CONSULTANCY AGREEMENTS AND CALCULATION OF FEES

The Nigerian Institute of quantity Surveyor recommends the appointment of an independent quantity surveyor
on construction projects of all types

- Building
- Civil engineering
- Process/heavy engineering

It is believed that the quantity surveyor has the training and experience to provide effective cost management
services on construction projects.

In all cases it is essential that there are comprehensive and precise forms of appointment so that both client and
consultant are in no doubt as to the services to be provided by the qs and the payment to be made by the client
for the said services.

The NIQS has a published form for conditions of engagement and consultancy services agreement and the
federal government periodically approves scale of fees for all consultants to the construction industry. The most
current scale of fees is dated April 1996.

The NIQS form covers the following relevant mattes

- Parties to the agreement including witnesses

- Scope of services to be offered by the consultant quantity surveyor, which could be normal services,
partial services and/or additional services.
- Remuneration for the services to be provided
- Reimbursable expenses
- Method of payment
- Staff to be provided by the consultant
- Assignments if any
- Terms for termination of agreement
- Dispute settlement channels
- Responsibilities of the client

SCOPE OF SERVICES

Normal Services comprise the following:

Stage 1.

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Preliminaries and Final Budget estimate: This would include preparing preliminary estimates based on
measurements and information provided by client and other consultants; cost checking of alternative designs
and specification to arrive at acceptable budget estimate and advice on type of contract best suited for the
project.

Stage II

Contract Documentation, Which comprises preparation of Bills of quantities, schedule of rates or schedule of
works, specifications, forms of tender, preliminaries and contract conditions necessary for obtaining tenders
from contractors. Also assisting the employer in the pre-qualification of contactors, subcontractors and suppliers
and advising on list of suitable to be invited to tender.

Tender Report and analysis, Which includes pricing bills as a basis for comparing tenders and writing reports on
tenders submitted by contractors and making recommendation for final selection of a single contractor.

Stage III

Contract Administration: Covers the whole period of the contract duration and the quantity surveyor is expected
to provide monthly supervision and inspection ensuring that payment for work done is in accordance with the
contact, prepare interim valuations, financial statements advising the client if the budget is to be exceeded for
any reason. The qs should advice the client on the contract programme and its effect on client’s cash flow.

The quantity surveyor is expected to obtain and report on estimates and other information for nominated
subcontractors and suppliers including the supervision of the preparation and execution of the subcontract
agreements.

The quantity surveyor is expected to prepare the project final account and final settlement of claims based on the
original contract sum taking into account all variations and fluctuations properly approved during the execution
of the project.

Partial Services:- refer to a situation where the client only requires some of the services detailed as normal
services. For instance, the client may require contract documentation but not preliminary estimate and not
contract administration.

Additional services:- are other services that are outside those detailed as normal services and they attract
additional payment. They include:

1. Feasibility or viability studies

2. Re-pricing/Re-evaluation: This involves re-pricing of bills of quantities or re-validation or re-
evaluation of a suspended, abandoned or terminated contract.
3. Preparing schedule of materials/plant for a project
4. Preparation of bills of quantities for electrical and mechanical works in building projects.
5. Making any site visits or attending any site visits other than the normal single monthly meetings

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 6. Any normal supervision beyond the original contract period
7. Litigation and attribution
8. Construction cost of replacement for insurance or other purpose
9. Liquidation
10. Fluctuation claims investigations, checking, negotiating and agreeing rates
11. Resident supervision

Reimbursable Expenses:- Which are calculated on cost’ “plus basis, are paid on receipted invoices/bills plus
allowance to over head office overheads and profits. The allowance to cover for head office overheads and
profit is 25% for cost of printing reproduction of drawings, photocopying, office equipment and other incidental
expenses and 15% for travel and hotel charges.

Scale of Fees for Prime Consultants

A prime consultant is the leader of the team of consultants on a project. He conceives and initiates the project,
produces the guiding designs or sketches co-ordinates and in some cases manages the project.

