information not included. SECTION 2 SECTION 5. Section 2 (10/02) Effective from 1/12/02 Page 1 . ranging from introductory background for the beginner to more detailed coverage on specific topics for the more experienced reader. Where possible. publications and other sources of reference. This schedule attempts to meet the widest needs. The number of publications is daunting and the members of the RICS working party on CDM are frequently asked for advice in this respect. data has been collated on a functional basis under the heading of the various representatives of the project team for whom it is felt that the information is most useful. guidance has been prepared which is based on the personal experience of the working party members. In response to this. THE RICS HEALTH AND SAFETY IN CONSTRUCTION PRACTICE PANEL The Surveyors’ Construction Handbook Part 5. produce reading lists which contain much more comprehensive information. A variety of available media has been included such as videos and audio tapes.

HSE. 1996 [0110359046] Accident Awareness/Statistics ‘Blackspot Construction’ – Study of fatal accidents in the building and civil engineering industries 1981–1988 (out of print). 2000 [CIS 39] Clerk of Works The CDM Regulations: Their Implications for Practice. 1995 [1859460062] Clients and The CDM Regulations: What You Need to Do. Schedule of Sources of Useful CDM Information Regulations The Construction (Design and Management) Regulations 1994. 2000/01 [0717621103] Risk Assessment 5 Steps to Risk Assessment. 39 Construction (Design and Management) Regulations 1994: The Role of the Client. APS. HSE. HSC. RIBA. 2002 Construction Sheet No.1. A Guidance Note for Clerk of Works. 1993 [Video SP100V] Health and Safety Statistics of HSE 2000/01. CIRIA. Safety and Welfare) Regulations 1996. HMSO. HMSO. Approved Code of Practice and Guidance. ICW GB Page 2 Effective from 1/12/02 Part 5. 1988 [0118839926] ‘Not Just an Accident. Section 2 (10/02) The Surveyors’ Construction Handbook . HMSO.PART 5.2. HSE.’ Video. SECTION 2 5. 1998 [0717615804] Clients Engaging an Architect: Guidance for Clients on Health and Safety. 2001 [071 7621391] The Construction (Health. 2000 ‘Managing Construction for Health and Safety’ Construction (Design and Management) Regulations 1994. 1994 [0110438450] The Construction (Design and Management) (Amendment) Regulations 2000. HSE.

APS. Building Design. CIRIA. Construction (Design and Management) Regulations 1994: The Role of the Designer. 1995 [CIS 42] Construction Sheet No. HSE. 1995 [CIS 43] The Surveyors’ Construction Handbook Part 5. HSE. ACE. CIRIA. CERCI. by Sylvester Bone. 1995 [0717608077] CDM Regulations Case Study Guidance for Designers: An Interim Report. 2000 [CIS 40] CDM Documents (See also ‘Comprehensive Guidance’) Construction Sheet No.PART 5. 2000 [PS/99] Form of Appointment as Planning Supervisor. 42: CDM – The Pre-Tender Stage Health and Safety Plan. 1997 Out of Print Planning Supervisor Construction Sheet No. Section 2 (10/02) Effective from 1/12/02 Page 3 . HSE. CONIAC. Construction (Design and Management) Regulations 1994: The Role of the Planning Supervisor. 1995 [Agreement F] Designers Designing for Health and Safety in Construction (The Green Book). 1995 [0717607771] A Safer Bet: An Introduction to the Principles of the CDM Regulations 1994. 2001 3rd edition [08 601 78005] Building Design: Easibrief. RIBA. 43: The Health and Safety Plan During the Construction Phase. 1995 [CIS 41] Site Safety Handbook. 1995 [Video 1898671044] Out of Print Construction Safety Sheet No. 41. CDM Primer by Henry Haverstock. 2000 [FOA/2000] Where a Consulting Engineer is Engaged to Act as Planning Supervisor. SECTION 2 Forms of Appointment for Planning Supervisors Form of Appointment as Planning Supervisor. HSE. HSE. 40. 1995 [0860174212] Information on Site Safety for Designers of Smaller Building Projects.

1995 [GCI] Health and Safety in Construction.a. CITB.).PART 5. 1997 [0901919136] Comprehensive Guidance CDM Regulations: How Do Regulations Affect You? HSE. SECTION 2 Construction Sheet No. 1995 [0717607550] CDM Regulations Explained by Raymond Joyce. Scaffolds and Ladders. Building Centre Trust. 1990 [M20 6/90] Out of Print Prevention of Falls to Window Cleaners: Guidance Note. 1997 [CIS 10 rev] Inspections and Reports. HSC. 1996 [HS G 150] [0717621065] Construction Health and Safety Manual (includes 2 updates/year). HSE. HSE. Thomas Telford 2nd edition 2001 [0727730363] Croner’s Management of Construction Safety (includes 2 updates and 12 newsletters p. 1997 [CIS 49] Dust and Noise in the Construction Process. Croner. 1997 [CIS 47] General Access. HMSO. HSE. 1995 [CRR73] [0717607682] Control of Substances Hazardous to Health in Construction by HSC. 1991 [GS 25 0118856820] Out of Print Contractors (See also ‘Comprehensive Guidance’) Page 4 Effective from 1/12/02 Part 5. HSE. CIP. 1997 [CIS 8 rev] Tower Scaffolds. 1997 CDM: The View from Here. HSE. Contract Research Report. 1997 [1852630 027] Specific Hazards Safety in Excavations. HSE. HSE. 1995 [CIS 44] The Building Centre Maintenance Manual & Health and Safety File. Section 2 (10/02) The Surveyors’ Construction Handbook . HSE. 1995 [PML 54] Out of Print A Guide to Managing Health and Safety in Construction (The Brown Book). 44: The Health and Safety File.

Newsletter [SPOL] Construction Safety Manual (2 Volumes). SECTION 2 Safety Policies for Construction – BEC Guide. 2000 [GE 700] CD-Rom Audio Tapes CONDAM – CDM Regulations. CITB. Section 2 (10/02) Effective from 1/12/02 Page 5 . 1995 [AT 1] Health and Safety in Property. CITB. 1995 [ASP 17230] Key to References Used Name ACE (Association of Consulting Engineers) Address Alliance House 12 Caxton Street London SW1H 0QL Telephone 020 7222 6557 APS (Association of Planning 16 Rutland Square Supervisors) Edinburgh EH1 2BB Building Centre Trust The Building Centre 26 Store Street London WC1E 7BT CMP Information City Reach 5 Greenwich View Place Millharbour London E14 9NN 26 Store Street London WC1E 7BT 0131 221 9959 020 7692 4000 Building Design 020 7861 6467 CIC (Constructio Industry Council) 020 7637 8692 020 7222 8891 CIRIA (Construction Industry 6 Storey’s Gate Research and Information London SW1P 3AU Association) CITB (Construction Industry Training Board) CITB Publications Bircham Newton Kings Lynn Norfolk PE31 6RH 01485 577577 CONIAC (Construction HSE Books Industry Advisory Committee) PO Box 1999 Sudbury Suffolk CO10 2WA 01787 881165 The Surveyors’ Construction Handbook Part 5.PART 5. BEC. Owlion. 1997 [CHSMAN] Construction Site Safety: Safety Notes Loose-leaf. Owlion 1995 [ASP 10100] Construction Radio: Talking Point on the CDM Regulations. RICS and College of Estate Management. BEC. RICS and College of Estate Management.

Section 2 (10/02) The Surveyors’ Construction Handbook . SECTION 2 Construction Federation Construction House 56–64 Leonard St London EC2A 4JX Croner CCH Group Ltd 145 London Road Kingston upon Thames Surrey KT2 6SR HSE Books PO Box 1999 Sudbury Suffolk CO10 2WA 1st & 2nd Floors The Old House The Lawns 33 Thorpe Road Peterborough PE3 6AD Bracknells Lane Garston Watford WD25 9XX RICS Books Mail Order Surveyor Court Westwood Business Park Coventry CV4 8JE 66 Portland Place London W1B 4AD 020 7608 5000 Croner 020 8547 3333 HSE/HSC (Health and Safety Executive/Commission) 01787 881165 ICW GB (Institute of Clerks of Works of GB) 01733 564 033 LPC (Loss Prevention Council) Owlion 01923 66 4000 020 7222 7000 (mail order) RIBA (Royal Institute of British Architects) The Stationery Office (previously HMSO) Thomas Telford Publishing 020 7580 5533 0870 600 5522 The Institution of Civil Engineers 1 Great George Street London SW1P 3AA 020 7987 6999 Page 6 Effective from 1/12/02 Part 5.PART 5.

It represents the building control discipline within RICS but also has a remit to provide a mechanism for all those interested. SECTION 3 PART FIVE: ADDITIONAL GUIDANCE AND INFORMATION SECTION 3: BUILT ENVIRONMENT GROUP ROLES AND INFORMATION Introduction The articles and guidance published in the Construction Handbook are largely the responsibility of three faculties and their associated forums. involved or affected by building control issues to network. Section 3 (09/03) Effective from 1/11/03 Page 1 . planning. electrical. PROJECT MANAGEMENT This Faculty is responsible for project management in the property and construction industries. and • surveying profession services in civil. The Surveyors’ Construction Handbook Part 5. and health and safety relating to all forms of construction. petrochemical and instrumentation engineering. employers. CONSTRUCTION The Construction Faculty is responsible for: • strategic construction consultancy. mechanical. • construction management. economics.PART 5. The contributing faculties are: BUILDING SURVEYING The Building Surveying Faculty aims to increase the public perception and appreciation of the core values offered by a building surveyor and in particular the building surveying specialisms. heavy. It also seeks a clearer understanding for the public. The faculty wants to be identified as the principal source of knowledge and innovative thought on building surveying matters. management. contracts and materials procurement. media and other construction professionals of the skills building surveyors hold and an awareness of what can be added through their appointment. The associated forums are: BUILDING CONTROL The Building Control Forum was initially established as a consequence of the members of the former Institute of Building Control (IBC) taking up membership of RICS on 1 January 2001. It currently has a membership of approximately 4000.

). after consultation with members. Groups and committees fulfil these roles primarily by providing these types of outputs: • • • • • • Page 2 Practice Statements. and are a very pleasant way to achieve CPD. model and standard conditions of engagement and standard services. It currently has around 1000 members. information and articles in RICS Business and (if produced) faculty journals. I 5. to make strategy recommendations for new marketing activity and to assist in the implementation as appropriate. lawyers. electronic communications. Most of these are low cost. The forum publishes a regular series of short guides on matters related to historic buildings. Appointing a Building Surveyor (guidance note). It represents the building conservation discipline within RICS but also has a remit to provide a networking mechanism for all those interested. etc. seminars and conferences. Section 3 (09/03) .g. e. the media. The forum runs an accreditation scheme for surveyors in conservation. the public.1 Faculty working groups and committees of selected members have the following roles in respect of defined spheres of surveying services: • • • • • • to help members meet the market’s requirements for their professional services.PART 5. Effective from 1/11/03 The Surveyors’ Construction Handbook Part 5. involved or affected by building conservation issues. The events range from an annual seminar to half-day visits to work in progress at historic buildings. This highly respected scheme was started to help surveyors win church work and grant-aided work. to assist in answering queries on the content and quality of professional services (from members.3. Now there is an architects’ accreditation scheme in operation and one for engineers in prospect. SECTION 3 BUILDING CONSERVATION The Building Conservation Forum was founded in 1987 to develop a forum for chartered surveyors linked by common interest in conservation. and to receive market briefings and advice on developments in the market and to provide appropriate support to members. to produce or contribute to responses to government consultation papers. English Heritage and Historic Scotland will be making it a requirement that professionals involved in grant-aided work be accredited by their professional organisation. to respond to consultation papers from other bodies on the content of professional services and to developments in the market. and Information Papers. Guidance Notes. and has arranged an active programme of events for members. Since its formation the forum has contributed to increasing the profile of building conservation. dedicated web-sites.

Faculty working groups and committees are responsible for producing material for this handbook. Health and Safety Oil and Gas M&E Engineering JCT Consultant QS Procurement Contractors The Surveyors’ Construction Handbook Part 5. Building Insurance and Assessment of Claims Construction Administration and Management Building Survey and Maintenance Dilapidations DDA Construction Design and Economics – certification of domestic structures Boundaries and Party Walls CONSTRUCTION FACULTY IT – working with construction IT Railways – cost planning and cost control of major infrastructure projects and maintenance contracts Cost Planning Taxation – capital allowances. etc. SECTION 3 • • • I 5. guidance and related asbestos matters.3. The section can be contacted: • • • by telephone on +44 (0)20 7334 3791. Section 3 (09/03) Effective from 1/11/03 Page 3 .PART 5. Within the Faculties and Forums department there is a Professional Information Section which provides a free professional and technical enquiry service.uk I 5. or by email to profinfo@rics. The following working groups are currently in existence and are listed by faculty: BUILDING SURVEYING FACULTY Asbestos – management of asbestos regulations. and proposals for marketing and policy initiatives. by fax on +44 (0)20 7334 3844. advice to others on the content of professional services.3 Working groups and committees are not permanent and are subject to continuous review.3.2 representations to other bodies.org.

uk construction.org.org.faculty@rics.uk pm. GENERAL ENQUIRIES For general enquiries.faculty@rics. Section 3 (09/03) Effective from 1/11/03 The Surveyors’ Construction Handbook . The postal addresses of our headquarters (Parliament Square) and two other central offices are: RICS 12 Great George Street Parliament Square London SW1P 3AD United Kingdom RICS Surveyor Court Westwood Way Coventry CV4 8JE United Kingdom RICS 3 Cadogan Gate London SW1X 0AS United Kingdom Page 4 Part 5. SECTION 3 PROJECT MANAGEMENT FACULTY Project Management – PM Agreement FACULTY CONTACTS The relevant faculties can be contacted by Email at the following addresses: Building Surveying: Construction: Project Management: bs. please call our main switchboard on +44 (0)20 7222 7000.PART 5.faculty@rics.org.uk or by post to: RICS Contact Centre Surveyor Court Westwood Way Coventry CV4 8JE United Kingdom If you already know who you need to speak to.org.uk or by fax on +44 (0)20 7334 3844. please get in touch with the RICS Contact Centre on +44 (0)870 333 1600. by Email at contactrics@rics.

