Nadia Slattery Revision Document - at 06.11.08

Nadia Slattery
APC Revision Document
November 2008
Nadia Slattery
Contents
Definitions
M001 Accounting Principles & Procedures (Level 1)
M002 Business Planning (Level 1)
M006 Conflict Avoidance, Management & Dispute Resolution (Level 1)
M007 Data Management (Level 1)
14
M009 Sustainability (Level 1)
16
M010 Team Working (Level 1)
21
M003 Client Care (Level 2)
22
M004 Communication & Negotiation (Level 2)
25
M008 Health & Safety (Level 2)
26
M005 Conduct Rules, Ethics & Professional Practice (Level 3)
33
T013 Construction Technology & Environmental Services (Level 3)
46
T017 Contract Practice (Level 3)
49
T022 Design Economics & Cost Planning (Level 3)
79
T062 Procurement & Tendering (Level 3)
90
T067 Project Financial Control & Reporting (Level 3)
108
T074 Quantification & Costing of Construction Works (Level 3)
109
T010 Commercial Management of Construction (Level 3)
113
T016 Contract Administration (Level 3)
114
Topical / Current Issues
115
November 2008
Nadia Slattery
Definitions
Adjustment of Completion
Date
All Risks Insurance
Annual Turnover
Assignment
Balance Sheet
BCIS
Benchmarking
Bond
BREEAM
Brown Roof
Building Cost Index
Building Regulations
Capital Allowances
Cash Flow Forecast
Category A Fit-Out
Category B Fit-Out
CDM Regulations
Clerk of Works
Collateral Warranty
Conflict of Interest
Contract at Large
Contingency
November 2008
Extension or reduction to Date for Completion stated in the

contract due to one of the Relevant Events. Provides relief to
contractor for breach of contract and liability of LAD's
Insurance for physical loss or damage to work executed, site
materials and reasonable cost of removal and disposal of debris
which results from such loss (with exceptions).
Income or revenue that a company receives from its normal
business activities, usually from the sale of goods and services.
The transfer of rights under a contract to another party i.e.
Developer to Tenant.
A snapshot of a company's financial condition used to
determine its net worth (assets - debts).
Subsidiary of RICS, providing cost data for construction cost,
operation and maintenance and rebuilding. Based on tender
analyses submitted by members.
The use of historical data from projects of a similar nature as a
comparison or cost check of the cost of project.
Arrangement whereby obligations of one party are financially
guaranteed by a third party.
Method of assessing environmental performance of a building.
Planted with sedum, soil and stones to replace habitat lost
during construction bringing with it wildlife friendly space and
benefits to biodiversity.
Measures movement of basic labour and materials costs to the
Builder. Used to forecast inflation during the construction
phase.
Legislation ensuring compliance of reasonable, adequate,
appropriate functional requirements regarding the built
environment.
Tax relief on capital expenditure for acquiring, constructing,
refurbishing or fitting out a property. Plant and machinery, land
remediation.
Graphical representation of anticipated expenditure during
project. Used to assist client in assessing timing and amount of
future payments.
Fit out of functional areas. Including raised floors, suspended
ceilings, M&E installation beyond risers.
Further specific fitting out for end user. Including internal
partitions, underfloor power, IT and data.
A code of practice which places statutory duties on clients,
CDM co-ordinator, designers and contractors to plan, manage
and co-ordinate health and safety throughout project.
Appointed by the Employer to act solely as inspector on his
behalf under the directions of the CA.
Side agreement which establishes a contractual link that would
otherwise not exist due to privity of contract. A separate
contract.
Where members interests conflict with a clients or where two or
more clients interests conflict
The fixed completion date ceases to apply due to interference,
prevention or continuation after breach of contract.
A sum of money used to fund unknowns, risks etc. May be
construction, design reserve, risk or client contingency.
Construction contingency may be included as an undefined
provisional sum or held below the line.
Nadia Slattery
CPI
Co-ordinated project information.
Dayworks
If works cannot be properly valued by measurement then

dayworks are used as a fair and reasonable measure of works.
Defects, shrinkages or other faults in the works due to materials
or workmanship not in accordance with the contract.
Methods of dealing with conflict between parties.
Defects
Dispute Resolution
Disruption
Energy Performance Cert
Regular progress of the works is materially affected by a

Relevant Matter. Contractor is entitled to L&E which he would
not be reimbursed by payment under any other provision in the
contract
Also known as reverse bidding. Tenderers in auction situation
in knowledge of lowest/required sum.
Employer may, with consent of Contractor, use or occupy site
(or part thereof) before PC. Insurers must confirm policy not
prejudiced. Contractor cannot unreasonably delay or withhold
consent.
Employers representative who may perform the functions of the
employer.
Brief which outlines what the employer requires in the form of
an outline specification and drawings.
Gives an energy efficiency rating to a building.
Enhanced Capital
Allowances
E-Tendering
Enhanced rate of tax relief for energy saving and green plant
and machinery.
Electronic, paper-free form of tendering process.
Ethics
Standards of what is right and wrong in terms of obligations,

fairness and benefits to society
Insurance clauses. Contractor not required to indemnify
Employer under All Risks insurance for injury, death or damage
resulting from Excepted Risks.
Dutch Auction
Early Use by Employer
Employers Agent
Employers Requirements
Excepted Risks
Expert Witness
Extension of Time
Facilities Management
Force Majeure
Green Roof
Heads of Claims
Health & Safety File
Indemnity
Insurance
Joint Names Policy
November 2008
Excepted Risks include radiations, contamination by

radioactivity etc.
A professional that can be called into a dispute by a party to
give expert evidence of their opinion to support a dispute.
Adjustment to Completion Date due to delay caused by a
Relevant Event.
Management of the operation and maintenance of a property.
A Relevant Event. Acts of God or man-made events beyond
the control of the parties i.e. war, strike, riot, crime, flood,
earthquake.
Note: Exceptionally adverse weather, civil commotion and strike
are all covered as separate Excepted Risks therefore coverage
of force majeure actually very limited.
As brown roof but planted.
Prolongation, disruption, loss of profit, head office overheads,
finance charges.
Record of information for client or end users which focuses on
H&S. Alerts readers to key health and safety risks that need to
be dealt with during maintenance, repair and construction work.
Compiled by CDM Co-ord (or Contractor under D&B).
Guarantee, compensation.
Method of providing indemnity. Equitable transfer of risk in
exchange for a premium.
Insurance policy in names of both parties. Removes
opportunity for subrogation.
Nadia Slattery
KPI
Used to benchmark projects against set of standards.
Latent Defect
Any defect which becomes apparent after the end of the

Rectification Period / issue of Making Good Defects.
Letter outlining intention to enter into contract.
Letter of Intent
Life Cycle Costing
Liquidated Damages
Loss and Expense
New Civil Procedure Rules
Novation
Parent Company
Guarantee
Partial Possession
Performance Bond
PFI
PPP
Practical Completion
Prime Cost
Prolongation
Provisional Sum
Profit & Loss Statement
Preambles
Preliminaries
November 2008
Consideration of costs over the whole life of a building not just

the capital costs i.e. understanding both capital and running
costs. The 3 Rs: running, repairs, replacement.
Genuine, pre-estimate of loss to be suffered in the event of noncompletion.
Any loss suffered or expense incurred by the contractor due to
a Relevant Matter for which he would not be reimbursed by
payment under any other provision in the contract.
Reforms to civil justice system proposed by Lord Woolfe.
Improved the speed of litigation, reduced the cost and improved
chances of early settlement.
The transfer of rights and obligations under a contract from one
party to another, under a separate contract.
Alternative to a Performance Bond. Parent Company
guarantees fulfil obligations at own cost in the event of nonperformance or insolvency.
Employer may take possession of part of site in advance of PC.
By mutual consent, not previously agreed. PC deemed to have
occurred on the Relevant Part.
Guarantee of performance. Guarantor pays for loss up to value
of bond.
Form of procurement. A long term service contract between a
public sector body and private sector operator. Privately
financed projects are repaid by government over a period of
time. Much like a mortgage.
Form of procurement where relationships formed between
private sector and public bodies.
When, in the opinion of the CA, practical completion of the
works is achieved.
Sum of money to be expended on works by nominated
subcontractors or goods by nominated suppliers.
Extended site presence due to a Relevant Matter for which the
Contractor would not be reimbursed by payment under any
other provision in the contract.
Sum for work that the Employer may or may not decide to have
carried out or which cannot be accurately measured at tender
stage.
Defined Where item can be described and approximately
quantified to extent that Contractor can make allowances within
their prelims and programme.
Undefined Where scope of work is unknown and cannot be
adequately described therefore Contractor not able to make
allowances within their prelims or programme.
A financial statement that indicates how revenue is transformed
into net income. Indicates whether the company has made or
lost money in the period.
Preliminary introduction explaining the purpose and any implied
points i.e. indicative list, not exhaustive.
Measured under SMM7. General and particular items relating
to the project generally (site set up, location), the contract
(bonds, insurance), employers requirements (security, safety,
quality standards), contractors general cost items
(management, accommodation etc)
Nadia Slattery
PII
Quantum Meruit
Relevant Event
Relevant Matter
Retention
RIBA Plan of Work
RICS Rules of Conduct
RICS Member Support
Levy
Risk
Risk Management
Run Off Cover
Schedule 2 Quotation
Site Materials
Step-In Rights
Subrogation
SMM7
Specifications
Specified Perils
Star Rate
Sustainability
SWMP
Tender Price Index
November 2008
Insurance to indemnify client in event of financial loss due to

professional negligence. Protect firm from loss it cannot meet
due to a claim for professional negligence.
As much as he has earned. A claim for a reasonable sum as
payment for services rendered. Used where there is no
contractual basis for assessing amounts due.
Occurrences which entitle Contractor to extension of time
should they affect regular progress of the works.
Occurrences which entitle Contractor for Loss and Expense for
which he would be not be reimbursed by payment under any
other provision in the contract.
Monies retained to fund rectification of any defective works
which the Contractor fails to make good.
Breakdown of the processes for a project from inception to
completion. Clearly describes key activities and deliverables.
Set of professional parameters and expectations for members
behaviour.
A support fund to protect members who find themselves being
sued personally and have no access to PII protection.
Introduced following Merrret v Babb
An uncertain event which, if it were to occur, would have an
effect on the project.
Identification, assessment and ongoing management of risks.
Continuation of PII cover for a further 6/12 yrs following ceasing
practice. RICS recommends 15 yrs.
Quotation to be provided upon request by CA. To include
adjustment to contract sum, completion date, any L&E,
reasonable cost of preparing quote and, if requested, additional
resources and method statement.
All unfixed materials and goods delivered to and placed on or
adjacent to the works which are intended for incorporation
therein.
Allow party to step-in and perform contract if original party is
unable or unwilling to do so i.e. collateral warranties.
The right to sue in the name of the assured any person who
could have been sued by the assured in respect of the loss i.e.
for loss caused as a result of negligence, breach etc.
A recognised system of measurement utilising the CAWS.
Defines precise nature and extent of works.
Produced by design team to detail scope, materials and
workmanship required.
Insurance Option C = Joint Names Policy required for existing
buildings and contents against loss or damage due to SPs.
SPs are fire, lightning, explosion, storm, flood etc.
Loss or damage caused by SPs?:
- Contractor entitled to EoT (but not L&E)
- Either party can terminate
If terminated due to SP caused by Employer negligence then
contractor is entitled to L&E.
Where a rate cannot be valued simply from contract rates, a
star rate is derived using contract rates as a basis.
Constructing with consideration for the environment and not at
the detriment of future generations. Considering the long term
social and economic implications of a development.
Records amount and type of waste produced on site and how it
will be reused, recycled or disposed of.
Analysis of accepted tenders to predict future movement in the
market. Used to forecast inflation up to construction phase.
Nadia Slattery
Terrorism Cover
Value Engineering
Value Management
Variations
Variations in D&B
Warranty
WRAP
November 2008
Insurance provided by a Joint Names Policy to cover physical

loss or damage to works, site materials or existing structures
caused by terrorism.
REACTIVE. Providing required function, at required quality for
lowest cost. Making most efficient use of resources.
PROACTIVE. Understanding what value means to the client,
communicating that to the team and maximising the delivery of
those benefits whilst minimising use of resources.
Alteration or modification of the design, quality or quantity of the
works and the imposition of obligations of restrictions regarding
access to site, limits on working space, working hours or order
of completing the works.
Called changes. Any change in the ERs which makes
necessary the alteration or modification of the design, quality or
quantity of the works etc as above.
Written guarantee of quality of a project
Advises how to reduce waste and increase recycling, making
better use of resources and helping tackle climate change.
Nadia Slattery
M001 Accounting Principles & Procedures (Level 1)

Annual Turnover
-
Income or revenue that a company receives from its normal business activities
Usually from the sale of goods and services to customers
Balance Sheets
-
Assets debt = net worth (value)
A snapshot of a companys financial condition
Use to value a company
Use to evaluate creditworthiness
Use to evaluate the money a company has available in the short term
Profit and Loss Account

-
A financial statement that indicates how revenue is transformed into net income
Shows whether the company has made or lost money during the period
Ratio Analysis
-
Evaluates relative strength or weaknesses of potential investment
Return on equity indicates firms profitability and potential growth
Taxation
-
CIS Scheme introduced from October 2007
Verification service to address issue of counterfeiting of old style registration
Sets out the rules for how payments to subcontractors for construction work must be
handled
CIS can apply to all types of businesses that work in the construction industry in the
UK, including:
o
Self-employed individuals working as sole traders
Partnerships
Companies
Limited liability partnerships (LLPs)
Also:
-
Revenue and Capital Expenditure
Credit Control
Profitability
November 2008
Nadia Slattery
M002 Business Planning (Level 1)

