Quantity Surveying & Costing (Lab) (CE-505) - Unit 1 Short Notes

CE-505 - Quantity Surveying & Costing (Lab) - UNIT 1: FOUNDATIONS OF QUANTITY SURVEYING & COST PRINCIPLES

1.0 Introduction to the Quantity Surveying Profession

1.1 Definition and Scope of Quantity Surveying (QS)

• Definition: A Quantity Surveyor (QS) is a construction professional responsible for managing all financial aspects of a building or civil engineering project, from initial concept to final account. Their core function is to ensure the project is delivered within the agreed budget.

• Scope: Encompasses cost planning, estimating, procurement advice, contract administration, cost control, valuation, and dispute resolution.

1.2 Evolution of the Quantity Surveyor's Role

• Historical Role ("Measurer"): Primarily focused on measuring quantities from drawings to prepare a Bill of Quantities (BOQ) for tendering.

• Modern Role ("Cost Manager"): A strategic advisor involved throughout the project lifecycle, focusing on value engineering, risk management, whole life costing, and client's best value.

1.3 Key Professional Roles & Responsibilities

1.4 Stakeholders in Construction Projects & QS Interface

1.5 Professional Bodies & Ethics

• Key Bodies: RICS (Royal Institution of Chartered Surveyors - UK/Global), CIOB (Chartered Institute of Building - UK), IQSSL (Institute of Quantity Surveyors Sri Lanka).

• Ethics: Adherence to a Code of Conduct emphasizing integrity, objectivity, confidentiality, and competency. Professional indemnity insurance is mandatory.

[!TIP] Exam Focus: Be prepared to differentiate between the historical "Measurer" and modern "Cost Manager" roles. Know the key pre- and post-contract responsibilities.

2.0 The Construction Project Lifecycle & QS Involvement

[!TIP] Common Pitfall: Confusing the Elemental Cost Plan (Stage 3) with the Pre-tender Estimate (Stage 4). The former is based on elemental areas/volumes; the latter is based on detailed measured quantities.

3.0 Fundamentals of Construction Economics & Cost

3.1 The Nature of Cost in Construction

• Capital Cost (Initial Cost): The one-off cost to design and construct the asset (e.g., land, construction, professional fees).

• Operational Cost (Running Cost): The recurring cost to operate, maintain, and occupy the asset over its life (e.g., energy, cleaning, repairs).

3.2 Introduction to Whole Life Costing (WLC) / Life Cycle Costing (LCC)

• Definition: A technique to assess the total cost of ownership over the asset's entire life cycle.

• Formula (Conceptual):

$$ \text{WLC} = \text{Capital Cost} + \sum_{t=1}^{n} \frac{\text{Operational Cost}_t}{(1 + r)^t} $$

Where \( r \) = discount rate, \( t \) = year, \( n \) = life cycle years.

• Purpose: Enables informed decision-making between design options with different capital and operational costs (e.g., a cheaper boiler with high energy cost vs. an expensive efficient boiler).

3.3 Value for Money (VfM) & Cost-Benefit Analysis

• VfM: The optimum combination of whole-life cost and quality (fitness for purpose) to meet the user's requirements. Not simply the lowest initial cost.

• Cost-Benefit Analysis (CBA): A broader evaluation comparing monetized costs against monetized benefits (which may include non-financial benefits like social impact).

3.4 Inflation, Escalation, and Cost Fluctuations

• Inflation: General rise in price levels.

• Construction Cost Escalation: Specific rise in construction costs (labour, materials, plant) often outpacing general inflation.

• Management: Use of cost indices (e.g., BCIS, RICS Indices) to adjust base costs to current or future market levels.

3.5 Understanding the Construction Market

• Dynamics of supply (contractors, materials) and demand (client projects).

• Market conditions ("hot" / "cold") directly influence tender pricing, contractor margins, and availability of resources.