COST OF PROJECT FEES PAYABLE AS A %AGE OF COST OF

PROJECT
Up to 5 million 4.75%
Next 10 million or part thereof 4.5%
Next 15 million or part thereof 4.25%
Next 45 million or part thereof 4.00%
Next 75 million or part thereof 3.50%
Next 150 million or part thereof 3.00%
Next 200 million or part thereof 2.50%
Balance over 500 million 1.75%
Table 1: Scale of fees for prime consultant

Stage payment for all categories of consultants in the construction industry

The proportion of the total fees payable to all categories of consultants at the different stages of implementation
shall be as follows:

Stage 1- Should 25% of the fees based on the Estimated Total Cost (ETC) of project

Stage 2 - Should be 50% of the fees based on the estimated total cost (ETC) of project
stage 3 - Should be 25% of fees based o the total construction sum (TCS) of project

Calculating Fees for Stage Payment for all Categories of Consultants in the Construction Industry

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Fees for stage 1 and 2 shall be calculated on the basis of estimated total cost (ETC) of project and payments
shall be made on these stages accordingly. Fees for stage 3 shall also be calculated on the basis of the total cost
(ETC) of the project, which is reviewed periodically as the project progresses, and payments shall continue to be
made periodically accordingly. The total construction sum (TCS) shall only be used to adjust the final payment
in stage 3. The tender sum shall be adopted as the ETC where this is known.

Reimbursable Expenses for all Categories of Consultants on a Construction Project.

The payment of reimbursable claims on transport, accommodation, printing computer rentals, office equipment
and other incidental expenses incurred on the project shall be made to all the consultants in addition to normal
fees, but only after receipt making up such claims have been accepted by the client. Subject however to a
maximum of 1% of the cost of the project. This amount is distributed amount the consultants as follows:

Architects (prime Consultant) 40%

Structural Engineer 15%

Quantity surveyor 15%

Mechanical Engineer 10%

Electrical Engineer 10%

Geotechnical Engineer 5%

Builders 5%

Where the Architect is not the prime consultant, he will exchange his place on the distribution list with the
professional that is the prime consultant on the project

Where the 1% of the cost of the project as distributed is found to be inadequate, the approval to exceed must
first be obtained from the client before the affected consultants is free to make a case for additional
reimbursement supported with relevant receipts.

Where a geotechnical engineer and/or builder is /are absent on the project, his/their share of reimbursable revert
to the prime consultant.

Scale of fees for multifarious complex projects.

Multifarious projects usually have more than one prime consultant on them. In this sort of project, for example,
the electrical engineering consultant is treated as a prime consultant on the design of the street lights on the
estate. The buildings on the estate are treated separately with the structural engineer as the prime consultant.

For multifarious projects management is considered advisable and the fee payable for the services shall be based
on the total cost of the project.

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Project Management for all Category of Consultants

COST OF PROJECT FEES PAYABLE AS A %AGE OF COST OF

PROJECT
Up to 5 million 1.00%
Next 10 million or part thereof 0.90%
Next 15 million or part thereof 0.80%
Next 45 million or part thereof 0.70%
Next 75 million or part thereof 0.60%
Next 150 million or part thereof 0.50%
Next 200 million or part thereof 0.40%
Balance over 500 million 0.30%
Table 2: Scale of Fees for Project Management

Scale of fees for consultant Quantity surveyor

For the purpose of remunerating the Consultant Quantity Surveyor for his services projects are classified into
the following two broad based groups.

i. Scale of fees for Quantity surveying Work in project where the architect, Mechanical, Electrical or
Structural Engineer is the prime Consultant.

The scale of fees for quantity Surveyor in projects where the Architect, Mechanical, Electrical or
structural Engineer is the prime Consultant shall be as shown in the table below

COST OF PROJECT FEES PAYABLE AS A %AGE OF COST OF

PROJECT
Up to 5 million 2.75%
Next 10 million or part thereof 2.50%
Next 15 million or part thereof 2.30%
Next 45 million or part thereof 2.00%
Next 75 million or part thereof 1.75%
Next 150 million or part thereof 1.40%
Next 200 million or part thereof 1.00%
Balance over 500 million 0.80%
Table 3: Scale of fees for Quantity Surveyor.

ii. The scale of fees for quantity Surveyor in projects where the Civil Engineer is the Prime Consultant