-
Principles of Law Parliament, legislation, tort, common law etc
Short/Long Term Strategies
Market Analysis
Five Year Plans
Business Support Services administration, secretarial, HR, IT etc
Staffing Levels recruitment/turnover
Employment Law
Employment Policy
How does your business ensure it is making a profit?

o
Timesheets
Resource forward planners
Financial management software
Fee/cost reconciliation
November 2008
Nadia Slattery
M006 Conflict Avoidance, Management & Dispute Resolution (Level 1)

How Standard Forms Of Contract Deal with Conflict Avoidance and Dispute Resolution
JCT
-
Incorporates adjudication
2005 dropped arbitration in favour of litigation

o
Not actually cheaper in practice as parties have to pay for arbitrator and
venue (court and judges are free in litigation)
Litigation has improved, judges at the construction courts are often

construction specialists
Civil Procedure Rules have improved the speed of litigation, reduced the cost
and improved chances of early settlement
Greater use of adjudication has reduced number of cases going to court so

now quicker to reach court (not wait months to book a slot)
Arbitration can still be selected if desired
NEC / ECC
-
Incorporates adjudication
Early warning provisions
Dispute resolution built into principle of contract
Conflict Avoidance
How to avoid a dispute:
-
Clearly state in all tender / contract documents exactly what is required of all parties
Ensure continuous effective communication between all parties
Put everything in writing to ensure there is always documented evidence should a

dispute arise
Negotiation
General:
-
Discussion that ends in agreement by both parties
Suitable for simple matters, easily resolvable, compromises made
Such as of conditions of contract etc.
Requires the co-operation of both parties
Quick and inexpensive
The threat of more formal proceedings should act as encouragement for an

agreement to be reached
November 2008
Nadia Slattery
Process:
-
Agreement between parties to negotiate
Set objectives
Compile supporting evidence
Establish what your non-negotiables are
Identify areas of compromise
Determine what the opposing parties targets are
Give opposing party an opportunity to retract their position
Demonstrate and emphasis that your target is reasonable
Facilitated Negotiation:
-
Neutral facilitator
Requires co-operation of both parties
Cost of facilitator can be high
Mediation
General:
-
Consensual process
Most popular form of ADR
Informal and reasonably inexpensive fees split 50/50
Private
Non-binding decision unless agreed otherwise by parties and no legal backing to

decisions
Neutral party assists in settlement of dispute
Process:
-
Settlement negotiations in the presence of a neutral Mediator who will facilitate but
not make a judgment
Mediator will make recommendations but resolution and the terms of such lies with
the parties
Conciliation
General:
-
Similar to mediation
Conciliator is empowered to express his views and opinions but not make judgment
Conciliator is independent and impartial
May chair an open discussion but this is not common
Process:
-
Conciliator talks to each party in private
November 2008
Nadia Slattery
Will make recommendations but resolution lies with the parties
Adjudication Part II Housing Grants, Construction and Regeneration Act

General:
-
UK Statutory dispute resolution procedure
HGCR Act 1996 introduced it into every construction contract
Employer may delete adjudication clause but rights under Act will reinstate
Adjudicator or nominating body (i.e. RICS) can be named in contract
Decision is binding until referred to legal proceedings (arbitration / litigation)
Decision cannot be appealed until PC
Adjudicator must
Act impartially
Decide the matters in the dispute
Provide reasons if requested
Adjudicators fee is split equally unless adjudicator says otherwise
Process:
-
Referring party serves a Notice of Adjudication to other party
Adjudicator must be appointed within 7 days of the Notice
Referring party must serve their referral document within 7 days of the Notice
Responding party have 7 days to respond to referral
Adjudicator makes a decision within 28 days
Can be extended a further 14 days if both parties agree
Decision is binding until PC
If losing party fail to comply, courts will enforce the decision (even is a mistake)
Arbitration Arbitration Act 1996

General:
-
Arbitration Act 1996 introduced to revive and improve the process
Act reformed and clarified the process
It must be a joint decision to arbitrate
Parties must go to adjudication first
Arbitrator appointed by nominated body i.e. RICS, RIBA
Costs awarded at Arbitrators discretion
Private
Cheaper and faster than litigation
Decision is binding
Can appeal on point of law only
Favoured over litigation due to privacy, flexibility etc
November 2008
10
Nadia Slattery
Process:
-
Parties prepare a case
Preliminary hearing in court in the presence of an Arbitrator
Followed by agreed timetable of document submissions etc by the claimant, to which

the defendant can respond
Concludes with a formal hearing
Power of Arbitrator:
-
Rectify contract so it accurately reflects the agreement of the parties
Award any sum which ought to have been included in any certificate
Open up, review and revise any certificate, notice, decision, requirement
Determine matters in dispute as if no certificates or notices had been given
100 Day Arbitration:

-
Introduced by Society of Construction Arbitrators
An attempt to resuscitate the construction arbitration procedure by introducing fasttrack procedure
Applicable for all types of dispute
Cheaper than traditional arbitration or litigation
Places a duty on the Arbitrator to make his award within 100 days from service of the
defence
Litigation
General:
-
Very formal and adversarial process
Long and expensive procedure
Legally binding can appeal
Very public
Parties often end up agreeing a settlement before reaching the courts
Will inevitably damage relationships
Process:
-
Parties prepare a case to be heard in court in the presence of a judge
Both parties present case to judge
Decision is based on evidence presented
Expert Witness
-
A professional that can be called into a dispute by a party to give expert evidence of
their opinion to support a dispute
Gives an unbiased and independent opinion
November 2008
11
Nadia Slattery
A party can seek an alternative expert witness should one provide them with an
unfavourable report
The expert witness is entitled to a fee (unlike a witness of fact)
Part 35 of the Civil Procedure Rules (CPR) & Civil Evidence Act 1995
Independent Expert Determination

-
Appointment of an individual professional
The expert has the freedom to make decisions and investigate the background rather
than just reply on the evidence presented
The experts decision is final and legally binding no appeal process as parties agree
to be bound by the decision
Informal
More ideal for highly technical disputes
Expert is liable for his decision
Pre-action Protocol for Construction and Engineering Disputes

General:
-
Objectives are to:

o
Encourage exchange of early and full information about prospective claims
Enable parties to avoid litigation by settling a claim before proceedings

commence
Support efficient management of proceedings where litigation cannot be

avoided
General aim to ensure:

o
parties have provided sufficient information to know the nature of each

others case
each party has opportunity to consider, accept or reject the case against
them at earliest possible stage
there is more pre-action contact between parties
better and earlier exchange of information
better pre-action investigation by parties
parties have met formally at least once with a view to define and agree issues
and explore possible ways to resolve the claim
that parties are in a better position to try to settle cases early without litigation
proceeding will be conducted efficiently if litigation does occur
November 2008
12
Nadia Slattery
Process:
-
Letter of Claim:
o
Prior to commencing proceedings claimant sends a letter to defendant

containing:
Names and addresses of parties
Clear summary of the facts of the claims
Basis on which claim is made
Nature of relief claimed
Where claim previously rejected, why claimant believes wrongly

rejected
Defendants Response:
o
Acknowledge receipt of letter of claim within 14 days
Notify any objections to the courts jurisdiction or the named defendant within
28 days
Which facts are agreed and which disagreed
Which claims are agreed and which disagreed
Which damages are agreed and which disagreed
Summary of facts if contributory negligence is claimed
Any counterclaim
Names of any experts instructed
Claimant must respond to any counterclaim within 28 days
Pre-Action Meeting:
o
Send letter of response within 28 days identifying:
Parties should meet within 28 days of responses
Limitation of Action
November 2008
13
Nadia Slattery
M007 Data Management (Level 1)

Building Cost Information Service
-
The BCIS is a subsidiary of RICS, established in 1962
Collates and analysis data submitted by members of the service
Incorporates material from other relevant sources
Information available online and through several publications
Provides information on:

o
Construction costs
Maintenance and operating costs
Used for early cost advice
For life cycle cost plans
Rebuilding costs
Insurers use to quote more accurate premiums for buildings

insurance
BCIS 5 Year Forecast

-
Long term annual forecast of national average tender price inflation
Published forecast in August 2008
1Q06
1Q07
1Q08
1Q09
1Q10
1Q11
1Q12
to
to
to
to
to
to
to
1Q07
1Q08
1Q09
1Q10
1Q11
1Q12
1Q13
Annual % change
Tender Prices
+4.8% +2.9% +4.5% +3.9% +3.4% +4.3% +4.9%
Summary:
o
New work output expected to fall in 2008
To remain static in 2009
Return to trend growth in 2010
Tender price rises are expected to be driven by input cost pressures
As new work output moves ahead of trend in 2011 and 2012, tender prices
are likely to outstrip input cost rises, as contractors try to improve their
margins
Building Cost Index (BCI)

-
The BCI measures movement of basic labour and materials costs to the Builder
The proportion of labour to material is assumed to be 40:60
The labour element is based on the change in the cost of "all in hourly rates" for
building operatives paid in accordance with the Construction Industry Joint Council
November 2008
14
Nadia Slattery
The materials element is based on BERR (formerly DTI) material price indices
Refers to contractors costs i.e. labour, plant and materials rates
Used to forecast inflation during the construction phase
Tender Price Index (TPI)

-
TPI reflects changes in the level of pricing contained in the lowest accepted tenders
for new work
The TPI measures movement of market conditions

o
Labour
Market
Economic climate
Inflation
Data from prices tendered for construction projects
Inclusive of labour, plant, materials, preliminaries and OH&P
Used to forecast inflation up to construction phase
Pricing Books
-
Spons (by DL)
Wessex (by BCIS)
Laxtons
Other Information:
-
Data Base Use Generally
Employers In-House Data Storage and Filing Systems
Scheduling
Libraries
Data Protection Act
November 2008
15
Nadia Slattery
M009 Sustainability (Level 1)

Sustainable Development / Construction
Definitions:
-
Meeting the needs of the present without compromising the ability of future
generations to meet their own needs
Constructing with considerations of the environment and not at the detriment of future
generations
Three principles of sustainability are:

o
Social
Developments should respond to needs of wider community
Provide public transport links
Amenities schools, welfare, education etc
Environmental
Prevent harmful and irreversible impacts on the environment
Careful use of natural resources
Minimise waste and energy
Economic
Efficient use of resources
Value for money
Why Its Important to Construction:

-
Critical global issue facing our generation
Construction makes up 10-15% of worlds GDP
40% of global waste comes from construction
Environmental Concerns:
-
Climate change
Carbon emissions
Water management
Waste management
Depletion of fossil fuels
Renewable energy sources
Sustainability Techniques:
-
Recycled materials
Locally sourced materials (reduce waste and energy)
Sustainable energy (solar, wind, geothermal)
Passive energy design (building orientation, solar shading, daylighting)
November 2008
16
Nadia Slattery
Natural ventilation
Produce less waste and recycle (landfill tax increase is encouraging this)
Reduce consumption of energy during construction and end users
Reduce carbon emissions during construction & end users
Low or zero carbon technologies
Regulations and Codes of Practice for Sustainability

-
Building Regulations (Part L conservation of fuel and power)
Code for Sustainable Homes
Energy certification of buildings
Site waste management plans
BREEAM assessment
Specific Legislation:
-
Landfill Tax
o
Discourages disposal of waste in landfill sites
Encourages recycling
Aggregate tax sustainability fund

o
Commercial exploitation of aggregates
Encourages use of recyclable materials
Part L of the Building Regs (conservation of fuel and power)
Energy Performance Certificates:

-
All sales and lettings to have EPC
Assesses how energy efficient a building is
Assesses estimated energy use, CO2 emissions and fuel costs
Provides a summary of energy performance related features e.g. wall and loft
insulation
Rated from A to G (much like white goods)
Gives recommendations to improve the performance
Other Incentives:
-
Capital allowances for the remediation of contaminated land
Enhanced capital allowances

o
tax relief on first year spending on qualified energy saving plant, machinery
and water conservation plant and machinery
Grants for renewable energy sources
November 2008
17
Nadia Slattery
Building Regulations
How can you meet Part L?
-
Wind turbines
Photovoltaic cells
Combined heat & power (CHP) captures the byproduct heat for heating purposes
close to the plant rather than emitting into the environment
Ground source heat pumps
Geo-thermal energy
Rainwater harvesting
Solar thermal water heating
Biomass boilers
BREEAM
General:
-
Building Research Establishment Environmental Assessment Method
Assesses environmental performance of building
Most widely used method for buildings
Can be undertaken on all types of building and new, refurbishment or existing
Gives a rating of pass, good, very good, excellent or outstanding
Areas of Assessment:
-
Management (considerate contractors, monitoring waste etc)
Health and wellbeing (natural daylighting, ventilation etc)
Energy (CO2 emissions, energy use etc)
Transport (access to public transport, cycle racks and showers etc)
Water (water saving, meters, leak detection etc)
Materials (re-use existing materials, sustainable sources, recycling etc)
Land Use and Ecology (remediation, managing existing ecosystem etc)
Pollution (use of refrigerants, insulation spec etc)
Benefits:
-
Demonstrates level of achievement
Lowers environmental impact
Improves internal environment which increases productivity
Reduces operating costs
Improves marketability
New Developments:
-
Two stage assessment process (design stage and management stage)
Mandatory credits introduced
November 2008
18
Nadia Slattery
New Outstanding rating level introduced
Contaminated Land
-
New contaminated land provisions introduced to encourage recycling of brownfield

sites
Capital allowances for remediation of contaminated land
Landfill Tax
-
Discourages disposal of waste in landfill sites and encourages recycling
Finance Act 1996
Licensed landfill sites
Tax levied on owners of landfill sites
Revenue raised is put back into waste minimisation initiatives
Aggregate Tax
-
Tax on every tonne of primary material extracted
Introduced to discourage use of primary material and encourage recycled or

secondary aggregate
Site Waste Management Plan

-
Under Clean Neighbourhoods and Environment Act 2005
Compulsory from 6 April 2008, for projects over 330k
Different rules for projects over 500k
To raise awareness of how much waste is being produced
Contractors can then take steps to minimise
Works shouldnt commence unless SWMP in place
Live and updated throughout project
Early consideration made for waste reduction reusing and recycling site-gained
materials
SWMP includes:
-
Type/ description of waste removed
Who removed
Environmental permit or exemption held by site where material taken
Contractor Responsibility
-
Update at least every 6 months
Obtain info from subcontractors
Keep on site during project
Allow access to it during project
November 2008
19
Nadia Slattery
Keep a copy for two years
Level of detail depends on estimated contract value
WRAP
General:
-
Waste and Resources Action Programme
To help identify how to increase recycled content through product substitution
Identifies recycled content found in market for each product type

o
E.g. roof insulation Isowool Frame Batt HP 70%
Promotes market for materials with increased recycled content
Identifies 3 levels of recycled content standard, good, best
Aims to minimise and avoid waster and landfill use
Makes better use of resources
Benefits:
-
Contributes to sustainable goals of clients
Satisfies planning and development authorities
Financial savings if recycling materials locally
Diversion of waste from landfill
Less demand on finite natural resources
Possible to use equivalent products with higher recycled content with no negative
effect on cost, performance or availability
JCT Consultation Paper on Sustainability (January 2008)