4.0 Principles of Measurement & Standard Methods of Measurement (SMM)

4.1 Purpose and Importance of Standardized Measurement

• Purpose: To provide a consistent, unambiguous, and fair method for measuring and describing construction work.

• Importance: Enables accurate comparison of tenders, forms a basis for the BOQ, and is a contractual document.

4.2 Overview of Key Measurement Standards

4.3 Core Measurement Principles

1. Coverage: Items must be measured according to the rules of the applicable SMM.

2. Billing: Items are listed in the BOQ in a logical sequence (often following the construction sequence).

3. Description: Must be clear, concise, and sufficient to define the nature and extent of the work without reference to drawings.

4.4 Units of Measurement and Their Application

[!TIP] Exam Focus: Know the difference between NRM1 (detailed BOQ) and NRM2 (cost planning/estimating). Understand why CESMM4 is used for civil works, not building works.

5.0 Types of Estimates and Cost Planning Stages

5.1 Order of Cost Estimate (Feasibility/Conceptual Estimate)

• Stage: Very early (strategic briefing).

• Basis: Gross Floor Area (GFA) or functional units (e.g., cost per bed in a hospital).

• Accuracy: ±25% to ±40%.

• Purpose: Establish initial client budget and project feasibility.

5.2 Elemental Cost Plan / Pre-tender Estimate

• Stage: After concept/scheme design.

• Basis: Elemental quantities (e.g., m² of external walls, m³ of foundations) derived from outline drawings.

• Accuracy: ±10% to ±20%.

• Purpose: Detailed budget control during design development.

5.3 Approximate Quantities / Analytical Estimating

• Basis: Uses historical cost data per unit (e.g., cost/m² of wall, cost/m of drainage) applied to approximate dimensions.

• Purpose: Quick updating of estimates as design progresses.

5.4 Detailed Bill of Quantities (BOQ) Estimate

• Stage: After technical design, before tender.

• Basis: Fully measured quantities from detailed drawings using SMM rules.

• Accuracy: ±5% to ±10%.

• Purpose: The definitive tender document; forms the basis of the contract sum.

5.5 The Cost Planning Process: From Budget to Tender Figure

Flow: Client Budget → Order of Cost Estimate → Elemental Cost Plan → Design Development → Pre-tender Estimate → Detailed BOQ → Tender Returns → Contract Sum.

5.6 Cost Modeling and Cost Data Benchmarking

• Cost Modeling: Creating a digital or spreadsheet model of the project's cost structure (often elemental) to test "what-if" scenarios.

• Benchmarking: Comparing project costs/ratios against historical data (from similar past projects or published sources like BCIS) to check viability.

6.0 Introduction to the Bill of Quantities (BOQ)

6.1 Purpose and Function of the BOQ

• Tender Document: Allows contractors to price on a uniform, identical basis, ensuring tender comparability.

• Contract Document: Forms part of the contract. The priced BOQ is used for valuation of variations and interim payments.

6.2 Structure of a Standard BOQ

1. Preliminaries / General Conditions: Costs for site setup, management, facilities, insurance, etc. (Lump sum or priced items).

2. Measured Works: The main body, grouped by Work Sections/Trades (e.g., Earthworks, Concrete, Masonry, Finishes).

3. Provisional Sums: Sums for work that cannot be measured at tender time (e.g., "Provisional sum for future staircase"). Not included in the contract sum initially; becomes actual work on instruction.

4. Prime Cost Sums (PC Sums): Sums for materials or goods to be supplied by the contractor (e.g., "PC sum for kitchen units"). Contractor adds profit & on-costs.

