UNIT 107: QUANTITY

SURVEYING
Lakshitha Senarathne
BSc (Hons), AMIE(SL)
Quantity Surveyor

quantity surveyor (QS)

is a professional
working within the
construction industry
concerned with
construction costs and
contracts.
Type of QS
Professional Quantity Surveyor
Broadly concerned with contracts and costs on construction projects.
The methods employed, however, cover a range of activities which
may include cost planning, value management, feasibility study,
cost benefit analysis, lifecycle costing, tendering, valuation, change
control, dispute resolution and cost estimation.

Contractors Quantity Surveyor

A contractor's QS is responsible for the performance of operations
that mirror those of the owner's QS; i.e., the measurement and
pricing of construction work, but specifically performed by the
contractor as opposed to the construction work described and
measured in the construction contract between the employer and
the contractor.
TRADITIONAL ROLE OF A QS
Measurer Arrives at quantities of different
items of work for
Tender document preparation (for developer)

Tender Pricing (for contractor)

Handles BOQ and prices schedules

Bills for payment, intermediate and final

Measures quantities from drawings and from

site
Function of a QS
preparing tender and contract documents, including
bills of quantities with the architect and/or the client;
undertaking cost analysis for repair and

maintenance project work;

assisting in establishing a client's requirements and

undertaking feasibility studies

performing risk, value management and cost

control;
advising on procurement strategy

identifying, analyzing and developing responses to

commercial risks
preparing and analyzing costings for tenders
Function of a QS Contd..
allocating work to subcontractors
providing advice on contractual claims
analyzing outcomes and writing detailed

progress reports
valuing completed work and arranging

payments
maintaining awareness of the different

building contracts in current use

understanding the implications of health and

safety regulations
Special Knowledge required for
QS
offering advice on property taxation
providing post-occupancy advice, facilities

management services and life cycle costing

advice
assisting clients in locating and accessing

additional and alternative sources of funds

enabling clients to initiate construction

projects
advising on the maintenance costs of specific

buildings.
Time value of Money

Money available at the

present time is worth more
than the same amount in the
future due to its potential
earning capacity. This core
principle of finance holds that,
provided money can earn
interest, any amount of
money is worth more the
sooner it is received.
Interest

Interest is the charge for

the privilege of borrowing
money, typically expressed
as annual percentage rate.
Inflation

Inflation is defined as a
sustained increase in the
general level of prices for goods
and services. It is measured as
an annual percentage increase.
As inflation rises, every dollar
you own buys a smaller
percentage of a good or service.
Discounting

The process of determining the

present value of a payment or a
stream of payments that is to be
received in the future. Given the time
value of money, a dollar is worth
more today than it would be worth
tomorrow given its capacity to earn
interest. Discounting is the method
used to figure out how much these
future payments are worth today.
Depreciation

A method of allocating
the cost of a tangible
asset over its useful life.
Businesses depreciate
long-term assets for both
tax and accounting
purposes.
Taxes

Taxes are generally an

involuntary fee levied on
individuals or corporations
that is enforced by a
government entity, whether
local, regional or national in
order to finance government
activities.
Cost Planning & Management
What is Cost and Project Cost
Management?
Cost is a resource sacrificed or foregone to
achieve a specific objective, or something
given up in exchange.

Costs are usually measured in monetary

units, such as LKR, USD, GBP etc.

Project cost management includes the

processes required to ensure that the project
is completed within an approved budget.
Project Cost Management Processes

Cost estimating: Developing an

approximation or estimate of the costs of the
resources needed to complete a project.

Cost budgeting: Allocating the overall cost

estimate to individual work items to
establish a baseline for measuring
performance.

Cost control: Controlling changes to the

project budget.
 Basic Principles of Cost
Management
Most members of an executive board have a
better understanding and are more interested
in financial terms than IT terms, so IT project
managers must speak their language.
Profits - revenues minus expenses.
Life cycle costing - Total cost of ownership, or
development plus support costs, for a project.
Cash flow analysis - Estimated annual costs and
benefits for a project and the resulting annual cash
flow.
Basic Principles of Cost
Management
Tangible costs or benefits - Those costs or
benefits that an organization can easily measure in
money.
Intangible costs or benefits - Costs or benefits
that are difficult to measure in monetary terms.
Direct costs - Costs that can be directly related to
producing the products and services of the project.
Indirect costs - Costs that are not directly related
to the products or services of the project, but are
indirectly related to performing the project.
Sunk cost - Money that has been spent in the
past; when deciding what projects to invest in or
continue, you should not include sunk costs.
How Do We Manage Cost?