-
Should construction contracts should include clauses which put requirements on

contracting parties with regard to sustainability?
Specification of products
Construction process
Supply chain
Examples of Sustainability on My Projects

-
BREEAM on 7 Dials
Rooflights on Stannary Street to introduce natural daylight
Green roof on Stannary Street roof top biodiversity through extensive planting
Looking at prefabrication on phase 2 minimise site waste
November 2008
20
Nadia Slattery
M010 Team Working (Level 1)

-
Understand the Role of Team Members client, design team, consultants,

contractors
Appointing the Project Team
Relationships with Other Team Members
Communicating with Other Team Members
Partnering and Collaborative Working
Strategic Alliancing
Supply Chain Management
European Legislation for Selecting Project Teams OJEU etc
Construction the Team Latham Report
November 2008
21
Nadia Slattery
M003 Client Care (Level 2)

Principles of Client Care
-
Identifying clients
o
Consider existing and new clients
Client care for existing clients is vital
Requires active management
How to identify new clients
How to attract new clients
Types of client
o
Different industry sectors have varying structures
This affects the nature of the client, their general objectives and interests
Behaviours
o
RICS guidance on ethics and conduct rules
Delivering good client care includes behaviours such as:

Clarity of remit
Clear communication
Setting realistic expectations
Ensuring timely delivery
Ensuring quality of outputs
Managing the process of client care:

o
On projects:
Clear communication
Ongoing dialogue
Clear and defined deliverables
Timely delivery
Quality of outputs
Generally:
Structured account management
Maintaining regular contact away from current projects
Understanding how can assist clients business objectives
Feedback
o
Formal and informal
Client satisfaction surveys
Use of KPIs
November 2008
22
Nadia Slattery
Collecting and responding to feedback
Project reviews
Complaints
o
Complaints handling procedure (RICS requirements)
Appointed complaints handling officer
Collect data to analyse and define the needs of clients

o
Briefing process:
To ensure a clear scope of work is defined
Job planning:
Internally planning how clients requirements can be met
Example Stannary Street:

-
Established who main contact within the client organisation was (Marc Seale)
Established other stakeholders (i.e. Steve Hall and Charlotte Milner)
Identified importance of Architect to this client
Ensured I established a close working relationship with them
Maintained client care by meeting the clients expectations for deliverables, clear and
ongoing communication and feedback processes
Developed relationship further by understanding the clients business and future plans
As project progressed, obtained client feedback both formally (client feedback forms)
and informally (conversations with client)
QS Tendering
-
Terms and conditions
Outline scope of services
Services exclusions
o
Detailed examination of financial claim
Steps towards resolving disputes
Fee breakdown
Potential drawdown or expenditure cash flow
QS Appointment Documents
-
Deed of appointment (terms and conditions)
Outline scope of services

o
Develop budget
Lead procurement process
Lead tender process (inc prepare tender and contract documentation)
Review tender returns
November 2008
23
Nadia Slattery
Lead post tender interviews
Carry out and prepare cost reporting, valuations and FA
Ensure delivery of best overall value for money
Control costs in accordance with approved budget, cost plan, cash flow
projections
Advise client on matters affecting cost, delays and advise measures to

reduce and avoid
Communicate and report to the architect on clients requirements
Report to project manager
Service exclusions (detailed examination of financial claim, steps towards resolving

disputes)
Fee breakdown
Potential drawdown or expenditure cash flow
Establishing Fees
-
Calculate on scope of services and resources required
Key Performance Indicators (KPIs)

General:
-
Benchmarking a project / company against a range of performance criteria across the

industry
Measure of performance that is critical to success
DTIs Constructing Excellence KPIs:

-
Time
Cost
Quality
Client satisfaction
Health and safety
DLs use of KPIs:

-
Client feedback forms which make use of industry standard KPIs
Enables us to measure our performance against DTIs published KPI data for
consultants
November 2008
24
Nadia Slattery
M004 Communication & Negotiation (Level 2)

Oral Communication:
-
Phone calls
Reporting at meetings
Facilitating/chairing meetings
Client and bid presentations
Staff presentations
Contractor interviews
Public speaking at seminars etc
Listening skills
Written/Graphical Communication:
-
Letters, memos and emails
Report writing
Compiling tender and contract documents
Programming
Using drawn information checking scales and revisions
Using CAD documents
Negotiation:
-
Establishing negotiating position
Setting objectives
Compiling supporting evidence
Establishing non-negotiable areas
Identifying areas of compromise
Assessing other sides position
November 2008
25
Nadia Slattery
M008 Health & Safety (Level 2)

Health and Safety at Work Act 1974
-
Primary piece of legislation covering occupational health and safety in UK
Sets out general duties employers have towards employees and members of the
public
Sets out general duties employees have to themselves and each other
Law requires good management and common sense
Penalties under the Act include:

o
Enforcement notices
Fines
Prison
Corporate manslaughter
Director disqualification
The Management of Health and Safety at Work Regulations 1999

-
Generally make more explicit what employers are required to do to manage health
and safety under the Act
Main requirement on employers is to carry out risk assessments (and implement

measures identified within it)
Construction (Health, Safety and Welfare) Regulations 1996

-
Set of modern and simplified construction regulations
Explain detailed ways of working in construction activities
Aimed at protecting health, safety and welfare of everyone who carries out
construction work
Also give protection to other people who may be affected by the work
Construction (Design and Management) Regulations 2007 CDM

-
Places statutory duties on clients, CDM Co-ordinator, designers and contractors to

plan, manage and co-ordinate health and safety throughout project
A code of practice
Advises on complying with HSE law
Improves safety on site through design, planning and management
New regulations require clients to be more involved in construction process
Does not apply to domestic clients
Notifiable Projects:
-
More than 30 days or 500 person days
November 2008
26
Nadia Slattery
The 3 Cs
-
Co-ordination
Competence
Co-operation
Roles, Responsibilities & Obligations

All
-
Ensure client is aware of his duties
Provide information for the H&S file
Co-operate and co-ordinate with others on project and neighbouring/adjacent projects
Ensure works dont commence until a suitable and adequate H&S plan is in place
Client
-
Appoint a competent CDM (in writing) before design starts and principal contractor,
consultants and contractors
Ensures the CDM Co-ordinator carries out all his duties
Responsible for pre-contract H&S
Provide pre-construction information for designers and contractors
Ensure mobilisation periods are adequate in relation to the size and complexity of the
project
Retain and provide access to the H&S file
Before construction phase begins ensure adequate welfare facilities and construction
phase plan are provided
Allow sufficient time and resources to enable work to be carried out without H&S risk
Designers (now including QS)

-
Ensure work on projects doesnt commence until CDM Co-ordinator been appointed
Report obvious risks
Ensure adequate resources and competence with regard to H&S
Apply principles of eliminating hazards and reducing risks
Consideration of the Workplace Regulations incorporated into design
CDM Co-ordinator
-
Advises and ensures client meets and fulfils his obligations of H&S matters
Assist client with providing information
Manage and co-ordinate the flow of H&S information
Check suitability of information provided by designers for contractors
Prepare H&S file (contractor in D&B)
Give client advice on construction H&S risk matters
November 2008
27
Nadia Slattery
Principal Contractor
-
Construction phase plan is prepared and received by employer before construction

work commences
Welfare facilities are provided for duration of construction phase
Provides info to CDM Co-ordinator for preparation of H&S file
Plan and manage the construction phase to minimise risk
Provide relevant information and training
Develop and comply with the H&S plan
Responsible for post contract H&S
Prepare H&S file (D&B only)
Consult the workforce on matters affecting their health, safety and welfare
Ensure they and any s/c is competent and adequately resourced
Monitor safety
Site induction site risks, how to report problems, respond to emergencies
Differences between CDM 1994 and 2007

-
Further simplification and clarity of existing regulations
Terminology changes
Reducing paper work
QS now a designer
Focuses on managing risks on site
Encouraging team work
Getting the right people for the right job at the right time
Less than 30 days, 500 man days and domestic projects not notifiable
Suitable provision for welfare is made
F10 Notice
-
Notifies HSE of site, duration, location, numbers on site, when, local authority
Client is only signatory
Pre-Construction Information Pack

-
Part of tender documentation
Was pre-tender health and safety plan
Includes:
o
Description of works
Client considerations and management requirements
Environmental restrictions
Design and construction hazards
Format and presentation of the H&S file
November 2008
28
Nadia Slattery
Contractor Mobilisation Responsibilities (Start on Site)

-
Prepare and develop a written plan and site rules
Make sure suitable welfare facilities are provided and maintained throughout
Check competence of who they appoint
Secure site
Liaise with CDM Co-ordinator
Health and Safety File

-
Document recording key H&S matters to advise owners and users how to manage
structure safely
Prepared by CDM Co-ordinator
Brief scope of works
Remains with building at completion for use by tenant/ landlord
Key risk and residual hazards and how dealt with e.g. surveys for asbestos,
contaminated land, soil investigations, existing services routes, etc.
Structural information e.g. safe working loads of floors and roofs, pre or post
tensioning
Hazardous materials e.g. lead paint, pesticides, asbestos
Information regarding removing or dismantling plant or equipment
Information necessary regarding use, maintenance, adoption of the building
O&M information
Construction Phase Health and Safety Plan

-
Developed during construction phase by contractor
Reviewed and signed off by CDM Co-ordinator and client at completion of

construction phase
Risk Assessment
-
To protect people as reasonably practicable from harm
Process:
o
Identify the hazards (anything that may cause harm)
Decide who might be harmed and how
Evaluate the risks and decide on precautions (different material, barriers,

PPE, site inductions)
Record your findings and implement them
Review risk assessment and update if necessary
Construction Skills Certification Scheme (CSCS)

-
Demonstrates vocational and H&S competence
Employees of participating companies required to undertake H&S test
November 2008
29
Nadia Slattery
Card valid for 5 yrs as legislation changes
Personal Safety Procedures When Visiting Site

Site precautions:
-
Slips, trips and falls
Working at height
Confined spaces
Joint fire code
Hot works permits
Inadequate supervision
Access and egress
Handling, storage and transportation
Contact with overhead lines
Unintended collapse of part of a building
Accident Prevention on Site:

-
Accident book
Visitors log (fire evacuation)
First aid kit
Fire extinguishers
PPE
Site security
Handrails, ladders
Signs/ posters
Personal Health and Safety at Work RICS Publication Surveying Safely

-
Guide to personal safety at works, published by RICS
Reporting of Injuries, Diseases and Dangerous Occurrence Regulations 1995 (RIDDOR)

-
Fatalities and major injuries Notify HSE immediately
Dangerous occurrences Notify HSE immediately
Off work for 3+ days Report to HSE within 10 days
Considerate Constructors Scheme

General:
-
Aims to improve image of construction
Promote delivering the best in considerate site practice
Targets delivering standards and benefiting the neighbourhood, environment and

workforce
Not regulated but committed, voluntary effort
November 2008
30
Nadia Slattery
Code of Considerate Practice

-
Considerate
o
Considers the needs of site personnel, visitors, general public
Environment
o
Awareness of environmental impact
Minimise noise, light and air pollution
Use local resources where possible
Attention to waste management reuse and recycle where possible
Cleanliness
o
Keep site clean and in good order
Surplus material and rubbish not to accumulate on site
Minimise dirt and dust
Good neighbour
o
Provide general information for all affected by work
Communicate with neighbours regarding programming and site activities
Respectful
o
Respectful and safe standards of dress at all times
No tolerance of derogatory behaviour or language
Pride in management and appearance of site
Safe
o
No building activity should be a security risk to others
Construction operations and site vehicle movements carried out with care
and consideration for safety
Responsible
o
Ensure all associated understand and comply with the code
Accountable
o
CCS poster to be displayed where visible to general public
Contact details provided for those affected
Control Of Substances Hazardous To Health (COSHH)