1 BCIS provides current. reliable and useful by subscribers. together with indices for certain sub-markets in the construction industry.500 projects. architects. The BCIS database is collated by analyzing unique data submitted by members and incorporates material from all other relevant sources.4: BUILDING COST INFORMATION SERVICE (BCIS) I 5.4. building contractors. a range of derived regional tender price indices and trade price indices. It includes the following information.1 ANALYSES Elemental analyses have been at the heart of BCIS since the first printed service was launched.2 INDICES BCIS compiles a full range of building cost. including consumer prices. I 5. I 5. general practice surveyors. developers. building surveyors. I 5.4. Subscribers can also automatically recalculate the costs to reflect a selected location and date. I 5. SECTION 4 SECTION 5. financial analysts and property owners in both public and private sectors.3.4. engineers.3 BCIS Online BCIS Online gives direct access to the BCIS database of information and is therefore always complete and up-to-date. Using analyses allows the cost of a new building to be forecast using examples of buildings priced in the market place.3.2 I 5.PART 5. BCIS Online has a search capability which allows you to quickly and easily find the most appropriate examples to match your current project from the database of over 14.3. and BCIS Online for those preferring to receive it electronically via the internet. accurate building cost and tender price information for the construction industry and the property market.3 AVERAGE PRICES BCIS average prices can be used to give indicative costs prior to producing elemental estimates and they can also be used as a cost check. who include quantity surveyors.4. • Element cost per m2.4. The information is interpreted by BCIS professional staff and presented to subscribers in two accessible and practical formats: the comprehensive BCIS Bulletin Service. Section 4 (revised 10/02) Effective from 1/12/02 Page 1 . It is regarded as authoritative.4. tender and output indices. The Surveyors’ Construction Handbook Part 5. construction output and new order statistics. Five studies are available: • £/m2 study. A wide range of background statistics is available. which provides hard copy data.

together with the build-up for the latest rates. SECTION 4 • Element unit rate study. • Functional unit prices.PART 5.4. I 5.6 DAYWORKS BCIS interprets the definitions of prime cost of daywork for all the main types of operative in the industry. type of work. This section also includes the annual BCIS Five Year Forecast. regional trends. and • Group element prices I 5. I 5.1 BCIS Review Online provides access to summary level information for the BCIS Database. • Average Prices Two studies are available: • £/m2 study • functional unit prices Briefing BCIS Review Online Briefing carries the latest news in areas of key importance to the construction economy. It includes the following sections: • Indices BCIS Cost and Tender Price Indices are available together with Retail Price Indices. I I 5.4.5 STUDIES Tender price studies report on the effect on tender prices of location. Page 2 Effective from 1/12/02 Part 5. building height. national insurance and CITB levy supplement this part of the service.3. This section also includes the annual BCIS Five Year Forecast. selection of contractor. Section 4 (revised 10/02) The Surveyors’ Construction Handbook .3. Together with the BCIS commentary and background to the forecasts. together with the BCIS commentary and background to the forecasts. Contract percentage studies report on preliminary percentages and percentage additions to PC sums. Details of construction wage agreements. Current and historic base rates are provided.4 BRIEFING BCIS Online Briefing carries the latest news in areas of key importance to the construction economy. site conditions and contract sum.4.3.4.4. building function.4.4 Other BCIS Publications and Services 5.

(e) Digests Digests give the source of publication and a brief summary of articles on construction economics.4. Published quarterly. I 5. regional trends. An updating service informs subscribers of any changes. input costs and output costs.4 GUIDE TO DAYWORK RATES AND UPDATING SERVICE This annual guide covers the daywork rate for 63 grades of operative. Section 4 (revised 10/02) Effective from 1/12/02 Page 3 .4. They include: (a) Indices and Forecasts Published quarterly. site conditions and contract sum. The information shows the rates and operative dates for current and recent settlements. commentary on market conditions and projected trends. It also has an executive summary. building height. including tender prices. I 5.4.4.4. The Surveyors’ Construction Handbook Part 5. I 5. building function.3 BULLETIN SERVICES BCIS Bulletin Services contain information selected from the BCIS database published in regular bulletins. The 2001 edition of the schedule has been revised and extended to reflect the types of plant likely to be available on a building site.4. regional prices. type of work. (c) Elemental Analyses The key source of price information from accepted tenders available at either concise or detailed level. I 5.4. selection of contractor. this bulletin contains a complete series of BCIS indices.4. (d) Labour. Hours and Wages and Dayworks BCIS publishes details of the principal wage rates in the building and allied industries. It also carries a brief commentary on market conditions and tender prices. SECTION 4 Studies Tender price studies report on the effect on tender prices of location. location factors and average £/m2 building prices.PART 5. Detailed analyses break down tender prices into 34 elements. (b) Surveys of Tender Prices This quarterly publication contains a range of current pricing studies and an update of the BCIS Tender Price Index.2 QUARTERLY REVIEW OF BUILDING PRICES The BCIS Quarterly Review contains a selection of BCIS data which gives guidelines on the general level of building prices.5 RICS SCHEDULE OF BASIC PLANT CHARGES For use in connection with Daywork under a Building Contract.

A monthly figure is circulated to all subscribers.4. and • three quality specifications (b) Guide to Rebuilding Cost of Flats This new guide provides cost per unit area tables for: • modern low-rise and medium-rise flats which will be applicable to many flats built post 1950.PART 5. It helps surveyors and valuers take account of differences in various parts of the country.co.5 Further details are available from: BCIS Ltd 12 Great George Street Parliament Square London SW1P 3AD Tel: 020 7695 1500 Fax: 020 7695 1501 Email: bcis@bcis.bcis.uk Website: www. (c) Regional Supplement The Regional Supplement contains separate tables of costs for each of the Standard Regions. and • flats in converted houses built between 1900 and 1950 which will also be applicable to low-rise purpose built mansion blocks Additional cost advice is given to help to adjust the base figures for a range of specific circumstances. I 5. It contains sixteen main tables of costs for: • four regional groups.4. Section 4 (revised 10/02) The Surveyors’ Construction Handbook . (d) ABI/BCIS House Rebuilding Cost Index This index assists in the updating of the figures in the guides between the annual issues.4.co. • three sizes of house.6 GUIDES TO DOMESTIC REBUILDING COSTS FOR INSURANCE PURPOSES (a) Guide to House Rebuilding Costs This annual guide is widely used by professionals when assessing rebuilding costs for insurance valuations. • five house types. SECTION 4 I 5.uk Page 4 Effective from 1/12/02 Part 5.

5. • services maintenance. The Surveyors’ Construction Handbook Part 5.2 BMI Quarterly Cost Briefing The BMI Quarterly Cost Briefing provides information o current and forecast trends in maintenance costs making it an essential tool for the facilities and maintenance manager. The BMI information will help in budgeting. • lift service labour. gas. maintenance and refurbishment.5. cost control. oil. fuel. Subscribers are provided with information on current.5: BUILDING OCCUPANCY COST INFORMATION (BMI) 5. historic and forecast costs of building maintenance and occupancy in a readily accessible form. I 5. • cleaning (labour and materials). It is widely used as a schedule of rates to ensure competitive prices. SECTION 5 SECTION 5. contract administration and life-cycle costing. Indices are included for: • redecoration.5. It contains guidance on letting maintenance work.3 Building Maintenance Price Book The BMI Building Maintenance Price Book is the only annual guide to estimating and pricing exclusively for building maintenance and repairs. Cost indices track the general movement of costs in different industry sectors allowing users to monitor their own costs against general maintenance cost inflation. The Price Book gives labour constants and measured rates for over 1.300 items as well as current wage rates and materials prices. electricity) I 5. It is a valuable working document for all those involved in estimating. and • energy (coal. forecasting. Section 5 (revised 10/02) Effective from 1/12/02 Page 1 . benchmarking. The publications listed below are included in the full BMI subscription service but are also available separately. checking and negotiating rates for maintenance and repair work. • fabric maintenance.1 BMI provides an independent cost information service for professionals in facilities management.PART 5.

I 5. Two plans a year are published and recent examples include retail centres and sports centres. • occupancy (cleaning.co. Digests and Reports BMI also monitors changes in the maintenance and facilities management industries and reports the findings to keep subscribers up to date. Section 5 (revised 10/02) The Surveyors’ Construction Handbook . administrative costs). I 5. further details. detailed occupancy cost plans and special benchmarking studies. and • Guide to Information Sources for Facilities Management BMI News summarizes the latest industry developments and contains statistical and editorial articles designed for quick reading to keep subscribers well informed. BMI occasional reports include: • The Economic Significance of Maintenance. Detailed occupancy cost plans for typical buildings show maintenance and occupancy costs projected over a 20 year period.5.PART 5.5.5 News. and • rehabilitation. utilities.5.uk Page 2 Effective from 1/12/02 Part 5. The annual surveys of information provide estimated annual average costs for a range of common building types: • maintenance (redecoration. SECTION 5 I 5. fabric. services). a full list of BMI special reports. BMI publishes digests of articles with a bearing on property occupancy from a wide cross-section of the building maintenance and facilities management press. This information can save subscribers hours of reading time and is backed up with a photocopying service. up-to-date prices and special rates for chartered surveyors are available by contacting: BMI 12 Great George Street Parliament Square London SW1P 3AD Tel: 020 7695 1500 Fax: 020 7695 1501 Email: bmi@bcis. occupancy and rehabilitation costs covering a range of common building types.6 Annual subscription rates.4 Special Reports for Benchmarking BMI publishes regular reports on maintenance.

there is far more regulation being introduced into everyday life. there are a number of problems related to electronic storage which have to be addressed. In fact. First. SECTION 6 PART FIVE: ADDITIONAL GUIDANCE AND INFORMATION SECTION 6: ELECTRONIC DOCUMENT STORAGE – LEGAL ADMISSIBILITY G Introduction The production and storage of documents and other information on computer systems has become increasingly common and it is. Increasingly. paper storage is a significant problem for many practices. Secondly. under the right conditions. Storage conditions must be right to ensure that storage is effective. The quantity of paper produced is increasing year on year and would do so even without expansion of the business. Section 6 (12/03) Effective from 12/03 Page 1 . and this is linked directly to a more litigious population. This is a medium that requires far less floor space and ensures longer term storage. The purpose of this text is to provide information on the best practice principles which have thus far been identified. Using a local lock-up garage will probably not be adequate to prevent deterioration of paper copies over a period of time.PART 5. provide acceptable evidence in the event of litigation. it is hoped. but there is a shift of emphasis away from admissibility towards evidential value or weight which is in line with the Civil Evidence Act 1995. Annex G of the Code of Practice (see Part 1) gives information on relevant national legislation. the growth in management systems generally. The Surveyors’ Construction Handbook Part 5. There is no current standard which guarantees legal admissibility (some countries have made a move towards this). However. and will be produced. therefore. as previously promulgated in BS EN ISO 9001:1994 and now in BS EN ISO 9001:2000. The requirement for storage also has implications – not least of which is the cost of dedicated storage areas. However. legal admissibility has to be considered: there has to be a certainty that electronically stored documents will have the same weight and validity as the original versions. has led to an increase in documentation. Two factors have led to the increase in the amount of documentation being produced by businesses. inevitable that these stored documents will be used in their electronic form as a basis for business transactions. the processes involved in compliance with ISO 9001 are designed to provide the documentary evidence which will satisfy the regulations which are relevant to the particular business and. businesses are turning to electronic storage. without deterioration. The need is now to be able to prove what actions occurred and when. transmitted and stored in significant numbers. There is a need to store and retain records for professional and legal purposes. In particular.

The Code of Practice should be used as a basic reference document. It has also been extended from the original version to cover any type of electronic storage medium. The difficulty is the range of issues which have to be considered. leading institutions took the view that a Code was required which recognised new technologies and would give a framework which reflected the existing legal precedents but applied to the new technologies. A document entitled Principles of Good Practice for Information Management. In the absence of a formal set of requirements approved by the courts through case law or by Parliament through the Civil Evidence Act. It covers data files stored on Write-Once-Read-Many times (WORM) optical storage systems and as such covers WORM. where it is stated that an action ‘should’ be carried out in relation to the Code. but also that the data now present has not been modified in any way. It should be emphasised that the Code does not guarantee legal admissibility. SECTION 6 G 5. the Code came about as a result of the merging of the research carried out by two organisations. Page 2 Part 5. In this guidance note. It defines best practice in document management and provides guidance that will help maximise the value and integrity of information in a court of law.6. written by two of the authors of the Code of Practice. The use of rewriteable media requires additional controls. which is evolving as technology and electronic commercial practices mature. contains a detailed explanation of the background to each of the sections of the Code. First prepared and published in 1996. It seeks to define the current interpretation of best practice. Section 6 (12/03) Effective from 12/03 The Surveyors’ Construction Handbook . including those that are rewriteable. and compact-disc-recordable (CD-R) systems. a Code of Practice (DISC PD 0008) has been developed. the rate of change of technology and the need to consult our European partners on all legal aspects. The Civil Evidence Act 1995 would have to be updated annually just to keep pace and this clearly cannot happen. It has not been possible to develop a set of requirements and may not be for some time. namely the Legal Images Initiative (formed by the Information and Document Management Association) and the Document Management Forum (a group of the Computing Suppliers Federation). multi-function media systems used in a write-once mode. as it is necessary to be able to demonstrate not only that the correct data was stored in the first place.PART 5.1 Code of Practice – DISC PD 0008: 1999 A Code of Practice for Legal Admissibility and Evidential Weight of Information Stored Electronically There has been considerable discussion about the value of documents stored on a document management system (DMS) when documents are required to be kept as evidence for a considerable time. Instead. the word ‘should’ indicates that such action is necessary in order to claim compliance with the Code. It has been accepted by most commentators that a common discipline needs to be agreed so that the value of these documents as evidence can be maximised.