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 The scale of fees for quantity Surveyor in projects likes roads, bridges, etc. where the civil Engineer is
the prime consultant shall be as shown in the table below

COST OF PROJECT FEES PAYABLE AS A %AGE OF COST OF

PROJECT
Up to 5 million 1.37%
Next 10 million or part thereof 1.25%
Next 15 million or part thereof 1.15%
Next 45 million or part thereof 1.0%
Next 75 million or part thereof 0.87%
Next 150 million or part thereof 0.70%
Next 200 million or part thereof 0.50%
Balance over 500 million 0.40%
Table 4-Scale of fees for Quantity Surveyors in civil engineering works

Scale of fees for Quantity Surveying in Multifarious Projects Where the Consultants in Various
Disciplines Perform as Prime Consultants

On this type of project there are several Prime Consultants. Example of such projects are the university
Complexes, Housing Estate etc., where Civil Engineer (Prime Consultant) takes charge of estate roads,
Architect (Prime Consultant) takes charge of buildings, Electrical Engineer (Prime consultant) takes charge of
street lighting while Structural Engineer (Prime Consultant) Takes charge of sewage treatment. Under these
circumstances the scale of fees for Quantity surveyors as in table 3 and 4 are applied appropriately using Prime
Consultant as a base for determining the Estimated Total Cost of project for his area of operation.

Scale of fees Approved As Part of the Quantity Surveyor’s Fees to the Mechanical or Electrical
Engineer

Where the services of the mechanical or electrical Engineer is employed by the Quantity Surveyor in the
preparation of the bill of quantities for a project, making an input into the preparation of the bill of quantities for
the project, the fees payable to each Engineer shall be negotiated, but not more than 50% of the fee accruable to
the Quantity Surveyor in consideration of cost of work of the respective Engineers.

Scale of Fees Approved as Part of the Quantity Surveyor’s Fees to the Civil Engineer.

Where the services of the Civil Engineer is employed by the Quantity Surveyor in the preparation of the bill of
quantities or making an input into the preparation of the bill of quantities for a project, the fee payable to the
civil engineer shall be negotiated, but not more than 50% of the fee accruable to the quantity surveyor in
consideration of the cost of civil works.

Repetitive Works for all Categories of Consultants in the Construction Industry.

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The remunerations for repetitive works is in line with the scale of fees for basic services and depending on how
many times the same work is being repeated, the scale shall be as in the below.

Number of Repetitions Fees Payable As a Percentage of the Actual

Fee Based on Appropriate Scale of Fees
Initial Project 100%
First 10 Repetition 30%
Next 10 Repetition or part thereof 20%
Next 20 Repetition or part thereof 15%
Next 30 Repetition or part thereof 12.50%
Next 50 Repetition or part thereof 10%
Next 150 Repetition or part thereof 7.50%
Next 250 Repetition or part thereof 5.0%
Example

1. An oil marketing company has appointed your firm as quantity surveyors for a new development on a
2.5 hectare of land in Escravos. The development is to include ten pump islands, a large shopping
complex, and office complex a restaurant and games center.

The cost limit approved by the client and the design team is N350,000,000.00 and the client expects
construction to commence immediately while design is just developing from sketch plan stage.

Prepare the fee claim for your fees using the federal Government scale of fees current edition.

Solution.

Quantity Surveyor’s fee.

Estimate Total Cost (ETC) N 350,000.000.00.

First 5, 000,000.00 @ 2.775% = 137,500.00

Next 10,000,000.00 @ 2.50% = 250,000.00

Next 15, 000,000.00 @ 2.30% = 345,500.00

Next 45, 000,000.00 @ 2.00% = 900,000.00

Next 75, 000,000.00 @ 1.75% = 1,312,500.00

Next 150, 000,000.00 @ 1.40% = 2,100,000.00

Balance 50, 000,000.00 @ 1.00 = 500,000.00

350,000,000.00 5,545,500.00

Stage i.

