- Today, we're gonna talk about cost management documents,
what's what, and what you might need to financially plan
and control your construction project successfully.
This video follows on from our previous video,
which covered the topic from project inception to tender,
and this is part two in our series of free videos.
This video will cover the tender stage documentation.
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Before we get into it,
let's just recap from our previous video.
In the previous video,
we talked about the order of cost estimate,
which is a document that sets out the details
of the authorized budget and cost limit,
cost plans that aim to keep expenditure
within cost limits approved by the client,
and the final cost plan and pre-tender estimate
that estimates the likely cost of the works
that are described in the complete tender documents
prepared to seek tenders from prospective contractors.
So let's get stuck into the tender stage QS documents.
There are several types of documents
used for tender pricing,
and the level of detail they include
are broadly categorized as unquantified schedules of works,
quantified schedules of works,
unquantified bills of quantities,
quantified bills of quantities,
tender stage cost plan, and a contract sum analysis.
Schedules of works are, as the name suggests,
lists of works entailed in a project.
Typically, they're used for small building projects
or alteration works
and enable the contractor to price the work.
The schedules provide high-level data
and more in-depth information about the quality of items
should be attained from specifications documents
issued alongside the schedules and drawings.
Schedules of works are designed to assist the contractor
in preparing their estimate.
Whilst it's down to the contractor
to ensure they have sufficient information
to accurately estimate the costs,
it is equally important to ensure the schedules
provide sufficient quality information
to avoid claims from the contractor at a later date,
to give an example of the difference
between unquantified and quantified schedules,
unquantified schedules refer broadly to each item
without detailing the exact number,
i.e. a line in the schedule might detail
the installation of internal doors
without detailing how many doors are required.
By contrast, quantified schedules of works
provide the number of doors,
but the specification with regards to fire-rating,
material, size, or location would need to be taken
from the accompanied drawings and specification documents.
Bills of quantities are a more comprehensive document,
and in turn offer greater cost certainty for all parties.
Whilst the client may choose to obtain a BQ
and then share unpriced versions
with the tendering contractors,
it is a more common approach for a contractor
to obtain their own BQ.
Prepared by a professional cost consultant,
BQs require completed drawings and detailed specifications
in order for the BQ to be compiled.
The project is broken down into defined elements,
prelims, substructures, superstructures, and so on,
all in accordance with recognized industry standards.
BQs are required to comply
with the new rules of Measurement 2, NRM-2.
However, as estimators and contractors
still prefer the standard method of Measurement 7, SMM-7,
the industry adopts the use of both.
The term unquantified BQ may sound counterintuitive
and to a lay person might be a tricky concept to grasp.
In some respects, they could be compared
to unquantified schedules of works.
For example, there may be a line in the bill
requiring a removal of a specified item
from a specified location
while actually providing the measurement of the item,
thereby rendering it a unquantified item.
Quantified BQs provide the greatest cost certainty
for a construction project.
This is a highly detailed document
that takes into account of every item and activity
involved in delivering a completed project
and sets a cost against it line by line.
Where assumptions are made, these will be set out,
making them easy to identify and to monitor.
With projects broken down into distinct work packages,
the procurement of sub-contractors is made easier,
as it is the pre and post contract cost monitoring
and the assessment and handling of variations.
The tender stage cost plan is the cost plan in place
at the point of which tenders are invited
and can be issued at various times in the project,
as demonstrated by the RIBA plan of works.
If the tender process starts early in the design process,
then, clearly, there'll be changes along the way.
The more comprehensive and developed the cost plan is
at the point it is issued,
the greater the cost certainty for both the client
and the contractor that the project can be delivered
within the budget parameters.
Cost plans are particularly useful
for construction management
and management contracting procurement,
and are used as a contract document.
A contract sum analysis is a cost breakdown
that should be provided by the contractor
as part of their tender on design and build projects.
In practice, however,
the employer's requirements will prescribe the format
and break down that the contract sum analysis should take,
and is usually an adapted version of the final cost plan
produced by the QS prior to tender.
The CSA in the employer's requirements
will generally omit quantities and replace these with,
for example, one item,
as quantification is a contractor's responsibility.
By the QS not producing a CSA and ERs
and relying purely on the contractor to produce the CSA,
it is somewhat counter-intuitive,
as a CSA will usually be revisited and expanded
before construction commences,
to ensure that it properly reflects
the nature of the project
and to ensure it is suitable basis for payment,
and avoid any front-loading.
So, in summary, the aim of the tender stage documents
is to achieve comparable end-to-end costs
for the project from tendering contractors
in order to award the contract to the bidder
able to demonstrate the greatest value for money.
Notes, however, that value for money
does not necessarily mean the cheapest bid wins,
and nor should it.
With properly completed tender submissions,
it will become apparent which bidder is best equipped
to deliver the element of the project
and how pricing compares across the returns.
If a contractor has misinterpreted aspects of the design,
it will usually become apparent during the tender process,
thus affording the client
the opportunity to clarify these areas.
So, I hope you found value in this video.
If you have any questions, please feel free to contact us,
and we really look forward to hearing from you.