AQS 4150

QS practice and procedure

1st. lecture
TYPES OF QUANTITY SURVEYING PRACTICE

 SOLE PROPRIETORSHIP
• Owned by one person (i.e. Professional registered QS)

Advantages:- Disadvantages:-
1. Ease of formation (simple 1. Unlimited liability – owner
procedure and fast)
is liable to an unlimited
2. Flexibility of decision making – one
person decides what to do. extent for debts of the
3. Direct rewards – sole proprietor business
reaps the rewards (i.e. profits) of all 2. Limited life – if sole
his efforts proprietor dies, or is
incapacitated, business
may cease to operate
3. Limited source of funds
4. No sharing of knowledge
and experience , since
he/she is alone.
5. No sharing of risks
TYPES OF QUANTITY SURVEYING PRACTICE

 PARTNERSHIP

A partnership is an unincorporated business with more than one owner.

These joint owners are known as partners, and they must all be
registered (professional) quantity surveyors.

Advantages:-
1. Formation of partnership firm is
simple.
2. With more partners, more funds
(internally) are available.
3. Sharing of knowledge ,
experience , between partners.
4. Sharing of workload and
responsibility between
partners.
5. Management of business may
be better, with more
professionals.
Disadvantages:-
1. Unlimited liability of partners
who are jointly liable for all
business debts.
2. Dilution of control – any
decision or contract entered
into by one partner is binding
on the others.
3. Limited life – operation of
partnership usually ceases with
death or withdrawal of the
most active partners.
TYPES OF QUANTITY SURVEYING PRACTICE

PARTNERSHIP (continued)
A formal agreement between partners is not mandatory, but is advisable to avoid future
conflict or disputes between partners.

A partnership agreement should cover the following areas:-

1. The date of the agreement
2. Names and addresses of partners
3. The name of the business
4. The objective of the business
5. How long the agreement will last
6. The place of business, or where the business will be carried out
7. Amount of capital to be invested by each partner
8. How profit and loss will be divided among partners
9. The rights, powers, duties and responsibilities of each partner
10. Salaries to be paid to each partner
11. Method of withdrawal from the partnership.
TYPES OF QUANTITY SURVEYING PRACTICE

BODY CORPORATE

An incorporated company is a business which has its own legal identity, quite
apart from its owners or shareholders. It can both sue and be sued by others,
seek compensation from individuals OR corporations, INCLUDING the owners or
shareholders of the company.
There are generally 3 groups of people in every company:-
1. The shareholders OR owners, who provided the money to form the company
2. The directors who are elected by the shareholders as their representative to
manage the company
3. The officers who are responsible for the day-to-day running of the company.
These officers are appointed by the directors and are responsible to them

For a small private limited company, the shareholders may also be the directors
as well as the officers of the company.

For a QS consultancy firm, the directors must be a professionally registered

quantity surveyors.
TYPES OF QUANTITY SURVEYING PRACTICE

BODY CORPORATE (continued)

A registered QS may be the director of a QS consultancy firm, as well as the director

of a multidisciplinary consultancy firm registered with the Board of QS malaysia.

The Multidisciplinary consultancy firm must have directors who are professional
engineers AND/OR professional Architect and professional QS, and these people
must hold a minimum of 70 % of the shares. The QS must hold a minimum of 10%
shares for the company to be allowed to perform QS services.
TYPES OF QUANTITY SURVEYING PRACTICE
BODY CORPORATE (continued)
Advantages:-
1. Limited liabilities of
shareholders ; up to the
amount of shares they have
each invested in the company
2. Longer life of firm – the
company is a legal entity and
will legally continue to exist
even though the shareholders
have withdrawn or died
3. Wider source of funds with
more shareholders. Banks are
also more willing to lend to
incorporated companies.
4. Sharing of knowledge, skills,
duties and responsibilities.
5. Ownership of company can be
transferred with ease.
Disadvantages:-
1. More regulations to follow – eg.
Companies are required to
submit annual audited accounts
and director’s reports.
2. Complexity – structure and
workings of incorporated
companies are much more
complex .
3. No one person have full control
of company.
4. Sharing of profits
 NEW BUSINESS ENTITY VS BRANCH OF EXISTING PRACTICE

NEW BUSINESS ENTITY BRANCH OF EXISTING

PRACTICE
Need to have enough funds to start. Name of company already established

Takes time to be established, before clients are Working procedures and templates already
comfortable to give big projects established

Have to establish office set up, working procedures Can get support of main office in case of heavy
etc. workload

Need sufficient funds to sustain at least 6 months Not free to make own decisions on everything
before any payment can be received.

Have full control of everything; decisions, method of Share of income with main office.
working etc

For branch of a corporate body, you may be director of the company, if professionally
registered.