Hazardous Substances:
-
Adhesives
Cleaning agents
Paints
Fumes
Grain dust
Biological agents (bacteria)
Asbestos (own regulations)
Lead (own regulations)
November 2008
31
Nadia Slattery
Effects:
-
Skin irritation
Asthma
Cancer
Losing consciousness
Measures:
-
Assess risks
Decide precautions
Prevent or control exposure
Ensure measures are used and maintained
Monitor exposure
Carry out appropriate health surveillance
Prepare plans to deal with accidents, emergencies
Ensure employees properly informed, trained, supervised
Control of Asbestos at Work Regulations

-
Asbestos found in:

o
Cement (roofing)
Insulation board (ceilings and walls)
Coatings (steelwork fireproofing)
Insulation (pipe laggings)
Regulations prohibit the importation supply and use of asbestos
Regulations include the duty to manage asbestos in non-domestic premises
Asbestos must only be removed by licensed contractor
ASB5 notice into HSE, 14 day notice period, must include method statement
Asbestos can be sealed in if it is undamaged and wont be disturbed in future
November 2008
32
Nadia Slattery
M005 Conduct Rules, Ethics & Professional Practice (Level 3)

General
-
Founded 15 June 1868
Motto is Est Modus in Rebus there is measure in all things
International HQ in London (Great George Street)
World regional offices in Brussels, Dubai, Hong Kong, New York and Sydney
Members in 146 countries
34,000 students on 400 accredited degree courses
500 industry research and policy papers published every year
50 national associations
160 diverse specialisms represented across 17 faculties
Levels of membership:
o
Fellow
Professional Member
Technical Member
Honorary Member
Student Member
Key Roles of RICS

-
Regulate and promote the profession
Maintain the highest educational and professional standards
Protect clients and consumers through a strict code of ethics
Provide impartial advice, analysis and guidance
RICS structure
-
Governed by a 70-strong International Governing Council, chaired by the President,

including RICS members from all world regions
Who is President of RICS?
Peter Goodacre ex-Principal of CEM
Who is Senior Vice President?
Max Crofts
Who is the Chief Executive Officer?
Louis Armstrong
Who is the Chief Operating Officer?
Sean Tompkins
Who is Chairman of the const/QS faculty?
Michael Sullivan
Faculties
-
3 basic market groupings

Land
Property
Built Environment
November 2008
33
Nadia Slattery
Divided into 17 areas of specialisation - the faculties.
Each with its own board and elected chairman.
Can belong to a maximum of 4 faculties, although further subscriptions can be paid to

join more.
The 17 faculties are:

1. Arts and Antiques
2. Building Control
3. Building Surveying
4. Commercial Property
5. Dispute Resolution
6. Environment
7. Facilities Management
8. Geomatics
9. Machinery and Business Assets
10. Management Consultancy
11. Minerals and Waste Management
12. Planning and Development
13. Project Management
14. Residential Property
15. Quantity Surveying and Construction
16. Rural
17. Valuation
What The Faculties Do:

-
Primary role is to develop technical standards, generating professional guidance and

information
Responsible for setting and maintaining APC/ATC competencies
Provide technical advice to all other areas within RICS
Contribute to RICS public policy agenda
All but one are responsible for maintaining alternative designations e.g. chartered
quantity surveyor; chartered facilities management surveyor
RICS Rules of Conduct

-
Set out standards of professional conduct and practice expected of members and
firms
Over and above obligations placed on members by general law, for example in the
areas of discrimination and employment
Reduced to short bullet points within two separate documents for members and
firms.
November 2008
34
Nadia Slattery
There are 9 Rules for Members, divided into two sections:
Part One: General

1. Interpretation
Member means a Fellow, Professional Member, Technical Member or Honorary
Member of RICS or a member of the Attached Classes.
2. Service of Documents
Any notice or other document required by or for the purposes of these Rules to be
given or sent to a Member may be given to them personally or sent by post
Part Two: Personal and Professional Standards

3. Integrity
Members shall at all times at with integrity and avoid conflicts of interest and any
actions or situations that are inconsistent with their professional obligations.
4. Competence
Members shall carry out their professional work with due skill, care and diligence
and with proper regard for the technical standards expected of them.
5. Service
Members shall carry out their professional work in a timely manner and with proper
regard for standards of service and customer care expected of them.
6. Lifelong Learning
Members shall undertake and record appropriate lifelong learning and, on request,
provide RICS with evidence that they have done so. Exemptions for pregnancy,
redundancy, ill health and any other exceptional reason.
7. Solvency
Members shall ensure that their personal and professional finances are managed
appropriately.
8. Information to RICS
Members shall submit in a timely manner such information, and in such a form, as
the Regulatory Board may reasonably require.
9. Co-operation
Members shall co-operate fully with RICS staff and persons appointed by the
Regulatory Board.
November 2008
35
Nadia Slattery
Firms are required to register for regulation. A regulated form is one that has 50% of more
partners or directors who are RICS members.
What is required for registration?

1. Type of business
2. Statutory regulated activities
3. Nature of clients
4. Complaints handling procedure details and records
5. PII details
6. Whether the firm holds clients' money
The 15 Rules of Conduct for Firms are divided into three sections:
Part One: General

1. Interpretation
Interpretation of the Rules
2. Service of Documents
Any notice or other document required by or for the purposes of these Rules to be
given or sent to a Firm may be given or sent to the Contact Officer personally or
sent by post to the last address of the Firm notified to RICS.
Part Two: Conduct of Business:

3. Integrity
A firm shall at all times at with integrity and avoid conflicts of interest and any
actions or situations that are inconsistent with its professional obligations.
4. Competence
A firm shall carry out its professional work with due skill, care and diligence and
with proper regard for the technical standards expected of it.
5. Service
A firm shall carry out its professional work with expedition and with proper regard
for standards of service and customer care expected of it.
6. Training
A firm shall have in place the necessary procedures to ensure that all its staff are
properly trained and competent to do their work.
November 2008
36
Nadia Slattery
7. Complaints handling
A firm shall operate a complaints handling procedure. The complaints handling
procedure must include a redress mechanism that is approved by the Regulatory
Board.
8. Clients' money
A firm shall preserve the security of clients' money entrusted to its care in the
course of its practice or business.
9. Professional indemnity insurance

A firm shall ensure that all previous and current professional work is covered by
adequate and appropriate PII cover which meets standards approved by the
Regulatory Board.
Part Three: Firm Administration

10. Advertising
A firm shall promote its professional services only in a truthful and responsible
manner.
11. Solvency
A firm shall ensure that its finances are managed appropriately.
12. Arrangements to cover the incapacity or death of a sole practitioner

A firm which has a sole principal (i.e. a sole practitioner or a sole director in a
corporate practice) shall have in place appropriate arrangements in the event of
that sole principals death or incapacity or other extended absences.
13. Use of designations

A Firm registered for regulation must display on its business literature, in
accordance with the Regulatory Boards published policy on designations, a
designation to denote that it is regulated by RICS.
14. Information to RICS

A Firm shall submit in a timely manner such information about its activities, and in
such form, as the Regulatory Board may reasonably require.
15. Co-operation
A firm shall co-operate fully with RICS staff and any person appointed by the
Regulatory Board.
November 2008
37
Nadia Slattery
RICS Core Values

Core values replaced by a set of standards in helpsheet entitled Maintaining Professional
and Ethical Standards.
These standards replace the nine core values and supersede the guidance notes published
on professional ethics.
There are now 12 standards which members are expected to follow, both professionally and
personally:
1. Act honourably
Never put you own gain above the welfare of your clients or others to whom you have
a professional responsibility. Always consider the wider interests of society in your
judgements.
2. Act with integrity

Be trustworthy in all that you do - never deliberately mislead, whether by withholding
or distorting information.
3. Be open and transparent in your dealings

Share the full facts with your clients, making things as plain and intelligible as
possible.
4. Be accountable for all your actions

Take full responsibility for your actions and dont blame others if things go wrong.
5. Know and act within your limitations

Be aware of the limitations of your competence and dont be tempted to work beyond
these. Never commit to more than you can deliver.
6. Be objective at all times

Give clear and appropriate advice. Never let sentiments or your own interests cloud
your judgement.
7. Always treat others with respect

Never discriminate against others.
8. Set a good example

Remember that both your public and private behaviour could affect your own, RICS'
November 2008
38
Nadia Slattery
and other members' reputations.
9. Have the courage to make a stand

Be prepared to act if you suspect malpractice of any sort or a risk to safety.
10. Comply with the relevant laws and regulations

Avoid any action, illegal or litigious, that may bring the profession into disrepute.
11. Avoid conflicts of interest

Declare any potential conflicts of interest, personal or professional, to all relevant
parties.
12. Respect confidentiality

Maintain the confidentiality of your clients affairs. Never divulge information to others
unless it is necessary.
LLL
The RICS does not prescribe a set number of hours for lifelong learning. It simply requires the
learning to be effective, enabling members to do their work more competently. The outcome
of the learning is more important than the number of hours spent on it.
Disciplinary Procedures
First, there is a formal investigation by the Head of Regulation who then decides whether the
RICS will take any further action.
On completion of the investigation, if he considers disciplinary action is required, the Head of

Regulation can initiate one of the following three actions:
1. Serve a Fixed Penalty notice upon the member

2. Make a Consent Order
3. Refer to matter to the Disciplinary Panel
Fixed Penalty Notices:

Administrative fines for minor/minimal breaches of the Rules, such as late return of a firm's
annual return.
Consent Order:
Used for more serious breaches, such as for some minor breaches of the members accounts
regulations which could easily be corrected. A fine may also be levied.
November 2008
39
Nadia Slattery
Action by Disciplinary Panel:

Used in the most serious cases. Penalties available to the board are:
1. Issue a caution against repetition of the conduct in question

2. Reprimand or severely reprimand the member
3. Require an undertaking as to future conduct
4. Impose a fine
5. Impose conditions upon future continued RICS registration
6. Expulsion from membership or remove a firm
7. Require costs to be paid
8. Require publication of the results of the hearing in a local newspaper as well as RICS
website
On what grounds can a member be expelled from the RICS?

1. Failure to pay membership fees
2. Failure to renew PII
3. Failure to undertake LLL
4. Misconduct under Rules of Conduct
Professional Indemnity Insurance

Insures against breach of duty and negligence in professional role
Reasons PII is needed:

-
Firm is protected from financial loss it cannot meet as a result of negligence claim
To protect firm against any consequences of its inability
The firms clients do not suffer financial loss which the firm cannot meet
Limit of Indemnity:
Firms Turnover in Preceding Year
Minimum Limit of Indemnity
100,000 or less
250,000
100,001 to 200,000
500,000
200,001 and above
1,000,000
Run off cover:

-
Insurance against a claim arising from work previously undertaken
Required for a minimum of 6yrs (under hand) or 12 yrs (under deed)
RICS recommend should be purchased for 15 yrs
Compulsory Professional Indemnity Insurance (CPII) Regulations

-
Set the requirements / benchmark for PI Insurance
November 2008
40
Nadia Slattery
Merrett v Babb
-
Employer went bankrupt so PII was cancelled
Client sued employee instead (Mr Babb, a retired surveyor)
In response, RICS set up Member Support Service Levy to protect members who find
themselves being sued personally and have no access to PII protection. RICS would
provide defence and advisory services
Starting a Practice
RICS Compliance
1. Register with the RICS for regulation of the firm
2. Appoint a Contact Officer for all RICS communication
3. Prepare a Complaints Handling Procedure to be sent to all clients with the Terms of
Business
4. Appoint a Complaints Handling Officer and Money Laundering Reporting Officer
5. Obtain PII and send details to RICS
6. Set up financial systems to comply with members' accounts regulations, if holding
clients' money
7. Members who practice as surveyors, who are directors of a limited or unlimited
company, must ensure that the Memorandum and Articles of Association of the
company include a clause confirming that the business will be conducted in
accordance with the RICS Bye-Laws, Conduct Regulations and Practice Statements
8. Obtain an up to date logo kit from RICS to use for the production of all practice
material to ensure compliance with the new designation 'Regulated by RICS'
Statutory Compliance
1. Display names of partners or company name on business stationary
2. Register with the Office of the Data Protection Commissioner
3. Fully comply with the requirements of the applicable legislation i.e. DDA, H&S
Fees
-
Fee calculation is an accurate assessment of resources required to carry out

professional duty on a project + OH&P
Cannot submit a fee with prior knowledge of a competitors
Cannot change a fee based on knowledge of a rival bid could re-evaluate scope of
duties included in fee and resubmit
If you run out of fee, must carry out works as per fee agreement but check if there is
any grounds for payment of additional fees
November 2008
41
Nadia Slattery
Terms of Engagement
-
Fees
Payment of expenses
Manner in which expenses and disbursements are to be calculated
Members complaints handling procedure
Members Accounts
-
Dont accept cash electronic payment only!
All monies to be kept in separate account, clearly identifiable with Client in name
Inform client immediately of account name, bank/building society and whether the
account is accumulating interest
The money must be available on demand
Maintain accurate records of all transactions/dealings
Complaints Handling Procedure

The firms Complaints Handling Procedure (Rule 5 of the Rules for firms) must include:
-
Contact name/details
Internal timescale of firms procedure
Recognition of the right to complain
Reference to the possibility of mediation
Recognition to take complaint to an independent third party
Handling a complaint:
-
Keep a written record of the complaint
Investigate fully and firmly
Ensure the client feels the matter is being taken seriously
Give client a timescale for a response
Face to face meetings often lead to more constructive and satisfactory solutions
Solutions could include an apology, agreeing to waive fees, offer of compensation or

the agreement to go to dispute resolution
Analysis is a vital form of client feedback
DLs complaint procedure (referred to in our Standard Terms of Engagement):

-
Contact Mark Hackett (who is appointed to deal with complaints)
Where complain is initially made orally, client is requested to send written summary of
complaint
Timescales for responding to the customers written complaint are:

o
Initial response (DLs understanding of complaint) 14 days
Full response (outcome of investigation) 21 days from date of initial

response
November 2008
42
Nadia Slattery
If complainant is dissatisfied with the handling of the complaint, he may refer the
matter to the Senior Partner who will undertake separate review of complaint
If complainant remains dissatisfied, despite the Senior Partner's intervention, then

further stages can be implemented, namely:
o
the mediation procedure as per the Centre for Dispute Resolution Model
Mediation Procedure, or the mediation process adopted by the RICS
If complaint still not resolved then refer complaint to Surveyors Arbitration Scheme
Conflicts of Interest
Where members interests conflict with clients or where two or more clients interests conflict.
Examples of conflicts of interest:

-
Acting for both a developer and contractor
Acting for two competing developers/contractors
Acting on behalf of a family member
Action to be taken:
1. As soon as you are aware, disclose to client in writing, the possibility and nature of
conflict
2. Advise client in writing that neither member nor members firm can continue to
represent unless:
a. unconditionally, the client requests you to do so
b. the client finds it acceptable and approves, in writing, the specific conflict
handling arrangement put in place
What is the Agenda for Change?

