INTRODUCTION TO QUANTITY SURVEYING AND THE CONSTRUCTION

INDUSTRY

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Thanks for the good explanation

Quantity surveyors estimate and control costs for large construction projects. They make
sure that structures meet legal and quality standards. Quantity surveyors are involved at every
stage of a project. Whether they’re working on residential, commercial or industrial projects,
clients rely on them to ensure that the final outcome is value for money.

A person needs to go through the registration process as stated in the Surveyors Act 1967
(Act 487) before being commissioned as a Quantity Surveyor. The services provided by a
consulting quantity surveyor as stated under the memorandum of agreement with the client
encompass six basic services and six additional services

As a quantity surveyor you will be responsible for helping to estimate costs, quantities, and
project timelines and providing this information to clients. You will be liasing with a variety
of other teams and helping to keep a project on track.

There are 2 categories of services provided by consulting surveyors, as stated under the
memorandum of agreement with the client: -

- Basic Services
It is part of the service fee agreed with the customer.
- Additional Services
Services with additional payment by the customer are calculated and reimbursed.

Construction industry refers to the industrial branch of manufacturing and trade related to
building, repairing, renovating, and maintaining infrastructures. The construction industry in
Malaysia is expected to grow steadily over the next four quarters. The growth momentum is
expected to continue over the forecast period, recording a CAGR of 5.9% during 2022-2026.

The construction output in the country is expected to reach MYR 228,680.8 million by 2026.

The importance of the construction industry to our country is because construction can create
buildings and spaces that connect communities, provide jobs and improve society. The
construction industry is often divided into four subsectors by various government agencies
and industry interests: residential, commercial, infrastructure, and industrial.

The construction industry is involved in activities such as planning, designing, assembling,

installing, constructing, demolishing, repairing, altering, and maintaining to yield products
such as buildings, roads, bridges, tunnels, airports, railways, electrical facilities, mines, dams,
and canals.

RESEARCH AND INNOVATION IN THE CONSTRUCTION

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Research and development (R&D) in construction refer to activities that improve the quality,
productivity, efficiency and management of the construction project. R&D is a process to
impose innovation to the industry. The improvement of the technology also needs to be
considered in order to adapt with the environment concern and statutory requirements. R&D
in construction is beneficial in term time and the quality of the end product.

Innovation is a wide concept that includes improvements in processes, products or services. It

involves incorporating new ideas which generate changes that help solve the needs of a
company and so increase its competitiveness.

The advantage of innovation in the construction industry is that when using any innovative
construction methodology, you will see an increase in performance and efficiency. As you
implement the latest technology into your construction process, you will speed up your
project time, save money and overall create a better performing structure

Effective and targeted innovation in the construction industry has great potential as it can
translate into better housing, greater living, and working circumstances, reduced
infrastructure costs, sustainable development, and construction business that is competitive
and profitable all across the world

Some of the key practical benefits of innovation are:

- improved productivity.
 - reduced costs.
- increased competitiveness.
- improved brand recognition and value.
- new partnerships and relationships.
- increased turnover and improved profitability.

TOPIC 3: FORECASTING COST

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Preparation of a cost estimate for any project in general, is a complex process as the cost
estimate is based on various factors.

So cost management is important in construction projects to ensure project success. The most
affected factors in cost management are poor scope definition, inaccurate activity cost
estimates, poor work breakdown structure definition and changes in schedule.

Design issues seen to affect the cost of buildings include their function, geometry,
specifications, emphasis on whole life costs, legislative constraints and socio-economic
factors. The location, physical and environmental conditions of the site also exert a
considerable bearing on costs

The factors involved in forecasting building costs are as follows:

1. Similar Construction Projects

2. Construction Material Costs

3. Labour Wage Rates

4. Construction Site Conditions

5. Inflation Factor

6. Project Schedule

7. Location of Construction
 8. Contingency

9. Fluctuation in prices of materials

10. Cash flow and financial difficulties faced by the contractor

11. Shortage of site workers

12. Lack of communication between parties

TOPIC 4 : PROJECT COMPARISON ESTIMATES

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Estimating is vital in the construction industry to determine the construction cost of a project.
Each type of these techniques has their own advantages and disadvantages