Each business should consult its solicitor. The Surveyors’ Construction Handbook Part 5. G 5. in advance. (3) By keeping proper records of scanning and scanning difficulties. the prosecution faces a much higher burden of proof ‘beyond reasonable doubt’ than in civil proceedings ‘on the balance of probability’. This is explained in more detail below (see 5. until there is a request to produce a document.PART 5. (2) By having a control set of documents which have been used. G 5. the reason behind the request may not be known. if possible. The Code contains examples of compliance statements at Annex I and recommends that the Compliance Workbook PD 0009 be used to demonstrate compliance with the Code. There are three methods for doing this: (1) A maintenance record should be kept recording regular servicing of the equipment and any repair work either by the supplier/maintenance contract or by the in-house IT support where qualified/trained to do this. especially of any modifications to settings required.7). It is likely. the original document should be produced.2 Weight of evidence and document destruction Each business will have its own requirements and it is important to determine.6. Section 6 (12/03) Effective from 12/03 Page 3 . that it will be more difficult to prove their integrity in a court of law. It will rarely be possible to give a definitive recommendation regarding the destruction of original documents because. scanned and reproduced from the scanned version to set a benchmark for the quality of copy. the document storage system or the access control systems. and if weight of evidence or courtroom tactics could be unduly influenced by the destruction of the original document. how a document would be presented to a court of law. who will be able to provide a view as to which types of document are most likely to be disputed regarding their authenticity rather than their content. Documents may be rejected if this cannot be shown. according to agreed procedures) in order to authenticate documents stored on the system.6. There are different considerations for civil and criminal law. however. that these procedures have been followed. It is the reason for the request that will indicate whether.6. In a criminal case.3 Authenticity It is important to be able to demonstrate that the computer has been functioning properly (i. it does not follow that documents held on a system that does not conform are not legally acceptable. in a court of law. SECTION 6 The Code pays particular attention to the setting up of authorisation procedures and to the subsequent ability to be able to demonstrate.e. Whilst the Code defines essential procedures to be implemented.

it is the responsibility of the executives of the organisation to be able to produce the documents when required. photocopies and microfilm images are admissible as evidence. operation and access control. to the satisfaction of the court. The procedures by which documents are stored and accessed are vital in satisfying a court of law about the authenticity of a ‘copy’ of a document and the inability to tamper with it. Therefore. Section 6 (12/03) Effective from 12/03 The Surveyors’ Construction Handbook .4 Photocopies. All copies of documents (photocopy. Indeed. and even the computer programs and source code. However. Arguments over authenticity of evidence can lead to an investigation into the system that produced the paper and the method of storage. It could be disastrous for a business to find that it was uninsured because it had introduced a scan and destroy procedure. Page 4 Part 5.5 Document storage It is very important to note that. and it would be prudent to include professional indemnity insurers. The Code recommends that all interested third parties should be consulted. not the vendor of the storage system. the adversarial legal process means that the other party may try to discredit evidence on the basis of authenticity.6. It could be necessary to satisfy the court that the information is stored in a proper manner. microfilm or image processing) will be treated as secondary evidence by a court of law. for example. that the document storage system is flawed and cannot be trusted. image processed documents will be treated as secondary evidence in the same manner as a photocopy or microfilm image. By questioning hardware reliability. some photocopies use a raster scan copying mechanism which is essentially the same as an image processing scanner.PART 5. an opponent could establish. arguments are over what a document says rather than the authenticity of the document. This issue could be used by the opponent to try to discredit the evidence and to make inadmissible that and any similarly stored documents that are produced. It follows that image processed documents are likely to be admissible with the same weight of evidence as photocopies and microfilm images. However. to avoid dealing with the content. SECTION 6 In most cases. microfilm and image processing In very general terms. The company secretary or partners and the manager of the document storage systems are responsible for this document retrieval process. G 5. although no cases have yet been reported where this has been tested. This would allow the whole system to be brought into question and any documents stored within it ruled inadmissible. no matter how an organisation stores business documents. particularly when the original documents are subsequently destroyed. G 5. the advice of the company secretary (or solicitor) should always be sought before implementing any document storage system.6.

can be admitted as evidence in civil proceedings. This is in line with current procedures for microfilmed documents. the person who ‘certified’ a system. the court judge or arbitrator still has to be persuaded to treat the evidence as reliable and so organisations have to put in place procedures to prove the authenticity and reliability of the record. SECTION 6 with a subsequent reduction of weight of evidence if the authenticity of the copy can be questioned. However. and certificates obtained from the company auditors. for the image processing system to indicate whether an image taken was from the original or from a copy of it. Regular audits of the system should be performed. The Act introduces a flexible system whereby all documents and copy documents. It may help demonstrate the proper functioning of a system if a copy of the audit record is stored in the image system at the time of audit. Sections 8 and 9 of the Act address the hub of this issue: 8 (1) Where a statement contained in a document is admissible as evidence in civil proceedings. For example. authenticated in such manner as the court may approve. including computer records. may not be able to give evidence in person. advice should be sought from a company solicitor. The original document may reside in a file elsewhere. it may be proved: (a) by the production of that document. Although formal affidavits will not usually be necessary. There may be some confusion about ‘originals’ and ‘copies’.PART 5. It is essential that a proper system for auditing and certifying is implemented to demonstrate that the integrity of the system has been maintained from the time the document was stored. G 5. Of major importance to this Code is the Civil Evidence Act 1995. Section 6 (12/03) Effective from 12/03 Page 5 . if this is not readily apparent. or (b) whether or not that document is still in existence.6.6 Storage and access procedures Due to the duration of storage of many documents. It may be necessary. by the production of a copy of that document or of the material part of it. Many items to be scanned are actually themselves photocopies. but if a signature is being disputed then the original is likely to carry more weight than the copy. users should also comply with the relevant sections of BS 7799-1:2000 – Information Technology – A Code of Practice for Information Security Management. the original or a copy should be treated with equal weight. or a document stored on it. particularly if the original documents are to be destroyed. As well as the specific details included in the Code. The Surveyors’ Construction Handbook Part 5. where the content of a document is under question.

Section 6 (12/03) Effective from 12/03 The Surveyors’ Construction Handbook . where the issues of legal admissibility. and compact-disc-recordable (CD-R) systems. covering Write-Once-Read-Many times (WORM). (2) A document shall be taken to form part of the records of a business or public authority if there is produced to a court a certificate to that effect signed by an officer of the business to which the records belong. authenticity and evidential weight of information contained in these stored documents is important. 3) identify and specify business processes and procedures. each of which includes details of processes and procedures that need to be put into place to ensure conformity with the Code.6.1 GENERAL Scope The Code describes the use of electronic management systems to store information. Similar work is being undertaken by the Home Office on a Police and Criminal Law amendment.7. 9 (1) A document which is shown to form part of the records of a business or public authority may be received in evidence in civil proceedings without further proof. Sections 2 to 6 are structured in accordance with a set of five principles established in BSI DISC PD 0010 Principles of Good Practice for Information Management which are as follows: 1) recognise and understand all types of information.7 Format of the Code of Practice The Code of Practice contains an introduction and six sections.6. there are ten annexes. It is used with a document management system (DMS) incorporating write-once optical media as the storage device. 5.PART 5. 4) identify enabling technologies to support business processes and procedures. magnetic storage). SECTION 6 (2) It is immaterial for this purpose how many removes there are between a copy and the original. and 5) monitor and audit business processes and procedures. including one which identifies the changes since the previous edition. It now incorporates rewriteable media (for example. Page 6 Part 5. multi-functional media systems used in a write-once mode. In addition. G 5. 2) understand the legal issues and execute ‘duty of care responsibilities’.

While the Code covers aspects of document management that impinge upon the issue of legal admissibility of digitised images. it also covers aspects that may affect the use of images in a legal context. BS ISO/IEC 17799:2000 (BS 7799-1:2000) specifies eight controls which are either essential requirements. Such aspects include the legibility and completeness of the document images.PART 5. either created or imported. DISC PD 0008 was first published by the BSI in 1996. the paragraphs identified by text in bold type in the Code are considered essential in so far as they apply to the specific application concerned. It has since been revised and reissued in 1999. The Code covers all such data files. for example. and • end users who wish to ensure that the information created by. Section 6 (12/03) Effective from 12/03 Page 7 . The Code is heavily reliant on this document. Other paragraphs contain recommendations in italics that should be followed where practical. legislative requirements. The Code covers the capture of digitised images both from the original documents and from microform versions of the original documents. In the latter case. The Code is intended for: • systems integrators and developers whose equipment provides facilities to meet the requirements of end users. from the time at which the system assumes complete control of the data file. Where users wish to claim adherence to the Code. SECTION 6 The Code covers any type of data file controlled by the DMS. entered into and/or stored within the information management systems can be used with confidence as evidence in a court of law. even where admissibility per se is not at issue. Prior to this. Data files may be created by the DMS. The Surveyors’ Construction Handbook Part 5. directly or through a network system. Such networks may be local or wide area. These are designated ‘key controls’ and apply to all organisations and environments. and re-titled ‘A Code of Practice for Legal Admissibility and Evidential Weight of Information Stored Electronically’. users should be aware of the implications of the processes used in the microfilming of the original documents. and the transfer of the images to other systems. covering legal admissibility of information stored on electronic management systems. BS 7799:1995 was published in 1995 setting out best practice for information security management. or may be imported into it. They are intended as a basis for use by organisations setting out to implement information security controls. which has now been revised as Information Technology – Code of Practice for Information Security Management. or are considered to be fundamental building blocks for information security.

6. security. In addition. e) business continuity management. and • legal advice sought and acted upon. education and training. SECTION 6 The recommendations for essential controls include the following: a) data protection and privacy of personal information. • relevant information management standards. where appropriate.2 INFORMATION MANAGEMENT POLICY The Code advises that a policy document should be produced.PART 5. dealing with the policy on: • what information is covered. This policy must be approved by senior management and reviewed at regular intervals. c) information. • security classification. • retention periods and destruction. including any special regulations. • responsibilities. • data file format and version control. It is also recommended that the policy document details the responsibilities for compliance with the Code by identifying a person or job function and specifying retention periods for compliance documentation. Section 6 (12/03) Effective from 12/03 The Surveyors’ Construction Handbook . such bodies as professional indemnity insurers may wish to be consulted. BS 7799-1 is to be read in conjunction with BS 7799-2:2002 – Information Security Management Systems – Specification with Guidance for Use. b) allocation of information security responsibilities. Page 8 Part 5. • storage media. d) reporting of security incidents. b) safeguarding of organisational records.7. c) intellectual property rights. The recommendations for common best practice include the following: a) development of an information security policy document. 5.

where the organisation already has one.PART 5. • indexing. before the system is installed. the Code recommends that information should be grouped into types. Appropriate levels of security for managing information should be agreed and documented. Such a procedures manual.3 DUTY OF CARE It is essential that an organisation is aware of the value of information that it stores and executes its responsibility with regard to that information under the duty of care principle. Where the full weight of BS 7799 is not applicable. with the policy for all information within a type being consistent. • data capture. SECTION 6 The requirement for an information retention and destruction schedule is amplified as being critical to the successful implementation of the revised Code. In order to define the organisation’s information management policy.4 BUSINESS PROCEDURES AND PROCESSES The organisation should develop its own manual for the DMS. and relevant sections of the Code should be implemented. The Surveyors’ Construction Handbook Part 5. 5.7. The policy should list all types which are to be stored in compliance with the Code such as: 1) information generated by a computer system – also known as encoded data files. The revised Code contains more details of information security requirements which would be satisfied by compliance with BS 7799. in addition to any vendor-supplied manuals for the system.7. environment or personnel. 2) scanned images/digitised voice and/or video. and 3) information generated at a remote user or third party site. 5. is also critical.6. Consultation with interested third parties at the planning stage. there should be business continuity planning to ensure that all data can be recovered successfully following major failures of equipment. This can be incorporated in the quality management system. In any event. systems should be adequately managed. the controls listed in the Code should be implemented. should include the following topics: • document capture.6. Section 6 (12/03) Effective from 12/03 Page 9 . in either of the above two types.

• use of contracted services. • authentication of copies of data files. • date and time stamps. Section 6 (12/03) Effective from 12/03 The Surveyors’ Construction Handbook . The business should.PART 5. Any changes to procedures have to be documented and checked. • system maintenance • security and protection. have procedures for the examination process documented in its procedures manual. • information destruction. • workflow. and it is necessary to keep copies of previous versions of the procedure. • self-modifying files. If the information management system is used for storing images. Document capture There must be procedures dealing with the situations either where data files are created by the system or where they are imported into the system. Page 10 Part 5. audio and voice data (if applicable). All procedures must be reviewed at least annually and the results of reviews must be documented. • version control. • video. SECTION 6 • authenticated output procedures. then these procedures should be documented and users should comply with the recommendations set out in Annex C of the Code. • use of trusted third parties. Procedures need to be implemented to ensure that staff who operate the system will comply with the requirements. • file transmission. • backup and system recovery. Preparation of paper documents The Code requires documents to be examined before scanning to ensure that they are suitable. and • maintenance of documentation. therefore.

• the number of documents. • the type of material scanned. Section 6 (12/03) Effective from 12/03 Page 11 . In practice. Scanning processes The Code requires that the procedures manual should include details of the operational procedures used in the scanning process and that records be kept of all audit trails. and • details of post-scanning processes. if any. SECTION 6 Factors which may affect the scanning process should be considered and there must be a procedure to deal with scanning difficulties. (Appendix A shows a specimen form for recording scanning information. The Surveyors’ Construction Handbook Part 5. documents should be grouped in batches. Photocopying It may be necessary to photocopy a document prior to scanning and the procedures used must ensure that there is no loss of quality or of the total image.PART 5. Detailed procedures need to be established for general document preparation and collation. • the date and time of scanning.) The procedures should also describe how it is ensured that all documents in a batch are scanned. Where workflow is used. In particular. Document batching Wherever possible. alternative methods of controlling the scanning process may need to be established. Information held in the records is expected to include as a minimum: • a unique identifier for each batch. There should also be a method for identifying such things as ‘post-it’ notes attached to the original document or physical amendments which might not be visible after scanning. the scanning software will take care of many of the requirements and a paper record will fill the gaps. it requires each document to have a unique identity that cannot be changed or removed except on deletion and then only under tightly controlled circumstances. • the name of the person who performed the scanning. It is also advisable to provide some method of distinguishing between scanned originals and scanned photocopies.

