BUILDING QUANTITIES AND ESTIMATING I

BGN 233
ESTIMATING GROUPING

LECTURER NAME PN AZIRA BINTI IBRAHIM

GROUP MEMBER :
GROUP MEMBER:

AKALILY SOFIENA BINTI AZMI / 2020475656

TABLE OF CONTENT

BI CONTENT PAGE REMARKS

L
INTRODUCTION
CONTENT
i) TENDER
 ii) CONTRACT

What is contract?

Contract is a legally binding agreement between two parties based on policies and criteria written
down in writing. One or more property owners, as well as one or more contractors, are involved. The
owner, often known as the 'employer' or 'client,' has complete discretion over deciding what sort of
contract to utilise for a certain development and establishing legally enforceable terms and
conditions in a contractual agreement. The scope of work, risks, responsibilities, and legal rights of
both the contractor and the owner are all outlined in a construction contract.

For a contract to be valid, there must be an offer from the owner in the form of tender notice to get
some specified work to be executed and there must be an acceptance from contractor to execute
the work, both the offer and the acceptance must be definite and legal.

The law will consider a contract to be valid if the agreement contains all of the following elements :

i. Offer and acceptance

ii. An intention between the parties to create binding relations
iii. Consideration to be paid for the promise made
iv. Legal capacity of the parties to act
v. Genuine consent of the parties and
vi. Legality of the agreement

Agreement that lacks one or more of the elements listed above is not a valid contract.

Contract document
When a contractor's tender is accepted, the contractor and the owner enter into an agreement, and
the documents detailing the owner's and contractor's rights and obligations are attached to the
agreement bond, which is known as a contract document. The contractor's signature and the
accepting authority's signature appear on each page of the contract document, and any corrections
are made.
The contract agreement must have the following information:

I. Title Page – Name of work, name of owner, name of contractor, contract agreement no,
contents, etc
II. Index Page – Contents of the agreement with references pages
III. Tender notice - Brief description of work, estimated cost of work , date and time of
receiving tender, amount of EMD and security deposit, time of completion etc
IV. Tender Form – the bill quantities, contractor’s rate, total cost of work , time of completion,
amount of security deposit, etc
V. Schedule of issue of material – list of material to be issued by the owner/department to the
contractor with the rates and place of issue
VI. Drawings – Complete set of drawings including plan, elevation, sections, detailed drawings,
etc, all fully dimensioned.
VII. Specifications-
a) General specifications which specify the class and type of work, quality of materials etc.
b) Detailed specifications which is detailed description of each item of work including
material and method to be used along with the quality of workmanship required.

CONDITION OF CONTRACT

a) Rates of each item of work inclusive materials, labour, transport, plant/equipment and other
arrangements required for completion work
b) Amount and form of earnest money and security deposit
c) Mode of payment to contractor including running payment, final payment and refund of
security money, etc.
d) Time of completion work
e) Extension of time for completion of work
f) Engagement of subcontractor and other agencies at contractor’s cost and risk
g) Penalty for poor quality and unsatisfactory work progress
h) Termination of contract
i) Arbitration for settlement of disputes.
j) Special conditions – Depending upon the nature of work taxes and royalties included in the
rates, labour camp, labour amenities, compensation to labour in case of accidents, etc
k) Deed of pledge
 There are a few method that can be use in contract which is

TRADITIONAL METHOD

ARCHITECTS

EMPLOYER/ CLIENT
SURVEYOR

PROFESSIONAL TEAM ENGINEERS

MAIN CONTRACTOR OTHER CONSULTANTS

SUB- CONTRACTOR SUB- CONTRACTOR SUB- CONTRACTOR SUB- CONTRACTOR

The traditional schedule is a sequential method because the employer develops his scheme with his
professional team before choosing a contractor, the usual schedule is a sequential technique. The
consultant's function is considered as being within the budget and meeting the requisite standards.

Separating design and construction is a common practise in conventional procurement. The client
first hires consultants to plan out the project in detail, keep track of costs, and inspect the work as it
progresses. Contractors are then invited to submit single-stage competitive tenders for the project's
construction.