There are six techniques for estimating, which are

1. Detailed estimate

2. Assembly estimating

3. Square-foot or unit-based estimates

4. Parametric estimates

5. Model estimating

6. Project comparison estimates.

Project comparison estimates method involves the idea of a rough gross area for the projected
work and an adequate historical documentation of comparable building categories. The more
the number of previous project mixtures for which scope and prices are known, the simpler it
is to accomplish project comparison estimating

A comparison estimation is a fairly accurate cost estimation method. In it, an analogy is made
between the project at hand and projects that were assigned of a similar nature in the past.
This can be especially accurate if it involves the same team bringing the project to
completion. This can give a project manager a slight edge in that she can usually improve on
past project goals she’s achieved by fixing problems earlier on in the working process.
Weaker workers can be assigned to different aspects of production, and futile working
arrangements can be fixed

Project comparison estimating uses past data on total costs from previous projects of similar a
building type. For instance, the number of rooms in a hotel, or number of spaces in a parking
garage, or number of courtrooms in a courthouse can develop the basis of a project
comparison estimate by evaluating them to projects of a related scope done recently in the
same terrestrial area (Cullen, 2014).

TOPIC-5: STANDARD METHOD OF MEASUREMENT (SMM)

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Measurement is the processes of controlling the construction cost by accurate measurement

of the work required. It is also known as "TAKING-OFF". The quantities are measured from
drawings and specifications prepared by architects and engineers and tabled in a document
known as "Bill of Quantities"(BQs). The purpose of this Bill of Quantities is to prepare
tender documents and subsequently contract documents.

Standard Method of Measurement (SMM) is a reference document used to determine a

localized technique of construction measurement protocol needed in producing a good Bills
of Quantities (BQ) which is then incorporated into the contract document for the project

Bills of Quantity are prepared according to either the Malaysian Standard Method of
Measurement of Building Works (SMM2) or the Malaysian Standard Method of
Measurement of Civil engineering Works (CESMM). The current Standard Method of
Measurement that is extensively in use is the Malaysian Standard Method of Measurement of
Building Works, Second Edition (SMM2) published by The Institution of Surveyors,
Malaysia in May, 2000.

Standard Method of Measurement (SMM) is one of the most important standardizations in

construction industry. It provides a foundation about the measurement principles which can
be used to measure the design drawing's volume as well as the actual work's volume
The purpose of the Standard Method of Measurement is to provide a uniform basis for the
measurement of building works. The methods of measurement laid down herein shall be
applied to the preparation of Bills of Quantities before the works are commenced equally
with the measurement of finished works and variations

TOPIC 6: PROCUREMENT

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Procurement is the process of acquiring goods and services in construction. A construction

company needs to strategically approach the procurement process to maximize the efficiency
of a project. A construction firm must carefully approach procurement and purchase supplies
cost-effectively, considering factors like timeline, quality of project, and budget.

There are four processes of procurement:

1. Plan procurement

2. Conduct procurement

3. Administer procurement

4. Close procurement

The procurement system in Malaysia can be classified into three types,

1. Direct purchase - For purchases below RM50,000.

2. Tender (open and closed tender tender/quotation) – Closed tenders for procurement
of project costs between RM50,000 and RM200,000 and open tender is for
procurement exceeding RM200,000

3. Direct negotiations - In certain circumstances, the procurement could not be done

through tender. Therefore, the acquisition will be made through direct negotiations

Construction management can save you time and money. By compressing a number of steps
in the conventional process, schedules can be accelerated. Through greater flexibility and
project control, the risk of overspending is therefore minimized. You have access to a highly
qualified project team

TOPIC 7: TENDERING AND PRICING

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Tendering is the process of making an offer, bid or proposal, or expressing interest in

response to an invitation or request for tender.

The term tender refers to an invitation to bid for a project. Tendering usually refers to the
process whereby governments and financial institutions invite bids for large projects that
must be submitted within a finite deadline. The word tender can also refer to the acceptance
of a formal offer, such as a takeover bid

Pricing is described as the technical process of calculating net costs to carry out a specified
amount of building work for each of the items in the tender whereas tendering is the final
price or offer determined by the contractor and proposed to the client for approval.