SECTION 6 Quality control To be able to assess the validity of any scanned copy. Data capture This is mainly used where the original data is provided by such methods as Optical Mark Reading (OMR) or manual entry from an existing document. (It may be acceptable. which can be used to establish the quality of the scanned image. a document has to be rescanned. There should also be a procedure to deal with data migration from one system to another. this could conceivably lead to image manipulation.) This set of prints and originals is retained and periodically rescanned and checked. for the copy to be fractionally smaller than the original. The Code gives a number of criteria which may be appropriate to the user. Section 6 (12/03) Effective from 12/03 The Surveyors’ Construction Handbook . The results of all quality control checks (including audits) should be recorded. for example. following an audit. including print size and grey scale. the procedures should ensure that the original image is replaced and that the batch numbering and audit trail are not compromised. Page 12 Part 5. using normal settings. it is necessary to prepare a benchmark for evaluation. should make scanned copies of a range of types and conditions of document. Rescanning If. Annex D of the Code describes some of the different documents and associated image processing facilities that may be used.PART 5. In addition the equipment should be properly maintained at all times. The operator. Image processing If image processing is used to improve the quality of the image. The procedures manual should define how this is managed. All hardware and settings are recorded and the quality of each reprint is checked against the originals to ensure it is acceptable by the standards required by the business. Prints are then obtained through the normal printing process. as should any problems or difficulties which are experienced. where no scale is needed or where a drawn scale is available. Procedures need to be established which specify the quality and accuracy level required and that records of accuracy checking are retained.

then retrieval characteristics must be agreed and documented. a data file received from an external source must be saved on the system and the time and date of any data file should be stored as part of the audit trail. This is often built into scanning software and electronic document management systems. Section 6 (12/03) Effective from 12/03 Page 13 . The Code also places great stress on the authentication process and for controls where the output is not an exact reproduction. In these instances. File transmission If the documents are to be transmitted within a system. The Surveyors’ Construction Handbook Part 5. monochrome rather than coloured. there should be a formal process for recovery whereby the operator certifies that all equipment is operating normally and identifying the storage index data and document information which confirms that the reproduction is a true and complete record. Equally. Any changes to the index should be fully explained and audit trails dealing with the amendment should be available. There should be procedures for rebuilding indexes and for amending/correcting information held in the indexes and ensuring its accuracy at all times. Authentication of copies of data files It may be necessary to be able to identify whether a data file is original or a copy. wide-area communications system to the storage device. When a data file is transmitted to another party. Appendix B shows a specimen retrieval record for a scanned document/file.PART 5. which allows the operator to effectively certify that the document/file has been correctly retrieved. the original should be stored on the system. then procedures should be defined to ensure that changes cannot occur during the transmission either accidentally or deliberately. for example. via a network or external. If some aspect of the layout such as font or pagination is not maintained. the Code suggests that an electronic/digital signature can be stored with a trusted third party and could then be used to demonstrate whether a file is a true copy of the original. The Code also advises that in all cases the index files should be retained for at least as long as the information to which they relate. SECTION 6 Indexing The procedures manual must describe the indexing technique to be used and should include a method for checking the accuracy of the records. Authenticated output procedures For the prints to be legally admissible.

the procedures for checking of quality should be followed after maintenance procedures have been completed. for example. Backup and system recovery Backup facilities on the system should allow for automatic backup and verification of all data files and associated information. It is necessary. For the sake of the business. the procedures should deal with this. Procedures used in these systems should be documented in the procedures manual. therefore. including the requirement for secure off-site storage of the backups. including records of any down-time and reasons for faults and to undertake routine preventative maintenance. Under certain circumstances.PART 5. Information retention and destruction The procedure for retention and/or destruction of originals must be properly documented. which should include details of any problems incurred during the procedure. for example. Where document scanning is used. In some cases the original document will need to be retained. In each case. Section 6 (12/03) Effective from 12/03 The Surveyors’ Construction Handbook . SECTION 6 The Code goes on to explain the benefits of this in questions of authenticity where. System maintenance Obviously. Where backup data is used to recover from a system failure. There should also be a record kept in the system audit trail of all backup activity. the hardware and the software should be operating normally. including audit trails at regular intervals. it will be necessary to rescan documents following the identification of a fault (see Information retention and destruction). Page 14 Part 5. to have complete maintenance records. It is important to ensure that the files can be read even when the original hardware is no longer available. the original file purports to have been saved at a later date than the copy. or where fraud is suspected. It is therefore important that the backup media be tested regularly. where the original is of poor quality or holds annotations which cannot be scanned. it should not be possible to destroy an original before it is confirmed it has been safely stored. there should be documented procedures to ensure that data file integrity has not been compromised.

although this is not now referred to directly in the Code. The procedures implemented should be described in the procedures manual and should include the following: • appropriate security controls. limited access. The Surveyors’ Construction Handbook Part 5. with at least one backup off site. the client should check that the required accuracy is being achieved. • all media must be kept secure. In addition. and • all information on status of documents. Use of contracted services Having gone to the trouble of defining an internal procedure which complies with the Code. The procedures manual should contain all information relevant to the service provider. encryption keys and digital signatures. Details of the procedures used and the transfer of documents and/or media from the client to the service provider and from the service provider to the client should be documented in the procedures manual. • virus protection should be installed.g. including checking. maintenance and quality control and audit trails should be kept in a secure manner and be available for inspection and audit. • data file transfers must be strictly controlled. If the documents have to be transported physically. • removable media must be handled and stored as recommended. • user facilities may be in open areas. • mixed media may not be in write-once mode. SECTION 6 Security and protection The system should operate within the guidelines provided in BS 7799-1:2000. Section 6 (12/03) Effective from 12/03 Page 15 . • hardware must be protected against power failure.PART 5. copies of their procedures and audit records may be necessary. where the supplier also performs an indexing service. there should be a procedure for despatch and receipt. This should be assessed. The Code also describes the procedure where a copy is stored with a trusted third party as a secure means of detecting tampering with data files. it would be unacceptable if the business used outside services which afforded any less protection. e. The Code recommends that the contract between the supplier and the client should set out details of the extent to which compliance is claimed. but the central system should be in a secure area.

This means that the file cannot be ‘frozen’ in the sense required by the Code. the recording system must be up to the same standard as that required by the Code for the information management system. Self-modifying files In some cases. ‘summer time’ must be incorporated into the procedures. The information management system should include version control and superseded versions should be kept for at least as long as the final version. There also needs to be a procedure dealing with authentication of the source data. The Code requires operational details such as flow diagrams to be documented. as well as the process definition classification and the process definition life cycle. Version control If changes are allowed to stored data files. audio and video data The procedures should define how voice. This record of review needs to be stored in conjunction with the original document as a complete record. it is essential that the system is maintained with the correct information. to this end. then this must be in accordance with a documented procedure which includes any requirement to keep previous versions. Where the recording is not under the control of the information management system. i. document files contain automatic functions such as date entries which change to the current date when the file is opened. Date and time stamps Of key importance is an accurate record of the date and time and. audio and video data are to be dealt with. Some workflow applications link documents by virtue of changes to the index information.e. The creation and destruction of these links should be recorded in the audit trail of each document affected. Regular checking of system clocks and changes to reflect seasonal changes.PART 5. Voice. Either the automatic functions need to be disabled before storing or there need to be procedures which define how the files are to be stored and retrieved to ensure that authenticated copies of the original can be produced. Page 16 Part 5. Only authorised personnel should be able to change the system clocks. SECTION 6 Workflow This process allows a number of individuals to review a document at various stages. The Code then makes the point that all changes to procedures and processes should be implemented in accordance with an approved change control procedure. Section 6 (12/03) Effective from 12/03 The Surveyors’ Construction Handbook .

• authors or originators. SECTION 6 Maintenance of documentation Procedures and records should be maintained and stored in the same way as information generally. including system configuration and details of changes to the system. Access levels The systems description manual must define the levels of access available. This section of the Code describes technologies and how they should be utilised and controlled. • information storage and indexing. 5. the user should ensure that the system has been designed in accordance with the requirements of the Code. The following elements need to be addressed to achieve compliance with the Code. Systems description manual A list of hardware and software should be compiled. Section 6 (12/03) Effective from 12/03 Page 17 .6. The Surveyors’ Construction Handbook Part 5. with information on how they interact.PART 5. documents stored on the system prior to the introduction of the Code cannot be considered as conforming to it unless controls which meet the requirements of the Code were in place from the time of storing the documents.5 ENABLING TECHNOLOGIES General For a new system. Storage media and sub-system considerations Access to information must be controlled with ‘read only’ access or ‘read write’ access where appropriate and it should be possible to identify any changes to the document or data by those with ‘write’ access. For systems already in operation. as follows: • system manager. and • information retrieval.7. It is also important to prevent modifications being made without detection. • system maintenance. • system administrator.

• despeckle. These may include the following: • deskew. Compression techniques Two type of compression technique are recognised: (1) lossy. System integrity checks The system should ensure that the integrity of data files is maintained throughout the system. An additional element in the Code deals with digital and electronic signatures and the ability to verify the true identity of a person prior to their being enrolled as document signatory. It is safer not to allow image processing. The system should ensure that they are stored in the same location and can be retrieved as a complete facsimile of the image. These should only be used with extreme care and should be fully documented. Page 18 Part 5. • background clean up. and (2) lossless. including during the transfer of this data to and from the storage media. Compound documents Where an image such as a CAD (computer-aided design) drawing or a linked spreadsheet is stored. as any interference could invalidate not only that document but any other which may possibly have been adjusted. Image processing There are a number of ways in which an image may be processed to improve its appearance. and • forms removal. • black border removal.PART 5. SECTION 6 Only authorised members of staff may have access and such authority may only be given after suitable training. • noise removal. Section 6 (12/03) Effective from 12/03 The Surveyors’ Construction Handbook . the parts may be separated electronically.

It is also essential to be able to amend or remove incorrect or irrelevant data typically held in contravention of the Data Protection Act. Handling and storage procedures should also be described. but the Code sets out the requirements should this method be used. it is safest not to use lossy compression at all. SECTION 6 Lossy should not be used on primarily text files. In general. including date of creation and/or storage. Such correction may be accomplished by deleting the original document and substituting the corrected document or by using masks. it may be necessary to provide supporting information on the history of the document or data. movements from one medium to another and evidence of the controlled operation of the system. leaving only the variable data. the procedure for doing this must be documented. This information will be the subject of the audit trails and the records kept should be sufficient to provide a full historical record of all significant events associated with the stored information. as well as the procedure for checking the storage media regularly.PART 5. Section 6 (12/03) Effective from 12/03 Page 19 . This deletion can be accomplished by the removal of index entries to the relevant documents. These should be acknowledged and addressed in the system manual. In any event. The business should have procedures in place to handle the transfer of files at the appropriate time. Environmental considerations The hardware manufacturer may well have its own recommendations for the operational environment. it is almost inevitable that the hardware and/or software will cease to be supported. The Surveyors’ Construction Handbook Part 5. as the compressed image will lose certain details which may be replaced by artificially generated data when it is reproduced. a record should be automatically generated to record the removal and a copy of the template should also be stored on the same medium. Data file migration With changes in technology. and the information management system. Audit trails To be able to use the stored information as evidence. Information deletion and/or expungement It is essential that the system is able to delete or expunge documents as described in the Data Protection Act 1998. Form overlays and form removal Where the system software removes a fixed overlay from the digitized image.

G 5. there should be adequate procedures in place and that. Audit trail data should also be stored as a separate entity on the system. The audit trail information should be treated as having the same level of security as the information to which it pertains with secure backup copies being kept. it defines the best-practice approach for electronic storage generally. With the enactment of the Human Rights Act 1998 and the Data Protection Act 1998. in either case. destruction information and workflow. Page 20 Part 5. Section 6 (12/03) Effective from 12/03 The Surveyors’ Construction Handbook . Part of the audit trail should include the records of information capture. The procedures for data migration should be defined and the audit trail should include this information. Even without this requirement. including the user. In particular. it is expected that the pressure will continue to increase for a formal documented statement on legal admissibility. this is likely to feature in the Civil Evidence Act. SECTION 6 It is important that the audit trail be agreed with all stakeholders who might need to refer to the information. should mean that the information can be used as evidence in the civil courts. batch information. If paper copies are kept then the procedures should define how frequently they should be removed and stored.8 Conclusion The Code of Practice provides a sound basis for the use of electronic document and information management systems which. however. as far as possible. indexing. The danger. In time. it may be necessary to make it easily accessible to third parties who have little or no experience in the use of the system.6.PART 5. audit and legal functions. is that technology will continue to outpace any attempt at legislation. the date and time should be recorded contemporaneously. The Code recommends that. audit trail data should be generated automatically and that where this does not occur. if followed. It should be kept for at least as long as the information to which it refers and should be accessible. either by reference to the Code or to some European wide standard. change control.

..... Managing Partner The Surveyors’ Construction Handbook Part 5. The batch contains ............. SECTION 6........... Signed ……………………………................. Date Indexing information Project number File Folder reference Commentary DIP Operator/Archivist Confirmation of acceptance The above scanned files have been checked... Confirmation of destruction The above original documents may now be destroyed Date …………………... (No) images and consists of .... APPENDIX A Appendix A: Specimen form for recording scanning information The following files are authorised for scanning Project number Project Confirmation of scanning The above files have been scanned by ............................................ Signed …...................................... DIP Operator/Archivist Disk refererence….........................................PART 5.…….................................. Optical disk backup confirmed by IT .. (No) documents............................... the images are true and complete representations of the documents scanned...... Section 6 Appendix A (12/03) Effective from 12/03 Page 1 ......……….....................................

...........................................................PART 5................................ Date …………………………………....................... Section 6 Appendix B (12/03) Effective from 12/03 Page 1 .......... SECTION 6........... certify that the attached files/documents are a true reproduction of the originals which were archived in accordance with the procedures set out in our user manual......... The Surveyors’ Construction Handbook Part 5......... Authorisation to make certified copies The DIP Operator/Archivist/CAD Manager is authorised to make certified copies of the above Signed …………………………….. Signed ………………………………………..................... Managing Partner Files/Documents/Drawings retrieved The above files/documents/drawings have been retrieved from disk/tape reference: Retrieved by …………………………....... Name Date Indexing information Project number File Folder reference Commentary Certificate of authenticity I …………………….. being the DIP Operator/Archivist/CAD Manager employed by …………………….................. APPENDIX B Appendix B: Specimen form for recording retrieval Request for certified copies The following files/documents are required as certified copies Project number Project Documents or drawings Request authorised by Group Leader ……………………………………....................................

co. APPENDIX C Appendix C: References Further and more detailed information can be obtained from the British Standards Institution (BSI). Publications include: BSI-DISC PD 0005 Information Service Management BSI-DISC PD 0008:1996 A Code of Practice for Legal Admissibility of Information Stored on Electronic Document Management Systems (Edition 1) BSI-DISC PD 0008:1999 A Code of Practice for Legal Admissibility and Evidential Weight of Information Stored Electronically BSI-DISC PD 0009 Compliance Workbook BSI-DISC PD 0010 Principles of Good Practice for Information Management BSI-DISC PD 3000 Information Security Management: An Introduction BSI-DISC PD 3001 Preparing for BS 7799 Certification BSI-DISC PD 3002 Guide to BS 7799 Risk Assessment and Risk Management BSI-DISC PD 3003 Are you ready for a BS 7799 Audit? BSI-DISC PD 3004 Guide to BS 7799 Auditing BS 4783 Parts 1 to 8 Storage. SECTION 6.uk • Civil Evidence Act 1995 • Civil Evidence (Scotland) Act 1968 • Police and Criminal Evidence Act 1984 • Criminal Justice Act 1988 The Surveyors’ Construction Handbook Part 5. Transportation and Maintenance of Media used in Data Processing and Information Storage BS 7083:1996 Guide to the Accommodation and Operating Environment for Information Technology Equipment BS 7799-1:2000 Information Technology – A Code of Practice for Information Security Management BS EN ISO 9000 Quality Management and Quality Assurance Standards BSI publications are available from Customer Services. 389 Chiswick High Road. 123 Kingsway. Sales Department. W4 4AL. Tel: 0870 600 5522 Fax: 0870 600 5533 Web: www. London WC1.com The following publications are available from The Stationery Office. London.bsi-global. Tel: 020 8996 7000 Fax: 020 8996 7001 Web: www.tso.PART 5. Section 6 Appendix C (12/03) Effective from 12/03 Page 1 .