In 1998, the modelling of the current structure of the RICS was initiated by the Agenda for
Change, led by Richard Lay in his role as President.
It aimed to shape the RICS' structure and policy in three main ways by responding to three
perceived needs:
1. The need to be perceived as a global organisation, not just in the UK
2. The need to become more relevant to its members in the 21st century
3. The public's desire to see more accountability and understanding as to the role and
duties of a Chartered Surveyor
Key changes included:

1. The introduction of new stringent educational threshold standards for uni courses
2. The establishment of world regions and national associations
3. The replacement of 7 divisions by 16 (now 17) faculties
November 2008
43
Nadia Slattery
4. New criteria for attainment of Fellowship grade"
What is the Brooke Review?

Following the outcome of the radical changes from the Agenda for Change, there was
widespread unease among members in respect of the new structure and workings of the
RICS.
The Brooke Review Committee was established by RICS President Nick Brooke in 2003 to
recommend:
1. Improvements in two-way communication between RICS and its members
2. How to encourage more awareness of, and involvement in, RICS affairs
3. Better arrangements for considering members' opinions and complaints
Following consultation, a report was published setting out more than 40 recommendations.
Key recommendations included:

1. More power and responsibilities should be devolved to national and regional boards
2. Composition of Governing Council should be reviewed
3. Greater representation of Matrics at all levels of decision-making
4. Communications with members should be more cost-effective, better co-ordinated
and more user-friendly
The recommendations were adopted by the RICS International Governing Council in June
2004.
Initiatives implemented include:

1. A new RICS website with a members' only zone
2. The production of a simple guide to the RICS
3. Streamlined and targeted email alerts and correspondence to members
What is the Carsberg Report?

The RICS appointed Sir Bryan Carsberg in September 2004 to conduct a thorough internal
and external review of the regulation of the RICS.
Key recommendations included:

1. Regulation should continue to be carried out by internal bodies
2. RICS should develop a structure that separates regulatory functions from
representational functions
3. Establish a conduct board to operate disciplinary structures
4. RICS should regulate firms as well as members
November 2008
44
Nadia Slattery
5. A review of CPD arrangements to better protect the consumer
Following the recommendations of the report, a new regulatory board was appointed to
deliver a more independent, fairer and more efficient means of regulation of the RICS.
Current RICS issues and initiatives

-
Peter Goodacre wants to promote technical grade
Lecture series Surveyors in Society aims to highlight significance of the Chartered

Surveyor in business and the community
Dealing with global warming and population growth
Skills shortage QS now added to list of skills shortage
November 2008
45
Nadia Slattery
T013 Construction Technology & Environmental Services (Level 3)

Construction Technology
Substructures:
-
Piling Choice affected by ground conditions and site restrictions

o
Bored
Casing driven in
Reinforcement cage
Concrete poured in
Casing removed
Driven
Continuous flight auger
Auger driven in
Concrete poured in as auger is removed
Reinforcement placed in wet concrete
Sheet piling
Precast RC piles driven into ground
Corrugated metal sheets percussion driven into ground
Foundations
o
Strip
Pad
Raft
Piled
Measure
Excavate trench
Disposal of excavated material
Earthwork support
Compaction
Blinding
Hardcore
Formwork
Reinforcement
Concrete
Superstructures:
-
Concrete frame
o
Precast
In situ
Cast off site or in situ
November 2008
46
Nadia Slattery
Steel frame
o
Rolled sections
Hollow sections
Metsec systems
Portal frames
Comparison of concrete/steel frames

o
Steel frame quicker from concept to completion
Cost of steel governed by complexity and repetition
Late variations not easily incorporated in steel frames due to long lead-ins
Steel frame is lighter
Steelwork is high quality as fabrication is controlled off site
Steelwork can take greater spans, less intermediate columns
Concrete does not require any additional fire proofing treatments
Concrete can endure high temperatures from fire
Outstanding resistance to explosion or impact = safer
Concrete can use recycled aggregates
Concrete more readily available (steel has high demand in China, ME)
Types of fire protection

o
Intumescent painting
Sprayed vermiculite cement
Sprayed mineral fibre
Fire resistant boarding
Brick size = 215 x 102.5 x 65mm
Cladding/Glazing:
-
Unitised curtain walling
Semi-unitised curtain walling
Stick and panel systems
Ventilated facades
Triple glazed facades
Services Technology
-
Electrical systems
o
Modular wiring
Mechanical systems
o
Note: Air based systems require more ceiling/riser space for ducts
Four pipe fan coil units
VAV
VRV
November 2008
47
Nadia Slattery
VRF
Air displacement
Chilled beams
Chilled ceilings
Internal/external drainage
Mains services
Fire safety systems
Security systems
Environmental controls
Data systems
Building Regulations:
-
National standards applicable to all types of development
Published by ODPM
(Part A) Structure
(Part B) Fire safety
(Part C) Site preparation and resistance to moisture
(Part D) Toxic substances
(Part E) Resistance to the passage of sound
(Part F) Ventilation
(Part G) Hygiene
(Part H) Drainage and waste disposal
(Part J) Combustion appliances and fuel storage systems
(Part K) Protection from falling, collision and impact
(Part L) Conservation of fuel and power
(Part M) Access to and use of buildings
(Part N) Glazing - safety in relation to impact, opening and cleaning
(Part P) Electrical safety
Disabled Discrimination Act 2005:

-
Imposed in December 2006
No such thing as DDA compliance, about what is reasonable
Building Regs Part B and Part M apply
Increasing and creating rights rights for the disabled
Also:
-
Building Control
Planning
Party Wall Issues / Rights of Light
November 2008
48
Nadia Slattery
T017 Contract Practice (Level 3)

Construction Act Housing Grants, Construction and Regeneration Act 1996, Part II
-
Key objective is to influence the culture of the construction industry
Aim of reducing confrontation, and facilitating better cash flow and fair play
Ensures contracts incorporate minimum provisions with regard to payment and

dispute resolution
The main elements are:

o
Contracts must contain payment provisions:
If project exceeds 45 days, contractor is entitled to stage or interim

payments
Contract must provide for a due date for payments and a final date
for payment
Paying party must serve a notice of intention to receiving party,

stating amount and basis
Payments cannot be withheld unless a notice of intention to withhold

is given, stating amount and grounds for withholding
Prohibition of conditional payment provisions
Clauses making payment conditional on payment from a third party

are unenforceable except in the case of insolvency
Contractor may suspend performance for non-payment (must give 7

days notice) and completion date is automatically extended
Introduced the right to refer to a dispute to adjudication
Scheme for Construction Contracts Regulations 1998

-
Where there is contravention of Construction Act, the statutory default provisions in

this statutory instrument apply
Contains a Schedule in 2 parts

o
Part 1 Provides rules for the selection of an adjudicator with the powers to
make enforceable decisions
Will apply where contract contains no adjudication provisions; or
Where the provisions do not comply with the Act
Part 2 Provides payment rules
Will apply where contract fails to make provisions; or
Where parties have failed to agree on details such as timing of

payments
November 2008
49
Nadia Slattery
Principles of Contract Law

-
A contract is a legally enforceable agreement
Components of a contract:
Offer
Acceptance
Consideration
Also:
Intention (to make the agreement legally binding)
Capacity (to enter into that type of contract and mentally)
Legality (enforceable by the courts)
Repudiation - an implied or express refusal by one party to perform their obligations

under the contract
Statute of limitations maximum period of time, in common law, after an event that
legal proceedings may be initiated
Express terms
o
those contained in the main contractual document
those contained in other documents to which the main contract document

refers
Implied terms
o
those terms which are implied by law
Also may incur legal liability under the law of tort
Tort a civil wrong

o
Negligence
Nuisance
Trespass
Current Case Law

-
Amsprop sues Wilks Head & Eve for negligence over Regent Street disease
Cleveland Bridge v Multiplex
Choosing a Contract
-
Consider client, project and approach
Consider what tenderers are familiar and comfortable with to perceive lower risk
Unfamiliar contracts may attract a risk premium
Standard Forms of Main and Sub Contract

JCT Main Contracts
-
Approximately 80% of contracts issued under JCT form
New suite published in 2005
Drafted by Joint Contracts Tribunal representing employer and contractor bodies
November 2008
50
Nadia Slattery
Risk allocation historically criticised by employer, thus often heavily amended
Perceived as having an adversarial approach
NEC/ECC 2005
-
Recommended by Latham
Partnering style approach, avoids blame and claim culture, less confrontational
Suitable for all types of construction and engineering project
Little case law to see how stands in court
3 main aims
Clarity clear and simple language in present tense
Flexibility can be tailored to suit specific requirements
Stimulus to good management less adversarial
Available in 6 main options including:

o
A & B Priced contracts
C & D Target contracts
E Cost reimbursable
F Management contract
No reference to QS or CDM Coordinator
PM assumes full authority on behalf of employer
PM controls time and cost as an administrative function
PM updates risk register and issues instructions
Final account must be settled within 4 weeks of completion
Widely accepted that it generates a large volume of paperwork and admin
Programme is a contract document
Requirement for parties to give early warnings (or risk penalty) for:
o
Increase costs
Delay completion
Delay key date being met
Impair performance of the works in use
Compensation events give rise to variations and EOTs
LADs and retention are secondary options
PM assesses amount due and certifies payment within one week of each assessment
date
PM can withhold 25% of the valuation if contractor has not submitted first programme
PPC2000
-
PPC200 Project Partnering Contract
Latham called it the full monty of partnering and modern best practice
Used on offices, housing, schools, hospitals, universities
Just relaunched in October following feedback from users
November 2008
51
Nadia Slattery
GC/Works/1 1998
-
Originally established as a suite of contracts for government
Risk allocation in favour of employer
Rarely used now
Four volumes:
o
With Quantities General Conditions
With Quantities General Conditions
Single Stage Design & Build General Conditions
Model Forms & Commentary
ICE Conditions of Contract (7th Edition)

-
Civil engineering construction works
Suited to the scale and imprecise nature of civils projects
Suits technically complex projects
Re-measure on completion
No reference to QS
Association of Consultant Architects PPC2000, TPC2005

-
PPC 2000 was first standard form for Partnering
Direct result of Egan report Rethinking Construction
Covers whole procurement process including design development
Integrates the entire project team
FIDIC Conditions of Contract

-
International contract
Amending a Standard Contract

-
If not qualified to do so, DONT
Can destroy delicate balance of risk allocation
Can create legal uncertainty created by amending individual clauses which form part
of a complex web of interacting cross-referred terms
Amendments may fall foul of the Construction Act
Can attract a cost premium to tenders
Write clause not used rather than deleting and trying to renumber
Amendments must be reasonable and comply contract legislation
Courts can strike out amendments if contrary to good faith
November 2008
52
Nadia Slattery
Bespoke Contracts
-
Expensive to draft (legal fees)
May be badly drafted
Not familiar to other parties including CA
Untested in court
Unappealing to contractor
Roles and Responsibilities of Parties

Some implied some express
Employer
-
Give site access
Ensure any transfer of authority over and above what is normal within the contract is
communicated to the contractors
Make payments in accordance with the contract
Pay for any loss and expense incurred
Take out any necessary insurance provisions (clause 6.7 B or C)
Confidentiality
Contract Administrator
-
Supply information
Give instructions
Inspection and monitoring of the contract work
Adjudication and certification
Employers Agent
-
Employed as a representative to exercise the powers and function of the Employer
Administers contract
Monitors execution of project
Ensure all parties adhere to conditions of contract
Not responsible for making qualitative or design judgements
CDM Co-ordinator
-
Prepare Pre-Construction Information document
Assist client and ensure obligations are met
Issue F10 notices
Prepare health and safety file
Amend health and safety file as works progress
November 2008
53
Nadia Slattery
Quantity Surveyor (JCT)

-
Interim valuations
Valuing variations
Prepare statement of final account
Ascertaining loss and expense (if so directed)
Only use rates in priced document for purposes of the contract
No role in D&B contract
Contractor
-
Construct works in accordance with contract documents
Carry out works regularly and diligently
Health and safety
Take out any insurance, bonds and/or warranties
Project Manager (ECC)

-
Manages programme
Manages risk and value registers
Ensures clients needs and duties are covered
Assignment
-
Transfer of contractual rights only (not obligations)
i.e. developer may transfer rights for claiming defects to purchaser
Novation
-
Transfer of rights and obligations
Common in D&B contracts
Occurs when contract is being let
IN D&B, stated in ERs that consultants appointment is to be novated
Possible conflict of interests:
Consultant still has a duty of care to client
Consultant may be influenced by contractor i.e. VE
ERs and CPs must be clear and well prepared for novation to work effectively
Contracts (Rights of Third Parties) Act 1999