Cost Estimating

Cost Budgeting

Cost Control
Cost Estimating
Project managers must take cost estimates
seriously if they want to complete projects
within budget constraints.

Its important to know the types of cost

estimates, how to prepare cost estimates,
and typical problems associated with IT cost
estimates.
 Types of Cost Estimates
Type of
When Done Why Done Accuracy
Estimate
Very early of the
project cycle, Provide
Rough order of
often 3 5 years estimation of cost -25% to +75%
magnitude
before complete for decision
the project
Early, 1 2 year
Put money in the
Budgetary of project -10% to +25%
budget plan
completion
Provide details of
Later in the
purchasing,
Definitive project, Less than -5% to +10%
estimate actual
01 year
cost
Enterprise Inputs Tools & Techniques Outputs
Environmental
Factors Analogous estimating
Determine resource cost
Organizational
Process Assets rates Activity Cost
Bottom up estimating Estimates
Project Scope
Parametric estimating Activity Cost
Statement
Project management Estimates
Work Supporting Detail
software
Breakdown
Structure Vendor bid analysis Requested
WBS Dictionary Reserve analysis Changes
Cost of quality Cost Management
Project
Management Plan Updates
Plan
Schedule Mgmt
Pln
Staffing Mgmt Pln
Risk Register Cost Cost Cost
Estimating Budgeting Control
Estimating Methods
Analogous (Top Down) estimating Managers
use expert judgment or similar project costs
[quick, less accurate]
Bottom-Up estimating People doing work
estimate based on WBS, rolled up into project
estimate [slow, most accurate]
Parametric estimating Use mathematical
model (i.e. cost per sq ft). [accuracy varies]
Two types:
Regression analysis based on analysis of multiple data
points
Learning Curve The first unit costs more than the 100 th,
forecasts efficiency gains
Estimating Methods Contd..
Vendor Bid Analysis Estimating using bids
+ allowances for gaps in bid scope [slow,
accuracy depends on gaps]
Reserve Analysis Adding contingency to
each activity cost estimates as zero
duration item [slow, overstates cost]
Cost Budgeting
Budgeting is allocating costs to work
packages to establish a cost baseline to
measure project performance
Remember Contingency items are for
unplanned but required changes it is not
to cover things such as:
Price escalation
Scope & Quality Changes
Funding Limit Reconciliation Smoothing
out the project spend to meet
management expectations
 Tools & Techniques
Outputs
Cost aggregation Cost Baseline
Project Scope
Statement Reserve analysis
Work Breakdown
Structure Parametric estimating
WBS Dictionary Project Funding
Funding limit Requirements
Inputs
Activity Cost Estimates reconciliation
Activity Cost Estimates Cost Management
Supporting Detail Plan Updates
Project Schedule
Requested
Resource Calendars
Changes
Contract
Cost Management Plan

Cost Cost Cost

Estimating Budgeting Control
Cost Control
Project cost control includes:
Monitoring cost performance.

Ensuring that only appropriate project changes are

included in a revised cost baseline.

Informing project stakeholders of authorized changes

to the project that will affect costs.