APPENDIX C • Evidence Act (Northern Ireland) 1939 • Civil Evidence Act (Northern Ireland) 1971 • Statute Law Revision Act (Northern Ireland) 1973 • Police and Criminal Evidence (Northern Ireland) Order 1989 • Criminal Justice (Evidence) (Northern Ireland) Order 1988 Data Protection Registrar. Data Protection Guidance for Users of Document Image Processing Systems. Cheshire SK9 5AF. Wilmslow. Wycliffe House. SECTION 6. 1995 Available from Information Commissioner.PART 5. Tel: 01625 545700 Fax: 01625 524510 Page 2 Part 5. Section 6 Appendix C (12/03) Effective from 12/03 The Surveyors’ Construction Handbook . Water Lane.

5 BMI Quarterly Cost Briefing 5.1.4.1.4.1. 5.4(k) authority. Part 2 Section 2: Appendix B1.4.1 see also risk analysis analysis checklist 3.4.2.1. 2.2. Part 4 Section 2: Appendix A10 all risks yield 2.5.5(b) budget 2.4.5.10(c) ascertained damages 4.4 Appendix to the Form of Tender 4.4.1. Part 2 Section 3: Appendix A BCIS Standard Form of Cost Analysis 1.18(c) accidents 5.2.2.4.6 adjudication 4.5 architect as certifier 4.1.1 bills of quantities see quantities Blue Form 4.1 BCIS standard elements 2.1.4.5(Intro) approval processes 3.7.7(a) assumptions Part 2 Section 1: Appendix C attendances 3.2.1. Part 2 Section 3: Appendix A5N.10(d) agent see employer’s agent all–risks insurance 4. Part 2 Section 4: Appendix B2.4. 2.2.3(c) B balancing adjustment 2.5.1.3.1. Part 2 Section 4: Appendix A (Intro) automatic practical completion 4.6 arbitrator 4.4.11.1.5. 4.2. 2.5 Australian ruling 4.3 BS EN ISO 9001 5.4(e).7.4.2.2 architect’s information 2.2. B4 Building Occupancy Information see BMI The Surveyors’ Construction Handbook Index (12/03) Page 1 .2 BCIS Elements for Design and Build 2.1–2.6.6 (Intro) BS 7799: 1995 5. 4.1 build insurance 4.1 administration cost Part 4 Section 2: Appendix A1 admissible items 4. 5.4.5.4.8.2.3.1.2(Intro).3. 3.6.6.2.5 benchmarking 2. 2.4 Brundtland definition 2.6.1.4.2(Intro) conditions of engagement 3.2.3.2.2.2.1 ACE see Association of Consulting Engineers activity schedules 2.5 BMI Building Maintenance Price Book 5.15 BMI (Building Maintenance Information) 5.3. D advance payments 4.6.3 BMI News 5.2.1.6.6.2.7.4.6. 2. 2.6 balancing allowance 2.5.1.3 appointment documents 2.2.4.2 budgeting 5.1.7.2.16 builder’s work 2. 5.2.2.2 bond/parent company guarantee 3.3.11(c).4.2.4(Intro). 4.3.2.1. Part 4 Section 4: Appendix C addendums 3.1.2(Intro).1.4 best-fit solution 3.9 judgement in 4. 4. Part 4 Section 2: Appendix C3. 4.2.4.9.2(Intro).INDEX Note: references are to paragraphs.2.5.3(d) allowances see tax allowances alteration costs Part 2 Section 2: Appendix C4 alternative design solutions Part 2 Section 1: Appendix C amounts previously certified 4.4. Figures and tables are not included A ACA Standard Form of Contract for Project Partnering PPC 2000 4.8.1 BS 7799-1: 2000 5.2.2. 2.6.3.2.3. 5.3 audit trail 4.3.3 briefing 1.1.4. 4.2(b).2.5.7. 4. 2.1.1.3.2. 3.1.5. 5.1(a).6.2.5. 4.7. 5. D8 balancing charge Part 2 Section 2: Appendix C6. 4.2.6.2.4(b).1.4.3(c). 2.5.1.4.1.4.4 BCIS Quarterly Review 5.6. 2.1.7.2.6. 4.4.4.4. 4.3.4.4.2.2.4.4.4.1(c).2.2.3.8.4.2.5(c).5.3 documentation for 4.2.1(Intro).3.2. Part 2 Section 4: Appendix A (Intro) BCIS Five Year Forecast 5.2. 4.2.4(f) average risk premium discount rate 2. 5.3.2.1.2. 2.2.2.1.10 costs versus prices 4.7(c).3.2 Association of Consulting Engineers 3.2.2.3.3(e) ascertainment 4.3.6.11(b) application for reimbursement.3.2. 4.2.2.4.6(c).2.1.3.2.2.6.4.2.7.4.3(b) architect’s instruction 4.14(c) arbitration 4.7.1. 2.5. 5.4.4.4 global or individual 4.1.2(b) buildability 3.10A acceleration 4.4.7.3.3 BCIS Online Briefing 5.5.6 analysis 1.2. 2.3.1. 4.2. 2.10.2.1. A5O Building Cost Information Service see BCIS building life 2. Part 2 Section 2: Appendix A6.2.1–4.1.2. 5.6.3 acceptance certificates 4.2 application 4.7.5 responsibility for 4.2 see also time budget budget format Part 2 Section 1: Appendix B budget preparation methods 2.4(f).1.10(c) analyses 2. 2.1.3 (Intro).4.1.2.6 (Intro) BSRIA Allocation of Design Responsibilities for Building Engineering Services 3.2. D8 BCIS (Building Cost Information Service) 2.2.4.1.3.1.3.4.4 BCIS Bulletin Service 5.4. delegated 3. 5.3.7.2.2.3.4. 3.2.2.3.4.3.2.1. 5.3. 5. 2.4.1.2 architect as contract administrator 4.2.3.1.2.3(iii)(iv) Architect’s List 4.8 definition of 4. 4.4.4. written 4.4 BCIS Online 5. 3. 5.1.6(a).

1 client needs 3.7.1.1.2.3(b)(f). 4. Part 3 Section 1: Appendix A.2.1.6.6.2.3.1.3 employer’s requirement Part 2 Section 4: Appendix B2 items for which loss and/or expense allowed Part 4 Section 2: Appendix D procurement selection 3.1.18(b). 2.6.1.3(a)(d) client’s input 2.3. 3.4.2.1.13(m) client resources 3. 4.5. Part 4 Section 1: Appendix A10 certificates see final certificates.2.2.2.1.7.2.2.2.1. 5.2 CITB Levy 5.3.6.4(a).4.2. 3.7.1.3.1.2.3 enabling technologies 5. 5.2. Part 2 Section 2: Appendix D4 worked example 2.14(b) client satisfaction 3. 2.1.3.7. life cycle costing 2.3.1.2 conditions of engagement 3.5.(Intro). 5.5.7 client’s role 1.1.2 design-only engineer 3.2. 5.4. 1.1.6.1.13 prior to construction 3.4(l) see also perfect completion. 5.1.4.5 Page 2 Index (12/03) The Surveyors’ Construction Handbook .1.5.2.4. 2. Part 2 Section 4: Appendix A1.2.1.5.3(c).4. 2.1.4. steps when considering Part 4 Section 2: Appendix E time 3.6.6.6.5(Intro). 5.2–3.4. 3. avoidance of 3.2 client and property costs 2.5.7 civil engineering 2.5(d) CDM (construction (design and management)) information 5. 2.5.5. 3.13(g).3(a)(g).1.2.1. 1.building options. 3. 2. interim certificates.1.3(i).2 Building Research Establishment 2. practical completion certification of completion 4.1.2. two-stage completion completion date 2. 2.6.3.5(c) staged 4.2.3.3.1.2. 2.3.4.4. 2.4.1.6.1.4.5. 2.1.2.7.14(d) after contract let 3.1 options.3.2 regulations 2.1. 3.1.1.4. 4.1.9.1.1.1.4.5.1.2.4. 3. 3.6 building services procurement 3.4.2.4.5.2.3(Intro).5.2.1.2. 3.5.4.3. 2. 2.2.2.1.4.2. 3.1.19(a) change control overview 3. 2.5.6.1. 4.1.6. 2.4. 3.5.3.1.3(a)(f).3.7(d).3.19(g) see also client changes.1.4.4.1.4.7 C cables 2.2.2.3 tender documents 3.17 common inheritance 2.2.1.2.5 format 5.1.1.2.4.1.5.3 business rates 2.4.5 built environment group 5.4.3.2.4 scope and purpose 5.5.2. 2.2.8 duty of care 5. 4.5.2.4.4 Codes of Procedure 2.1 client and consultants 2. 4.6. Part 2 Section 2: Appendix C1 capital expenditure 2.4.3(c).4. 3.5.4.19(h) late 3. D6 capital income 2.4.1.2.1.6.5 contractor 3.3.3.4. procurement routes 3.6 completion distinct from practical completion 4.4(b) capital allowances 2.4. 2.3.1.3 choice (design) 3. D3.1.1 Code of Practice for the Selection of Sub-Contractors 3.2.1. 1.2.6.2.1 client 1.2. 2. Part 2 Section 4: Appendix A (Intro) collateral contracts 3.1.7.1.1.1. 2.1.5(f).2–3.2.3.3.1.2 building services installations 3.3.4 Building Services Research Information Association see BSRIA building standards and requirements 2.3.2.2(Intro). 1.5 designer 3.3.2.2.6.5.5.5.4.4.4.1.1.6.4. 2. 3. 2.1.5. 2.19(b) client context. life cycle costing 2.4.5(b)(f).6.4.4.1. 2. 2.1.1.2(Intro). 2.4. 2. 2. 1.7 client’s brief 1.2. 2.4 tendering 3.6.2.6.6 (Intro) competitive tenders 3.2(Intro).1 client changes 3. 4.13. B2.4(Intro).1.4. cost plan.4(b).3(a) client’s information 2.16(b) commissioning 3.1 Code of Practice (DISC PD 0008:1999) 5.7.3.2.6. 2.3(b) building sustainability 2.1 client’s objectives 1.8 cladding Part 4 Section 1: Appendix A6 clerk of works 2.11 client uniqueness 3.1.3(c).2.16(c). 2.7.2.3.1.3.4 procedures manual 5. 2.1.3(Intro).1.2.2.1 client reserve 3.4(f) Codes of Practice 3.5 design responsiblities 3.4.1.4.6. Part 4 Section 2: Appendix B2.4.2(Intro).1 Civil Evidence Act 1995 5.1. 2. 2.5.2.1. 2.4. 2.17(d) completion date see completion date sectional 4.2.3.6 client’s involvement 3.2. 5. 2.9(c). 2.1. 5.1. 3.1.4.1.7 client systems 3. 2.2.5 completion for all practical purposes 4.8.6. Part 2 Section 2: Appendix D1.5.1.2.19 changes 3.6.7. tender documents checklists analysis 3.1. 2.1 clients requirements 1.4.6 building project Part 2 Section 4: Appendix B2.2.7.7.2.5.2.6.4.4 risk 4.7 procedures and processes 5.1.6.3. 2.3 design coordination 3.8(e) completed part of the works 4.13 contractor’s proposal Part 2 Section 4: Appendix B2 cost 3.5.4.4.2.5.5(f).2 client’s responsibilities 1.4.2. 4.3. 4.2.4 building surveyor’s information 2.1.6(h) capital costs 2.2.1.2.2.4.6.4.1 change.2. 4.2.3(b)(iii) submissions.