-
Privity of contract
o
The private relationship between those persons party to a contract
A person not party to the contract cannot enforce it, nor acquire rights or
incur liabilities under it, even if the contract is intended to benefit a third party
But, there are often third parties with financial stakes in the project (i.e. funders,
tenants, purchasers) who are not party to the building contract
November 2008
54
Nadia Slattery
In the absence of direct contract, third parties can only sue in tort of negligence, but
this is limited in scope (cant claim for pure economic loss)
Rights of Third Parties Act and collateral warranties provide this link
Contracts (Rights of Third Parties) Act

o
Applies to contracts made after 11 May 2000
Gives direct, enforceable contractual claims to a third party if:
The contract expressly provides that he may; or
The term purports to confer a benefit on him
The third party must be identified in the contract by name or class (i.e. future
tenant, even if not in existence when contract executed)
Provides an effective alternative to collateral warranties
Only imposes benefits, not obligations
Act can be excluded from a contract
Collateral Warranties
-
Side agreement which establishes a contractual link between two parties which would
otherwise not exist
Provide third parties with contractual remedies against parties to original contract i.e.
o
Employer to subcontractor
Tenant to contractor
Allows third parties to enforce the terms of the contract
Many standard forms including JCT, British Property Federation and Construction
Industry Council
Types:
o
Contractor to Purchaser or Tenant
Contractor to Funder
Subcontractor to Purchaser or Tenant or Funder
Subcontractor to Employer
Third Party Rights v Collateral Warranties

-
In JCT05 referral to Third Party Rights eliminates the need to collateral warranties,
although they are still included within the contract
Advantages of Third Party Rights:

o
Much simpler then executing collateral warranties
Even small projects can generate large numbers of warranties
Less administration
Standard forms of warranty often amended and bespoke forms often used
Warrantor (or their insurer) often seeks to insert limitation clauses
November 2008
55
Nadia Slattery
Collateral warranties can sometimes be difficult to procure
Collateral warranties must be assigned every time tenant leaves
Disadvantages of Third Party Rights:

o
Little case law to rely on
No physical warranty which beneficiaries feel more comfortable with
Consultants and contractors wary of granting rights to unknown beneficiaries
Difficult for developers to impose rights on subcontractors as they are not

party to the building contract
No rights exist until developer and consultant or contractor agree and

complete the main contract
Party Wall Act

-
Prevents and resolves disputes relating to party walls, boundary walls and
excavations near neighbouring buildings
Must give adjoining owners notice of intention, even where work will not extend
beyond centre line of a party wall
Contract Documents
-
Form of Contract
o
Articles of Agreement
Conditions of Contract
Schedule of amendments
Design information
o
Drawings
Specifications
Work schedules
Pricing document
o
o
-
Option A Priced specification or work schedules
Pricing schedule
BoQ
Option B Contract sum analysis or schedule of rates
Information release schedule

o
Programme for issuing design information so as not to impede works
Pre-Construction Information
In D&B or where there is a CDP:

o
Employers Requirements
Contractors Proposals
In NEC Contractors programme
Relevant post tender correspondence
November 2008
56
Nadia Slattery
Letters of Intent
General:
-
A letter outlining a clients intention to enter into contract
Intention to create legal relations
Not a substitution for a binding, executed contract
Effect of the LOI depends entirely upon its wording
Does not bind contractor to carry out any works
If contractor carries out work on basis of LOI, a contract is created to pay for that
work
Enables contractor to undertake work before formal contracts are exchanged
Allows orders for long lead-in items to be placed
No guarantee contractor will sign the contract (and he is under no obligation to do so)
Financial limit may be reached before contract is signed
Can be with limited or unlimited authority

o
Limited
Use where still a number of outstanding matters to be agreed
Acknowledge certain items are still to be agreed
Maximum liability under letter is stated
Unlimited
Use where all details of contract have been finalised
Confirm basis upon which contract docs will be prepared
Requesting and authorising contractor to commence works
Undertaking to pay for such work even if contract is not executed

(unless contractor goes back on matter previously agreed)
Only intended to apply for a few days whilst contracts are being
prepared
Should Include:
-
Works to be subject to LOI
Value of works
Form of contract to be entered into, and key terms
Contract sum (if agreed)
Date for possession
Date for completion
Insurance provisions required
Method of payment
Expiry date of letter
State intention to enter into formal contract
State employers reservation of right not to award the contract for whatever reason
November 2008
57
Nadia Slattery
Risks to Employer:
-
Tend to lead to execution of formal contract drifting
Contractor may postpone agreement of contract and/or any outstanding matters
Employer loses incentive in negotiations
No protection if contractor becomes insolvent
May not be binding in court if express terms are not agreed
Quantum Meruit
-
As much as he has earned
Claim for a reasonable sum as payment for services rendered
Where there is no contractual basis for assessing amounts
Bonds
-
Obligations / Contractual duties owed by one party to another are financially

guaranteed by a third party
Provided by banks and insurance companies
Typically 10% of contract sum
Conditional or on demand
o
Conditional
Only payable if condition has been met or event occurs
And loss has resulted
On Demand
Can be called at any time
Not dependant upon conditions
Types of bonds:
o
Performance Bond
Guarantee of performance
Guarantor pays for loss up to value of bond
Normally activated upon insolvency or retention fund not sufficient for

making good defects
Advanced Payment Bond
Used where contractor has high mobilisation costs
Security against the advance payment
Payment for Off-Site Materials and/or Goods
November 2008
Security against listed items which not yet been delivered to site
Retention Bond
Employer calls on bond if defects arise
In lieu of retaining cash, helps contractors cash flow
Expires after Certificate of Making Good Defects is issued
58
Nadia Slattery
Difference between a Bond and Collateral Warranty

-
Bonds are contained within the contract
Collateral warranties are a side agreement to the contract
Warranties
-
Written guarantee of quality of a project
an assurance by one party to the other that certain facts or conditions will happen
the other party is permitted to rely on that assurance and seek remedy if it is not
followed
From a supplier, subcontractor
Parent Company Guarantee

-
An alternative to a performance bond
Contractors parent company guarantees to fulfil obligations at own cost in the event
of non-performance or insolvency
Contractual performance is underwritten by parent company
Not limited by value
Free to obtain
Insurances
General:
-
Risk of damage and injury related to construction projects is high
Therefore insurance provision an essential requirement of construction contract
Two basic types of insurance

o
Liability insurance financial cover for legal liabilities owed to others
Loss insurance providing cover for losses, which fall directly on insured
parties
Indemnity guarantee, compensation
Insurance method of providing an indemnity
Joint Names Policy

o
Policy in names of two or more parties (i.e. contractor and employer)
Prevents insurer from using rights of subrogation against parties named in

policy
Subrogation
o
The right to sue in the name of the assured any person who could have been
sued by the assured in respect of the loss
Example, contractors negligence causes a fire in the existing building.

Insurer can pay out and then sue contractor for negligence to reclaim his loss
November 2008
59
Nadia Slattery
Three main categories of risk:

-
Injury or death to persons
Damage to property other than works
Damage to works
Injury to Persons or Property:

-
Clause 6.1 Liability of Contractor Personal Injury or Death

o
Requires contractors to indemnify Employer
Injury arising out of, or in the course of, or caused by, the carrying out of the
Works
Liability does not extend to injury or death as a result of an act or neglect by

any of the employers team
Clause 6.2 Liability of Contractor Injury or Damage to Property

o
Requires contractors to indemnify Employer
Injury or damage to property arising out of, or in the course of, or by reason
of, the carrying out of the Works
Includes non-physical injury to property but where enjoyment of a right has

been affected i.e. loss of light caused as a result of construction works
Liability does not extend to injury or death as a result of an act or neglect by

any of the employers team
Where a statutory undertaker is working as a domestic subcontractor, the

contractor is liable for injury or damage caused by them
Excludes the Works, works executed and/or site materials
Clause 6.3 Injury or Damage to Property Works and Site Materials Excluded
o
Excludes Works, work executed and site materials from Contractors liability
to indemnify Employer under clause 6.2
Insurance against Personal Injury and Property Damage:

-
Clause 6.4 Contractors Insurance of his Liability

o
Requires contractor to provide insurance for indemnities in clauses 6.1

and 6.2
For personal injury and death to third parties and damage to property
Not less than the sum stated in the Contract Particulars
Employer can request documentary evidence that insurance in place
Employer can take out insurance and recover the cost from the contractor in
the event that the contractor defaults
November 2008
60
Nadia Slattery
Clause 6.5 Contractors Insurance of Liability of Employer (optional)

o
Non negligent damage insurance
Excludes damages caused by neglect, default or omission
Stated in Contract Particulars if it is required
Cost of policy added to contract sum
Contractor must take out joint names policy
Insurance against liability of Employer for damage to any property caused by

collapse, heave, vibration, weakening or removal of support or lowering of
groundwater
Clause 6.6 Excepted Risks

o
The contractor is not required to indemnify the Employer or insure against

injury, death or damage resulting from Excepted Risks
Insurance of the Works

-
Clause 6.7 Insurance Options (A, B & C, set out in Schedule 3)

o
All Risks insurance must be in joint names
Must cover all subcontractors, or include a waiver by the insurers of their

rights of subrogation against subcontractors
Option A New Buildings All Risks Insurance of the Works by the Contractor
o
For construction of new buildings
Insurance by Contractor
If the contractor has existing All Risks policy, do not need to take out an
additional policy providing that the scope of the policy is sufficient
If loss or damage occurs, the contractor must give written notice to the
architect and employer of the extent, location and nature of loss / damage
No account is taken of loss or damage in calculating contractors payments
Following completion of insurers inspections the contractor must reinstate the

loss or damage
The contractor will be paid to reinstate work as certified by the architect
The contractor authorises the insurers to pay all sums due under claim to
employer
Option B New Buildings All Risks Insurance of the Works by the Employer
o
For construction of new buildings
Insurance by Employer
Operates the same as Option A except Employers obligations
If loss or damage occurs, the process is the same as Option A except the
reinstatement works are treated as a variations
November 2008
61
Nadia Slattery
Option C Insurance of Existing Structures Insurance of Works in or Extensions to

Existing Structures
o
For projects involving work to an existing building
Refurbishment
Repair
Fitting-out
Extensions
Arranged by the Employer
Need to insure existing structure, its contents and the Works
CDP Professional Indemnity Insurance

-
Clause 6.11 Obligation to Insure

o
Where there is a CDP, contractor must take out professional indemnity

insurance
Contractor to maintain insurance for period stated in Contract Particulars

(provided it remains available at a commercially reasonable rate)
If no longer available at commercially reasonable rates, contractor must notify

employer
All Risks Insurance

-
Insurance of physical loss or damage to work executed and Site Materials and
against reasonable cost of removal and disposal of debris arising from such loss
Excludes cost of:

o
Property which is defective due to:
Wear and tear
Obsolescence
Deterioration, rust or mildew
Works or site materials damaged as a result of defective design, plan,

specification, material workmanship
Loss or damage caused by or arising from:
War etc
Disappearance or shortage
Excepted risk (ionising radiations, radioactive contamination etc)
Joint Fire Code

-
Applies where Contract Particulars state so
If Joint Fire Code is amended or revised, the cost is borne by the party named in the
Contract Particulars
November 2008
62
Nadia Slattery
Specified Perils
-
Fire, lightning, explosion, storm, flood, earthquake, articles dropped from aircraft etc.
Interim Valuations and Payment Provisions

General:
-
Valuation of works completed
Stage or periodic payments
Usually monthly
Up to date of Practical Completion
Final valuation at end of Rectification Period or issue of Certificate of Making Good

Defects (whichever later)
Interest payable on any overdue payment (at 5% above BoE base rate)
Contractor may suspend works for failure to pay
Includes:
-
Total value of works properly executed
Variations under val rules, prov sums, approx quants
Variations valued under Schedule 2 Quotations (with confirmed acceptance)
Value of any listed materials (off-site materials)
Items not subject to retention:

-
Additional insurance premiums
Fees and charges not already included or relating to the CDP
Royalties, damages and other monies for infringement of patent rights in complying
with CAIs
Costs of opening up or testing if result is in accordance with contract
Cost for taking out and maintaining Liability of Employer insurance
Loss and/or expense (including antiquities)
Restoring, repairing or replacing any loss or damage or removing the disposal of

debris treated as variations under Schedule 3
Amounts allowable to contractor under Fluctuation Option
Deductions:
-
Not amending errors arising from inaccurate setting out
Defects, shrinkages or other faults instructed to be not made good
Employer employing others to execute any work which contractor did not comply with
after notice given
Work, materials or goods not in accordance with contract (which is instructed to

remain)
November 2008
63
Nadia Slattery
Activity schedule:
-
Used to chart progress of works with lump sums against each activity to be included
in valuations
Used in NEC contracts
Process:
-
Contractor may submit application 7 days in advance of issue of interim certificate
Assess contractors submission
Visit site to check progress, materials on site

o
Look for defects, works not in accordance, security of materials on site
View documentation regarding materials off site
Assess preliminaries fixed and time related
Assess any additions which should not be subject to retention
Ask CA to confirm any works not in accordance with contract
Provide details of any adjustment to contractors application
Issue recommendation to CA including retention statement and check last certificate
Payment = 14 days after Interim Certificate
Notice of Payment = 5 days after issue of Interim Certificate
Withholding Notice = 5 days prior to final date for payment
14
7 Days
Interim Certificate:
-
Certificate stating amount due to contractor from employer
Identifies:
o
Gross valuation
Less retention
Less any Advance Payment
Less amount due in previous certificate
Less any works not in accordance with contract
Materials On Site
-
Payable if:
o
Not brought to site prematurely
Adequately stored and protected
Delivery receipts and invoices correspond
November 2008
64
Nadia Slattery
Contractor can remove materials from site if:

o
Damaged
Contaminated
Presents a security problem
Safety hazard
Materials Off Site