25% of N5,545,500.00 = 1,386,375.00

Stage ii

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50% of N5,545,500.00 = 2,772,750.00

Stage iii

25% N5,545,500.00 = 1,386,375.00

Maximum reimbursable

Total reimbursable for all consultants = 1% of N350,000,000.00 = 3,500,000.00

Therefore,

Maximum reimbursable fort quantity surveyor

= 15% of 3,500,000.00

= N525,000.00

2. You are a branch manager of a firm that has been appointed as quantity surveyors for work on a
University campus. Draft a letter for your head office setting out total fees to be expected (fee based on
Federal Government approved scale of fess). The brief is as follows:

(a) Hall of residence 1Nr @ N55m

(b) Identical Staff Houses 10 Nr @ N 10m =N100m

(c) Identical block of classrooms 20 Nr. @ N20m =N400m

Assume maximum reimbursement for production, traveling, accommodation etc.

Solution

Hall of residence

Estimated Total Cost (ETC) N55,000,000.00

First 5, 000,000.00 @ 2.775% = 137,500.00

Next 10,000,000.00 @ 2.50% = 250,000.00

Next 15, 000,000.00 @ 2.30% = 345,500.00

Balance 25, 000,000.00 @ 2.00% = 500,000.00

55,000,000.00 1,232,500.00

Staff Houses

Estimated Total Cost (ETC) of initial project N10,000,000.00

First 5,000,000.00 @ 2.75% = 137,000.00

Balance 5,000,000.00 @ 2.50% = 125,000.00

10,000.000.00 262,500.00

Estimated Total Cost (etc) of repeated works (balance of 9 houses N90,000,000.00

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First 5, 000,000.00 @ 2.775% = 137,500.00

Next 10,000,000.00 @ 2.50% = 250,000.00

Next 15, 000,000.00 @ 2.30% = 345,500.00

Next 45, 000,000.00 @ 2.00% = 900,000.00

Balance 15,000,000.00 @ 1.75% = 262,500.00

90,000.000.00 1, 895,000.00

Repeated factor

N 1,895,000.00 @ 30% = N568, 500.00

Total

262,500.00

568,500.00

831,000.00

Classroom blocks

Estimated Total cost (ETC) of Initial Project. N 20, 000,000.00

First 5, 000,000.00 @ 2.75% = 137,500.00

Next 10,000,000.00 @ 2.50% = 250,000.00

Balance 5, 000,000.00 @ 2.30% = 115,000.00

20,000,000.00 502,500.00

Estimated Total Cost (ETC) of repeated works (first 10 block) N 200,000,000.00

First 5, 000,000.00 @ 2.75% = 137,500.00

Next 10,000,000.00 @ 2.50% = 250,000.00

Next 15, 000,000.00 @ 2.30% = 345,500.00

Next 45, 000,000.00 @ 2.00% = 900,000.00

Next 75, 000,000.00 @ 1.75% = 1,312,500.00

Balance 50, 000,000.00 @ 1.40% = 700,000.00

200,000,000.00 3,645,000.00

Repeated factor

N3, 645,000.00 @ 30% = 1,093,500.00

Estimated Total Cost (ETC) of Repeated works (Balance of 9 Houses) N 180,000,000.00

First 5,000,000.00 @ 2.75% = 137,500.00

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Next 10,000,000.00 @ 2.50% = 250,000.00

Next 15,000,000.00 @ 2.30% = 345,000.00

Next 45,000,000.00 @ 2.00% = 900,000.00

Next 75,000,000.00 @ 1.75% = 1,312,500.00

Balance 30,000,000.00 @ 1.40% = 420,000.00

180,000,000.00 3,365,000.00

Repeat Factor

N 3,365,000.00 @ 20% = N 673,000.00

Total

502,500.00

1,093,500.00

673,000.00

2,269,000.00

Total fee

Hall of residence 1,232,500.00

Staff houses 831,000.00

Classrooms 2,269,000.00

4,332,500.00

State 1

25% of 4,332,500.00 = 1,083,125.00

Stage II

50% of 4,332,500.00 = 2,166,250.00

Stage III

25% of 4,332,500.00 = 1,083,125.00

Maximum reimbursable

Total reimbursable for all consultants = 1% of 550,000,000.00 = 5,550,000.00

Therefore

Maximum reimbursable fort quantity surveyor

= 15% of 5,550,000.00

= N 832,500.00

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