3.2. pre-contract 2. 3.3.6.4.2.7. 5.2.4(intro). 4.2(Intro).3.2 cost information Part 2 Section 1: Appendix A. 4.5.1 see also design and build contract. 4.3(i) see also contracts contractor 4.1.2.4.4.1.4.1 interim payments to 4.4.4. 4.2.8 selection of 3.10 building services 3.6. 4.1.3 controls 3. 4.1.2. 5.1.2.completion process 2.4.1.3.5(c) installations 3.4.4. 4.5.1.1.8.3(c) see also extension of time Construction Task Force 1.4. 4.1.2.6 (Intro).2 computer aided design (CAD) 3.2.8 lead see lead consultant responsibilities of 2.1.10. Part 4 Section 2: Appendix E.1.5.2.4. 3.2.4(b) contingency Part 2 Section 3: Appendix A8.2 Control in Trade of Endangered Species (CITES) 2.5.4. 4. 4. 4.1.6.11 conversion 2.3.1(Intro).4(h) delay. 4.4(Intro).4.5(h) cost consultant 1. 4.5.8.4 concurrent engineering 3.2 application 4.1.2.1.3.13(d).4(b) computerised documentation authenticity 5.11. 4.1.12(f).1.6.8(a) construction administration see construction management construction completion report 4.4.4.5.5. 2. 5.1.2(a).3.4.4.3.1 contract administrator 2.2.5(d) submissions 4. microfilm and image processing 5. appointment of 3.4.2.1.4.15.1. 5.4.5.3.13.2.4 Contractor’s List 4.7 cost control 2.4. 2.4(h) design 3.1. Part 2 Section 4: Appendix B contracts breach of 4.2(Intro). 2.1(c)(d)(e).2.15.1.4.2. 3.1.3(d) conflict.2. 3. 4.7.7. 4.2.2.5 responsibilities of 2.2.3.2.14(g) constructors.4.13(m) contract administration 5.1. 4.1 coordination contractor 3.3 cost comparison (worked example) 2.2.2. 5.1. 4.3 analysis 2.3.4.18(c) completion time 3.1.11.3.1.1.1.1.2.2.2.4(b-d).3(iv) contractor’s initiative 4.2.3(e) contingency funds 3.5. 5. 3.1.3 building services 3.12. risk analysis 4.3.2. Part 4 Section 2: Appendix C1 performance monitoring 2.2 appointment of 1.3.1.3(h).5.2.3. 3.3.1 Corporation Tax 2.13 cost criterion 3. extension of time. 4. 4.1. 3. 3.1.1.4.4.2.4.14(c) see also extension of time completion to time 4.1.1.1.5.2. 3. Part 4 Section 2: Appendix B2.3(iii)(iv) range of 3. Part 2 Section 4: Appendix B1. 4.2.4.3(d) cost index 5.11(d) cost control overview 3. dealing with 1.12.4. 2.4.6.2.1.2.2.1.2.3 loss and/or expense 4.2.5.3.5.4. 2.3. 4.7(d) Constructing the Team see Latham Report construction 3.2.3(b)(f) consultation papers 5.2.4.1.2.7.3(e)(h).4.3.16 contract stages (design and build) duration Part 2 Section 4: Appendix A3 post-contract Part 2 Section 4: Appendix A4 pre-contract Part 2 Section 4: Appendix A2 contract sum 2.3.8.4. 4.2.2.4.6.3(3).6 construction management 3.4.7.1. 4.4.1.1.4.5.1.2.3.1(c).2.2 standard 3.3.2.13.4.16.14(e) cost limit 2.1 consulting engineers 2. 4.2(Intro) construction time 3.4.1. 2.3(e)(h). 4. 4.2.7. 3.3 construction (design and management) see CDM construction industry 2.7.1.16.1.4.10(c) contractor’s price statement 4.2. 4.2(Intro).4.4 contract switch Part 3 Section 1: Appendix A6(b) contract terms and conditions 3. 4.4. 2.4.6.1. 3.1.2.4.3.2.3. Part 3 Section 1: Appendix A.3(iii) contractor’s proposals 2. 4.1.1.1. 2.14.10.9(f).4(f) computer software.4.1.3 coordination 3.2.6.5.7 clause 13A 4. 4.5 contract documents 2.3.1.2. 4. 3.6.3 see also time contingency contingency allowance 1.2.2.3.1–5.1. 2.3(a) cost management.6.18(c) construction costs 2.4(a)(b)(c)(f) cost categories Part 2 Section 2: Appendix C cost checking 2.1.5.9.2.1(c)(d).2. Part 4 Section 1: Appendix A1 contract duration role of employer’s agent Part 2 Section 4: Appendix A3 contract implementation and administration 3.5.2.4.1.3(b) consultants’ information 2.2.1.1.1.4.7 risk allocation 3. Part 3 Section 1: Appendix A3. and individually.1.5. 2. 3.1.3. 4.4.6.2.7. 3.1. 4. 4.4.8(b) cost estimates 1. 4.6. 4.4. by title contractual arrangements 3.6.3.2.1.4.1. 4.4.1.5.1.2.4.3.2. 4. 4.2.2. 4. 3.2.1.2. 4.4 determination of employment 4.4 scanning 5.2.6.3.5.2.2.4.3.1(b).4 cost issues 3.2.4. 2.2.4.4.5.1.1.9 consultants 2.2(Intro).5. 4.1.2.1. 4.1.2.4.2.4 life cycle (worked examples) 2.3.2.6.1.1. 3.1.4. 2.2. notification of 4.1 cost models 2. 3.2.3.2.9.3.3. 3.3.1. 4.5 The Surveyors’ Construction Handbook Index (12/03) Page 3 .4.4.4.1.3.2.1.4.12. 4.1.6 photocopies.13(h) cost checklist 3.2. 5.9. Part 4 Section 2: Appendix C4.2. 3.1.10 control document 2.7.

3.1.4. 3.2.5 design options. 4.4. 4. 2.2.4.2. 2.2. 3.3.4 indirect 4. 2.3. 3.3.3.2.2.1.3.4.17(d) damages 4.6. schedule of defects.1. 3.2. 1.2(Intro). 4.7.1. 3. 2.1.2.5.2. building 3.1.18(c). 4. 3.1.5.4.5 defects liability 4.2.2.1.3.5.2.18(c) defects correction period 4.5.1.3.1. Trade and the Regions (DETR) 2. life cycle costing (worked examples) 2. 4.2 data electronic 4.cost plan 3.1. 1.1.6.4.1.2 design overview 3. pre-contract 2. 4.2. 4.2(b)(c) design team 1.5.5.4 decoration works Part 4 Section 1: Appendix A7 deductions 4.14.2.1.4.2.9.3.3. 4.2.2. 2.2.12.9(f).3 see also latent defects.3(c).2. Part 2 Section 6: Appendix B depreciation 2.2.7(b).13(j) cost risk 3. initial Part 2: Section 4: Appendix A1 design-only engineer 3.4 Data Protection Act 1998 5. 5.1.6.4.1.1.6. 4.1.2.4. 4.7(e).12 design performance checklist 3.2.13.14(f).1 primary 3.7 delay 3.2.2.2.4.3.1.1.6.1.2.3.4.2. 2.4.2. 4.19(d) design input.2 design risk 3.3(Intro).1.1 definition of the project 1. 4.7.2.2 building services 3.3.6.4.3 dayworks preliminaries 5. 3.11. 2.2.6.1.6.3.12.5.1(ii). 4.3.1. 2.3.6.3 design programme 1.1.2.1(f).2.2.4. 2.4.4.2.4.1.2.1–2.2.6.2. 2.2. 3.4. additional 2. 1.3.4.2. work not properly executed defects correction 4.1.2.1.2(d).1.4 outline proposals stage 2.2.5.4.4.4.1.1 decision-making process 1.1. D8 design 1. 5.2.4.7.1.3.4. Part 2 Section 2: Appendix D3. 2.3(e).1.4.4 types of 2.6.4. 4.6. 2.7.7.2. 3.4.1.1. 3.1.3(e) client-led 2.2. 4. 1.1.1.1 Code of Procedure for Selective Tendering 2.4.4 excess 2.5.11(b) design solutions 1.5. 2.2.2(ii).6(c) defects liability period 4.2.5.8 see also disruption demolish and rebuild.1.2.4.1. 4.8 dayworks 4. 4.1.5.6(a) design requirements 3.1.3.10.14.2 costs-in-use 2.1.5.3 design proposals 2. 4.5(a).4 risk 4.10.1.1.1.3.2. 4.3.4.2. 1.4.2.1. 3.1.9.4. 2.3.2.5.3.7 design re-evaluation 3.5.3. Part 2 Section 4: Appendix B1 design and build contract contractor’s proposals 2. 4.7. 2.2.1. 4.4.3.1.4.13(e) costing calculation 2.2. Part 2 Section 4: Appendix B employer’s requirements 2.4.2.6 demolition costs Part 2 Section 2: Appendix A4 density of vertical division Part 2 Section 1: Appendix C Department of Environment.2.3.2.10 defects 4.1.1(d) functional analysis of 1.1.6. 3.1.5.8.5.4. Part 2 Section 2: Appendix A3 see also life cycle costing costs categories of 2.1.1.1.2.1. C4.5 cost planning. 3.5.5.1.8 D damage to works 4.1.6(a) design responsibilities 3.7. 1. 4.6.2(b).2. 3.1(d) contractor-led 2.4.6 format Part 2 Section 1: Appendix B modification of 2.5(c) design times 3.5.1(Intro) outstanding 4.2 cost targets 2. 5.2.4.1.11 cost studies.4.8.4.12 design build fund and operate (DBFO) 2.3.1.2.4.6.2.1.7 Design and Build 2. 4. 2.1.4. preliminary 2. 2.1.4 scheme design stage 2.3.5.2.1(b) design stages 1. 2.3 Page 4 Index (12/03) The Surveyors’ Construction Handbook .3.1. 4.1.6.5.5.2.11(c).14(c). 3.1.6 design coordination 3.2.4.2.4.3(d).1.4.5.6.13(h) changes to 2. Part 2 Section 4: Appendix A5 services.1.1.4 design and manage 3.1.1. 1.2. 2.2.5. 1. 2.1.5(f).2.3.2.5.1. Part 1 Section 2: Appendix A process 3.5. 4.2.2.2.2.2.2.1.3. 5. costing 2.3.1. 4.4.6 presentation 2.3(c) surveyors as employer’s agent 2.1. 1.1. 3.3.1. 4.2.5.11.10 contract documentation 2.4.4.5(c) design failure 3.1.3. 5.8.2.4.11(d).2.3 design process 2.2.2.2.8.1 cost reports 2.4.1. 2.1.2.5.1.16.5.4.4. 5.5 see also contract stages (design and build) design and construction period 2.4(c)(e).3(b)(vi) sources for costing 2. 4.2.2.1.1.14(h) designer 2. Part 4 Section 2: Appendix B.4.2.5.4.8 criteria identification of 3.2(Intro).7.1.1.2.4.2.1. patent defects.1.5.6. 1.1.3.4 services. Part 3 Section 1: Appendix A5 design brief 1.1. 3.18 amendments 2.1.2.6.5. 4.4.1. 2.3.4. 2.2.1.4.1.10 de minimus rule 4.1. 4.4(Intro) variants 2.3.1. 2.4.2. 4.2.3.1. D7.3.5. 3.2.7.5.2. 1.2.2 setting of 3.3. 2.1.7.1(c).2(a) remedying 4.4.4.7.2.5.1. Part 3 Section 1: Appendix A6 background 2.10(b) design (frozen) 3.2.1.1. 2.2.1.9–3.6.2.1(b) costs versus prices 4.2. 4. D6. 4.2.3.4.1.

2. Part 5 Section 6: Appendix B see also Code of Practice (DISC PD 0008).5.3.1.1.2.6 (Intro).2 elemental unit rate basis 2.5(Intro) contract clauses 4.4.3.2.1. 5.4(b).4.2. 5. 4.2. 4.7. 2. 4.8.2.5.5 access procedures 5. 4.4.4. 4.2 digests 5. 2.1.1. 2. 2.9 contract administrator’s role 4. 4.4.6 (Intro). 4.1.1.4.5.3.5.4.5. 4.2.11.2. 2. 4.5.5.6.2 employer’s responsibilities 2.11 JCT contract 4.3 employer’s agent 2.1. 4.2.3 environmental 2.7.3(c)(g).3.2 impact 2.5.2.2.4.4.2(b).4.7.4.2.5. 4.5.6.5.5 guidance Part 5 Section 6: Appendix C maintenance record 5.2.5.5.9 development 2.2.2.3 developing the business case 3.5.1.2.4. C4 extension of time 4.2.4 electrical services see mechanical and electrical services electronic data interchange 4.3.4.4.2.2. Part 3 Section 1: Appendix A6 developers 1.3(Intro).6.4.5(e).11 event 4. 2.2. 4.2. 2.1.1.5.1 E early completion 4.3(2) duty of care 5.2.5. 2.1.3(1) paper 5.3(e) test 2.1.2. 3.7.2.4.6. Part 2 Section 4: Appendix A(Intro) employer 2.3(a) discounting 2.4.5.6.2. revenue expenditure expense in building projects 4.2. 2.6.2 – 4. 4.4.2 DISC PD 0008 see Code of Practice (DISC PD 0008) discount rate 2.5.6. Part 2 Section 6: Appendix A taxation 2.1.10.9.1. 2. 4.4. 2.6.2 administration 4. 4.2.4 engineer 2.5.2.5. 4.2.6(b) average risk premium 2.1.5.7.3(d). 5.2.1.6 electronic management system 5.3. 4.2.1 external works Part 2 Section 3: Appendix A6.4. computerised documentation documents see appointment documents.1.5. 4.5.6.13 European Union legislation 3.4.17(c) effective management 3.12 ICE contract 4.4 further reading Part 4 Section 5: Appendix A GC Works Contract 4.7. 4.2.3. Part 4 Section 2 Appendix C3.2.4.4. Part 2 Section 4: Appendix A Employer’s Representative 4.7.3.4.5.1. 3. 4.2.1.2 extension of time 4.2. 4.4.3.2.2.6.2.6.1.7.1.10.2.3.3 electronic 5.6(e) entitlement 4.5. 4.2.3.5.1.5 document storage 5.1 contractor’s obligations 4.5.4.6.6.1 elements for design and build 2.1. reimbursement documents.2(Intro).3.3.3.4(Intro).2.2.2 damage 2.1.2.2.12.5 direct.2.4.6.6.4. Part 4 Section 1: Appendix A7 F facilities management 5.2. 4.4.3. 4. document storage.3.3(b)(e) develop and construct 2. 2.4(Intro).2.6.1. definition of 4.13.5.2.6.14(b) engineering services 2.4.3(e) drawings 2.3.6 see also document storage element unit quantities Part 2 Section 1: Appendix C elemental cost analysis Part 2 Section 1: Appendix A2.5.1.8 consequential entitlement 4.6. 4.1.3.4.2.7.1.5.10 Neutral Event 4.4.2.1.2.3.2 evidence see legal admissibility of documents existing building 2.3(b)(g). contract documents.1.4.7. 5.3.2. 4. Part 2 Section 4: Appendix B2. 4.10 award. 5. 2. 2.1.6 efficiency 2.4.2.2.5.4.6.2. 2.1. 3.5.4.2 Relevant Event 4.5.2.5.designer’s information 2.2.5.3.6 control set 5.2.10.5 factors beyond control 3. 4.4 entrances Part 4 Section 1: Appendix A4 Envest 2.1. timing of 4.6.3.5. Part 2 Section 4: Appendix B energy consumption 2.5(c).6.5.2.1.2.1.6.3. 4.5. 4.3(b)(h). 4.14(a) The Surveyors’ Construction Handbook Index (12/03) Page 5 .6.8.2.9(k) evaluation 1. 2.2.1.2.5.4.4. 4.1(c).2.5 Domestic Sub-contract 2002 Edition 4.1.2. 2.4.4 retrieval 5.1.1 economic 2.1.4(g) disputes 4.1. 5.1.1(b) disruption 4.2 disposal costs 2.4.7.7(b).1.5.10.6 enabling technologies 5.2.4.6.5.1. 3.2. 2.5.3 Domestic Sub-contract IN/SC 4.6 (Intro) procedures 5.5.4 see also capital expenditure.1(Intro) early possession 4.2.2.5.5. 4.6.1.2.6 embodied 2.6.2. 2. 4.3(c) no risk return 2. 2.3.7.6.4.6.5.11(b)(c).4.13.12(f). 2.6. tender documents domestic rebuild 5.2.6.2. 2. 5.1.2.2.5(c).5(d).2.2.5.6. 2.4. 2. 4.1.6(c)(d)(f) expenditure excess 2.6. information.3. 2.5(Intro).12(a) estimating and estimates 3.5.3.3. Part 4 Section 2: Appendix B see also delay distribution Part 4 Section 2: Appendix A6 document destruction/deletion 5.6.4(a) elements for buildings 2.13(a) employer’s requirements 2. 2.4.1.5. 2. 4.3.4.8 electronic document storage 5.5.3.3.1. 4.1.6 concurrent delays 4.3(b)(d) selection 2. Part 2 Section 4: Appendix B. 4.5. 2.15.2.5.5.4.1(a).5.