Workmanship, materials, and work done by suppliers and subcontractors are all included in the
contractor's responsibilities. Except for temporary works, the contractor is not responsible for
design, though certain traditional contracts may allow the contractor to design specific sections of
the project

The characteristics of traditional method are firstly, project delivery is a sequential process. Next, the
design of the project should be completed before work commences on site. Lastly, the responsibility
for managing the project is divided between the client’s consultants and the contractor and there id
therefore little scope on involvement of either party in the other activities.
Classification of contract

I) Lump Sum contract

II) Unit price contract
III) Cost plus a fixed fee contract
IV) Percentage rate contract
V) Cost plus sliding scale of fees
VI) Negotiated contracts

Lump sum contract

A lump sum contract is often used in traditional procurement. Before the work begins, a single 'lump
sum' price for all of the work is agreed upon, and then stage payments are made as the work
progresses. When bidders are solicited, this is suitable when the project is well defined and large
changes to requirements are unlikely. This enables the contractor to precisely quote the job that is
being requested.

In this system, the contractor undertakes the execution of a specific work for a definite lump-sum
amount within a specified time period. On completion of the work, it is checked as per drawings and
specifications and if approved the amount is paid to the contractor. The quantities of various item Is
not measured and for decorative works this system is adopted.

Advantages for client/employer

The main advantage of lump sum contracts for project owners is their predictability. The owner can
anticipate the project to be completed on time and within budget, as the contractor will be able to
maximise resources and reduce labour expenses. Owners have less financial risk with lump sum
contracts because the contractor is accountable for any cost overruns. Because lenders like to fund
defined projects with clearly defined expenses, these features make it easier for project owners to
acquire funding.

Because the owner does not need to track costs, owner supervision of lump-sum contracts is
minimal. Furthermore, lump sum contracts typically have a payment structure that includes monthly
payments at particular iterations or as a percentage of finished work, streamlining accounts payable
operations.

Advantages for contractor

Despite the fact that lump sum contracts carry a higher financial risk than other forms of
agreements, contractors nonetheless enjoy a number of advantages.

Project owners must give contractors with finalised blueprints and thorough documentation under a
lump sum agreement, resulting in precise, linear project activities. Lump sum contracts also save
administrative expenses by requiring fewer paperwork, management, and accounting.

Another benefit of lump sum contracts is that they don't compel contractors to reveal how they
calculated their material or labour costs, allowing them to submit estimates with enough room to
avoid going over budget. The contractor keeps the profit if the project is completed within budget.
Lump sum contracts have drawbacks for both owners and contractors.

Project owners' disadvantages

The project is inflexible since owners must submit and adhere to approved designs and finalised
blueprints. If a change is required, lump sum contracts require a formal change order process as well
as a significant amount of paperwork.

There's also the possibility of being charged more to cover the contractor's expenditures in the
event of unforeseen circumstances. Contractors could also utilise lower-quality materials or
decrease costs in other ways to boost their profit from the fixed pricing. That's why it's a good idea
for owners to include material specifications in the pre-construction documents they send to the
contractor.

Contractors' disadvantages

Going over budget costs contractor money, which can eat into their earnings. If changes are needed,
contractors also face the issue of time-consuming change order paperwork.

Problems Associated With Lump Sum Contracts

While lump sum contracts are simple and eliminate many common construction contract hassles,
they are not without flaws that can affect project owners and contractors in different ways.

Delays

Unforeseen situations outside either party's control, such as weather or supply chain issues,
sometimes cause delays. Other times, it's due to a lack of clarity, a failure to offer timely instructions,
insufficient labour, or a shortage of equipment or materials.

Lump sum contracts should include clauses stating the circumstances under which each party is
accountable for delays and the costs connected with them. This can help to lessen the likelihood of
contract breaches and the necessity for time-consuming and expensive litigation.

Variations in prices

The cost of labour and supplies is likely to fluctuate throughout the project. Contractors must incur
the cost if prices rise because lump-sum contracts do not account for these swings. They can,
however, save money if interest rates fall. These dangers are arguably more severe in long-term
projects.

When presenting an estimate, contractors must account for probable upward variations and price
the project accordingly.
Amounts in escrow

Provisional or stipulated sums refer to the price of optional project work. Although lump sum
contracts are quite rigid in terms of scope and cost, provisional or stipulated sums relate to the price
of optional project work. The provisional sum is contained in the contract as a separate estimate,
and it only changes if the owner agrees to proceed with the optional work.