The sum of money which the contractor proposes will include not only the pricing but also a
margin for overheads and profit.

There are three types of tendering processes, which are: -

1. Open tenders

The client advertises the proposed project publicly and is available to all interested
contractors. The client may require a refundable deposit from all applicants. Open
tendering is common in both government and public sectors, and is widely used in the
construction industry. This technique is usually used extensively for small projects and it
is very effective

2. Selective tenders

The client only invites a shortlist of contractors to submit their bids for the tender.
Selective tendering is designed to mitigate the limitations of the open tendering
 method. Since a shortlist of qualified contractors is drawn in advance, participation is
restricted to only competent and skilled contractors.

3. Negotiated tenders

Commonly used in the construction industry, as negotiation starts from the tendering
process to the dispute resolution stage. Negotiated tendering involves two phases: the
pre-contract negotiations and the post-contract negotiations. This tendering process
typically involves a single contractor but has an allowance for a maximum of three
contractors.

The negotiated tendering process begins when the employer identifies a suitable
contractor to deal with. The employer can select the contractor from their list of
preferences or through the guidance of the professional team. Once the client
identifies a contractor, they give them the project details.

Negotiation tendering is suitable for types of contracts where:

- The contractor is involved in funding the construction project.

- The employer and the contractor have a long-term business relationship.

- The construction project is urgent, and the work must be fast-tracked.

TOPIC 8: WHOLE LIFE COSTING (WLC)

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Whole life costing is the methodology of arriving at the total cost of a building during its
entire cycle of life from the initial construction to its eventual demolition. Whole life costing
is applied when decisions to be made require the comparison of several alternatives from
sites, buildings, materials and renovation

Life-cycle cost analysis specifically requires the consideration of all significant costs of
purchasing, owning, operating, and disposing of a facility. Savings are measured as negative
costs, and analysts may sometimes include benefits or disbenefits not directly related to the
building
Two categories are divided from the LCC, initial cost and future cost, on the basis of time.
The initial cost is the total cost before the equipment is put into use, while the future cost is
the total cost of the equipment from being put into use to being scrapped

The main factors to be considered in calculating the whole life costing are: -

1. Set in between the initial cost of procurement

2. The running costs of operation

3. Maintenance and replacement as well as the completion cost of demolition works.

TOPIC 9 : VALUE MANAGEMENT (VM)

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Value management incorporates value engineering which is a systematic approach to

delivering the required functions at optimum whole life cost without detriment to quality,
performance and reliability

However, in a nutshell, VM is a tool to make sure clients get the best result from their
investment in construction projects.

VM application process is divided into three steps as follows:

1. Value Assessment (VA)

Is a manual process that determines that VA is conducted as part of strategic planning

before the project is approved. Its purpose is to identify projects that can contribute to
the achievement of optimising costs and improving the performance of the project.

2. Value Engineering (VE)

 Is for projects that have been approved at the federal agency. VE can be implemented
at all stages of design development to ensure that the projects achieve the functions
and objectives as required.

3. Value Review (VR)

Refers to the process of VM implementation after the project is completed, so that the
performance of the project can be evaluated and compared with the required
objectives. The objectives of VM also include the continuous improvement in
improving and enhancing the effectiveness of the project implementation.

TOPIC 10 - FINAL ACCOUNT

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Final Account is a statement prepared following the completion of all works under a
construction contract and the expiry of the defects liability and maintenance period. There is
no prescribed form for the final account but it is generally expected to show the original
contract sum and a tabulated breakdown of the items which arise from variations made
during the course of the contract. From these figures, the final contract sum is computed. The
final contract sum is then stated as a sum owing either by the owner to the contractor or the
contractor to the owner

The main elements to be included in a final account are as follows:

1. Statement of final account

2. Final account summary

3. Adjustment of prime cost sums

4. Adjustment of provisional sums

5. Adjustment of provisional items

6. Adjustment of variation account

7. Adjustment for fluctuations

 8. Adjustment for contractors’ claims.

The measurement of the variation work includes the omission, addition, substitution,
alteration and/or removal of any materials, goods and executed works.

The pricing of the variation work should be calculated according to bills rates, pro-rata rates,
agreed or fair rates, day works and formerly included bills rates