8(g) professional 2.5.11.1.2. Part 2 Section 4: Appendix B2.2.1.4. 4.1.2.4.7.1.3.4.1.13.2 information security 5. documents.7.1(Intro). 4.2.1. 3.4.4. 4.3 function elements 1.2.1.3.1.10(a).4. 4.4.4 Human Rights Act 1998 5.1 Forest Stewardship Council 2.1.3.2. 4. 2.2.7 FAST diagram 1.1.1.4.3. 3.4.2 insurance 3.18(c) Finance Acts 2.2. 4.2.16 implementation process 3.1.16(a) head office 4.1.1.4.5.6.1.5.6.1.6. 2. Part 1 Section 2: Appendix B functional analysis systems technique (FAST) 1.1. 4. 3. 3.2. 2.4 inter-generational equality 2.1.3. 4.8(f) additional activities 2.4.3.18.2. 2. 2.3.15 financial resources 3.2–5.5.6. 2.13 ICE Minor Works 4.5.2.1.5.6.2. 1.2.1.4.2.6.7.1 time charge 3.2. 4.1.2.2.3. 2.2.6(b) Institute of Chemical Engineers Forms (I Chem E) 4.4 inadmissible items 4.5 house rebuilding costs 5. 3.2.1. 3.7.6.5.2.2. 5. 2.2.9 installations Part 4 Section 1: Appendix A2. 2.1.4.1. 2.2.1.9.5.1.1.1.14.4(e) post-completion 4.5.2 Green Book 4.5.1.3(c) holidays-with-pay 5. 4.6. extension of time 4.5.2 human resources 3.14.17 grants.2 Indices and Forecasts 5.2. 2.2.4. 5. ICE 7th Edition: Substantial Completion 4.7 Hong Kong decision 4. Part 2 Section 2: Appendix C2 finishes 4.6.1. 4. 4.4.1.6. 5.18.1.19 Government Contracts GC/Works contracts.2. 2. 4.6.5.4.2 see also safety hire charges 4.5.4. 4.5.1.5.5.2. 1.6.1.1.3.2.5(a) fittings and furnishings Part 2 Section 3: Appendix A4.1.2. extension of time 4. 4.1.4.1.3.5 G Government Contracts GC/Works/1/Edition 2 4.5(b). 2.5 future generation 2.7.4.1.1. 4.1. 3.4.1.10(e).3.4.2.2.2. records of costs information management policy 5.1.1.2.1 financing costs 2. 5.2.1.4. 3.3(d) interest rates 2. 4.1.2.6.2.5.18.8.8.3.1. 4.1. C health and safety 2.1. 3.4.9(f).2(b).1.4.4(k)(l). 4.1.1.2. Part 2 Section 2 Appendix D5.2.2.4 housing sinking fund 2.4.2.1.4.2.7. Part 2 Section 6: Appendix B frost damage 4.1.1. Part 4 Section 1: Appendix A7 internal Part 2 Section 3: Appendix A3.1.6 (Intro).7.18(a)(c) gross floor area 2.2.1.8(i) fencing and security Part 4 Section 2: Appendix A5 final account 4. 4.2 ground conditions 3.1.1.3 FAST see functional analysis systems technique (FAST) fault free works 4. Part 3 Section 1: Appendix A6(n).4.9(c) H Handbook Introduction.2.6.6.1.8.1.4.4.3.5.2. 4. 4.1.5.5.5.18 instructions late 4.3.4.3 financing charges 4.1.2.3.5 Housing Grants and Reconstruction Act 1996 4. Part 2 Section 4: Appendix B2.4(b). 4.1.3 forecasting 5.8(h) percentage 3.3. Part 2 Section 2: Appendix D6 fitting-out 3.5 FCEC Blue Form of Sub-contract 4.2 specialist 3.1. 4. design and build contract Part 2 Section 4: Appendix B2.6 interested parties 1.1.13(k). Part 2 Section 4: Appendix B2 see also cost information. 2.4.2 initial design input role of employer’s agent Part 2 Section 4: Appendix A1 initial/first year allowances Part 2 Section 2: Appendix D6 inspection 2.5 initial control document 1.6.4 Hudson’s approach 4.2.4 information services 5.5. 5.5 implementation 1.6 indices Part 2 Section 1: Appendix A2. 1.13.7. Part 4 Section 2: Appendix A11.8.6.4.2.4 fees 1.1.1.6.6. 4.1.1(a).1.2. regional development 2.2.15 feasibility studies 2.4.1.5.4.5 production of 2.4 (c) ICE contracts. 2.2.1 preparation of 2.2.2.5.5.13 ICE Design and Construct Forms 4.7.10(c).6 (Intro). data.11.9 insurance risks 4.2.1(a) functional decomposition 1.5.2.2. 2.4.6.2 handover 3.1. 3.1.6.faculty working groups and committees 5.2. Part 2 Section 2: Appendix D3.12.2.7.8 I ICE 6th Edition: Substantial Completion 4.3.1.2.5 image processing of documents 5.3.7.4.6.6.4.5.5.4.18 Government Contracts GC/Works/1/Edition 3 4.2.3 first year allowances 2.5(b).1.2.2.7.4. Part 4 Section 2: Appendix A10. 5.2. 4. D6 independent client advice 1.12 government works 4.2.2.3.4.6.2.6.7(b).4.1 final certificates 4.1.4 implementation of contract 3.3.7 information general.2.2.3.7.1.2 industrial building Part 2 Section 2: Appendix D4 inflation 2.2.7.1.6.1(Intro) fluctuations 4.1.1.3 Gross National Product (GNP) 2.11(d). 5.9.7 interim certificates 4.3. 3. 4. 2.7.2.4.5.6 see also valuations for interim certificates Page 6 Index (12/03) The Surveyors’ Construction Handbook .2.1. 4.4.5.1.8 requirements 2.6 incentives 2.4 fluctuation bonds 4.7.1.2.1.11 ICE Design and Construct Clause 48(3) 4.7.6.7. D6 finance charges 4.5.2 lump sum 3.10. 5.

2.1.2.1(a) JCT Standard Form: wording 4.4.3 Latham Review Part 3 Section 1: Appendix A3(d) lead consultant competency level 2.6.2.1.6 investment tables (Parry’s) 2.4.4.1.1.4.7.4.5.1 costing calculation 2.2. 4. 3.6. 5.1. 4.4 techniques 2.1.1.5(Intro).5.1.1(e).5.5 Standard Form of Building Contract With Quantities 1998 (JCT98 With Quantities) 4.3. 5.2.4. Part 2 Section 2: Appendix C4.6 (Intro) late completion 3.2. Part 4 Section 2: Appendix B1.2.7.3.4.4. 4.5.2.10(c) liquidated damages 3.1.2.1. 5.4.5.6(Intro) items see admissable items.4.6(a) payments 2.1.3(e) JCT 80 Standard Form of Building Contract 4. 4.3.2.2.2.2. 4.1.1 key decisions 1. 3. 2.4.3.2.3.1. E. mechanical and electrical 2.2.10(a) loss in building projects 4.5.5.2.2.3 loss and expense 4.3.3(Intro).5.2.2.2.1.2.4 maintenance costs 2.7 liability at practical completion 4. 4.3.2.5.1. 2.5.5.4(g). Part 2 Section 2: Appendix A.4.5.2.3.2. D2 The Surveyors’ Construction Handbook Index (12/03) Page 7 .2 lump sum contracts 2.4.2.2.12.3 fees and duties 2.2.1 client context 2.2 schedule of duties 2.4.7 JCT practice note CD1A 2.2.5.2.2. 2.1.7.1.3.8.4. 4.2.2. Part 4 Section 2: Appendix D.3 design 3.4.1. 4. 2.1.5. 4.2 legal admissibility of documents authenticity 5.5.1(c)(d).9(d).14 JCT variant forms of contract 4.5.1(e) see also valuations for interim certificates Intermediate Form 4.4(Intro).1.1.1. 4.2.1. Part 2 Section 2: Appendix B residual values 2.1.4(Intro).3. 2. 4. 2.4 legal contracts 3.1.2.6.2.3.4.2. image processing 5.3. 4.3 interim valuations 2.2.1.13 Standard Form of Building Contract With Contractor’s Design (CD 98) 2. 5.6. 2. 4.2.2. 2.6 Code of Practice 5.2 Standard Form of Building Contract With Contractor’s Design (CD 81).4.11.2.1.5.3.7.2 Standard Form of Building Contract With Contractor’s Design 2. 2. 4.3.1. 4.1.2.2.3(e).1(c).2.8.2(d).7–4. 5.1. 4.1.1.13 Management Contract 1998 4.4 surveyor as 2.2. disruption of 4.2.4.1.2.2.8 Works Contract/2 4.2.1. 4.1 labour record 4.13 NSC/C Nominated Sub-contract Conditions 4.1.10 Standard Form of Prime Cost Contract 1998 4.2.4.2.2 costs and values Part 2 Section 2: Appendix C data sources 2.2.6.1.1.3.8 photocopies.18(c) ISO 9001 5. 2.6.1.1.5(b)(c).6. impact on 2.18(a) lump sum price 2.3.4.1.1.3 terms for taxation Part 2 Section 2: Appendix D worked examples 2.4.6.5(c) life cycle period.2.2.1(Intro).11(b) M machinery see plant and machinery maintenance and repairs 5.7 ISO 9000 3.2(Intro) see also limited liability life cycle cost appraisal 2.1. 2.6.8 investment appraisal 1.6.1. 3.4.2.3.1.6(Intro). 4.4.1.2.4 L labour.6.2. 3. 2.1 building life 2.1.2.5.1(e).12 late finish 3.5 K Keating’s analysis 4.3.2.2.5.10(c) determination of 4.2.4.2.2 litigation and evidence see legal admissibility of documents local authority requirements Part 4 Section 1: Appendix A2.5(a). C6 tax allowances examples Part 2 Section 2: Appendix E incentives and business rates 2.1.2(Intro) life cycle costing 1.13. 4.7.1 key elements 2.1(Intro).1. 4.4 NAM/SC Sub-Contract Conditions: for Sub–Contractors named under the IFC 84 4.6. 5.5. 2.5. 2.1 joint venture/negotiated project 2.14(e) latent defects 4. microfilm.1.2.2.7.5. 4. costed planned 2. 4.5(b)(c).2.3 tax relief.2.4.9.3. 4. 4.6 Management Contract 1987 4.1.1.4.1. 5.2.1.2.5.1. 5.3(e).4 (f) JCT Agreement for Minor Building Works 1998 (MW98) 4.6.3.2.1.2.9.4. 4. 4.2.2. 2.2.5.4.3.1.1.4. 5.2.4.2 Standard Form of Building Contract 1998 (JCT 98) 2.2 – 4.5 life cycle information 2.2.5.2.2.6 JCT 98 Standard Form of Building Contract 4.7 limited liability 3. 5. 4.6.10. 2. 4.interim payments 2.2.2.3.3.3.2 role of 2. inadmissable items J JCT Forms of Building Contracts Intermediate Form of Building Contract 1998 (IFC 99) 4.2.4.1.6.4.4 obsolescence 2.9. 4.1.3.5.2(b) Latham Report 2.2.5.4(iii) land 2.5 maintenance.6. 4.5.1 electronic documentation 5.2.