5. Dayworks: Schedule of labour, plant, and material rates for unforeseen work priced on a "time and materials" basis.

6.3 Key BOQ Terminology

6.4 BOQ Preparation Process

1. Take-off: Measuring quantities from final drawings.

2. Abstracting: Organizing measured items into a draft schedule.

3. Billing & Description: Arranging items in work section order and writing compliant descriptions.

4. Type-Setting & Checking: Final formatting, totaling, and rigorous error checking.

7.0 Basic Cost Analysis & Unit Rates

7.1 Components of a Unit Rate

A contractor's unit rate is typically broken down as:

$$ \text{Unit Rate} = \frac{\text{Direct Costs} + \text{Overheads} + \text{Profit}}{\text{Unit Quantity}} $$

Where:

• Direct Costs: Labour + Material + Plant costs for that specific item.

• Overheads: Site overheads (site management, huts, welfare) + Head Office overheads (admin, corporate costs).

• Profit: Contractor's risk reward margin.

7.2 Introduction to Resource-Based Estimating

• Method of building a rate from first principles:

  1. Determine resource requirements (e.g., 2 labourers, 1 mixer, 0.5m³ concrete per m³ of concrete).

  2. Apply resource costs (hourly labour rate, hourly plant rate, material price).

  3. Add productivity factors and allows for waste, wastage, and efficiency.

  4. Add overheads and profit.

7.3 Understanding Labour, Material, and Plant Costs

• Labour Cost: Basic wage + on-costs (pensions, NI, holiday pay, training levy).

• Material Cost: Net purchase price + delivery + wastage allowance (typically 5-10%).

• Plant Cost: Hourly or daily operating cost (depreciation, fuel, maintenance, operator).

7.4 The Concept of Overheads and Profit Margins

• Site Overheads: Often priced as lump sums in Preliminaries or distributed as % across measured rates.

• Head Office Overheads: Typically a percentage (5-15%) added to direct costs.

• Profit: Varies with risk, competition, and project type. Typically 2-10%.

7.5 Introduction to Cost Indices

• Purpose: To adjust historical cost data to current or future price levels.

• Example: If a building cost ₹10,000/m² in 2020 and the relevant cost index has increased from 100 to 120 by 2023, the current approximate cost is:

$$ \text{Current Cost} = 10,000 \times \frac{120}{100} = ₹12,000/m² $$

8.0 Laboratory/Software Component (Applied Skills)

8.1 Introduction to Quantity Surveying Software

• Purpose: To increase speed, accuracy, and consistency of take-off and BOQ production.

• Common Software: Bluebeam Revu (PDF take-off), Cubit (3D BIM take-off), Planswift (2D take-off), CostX (dimensional take-off), WinQS (cost planning & BOQ).

8.2 Basic Digital Take-off from Drawings (PDF/ CAD)

• Process: Overlay digital drawings, use measurement tools (length, area, count, volume) to capture quantities directly into a software schedule.

• Advantage: Quantities are linked to the drawing; if drawing changes, quantities can be updated.

8.3 Creating a Simple BOQ Structure in Software

• Set up hierarchical structure matching NRM/SMM (e.g., Project > Element > Sub-element > Work Section > Item).

• Link measured quantities from take-off to the correct BOQ item.

• Generate automatic totals and summaries.

8.4 Introduction to Cost Databases and their Use in Estimating

• Definition: A centralized repository of historical cost data (unit rates, resource costs, productivity rates).

• Use: Allows rapid assembly of preliminary estimates and elemental cost plans by applying database rates to elemental quantities.

• Sources: In-house database (from past projects) or commercial databases (e.g., BCIS, RSMeans).

8.5 Basic Spreadsheet (Excel) Application

• Essential for: Cost summaries, analysis, cash flow forecasting, and creating simple cost models.

• Key Functions: SUM, SUMIF, VLOOKUP, PivotTables for analyzing BOQ data by trade or location.

• Best Practice: Use consistent formatting, separate input data from calculations, and implement error checks.

[!TIP] Lab Exam Focus: You may be asked to perform a simple digital take-off on a provided PDF drawing and generate a basic BOQ summary in software or Excel. Accuracy in measurement and correct item grouping are key.