Many organizations around the globe have

problems with cost control.
 Inputs Tools & Techniques Outputs Cost Estimate
Cost Baseline Cost change control Updates
system
Project Funding Cost Baseline
Performance Updates
Requirements
measurement analysis Performance
Performance Forecasting Measurements
Reports
Project performance Forecasted
Work reviews Completion
Performance Project management Requested
Information Changes
software Recommended
Approved
Change Variance management Corrective Actions
Requests
Organizational
Project
Process Assets
Management
Updates
Plan
Project
Management Plan
Updates
Cost Cost Cost
Estimating Budgeting Control
Earned Value Management (EVM)
EVM is a project performance measurement
technique that integrates scope, time, and
cost data.
Given a baseline (original plan plus approved
changes), you can determine how well the
project is meeting its goals.
You must enter actual information periodically
to use EVM.
More and more organizations around the world
are using EVM to help control project costs.
Earned Value Management Terms
Planned value (PV) - formerly called the budgeted cost
of work scheduled (BCWS), also called the budget, is that
portion of the approved total cost estimate planned to be
spent on an activity during a given period.
Actual cost (AC) - formerly called actual cost of work
performed (ACWP), is the total of direct and indirect costs
incurred in accomplishing work on an activity during a
given period.
Earned value (EV) - formerly called the budgeted cost
of work performed (BCWP), is an estimate of the value of
the physical work actually completed. EV is based on the
original planned costs for the project or activity and the
rate at which the team is completing work on the project
or activity to date.
 Rate of performance (RP) - the ratio of
actual work completed to the percentage of
work planned to have been completed at any
given time during the life of the project or
activity.
Earned Variance at
Completion
Value (VAC)

Graph
Target
Cost &
Schedul
e

Schedule
Planned Variance
(Time)
Value (PV)

Earned
Value (EV)
Bid Document
Arrangement of tender
document
General arrangement of the standard tender
documents:
Section I: Invitation to tender

Section II: Instructions to tenderers

Section III General conditions of contract

Section IV Special conditions of contract

Section V Technical Specifications/Scope of

Works
Section VI Schedule of Requirements

-Section VII- Price Schedule

Section VIII Standard Forms

Section I: Invitation to Tender
Instruction to bidders on procedures for
submission of bids
Desirable goods or works to be procured
Criteria for evaluation of bids
Definitions of conditions of the proposed
contract
Clear information to enable tender decide
to tender or not.
Any other tender requirements.
Section II: Instructions to Bidders
Important clauses:
Eligible Tenderer

Eligible goods

Cost of tendering

Contents of tender document

Clarification of tender documents

Amendment of tender document

Language of tender

Documents compromising of tender

Instruction on how to complete Tender forms

Tender prices( with or excluding TAX)

Section II: Instructions to Bidders
contd
Tender currencies (Multi-currency or single
Currency
Tenderers qualifications
Tender security/tender securing declaration

Validity of tender
Format of signing of contract
Sealing and marking of tenders
Deadline for submission of tender
Notification and withdrawal of tender
Opening of tenders
Clarification of tenders
Section II: Instructions to Bidders
contd
Evaluation of Tenders and Award of
contract
Preliminary examination
Technical Evaluation
Financial Evaluation
Conversions to single currency ( for
multiple-currency tenders)
Award of contract and Communication to
bidders
Signing of contract
Performance Security.
Advance Payment Guarantee
Section III :General Conditions of
Contract
Payments (terms and duration etc.) and Prices
(include issues regarding conditions for
variations, adjustments)
Assignments to other parties ( no assigning of

obligation without PEs consent)

Sub-contracts( conditions for engagements) and

Termination of contract
Liquidated damages
Resolution of disputes
Governing Language
Force majeure
Section IV: Special Conditions of
Contract
To be prepared by the procuring entity
Should not contradict the general

conditions of contracts
They complement the general conditions

of contracts
The General and Special conditions of

contract will become the conditions

of the contract when it is finally
signed
Section V-Technical Specifications
Scope of works, Methodology to be executed for
the constructions.
Payment procedure(Pay items)
Terms of Reference (for Request for Proposals)
Drawings( for works)
Testing /Inspection (works and goods)
Standards (National/International)
Accepted Quality Levels
Note: Specifications to be performance based
preferably (No restrictive titles)
Section VI Schedule of
Requirements
Brief Description of Requirements
Quantity( may be as and when required or fixed)
Delivery Schedule (shipment) e.g. selected
Incoterms.
Note: The starting delivery date will be
specified
That date should either be the date of the
contract award or date of contract signature
Or the date of opening of letter of credit
Or the date of confirmation of Letter of Credit
Section VII-Bill of Quantity
Contains:
Item
Description
Quantity
Unit Price
Total Amount
Section VIII Standard Forms
Form of tender
Confidential Business Questionnaire Form
Tender Security Form
Contract Form
Performance Security form
Bank Guarantee for Advance payment
Manufacturers Authorization form
Declaration form
THE END