Unit price contract

The job to be performed is divided into numerous pieces, usually by construction trade, in a unit
price contract. The contract type is determined by the projected quantities of items, as well as their
unit values, which are tallied in the project. The project's final cost is determined by the quantities
required to complete the work. Painting, for example, is usually done on a square foot basis. Unit
price contracts are rarely used for full big construction projects, but they are regularly used for
subcontractor agreements that require correct identification of different categories of products in
the contract documentation, but not their quantity. They're also frequently utilised for maintenance
and repair.

What makes unit price contracts so unique?

Unit price contracts necessitate a significant amount of upfront effort from consultants and
contractors, but they can provide significant benefits throughout the bidding and building phases of
a project. High performance, competitive and compliance price in the bidding stage, and shared risk
for all stakeholders are all benefits of this sort of contract. Engineering, landscape construction, low-
rise construction, and homebuilding all use these contracts.

Comparing bids is a breeze using this tool.

The consultant or owner usually sets the price schedule, and contractors submit bids based on it. In
general, the bidding procedure allows for more comparable proposals. This is due to the fact that all
bids have the same things, amounts, and units defined in a comprehensible list. Furthermore,
because there is no requirement for a take-off, bidders are more inclined to submit a bid. Despite
this, non-compliant bids do occur. Here are eight different ways bidders are submitting their bids.

Fairness and increased transparency

The unit pricing contract enhances transparency at the start, middle, and finish of a project because
it clearly outlines all prices. At the start of a project, contract administrators can readily detect bids
that do not have fair weights and choose to rectify the issue. Second, at any time throughout the
construction phase, it's simple to see how much work is still due inside a contract. Finally, if the
contractor does not complete a portion of the original scope at the end of the project, they simply
do not bill for these items because billing is based on amounts done, which is only fair to the client.

Billing in Progress and Invoice Certification

With a unit pricing contract, certifying invoices is easier because the finished work is straightforward
to count or measure on-site by contract administrators. This is beneficial to the consultant, but it can
also be beneficial to the client.
Cost Plus Contract

The cost-plus contract is an agreement in which the buyer agrees to pay the whole cost of materials
and labour, as well as the contractor's overhead and profit. This contract form is preferred when the
scope of work is highly unclear or imprecise, and the types of labour, material, and equipment are
also inherently uncertain. The contractor's profit is established at a fixed sum in this case. If the
actual costs are less than the estimate, the savings are kept by the owner. Even if the real cost is
more than the estimate, the owner must pay for the building that was envisioned. Because his profit
is not at risk, the builder is less likely to cut corners or push for less expensive materials.

Three key types of cost-plus contracts are

 Cost + fixed percentage contract- Compensation is based on a percentage of the cost

 Cost + Fixed fee contract- Compensation is based on a fixed sum independent the final
project cost. The customer agrees to reimburse the contractor’s actual costs, regardless of
amount, and in addition pay a negotiated fee independent of the amount of the actual costs.
 Cost + Fixed Fee with Guaranteed Maximum Price Contract- Compensation is based on a
fixed sum of money. The total project cost will not exceed an agreed upper limit.

When projects aren't clearly defined, cost-plus agreements are advantageous since they minimise
risk for the contractor. Other advantages include:

 All associated costs have been covered.

 All of the risks that the contractor faces are covered.
 The contractor is not required to "fluff" quotes to account for unknowns and unanticipated
expenditures.
 The project doesn't have to be totally specified; you can start working even if the scope of
work is unclear.
 Rather than waiting for a completed design, you can get started on projects sooner.
 Useful when enough information is not available to create a detailed cost estimate

However, there are significant disadvantages for both parties:

 The project's final cost is unknown.

 The risk of cost overruns is assumed by the owner.
 It might lead to disagreements about what constitutes legitimate construction-related
expenses.
 It's possible that projects will take longer than intended.
 A contractor's ability to produce paperwork that justify all charges takes longer.
 The contractor must keep accurate and well-organized records. Contractors have no
incentive to keep expenses under control, which can lead to cost overruns.
 The contractor must be trusted by the owner to perform appropriately. Because you can't
anticipate all complications that create delays, it's tough to complete a project on schedule
and on budget.
Design build contract

CLIENT

TOTAL
CONTRACTOR

CONSULTANT
ARCHITECT SUBCONTRACTOR
ENGINEERS

A design-build contract is appropriate when the project delivery method

REFERENCES