2.2.5. fees.1.5.1.14.3(a) novation 2.2. 3.4(d).4(d) new-build 2. 3.1 offering up 4.4.2.4.2.1.1.1. 4.1. quality control overview.1.1.1 time 3.2.1.4(j). Part 3 Section 1: Appendix A6(b) O obsolescence 2.11(e) package deal 2.2. 4.13. 3.1.6.1. 3.2(b) see also fault free works perfection.4 readiness for 4. Part 3 Section 1: Appendix A design 2.3 off site 4.4.2.5. cost control overview.1. Part 2 Section 2: Appendix C4 tax relief 2.2 building 2.5.1.5.2.1. 5.4.4.2.4.4(c).2.1.3.5.2 outline proposals stage 2.2.1.1.3.2.1. Part 4 Section 2: Appendix A4.5. project management.1.2.2.1.1.4.18(c) periodic payments 2.2.6.2.1.15.4 planned maintenance programme 2.3 Parry’s Valuation and Investment Tables 2. 2.4.4.2.3.18 operation costs 2.7.2.6.5.2.2.4.18 beneficial 4.5.2.1.2.2.2.1.3 maintenance of the building 2.3.14(j) performance bonds 4.2.2.10(a).11(c).4.5. 4.4.17(a)(d).4(c).2.2.1.5.4.1 materials 2.5.1.7 partial possession 4.1.2.15–3.9(c) cost 3.6.3. 4.3–1.3.2.8(b) overrun 3.1.3(c) management systems 5.3.6(Intro) audits of systems 5.16.3(e) National Insurance 5.7.4 intermittent 2.1. time control overview owner occupiers 1. 2.1(c) future 2.6.2.1.4. B1.1(e) PFI see Private Finance Initiative (PFI) physical resources 3.4 ownership ‘reasonable proof’ 4.5. 2. 4.1(e) N Named Sub-contract NAM/SC 4. 3.2.1. 2.annual 2.3 options appraisal criteria 1.2.1. Part 4 Section 4: Appendix B matter 4. 2. 2.9 performance specified work 4. 4.1.4.4(e). 4.1.1.4.4.1.4.4.9 management contracting 3.5 overheads 2.8 occupancy 1.2. Part 2 Section 2: Appendix C3 operatives 5. design overview.1.1. Part 3 Section 1: Appendix A no risk return discount rate 2.1.3 performance tests 4.6. 2.6.4.7. 4. Part 2 Section 2: Appendix C4 cyclical 2.5. impossibility of 4.3(e) Europe 4.2.7.2.2.3(d) patent defects 4.1.1(Intro) performance criterion 3.5 pipework 2.6 organisations 5. 3.1.17.1.8.1.4.4.1.16(a) offices.8–4.3.1 NJCC 2.2.1.3 organisational structure 3.1.1(a).1.1.3 nomination 3.2.3.4.8(b)(c) performance failure 3.2.2(b) France 4. 3.15 measurement see quantities measurement contracts Part 3 Section 1: Appendix A2 mechanical and electrical (M & E) services 2.2.2.4.2.1.1.2.2.2. 4.5(b) partnering 3.1 over-specification 3. Part 4 Section 4: Appendix B on site 4. 4.4.2.5 operation of the building 3. 3.5.2.3.9.5. 2.1 performance requirements Part 2 Section 4: Appendix B2.4. 4.9.1.5.4.1.2.3(b)(d) Nominated Sub-contract NSC/C 4.6.3.1.2 maintenance 2.6(h) making good 4.2.12 manuals Part 4 Section 1: Appendix A10 market conditions 3.1 Page 8 Index (12/03) The Surveyors’ Construction Handbook .15.1.3(c) prior to completion 4.2.2. 4.1 management see facilities management.4 Planning Supervisors 5.5.2.1.2.2.1.4. 3.1.1.2.5 occupancy costs 2.6.5.1. 2.2.5 example 2.1.3.4.4.13(j)(k) overview see change control overview.4. Part 2 Section 2: Appendix C5 occupation 3.6 see also Code of Practice (DISC PD 0008) managing risk 3.1 New Engineering Contract (NEC) 4.2.6.3.5 performance 2. 2. 2.2.5.5.2.5.1.4.2.1. 4.1.2.5.2.3.2.1.6. 3.2.1.1.13(l) markets and marketing 5.1.1.1. Part 2 Section 4: Appendix A(Intro). 2.4.6 choice of 3.4. life cycle cost payments.2. quantity and quality 2. Part 3 Section 1: Appendix A4.1.3(a).1.4.1.2.2.6.5 ownership of 4.1. special payments perfect completion 4.7.5.4.10.2.2. Part 4 Section 2: Appendix C overlap 3.8(a).7.5.2.2.4(b) planned maintenance.5.5. life cycle costing (worked example) 2.2 payments see advance payments.2. interim payments.4(f).4. Management Contract 3.7(d) new building 3. centralisation of 2.14(i) overspending 3.4.6.1.2 parameters.4 performance risk 3.6. Part 4 Section 1: Appendix A9 schedule of Rates Part 3 Section 2: Appendix A minor works 4.3. Part 4 Section 4: Appendix B P pace 3.5.1.14 mitigation 4. Part 2 Section 2: Appendix B obsolescent properties 2.2.2.4. 3.2.7.1.4. 2.1.13.1–2.4. 5.16 maintenance option.2.1. costed 2. 5.7 negligence 2.3.1.1.4.2.1.1.1. 4.1.2.

1 Q quality see parameters.14.2 public health installation Part 3 Section 2: Appendix A public sector see procurement.1.1.2.18 quality/price mechanism 1.4.2.5.2. 3.1.5. partial possession post-contract role of employer’s agent Part 2 Section 4: Appendix A4 practical completion case decisions Part 4 Section 1: Appendix B definitions of 4.1.5 approximate 2. 3.18(b) planting Part 4 Section 1: Appendix A8 possession 4.6. 3.1(b).1.4.2 project uniqueness 3.6.1. Part 4 Section 2: Appendix A3.1. 2.1.1.9.5.2.3 construction 3.4.4.4.11.7. 4.11(f).1.1 pre-contract role of employer’s agent Part 2 Section 4: Appendix A2 preliminaries Part 2 Section 3: Appendix A7.4.5 see also early possession.5.2.5.2.1.3.16(c).1. 2.1. A6.1.4 objectives Part 4 Section 1: Appendix A problems of 4.1. work executed quantity see parameters.1.17.1.1.4.2.1.1.1.4.4.3.1.1.4.1.7.4. 3.3.13 project structure 2.1.5.4(a).1.3.1.14(c) project cycle 3.1.5.2.1.13(l) profit target 4. 3. 3.4.1 provisional certificate 4.4.3.1.6.4–2.1. 4.4.4.1 Private Finance Initiative (PFI) 2. 2.4.2. 5.1.13(l) tender 3. 4.2.5 prescriptive requirements 2.5 professional liabilities 2. 4.7. 1. 4. 4.1. 2.4. Part 4 Section 1: Appendix C. 5. 3.18(a) project characteristics 3.6.3 procurement options 2. 3.11 project evaluation 1.1 strategy 1.6.3.1.1.4.6. 3. 2. 3.2.4.2. 3.4(Intro).1. 3.7. 3. substantial completion Practice notes 2. B1.3(a).16(c) professional judgement 4.5.3.1. 3.2. Part 4 Section 1: Appendix A3 fitness for 4. 2.1. 1.1.4.4 plant projects 4.1.4.5.5.1.1.17 project monitoring 2.4.2.10(b).2. 3.3.6.12.4. 2.5 effects of 4.5.2.1(a).2. 1.1. 4.4.7. 3. 2.4.4(a).4.5.3 average 5. 4.1.2 project definition 3.3.6. 2. 3.1.3 see also element unit quantities. 2.1.2.1.1.4.4.5 price premiums 3.3 protection and safe practice 5.1.2. Part 4 Section 2: Appendix A.10(b) role of 1.7 prime cost sums 4.5. The Surveyors’ Construction Handbook Index (12/03) Page 9 . 3.2.1.10.1.1.4.3. 2.4(b).4. 2.3.2.2. 3.2.2.14. 3.5 pricing schedules 3.4(a) Prime Cost Contract 4.1.2 subsidiary issues.3.6.3.4.3 routes 2.1. 1. 4. 5.3(c) provisional sums 4.1.1.1. 4.16 project planning 2. 4.1(iii).3.2.1.1. 3.4.3.1. 3.2. 3.5(g).1.1. updating project brief 1.1.2. 2.4 quality control overview 3.1.1.9(c) professional adviser 3. 3. 3.4.4. 3. C4 quantity surveyor’s information 2.5.10.10(d) pricing options 3.5.2.5 see also building services procurement Project Manager 1.2.1.1. 4.4.16 Principals of Good Practice for Information Management 5.3.2.2.4. Part 3 Section 1: Appendix A Practice Statements 5.14(a).1. 4.4.3.13 project funder(s) 1. 3.1.2.1.4.4.7.1.4. 4.1.1.7.4 quantities 2.3.2.4(Intro).6 (Intro).1.5. public sector publications Part 2 Section 1: Appendix D.5.5 probability/impact matrix 4.1.6.3.4. Part 2 Section 4: Appendix B2.2.3.1 principal adviser 3.4. 2. Part 3 Section 1: Appendix A primary activities 3.4.3 see also building services procurement professional advice 3.2.1.4.6 see also early completion.1. quantity and quality quality assurance 3.1.1. 3.5.1.3.9(c) prices 4. A4.1.5.1. 2.1. right to bring 4. 3.2.3.5.4.1.4.1.5. 2.1.1.2. 4. loss of 4. 4.2(Intro) see also valuations for interim certificates quantity surveyor’s considerations Part 4 Section 2: Appendix B3.3(b) project management 1.6.1.2. 3.11(e).1.13.5 pricing and risk 3. determination of 4.3. 1.2.1. 2.1 profit. 2.16(c).1(f) programme 3.1.5 process 2.7.1.1.7.4.1.2.8.2. D5 plant charges 5.1.4.5.2.4.4 role of 2.4.1.4. 5.3.2.2.1.3.1.4.4.2(c).3.1.2.2.3.9. 3.2.2.4.2 selection of 3.5.2.1.4.4.2(Intro).2. 3.5. 3.3.5(Intro) professional services 5.2.4.8.1.2. 2.2 quality control 2.2.5.9.1.4.4.3.10–3.13.1.4 ascertainment by 4.5.3.3. 4.2. 3.3.2 project testing 3.3.3.1 standard forms and certification 4.1.3(c).13 development of 3.13 profit margins 3.5. 4. Part 4 Section 2: Appendix B2 R raw materials 2.4(g). 3.4.1.5. 1.1. Part 3 Section 2: Appendix A.4.2.1(a).16(c).4. 2.3.1. 5.1. 4.2.1.2.2.13(l) pricing 1.2.15–3.2.3 progress see stages of a project.2.1. C3.1.plant and machinery 2. 3.3 methods 4.8.18(c).3 project type 1.6. quantity and quality quantity surveyor 2.1.8.3 project objectives 1.4(a)(i) proceedings.11 project stages 2.11.1.4(Intro).2. 3.3(g).1.4.5.1.2.

5.14(h) residual values 2.5 risk taker 3. 2.3(a)(ii). 4.3.3.7.3(Intro).1.5.1.5.1. 4.1.3.4.1.4.6.3.3.4.3.4. 4.3.2.3 masonary 2.1.10 risk analysis 3.1.2.5.2.18(a)(c) redevelopment 2.1.2.2.4.2.2.4.4.8(j).2.1.3. 3.6.10 RIBA Plan of Work 2.4.1 mahogany 2.14(h) removal costs 4.4.5 written application 4.1.1.2.3. 4.2.2.4. 4.5.5 records of costs 4.11.3.9–3.2. C6 resources 3.4 workshops 4. 2.2.2. 2. quality. 3.3(d).3(b)(i)(ii) resequencing 3.10 delegated 3.5.1 key components 4. 4.3.1(d).2.2.2. 4. 3.1.3. 4.6.2.1. 2.8.3. 4.2.6(g) refurbishment 2.5.3.5.6. 4.4.5.2.5. 2.4.3 risk management 3.3 recycling 2.2.2.2.3.5.3.3.1.8.5.6.3.4.2. 3.6 allocation of 3.2.3(a)(i) and (b)(iv).6.2.13.3.18(a) reimbursement 4.3(b)(v) and (vi) risk response 4.3.3(e).5(i). 4. 2. 2.19(g) scaffolding Part 4 Section 2: Appendix A7 scanning of documents 5.4(b) principles 4.1 rebuild.2(Intro).2.7 Page 10 Index (12/03) The Surveyors’ Construction Handbook .3.2 probability/impact matrix 4.3.4.3.3.1. Part 2 Section 2: Appendix C4 research 4.3(a) setting out.3.1.5.3.2.1.5.1. 2.3.1.3.9 running charges 4.1.12 risk identification 4.3(a). 4.1.1 risk 2.1.4. 2.3 scheme design stage 1.3. 3.2.1. 2. 5.3.3(d) running costs 2.6 security Part 4 Section 2: Appendix A5 security see also information security selection process 3.3. 3.6.7.6(d) Schedule of Rates Part 3 Section 2: Appendix A.3.4 valuation and investment table 2.3.4.2.2.1 risk averse 3.4 reimbursable contracts 4.5. 2.1. 4.4.4.3.3.1.4. 4.11.2.4 plan 4.1.1 rehabilitation 5.3.6.3 relationships (time. 3.1.2.2.1. 2. 4.1.9 process 4.3(d) services mechanical and electrical (M & E) 2.8(a) regional development grants 2.3(b) renewal costs 2.4(b). 4.2.2.2.4. Part 2 Section 4: Appendix B2.3.3(3). Part 5 Section 6: Appendix A schedule of defects 4.3.2 regulations 2.1.1.2.1.2.6.3.1 RICS standard forms for interim valuations 4.1. 4. 3.4.2(Intro) re-usable materials Part 2 Section 2: Appendix A4 revenue allowances 2.7. 5.1.3.3.3(Intro). 2.1.4 assessment 4.2.3.1.2.4.3.1.7. 4.5.1.1.2(Intro).5.1.6 Red Book 4.3. 2.4(g).2.2.6.2.3–3.4 entitlement to 4.1 documents 4. Part 4 Section 2: Appendix C2 rectification of works 4. 3.3 see also uncertainty risk profile 4.9.10(f) shell and core contract 3.5(c) revenue expenditure Part 2 Section 2: Appendix D2 RIBA Notification of Extension of Time form 4.6.1 contractural entitlement 4.13(c) sequential see traditional strategy service engineer’s information 2. employer’s responsibilities retail buildings Part 2 Section 2: Appendix B5 retention 4.7. 4.5.3.4. 3.1.5.5.6.3.3.4.7.2.5 in construction process 4.6.4(b) RICS Notification of Extension of Time form 4.1.2.6.6.10 Rethinking Construction 1. 4.6 sinking fund 2.3.7 revenue costs 2.2.2. 2.2.3.5(a)(i) risk allocation 2.5.3.2. 4.2–5 benefits 4.3.13(c).1.15.1(b) S Safety File Part 4 Section 1: Appendix A10 saving 2.7 risk assessment 5.6.5.3(e).5.6.3. A9 standard elements Part 2 Section 3: Appendix A5.1. 4.3 royalties 4.6. 4.1.2.1.6 submission cost 4.4 RICS Building Cost Information Service (BCIS) 2.9 residual 3.2.5 responsibility additional Part 2 Section 4: Appendix B2. 2.1.2.5.3.1.11(a) risk transfer 3.6.4.4.13(m).11(c) secondary 4.1. 4.9.2.2 definitions 4. 4.1.3.2.2.1.1.2.3.3.2.5 see also building services procurement setting-up costs 4.1.3.1. 2. 4. costing 2.Part 2 Section 6 Appendix A fossil fuels 2.6.4.2 of subcontractors 4.1.5.4.4 sensitivity analysis 1.4 risk register 4. 2.10 RICS publications 2.10 roles built environment groups 5.2.2.2.3.3.2(Intro) 2.1.3.6.3.1. 3.4.6.2.7. 4.9–3.11(a) risk distribution 3.2. Part 3 Section 2: Appendix A.3.1.2.5. 3.2.2. cost) 3. 4.6 (Intro). 4.4.2.5.1.3. 4.3 extensions of time 4.5.5(g) replacement