-
Payable if included as a Listed Item in the contract
Process:
o
Check is a Listed Item
Visit manufacturers / storage facility
Ensure separately stored
Clearly identified as for client
Clearly identified as for works
Vesting certificate in place
Insurance provided
Bond provided for uniquely identified items (if required in Contract

Particulars)
Bond provided for not uniquely identified items
Retention
-
Percentage (3% default) of interim payment withheld for making good defects
Alternative is a retention bond
Half is released at Practical Completion, the remainder at end of Rectification

Period/issue of Certificate of Making Good Defects
Final Account (Adjustment of Contract Sum)

General:
-
Final payment due to contractor
Includes all additions and omissions (including L&E)
Additions to contract sum include:

-
Variations
o
CAI
CVI
Confirmed acceptance of Schedule 2 Quotation
Provisional sums
Variations to Prime Cost Sums
Adjustment of provisional quantities
L&E (including antiquities)
November 2008
65
Nadia Slattery
Fees and charges not already included or relating to CDPs
Royalties, damages and other monies for infringement of patent rights in complying
with CAIs
Costs of opening up or testing if result is in accordance with contract
Cost for taking out and maintaining Liability of Employer insurance
Restoring, repairing or replacing any loss or damage or removing the disposal of

debris treated as variations under Schedule 3
Amounts allowable under Fluctuation Option
Deductions to Contract Sum include:

-
Not amending errors arising from inaccurate setting out
Defects, shrinkages or other faults instructed not to be made good
Employer employing others to execute any work which contractor did not comply with
after notice given
Work, materials or goods not in accordance with contract (which is instructed to

remain)
Employer employing others to carry out remedial measures for breach of Joint Fire
Code (after notice given)
Amounts allowable to Employer under Fluctuation Option
Process:
-
6 months after PC = Contractor must provide all information to QS
3 months after receipt of info = QS must prepare statement on FA
Valuing Change
Definition of a Variation:
-
Alteration or modification of design, quality or quantity of the works including:

o
Addition, omission or substitution of work
Alteration of materials or goods
Removal of any works executed or materials or goods
Obligations or restrictions regarding:

o
Access to site
Limits on working space
Limits on working hours
Execution or completion of works in a specific order (contractor can make

reasonable objection)
Valuation of Variations and Provisional Sums:

-
Value to be agreed by both parties or otherwise to be valued by QS in accordance

with valuation rules
November 2008
66
Nadia Slattery
Valuation Rules:
o
Where work is of similar nature, use contract rates
Where not of similar character, use fair rates and prices
Make fair allowance for changes in conditions/quantities
Make allowance for preliminary items
If cant be properly measured, use dayworks
Same rules apply for CDPs to be valued
If, as a result of variation, there is change to conditions for other work, then
that work to be treated as if a variation and subject to valuation rules
Schedule 2 Quotation:
-
CA instructs contractor to provide quotation in accordance with Schedule 2
Confirmed Acceptance provided
Method of agreeing costs and identifying programme effects prior to instruction
Provides cost certainty
Speeds up final account
Quotation must include:

o
Amount of adjustment to contract sum
Effect on any other work
Any adjustment to time
Amount of L&E to be paid in lieu of ascertainment under clause 4.23
Fair and reasonable cost of preparing quotation
If specifically required, any additional resources required and method

statement
Deferment of Possession
-
If applicable, for maximum of 6 weeks
Entitled to EOT
Extensions of Time
General:
-
Contractor must always use best endeavours to avoid/minimise delays
EOT is adjustment to completion date
Relieves contractor of LADs and breach of contract
Entitlement if regular progress of works affected by Relevant Event:

o
Variations
Instructions for:
November 2008
Discrepancy or divergence in the Contract Docs
Postponement of work
Expenditure of Provisional Sums
67
Nadia Slattery
Instructions on antiquities (and separate L&E provision)
Schedule 2 Quotation
Opening up for inspection or testing (excluding if in Contract Sum or

if shows to be not in accordance with contract)
Deferment of possession
Suspension by contractor due to non-payment (following notice given)
Any impediment, prevention, default by employers team
Carrying out of statutory undertaker, or failure to carry out such work
Exceptionally adverse weather conditions
Loss or damage by Specified Perils
Civil commotion
Strike, lock-out etc
Exercise after Base Date by government of any statutory power
Force majeure
Extraordinary event or circumstance outside control of parties
Prevents one or both parties from fulfilling their contractual

obligations
Such as war, strike, riot, crime, act of nature (floods, earthquake,

volcano)
Note: items above covered by separate Relevant Events so coverage

of force majeure actually limited.
Concurrent delay
o
Two different causes of delay affecting the project in parallel
Such as adverse weather and failure of statutory undertaker
Assessment methods
The devlin approach
The dominant cause
Burden of proof
Tortuous approach
Float
o
Time available in a programme in addition to planned duration
Belongs to contractor
Can be taken into account when EOT is evaluated
As contractor obliged to use best endeavours to mitigate or prevent

delay
Acceleration
o
November 2008
Additional labour, plant, materials and preliminaries to advance works
68
Nadia Slattery
Process:
-
Contractor must give written notice

o
Material circumstances
Identify any event he considers a Relevant Event
Give particulars of expected effects including estimate of expected delay to

Completion Date
o
-
Notify CA of any material change in estimated delay or any other particulars
If, on receiving such notice, CA is of opinion

o
Is a Relevant Event; and
Likely to be delay to Date for Completion
must give an extension of time

-
In any event, CA must notify contractor of his decision:

o
Within 12 weeks of receipt of notice (or earlier if PC within 12 weeks)
State extension / or omission attributed to each Relevant Event
Loss and Expense

General:
-
To reimburse contractor for loss suffered or expense incurred which would not be
reimbursed under any other contract provision
Entitlement if
o
Deferment of site possession
Regular progress of works affected by one of the Relevant Matters
Relevant Matters are:

o
Variations (excluding Schedule 2 Quotation)
Instructions for:
Postponement of work or expenditure of Provisional Sums
Opening up for inspection or testing (excluding if in Contract Sum or

if shows to be not in accordance with contract)
Suspension by contractor due to non-payment (following notice given)
Any impediment, prevention, default by employers team
Disruption
o
Discrepancy or divergence in the Contract Docs
Reduced efficiency
Delay
o
Stopping of works
L&E must be actual loss incurred
Heads of claim can include any or all of the following:

o
November 2008
Prolongation
Site running costs for extended period
Increases in cost of labour, plant or materials
69
Nadia Slattery
Based on actual costs not contract rates
Disruption
Inefficient use of labour and plant
Loss of profit
Head office overheads
Formula may be used
Hudson, Emden
Finance charges
Must be a direct consequence of matter referred to in claim
Cannot claim for cost of preparing claim
No automatic right of recovery solely because an EOT has been granted
Conversely, can suffer L&E without EOT
Duty of CA to determine liability and entitlement
Duty of CA to ascertain amounts due (or QS if so directed)
Causation Test
But for the occurrence of the event, would the cost have been incurred
Two or more causes of delay?
Is the head of claim dominant?
Are the causes concurrent?
Remoteness Test
o
Does loss arise naturally from ordinary cause of events?
Do costs arise as a direct result of event?
Loss must satisfy both causation and remoteness test
Examine loss for evidence of mitigation

o
Was action reasonable in circumstances prevailing at the time?
Was the loss caused unnecessarily?
Could it have been readily avoided?
Process:
-
Contractor must make written application to CA
CA to form opinion that regular progress of works has been affected or if loss incurred
as a result of deferment
CA shall ascertain amount or instruct QS to do so
Contractor must:
o
Make application as soon as apparent regular progress has been affected
Upon request, submit information in support of application to enable CA to

form opinion
Upon request, submit details of L&E to enable CA/QS to ascertain amount

being incurred
Any amount ascertained as due must be added to Contract Sum
November 2008
70
Nadia Slattery
Must pay any amounts ascertained in interim valuations
L&E not subject to retention
EOT but no L&E:

-
Carrying out of statutory undertaker, or failure to carry out such work
Exceptionally adverse weather conditions
Loss or damage by Specified Perils
Civil commotion
Strike, lock-out etc
Force majeure
Antiquities
-
Fossils, antiquities and other objects of interest or value
Becomes the property of the Employer
Contractor:
o
Must use best endeavours not to disturb
Cease work if continuance would endanger object, prevent or impede its

excavation or removal
Take all steps to preserve object in exact position and condition
Inform CA of discovery and location
Instruct action to be taken
Only instruction contractor cannot refuse to comply with
Ascertain any EOT and L&E due
CA:
General:
-
When the works are practically complete and fit for purpose
Defined in JCT05 as:
CA is of opinion it has been achieved
Contractor has supplied as-built info for CDPs
Contractor has provided all info for health and safety file
CA must consider:
o
Liable for loss of LADs if certifies too early
Contractor may claim malicious delay if certifies too late
Ensure there are no patent defects
Works must be practically complete
November 2008
71
Nadia Slattery
Process:
-
CA issues Practical Completion Certificate
Employer takes possession
Rectification Period commences
Contractors insurance obligations are relieved (employer must take out policy)
Half retention is released
LADs no longer apply
Sectional Completion
-
Pre-defined sections of work to be completed
Separate Dates for Completion and LADs apply to each section
Value of each section must be agreed for release of retention
Partial Possession
-
A voluntary agreement between employer and contractor
Contractor must give consent
Not agreed in advance (would be sectional completion)
Practical completion deemed to have occurred for that section (and all associated
provisions occur)
Remainder of works continues to operate as contract states
LADs still applicable on incomplete areas (calculated pro-rata)

o
LADs x ( (Contract Sum value of relevant part) / Contract Sum)
Time at Large
-
Where no fixed completion date exists
Contractor expected to complete works within a reasonable period
Can occur when:

o
No completion date fixed in contract
Fixed time has ceased to apply by agreement or prevention
Additional works or employer beach but no EOT
Contractor breaches contract but employer elects to continue with

performance of contract
Employer has interfered with certification process to prevent proper

administration of the contract
Project is beyond completion date with neither an EOT or Certificate of Non

Completion issued
November 2008
72
Nadia Slattery
Rectification Period
Defects:
-
Defects, shrinkages or other faults
Due to materials, goods or workmanship not in accordance with contract
Failure to comply with CDP
Must be made good at no cost to employer
CA can instruct to remain and deduct sum from contract sum
Snagging:
-
Outstanding works of a trivial or minor nature
CA considers should not prevent PC
Do not affect use of building
CA may issue a programme for completion of snagging items
Process:
-
Begins once Practical Completion has been certified
Default is 6 months (usually amended to 12 months seasons)
Schedule of Defects to be issued 14 days after end of Rectification Period
CA can issue instruction whenever considered necessary for making good defects,
shrinkage or other faults during the Rectification Period
Contractor must make good within a reasonable time at no cost to employer
CA can instruct not to make good and deduct sum from contract sum
If contractor fails to make good, employer can instruct another and
CA issues Certificate of Making Good Defects once all completed and accepted
Remainder of retention is released
Latent Defects:
-
Those which occur after the end of the rectification period and after Certificate of
Making Good has been issued
Liquidated and Ascertained Damages

-
A genuine pre-estimate of loss suffered as a result of late completion of the works
Not a penalty
Quick remedy to avoid having to prove actual loss as a result of breach of contract
Benefits both employer and contractor

o
Employer knows he will recover his losses
Contractor knows limit of his liability
Client is to calculate (not QS)
Can cover items such as:

o
November 2008
Loss or rent or other income
73
Nadia Slattery
Additional fees
Fines from statutory bodies
Costs imposed by other parties
Cost of not having facility (storage, rent, abortive costs etc)
Rate stated in contract particulars
If no sum stated in contract:

o
Unliquidated
Client claims loss through the common law
If Nil or 0 is inserted, then client has lost right to claim unliquidated

damages
Applies upon issue of Certificate of Non-Completion
Client deducts LADs from payment (not QS or CA)
Employer must inform in writing before date of Final Certificate that may withhold
LADs
Employer must also give notice not later than 5 days before final date for payment of
withholding or deducting from payment due
Insolvency
Definition:
-
Insolvency the inability to pay debts
Liquidation the closing down of a company in order to use assets to pay debts
General:
-
Insolvency practitioner appointed
Contract can be terminated immediately (not automatically terminated)
Signs of contractor insolvency:

-
Slowing down works
Supply of materials drying up
Increase in defective work
Changes in management
Requests for payments
Complaints from subcontractors
Actions following rumours of contractor insolvency:

-
Maintain professionalism
Keep it confidential
Get credit check
Monitor situation closely any reductions in site labour etc
Ensure utmost accuracy of forthcoming valuations
November 2008
74
Nadia Slattery
Speak to subcontractors
Contractor insolvency:
-
Identify insolvency practitioner
Inform parties involved
Inform bondsman (bank / insurance company)
Stop any pending payment (can defend on grounds of counter claim for costs)
Secure the site
Take ownership of materials off site (if paid for in valuations)
Schedule all plant and materials
Value works competed and value any defects
Arrange insurances
Monitor L&E incurred by employer
Establish programme and costs to complete works
Establish employers preferred way forward:

o
Terminate contract and employ others to complete
Novation
New contract
Terminate contract and do no further work on project
Allow contractor to continue to complete works
Insolvency practitioner may novate contract to new contractor
Employer insolvency:
-
Inform contractor (to enable termination)
Secure site
Assess contractors final account
Contractors works suspended
Contractor goes on list of creditors
Termination By Employer
For default by Contractor:
-
If contractor continues to default from 14 days of CAs notice, or repeats default
Defaults are:
o
Without reasonable cause wholly or substantially suspends works or design

of CDP
Fails to proceed regularly and diligently with the works or design of CDP
Refuses or neglects to comply with instruction to remove work not in

accordance with contract and as a result works are materially affected
Fails to comply with clause 3.7 (sub-letting) or 7.1 (assignment)
Fails to comply with clause 3.25 (CDM Regs)
November 2008
75
Nadia Slattery
For insolvency of Contractor:

-
Client can terminate immediately
For corruption:
-
If contractor, or any persons employed by him, commits an offence under the

Prevention of Corruption Acts
Consequences of Termination by Employer:

-
Employer may employ others to complete works (and use site, temporary buildings,
plant, materials etc)
Contractor must remove all temporary buildings, plant, tools etc (once instructed by
CA)
Contractor must provide 2 copies of all CDP documents
Contractor must assign benefits of any agreements for supply of materials and goods
within 14 days of termination
Provisions for payment and retention release cease to apply
After Completion of Works:

-
Account must be prepared for:

o
A = Expense incurred by employer
B = Amounts paid to contractor
C = Total amount which would have been paid in accordance with contract
If A + B is greater than C, then difference is a debt payable to due to employer (or

vice versa)
Employers Decision Not to Complete Works:

-
If 6 months after termination employer decides not to complete works then:

o
Notify contractor in writing
Prepare a statement setting out:
Total value of work executed at termination/insolvency
Aggregate amount of expenses incurred
Payments then due for difference between the two
Termination By Contractor
For default by Employer:
-
Failure to make payment
Interferes with or obstructs issue of any certificates due
Fails to comply with clause 7.1 (assignment)
Fails to comply with clause 3.25 (CDM Regs)
Continues to suspend works for 14 days from contractors notice for suspension for:
November 2008
76
Nadia Slattery
CAI for discrepancies, variations or postponement
Impediment, prevention or default by employer or his persons
Note: default suspension period in contract is 2 months
For insolvency of Employer:

-
Contractor can terminate immediately
Termination By Either Party

Either party may terminate if works are suspended for a further 7 days after notice of
suspension for:
-
Force majeure (acts of God)
CAI for discrepancies, variations or postponement
Loss or damage due to Specified Perils (fire, flood, lightning etc)
Civil commotion or terrorism
Note: default suspension period in contract is 2 months
Consequences of Termination by Contractor or by Either Party

-
Provisions for payment and retention release cease to apply
Contractor shall remove all temporary buildings, plant, tools etc
Contractor must provide 2 copies of all CDP documents
Contractor (or maybe Employer where terminated by either party) must prepare an
account within 2 months for:
o
Total value of work executed at termination
Any sums for loss and expense incurred for antiquities or relevant matters
Reasonable cost of removing items from site
Cost of materials or good the contractor has paid or is legally bound to pay
Any direct L&E caused by the termination (only if due to default or insolvency
of employer or specified perils due to negligence of employer)
After taking into account pervious payments, Employer must make any payments due
within 28 days
Fluctuation Clauses
-
Passes risk for change onto client
Items are paid for on a cost-reimbursement basis (not fixed price)
Does not apply to a Schedule 2 Quotation
Three options:
o
Option A (Default) Contribution, levy and tax fluctuations
Option B Labour and materials costs and tax fluctuations
November 2008
77
Nadia Slattery
Option C Formula adjustment uses a price adjustment formula
Named / Nominated Subcontractors

-
Nomination no longer in use under JCT 05
Can still list contractors under clause 3.8
select from list at discretion of contractor
not less than three subcontractors
can add additional persons to list with consent of other party
appointed subcontractor becomes a domestic subcontractor
Executing Contract
-
Affects limitation period for instituting proceedings
Under hand
o
6 years
As a deed
o
November 2008
12 years
78
Nadia Slattery
T022 Design Economics & Cost Planning (Level 3)

The factors that influence the construction costs of a particular design.
General
Investment Appraisal aid to decision-making with the objective of achieving the maximum
return from an investment
Project Appraisal exploring the benefits of a project and evaluating the need in comparison
with the costs involved
Shell and Core

-
Frame and external envelope
Finished core
o
Reception
Toilets
Circulation
Plant rooms
Fit out of landlords areas
Internal partitions separating landlords from tenant areas
Plant / services installations to landlords areas
Category A (Developer Fit-Out)

-
Fit out works to the functional areas
Works to tenant areas

o
M&E beyond risers
Raised floors
Suspended ceilings
Floor, wall and ceiling finishes
Category B (User Fit-Out)

-
Further specific fitting out executed by tenant
To make functional areas work for tenants business needs

o
Internal partitions to tenant areas
Decoration and branding
Installation of below floor power distribution and data cabling
Tenant standby generators and UPS
IT and telecommunications installation
Fittings and furnishings and office equipment
November 2008
79
Nadia Slattery
RIBA Outline Plan of Work 2007

A Appraisal
B Design Brief
C Concept
D Design Development
E Technical Design
F Production Information
G Tender Documentation
H Tender Action
J Mobilisation
K Construction to Practical Completion
L Post Practical Completion
Economics of Design
Cost drivers are things which influence or affect costs:
Abnormals ground conditions (remediation, water table), basements, special

architectural features
Atria these affect nett:gross ratios and also additional foundations, atrium roof
(solid/glazed), atrium roof/wall cleaning system, floor edge details, balustrades etc
Structural grid the cost of a structural frame (whether concrete or steel) is

governed by extent of abnormal spans and loadings
Structural design loads i.e. plant room areas require significantly higher load
capacities; abnormal stiffening requirements associated with core design; cantilever
structures
Wall : floor ratio the complexity/intricacy of the faade will have a direct effect on
the wall:floor ratio. This is a significant cost issue as external walls usually form 2025% of overall cost. A reasonable ratio would be in the order of 0.40, with 0.35 being
regarded as very efficient. Significant articulation/indentation can push the ratio to
0.50.
Example:
A 0.05 increase in the wall:floor ratio of a 100,000ft2 building, with a faade cost of
450/m2 will result in a circa 4% increase in the total shell and core cost.
November 2008
80
Nadia Slattery
Type of faade the type of cladding system specified will determine the cost of the
external walls i.e. unitised curtain walling -v- panel system with strip windows
Storey height Affects the overall cost, particularly with regard to external walls and
structure. Made up of two dimensions 1) the sandwich of the suspended ceiling,
structural floor and raised floor and 2) floor-to-ceiling height of the office space
between.
Example:
Each additional 100mm on the storey height can add between 0.50 and 0.75% to the
total shell and core cost, and conversely for each reduction.
Services Services form 15-25% of the total shell and core cost. Type of air
conditioning system specified is a significant key cost driver.
Types of air con system:
Chilled beams and ceilings
Four-pipe fan coil
Variable Air Volume
Variable Refrigerant Volume
Nett : Gross Ratio / Planning efficiency the higher the ratio, the more efficient the
building (best achievable approx. 85%)
Plan shape This relates to wall:floor and nett:gross, the most efficient shape being
circular with a central core i.e. doughnut shape
Definition of an Estimate
-
An accurate assessment of the cost of a project
Ensuring that:
o
the clients objectives are met
the teams aspirations are achieved
value for money is maintained
Who Needs Estimates?

-
Developers
o
Purchase of land
Development appraisals
Tenant agreements
November 2008
81
Nadia Slattery
Funders
o
Security of investment
Tenants
o
Cost of occupancy
Cost of tenant enhancements
Cost of fitting out
Designers
o
Surety of scope
Design within budget
Quality check
Types of Estimate
-
Feasibility Estimate
o
Indicative cost of future project
Based on /m2 GIA or /unit rate
RIBA Stage A/B
Largely based on historical data (benchmarking)
High dependence on assumptions
Stated as a cost range in /m2 or /functional unit
Initial or Preliminary Estimate

o
Early stage cost plan
Based on /m2 elemental breakdown
RIBA stage C/D
Largely based on historical data (cost analysis)
Medium dependence on assumptions
Stated as an order of cost
Cost Plan
o
Detailed anticipated cost of work
Based on detailed measure items (quantities) /m2 per item
RIBA stage D/E
Based on subcontractor quotations and built up rates
Medium dependence on assumptions
Stated as an outturn cost
Cost Models
-
Considered estimate based on limited information and benchmarked information

RIBA Stage A/B
November 2008
82
Nadia Slattery
Components of an Estimate
-
Cover and contents
Summary
Basis
Assumptions
Exclusions
Schedule of areas
Detailed breakdown of estimate (element, quantity, unit, rate)
Important to:
-
Communicate cost plan to client

o
sit them down and talk them through the entire cost plan in detail
Reconciliation
o
ensure differences between cost plan revisions are identified and explained
to all parties
Identify areas of uncertainty and risk and subsequent contingency allowances
Managing contingencies
o
As detail develops you replace contingencies and risk with firm costings,
where appropriate
Information Required to Prepare an Estimate (dependant on RIBA Stage)

-
Drawings
Specification
Area schedule
Location
Programme
Demolition / enabling works required
Services / infrastructure
Budget
Level of detail required
Items included within an Estimate

-
Build costs
Preliminaries (usually a %)
OH&P (usually a %)
Design reserve / contingency
Basis (information used)
Assumptions
Exclusions
November 2008
83
Nadia Slattery
Exclusions from an Estimate

-
Any items not included within the estimate

o
Items for which separate allowance should be made
Items which may be required
Items thought not to be required
Must be relevant and logical (or will affect credibility of the estimate)
Can include the following:

o
Client costs
Site acquisition costs
Finance costs
Legal fees, professional fees, planning fees
Site investigations and site surveys
VAT
Any usual client direct costs
Procurement risks
Inflation beyond price date
Exchange rates
Design responsibility
Changes in market conditions
Building / Site risks
Abnormal ground conditions
Occupied sites
Accessibility
Third party risks
Planning consent
Building control
Sources of Cost Data

-
Market testing
Benchmarking studies
Previous estimates, rates from BQs and cost plans
In-house database i.e. National Cost Database, Office Specialist Group

benchmarking
BCIS database subsidiary of RICS, member firms submit completed cost analyses
on tender returns which inform the database (in much the same way as DLs NCD)
Price books i.e. Spons, Laxtons
Published cost data i.e. Building Magazine articles
Clients own cost data
November 2008
84
Nadia Slattery
Considerations When Using Sources of Cost Data

-
Check basis of the rate

o
Specification
Economies of scale
Special conditions
Check the coverage of the rate

o
Is it comprehensive
Location factors
o
Do you need to update for change in location
Location factors published in Spons
Market Inflation / Indexation

o
Tender Price Inflation (TPI)
Records and predicts market conditions (labour, materials, economic

climate, inflation)
Prices tendered for construction projects
Inclusive of labour, plant, materials, preliminaries and OH&P
Use TPI up to construction phase
Building Cost Inflation (BCI)
Actual costs
Monitors and predicts building costs considering labour, materials

and plant
Contractors costs i.e. labour, plant and materials rates
Use BCI during construction phase
Risk / Contingency in a Cost Plan

How do you deal with risk in a cost plan?
-
Provide contingency to cover unforeseen risks
Analyse and cost each risk
Include provisional sums or prime cost sums explain these to the client
As design develops, risk should be designed out or mitigated to a manageable level
Contingency levels in estimates:

o
10% - 15% at feasibility
5% -10% during cost planning stage
2.5% - 5% at tender stage
November 2008
85
Nadia Slattery
Contingency Post-Contract
-
Four categories:
o
Design Reserve to fund unavoidable design development from tender to

when design is complete
Contract Contingency to cover contract instructions emanating from

design team
Project Risk Reserve separate fund to cover any eventuality highlighted

within the risk register (where not covered in separate allowance elsewhere)
Client Contingency reserve purely to fund changes instigated by the client
Not to be used for items incapable of pricing (prov sums are for this purpose)
Level of contingency also needs to take into account:

o
Type and complexity of project (new build vs. refurb)
Information available for tender documentation
Scope of unknowns which may affect the contract
Managing budgets
If cost plan is over budget?
-
Ensure you have explained cost plan in detail
Approach matter positively
Identify areas of potential savings i.e. materials specifications, buildability, re-design
Value engineer alongside the rest of the design team
Risk
A risk can be defined as an uncertain event or circumstance that, if it occurs, will have an
affect on the projects objectives.
Risk Management
-
PROACTIVE
Identification, analysis and effective ongoing management response to risks
Manage, minimise, share or transfer
Eliminate, reduce, insure, contain
Design to avoid
Opportunities reduce with time
Risk Analysis
-
Qualitative
o
Based upon experience
A subjective assessment in terms of impact and likelihood
Use of risk analysis matrices i.e. high likelihood, low impact etc
November 2008
86
Nadia Slattery
Quantitative
o
Potential to use probabilistic analysis i.e. computer simulation
Monte Carlo simulation
Pre-Contract Risk Management Schedule / Risk Workshop

-
Identification
o
Description of risk (cause)
Consequence (effect)
Analysis (Qualitative Assessment)

o
Risk type (design, procurement, infrastructure)
Likelihood
Impact (cost, time, quality)
= risk level/ status
Allocation
o
Party / individual responsible / in control
Action planned or taken
Response
o
Mitigation method (reduce / mitigate / transfer / hold)
Monitor of current situation
Value Management
-
PROACTIVE
How?
o
Define what value means to client
Communicating it clearly to project delivery team
Maximising delivery benefits
Minimising use of resources
Maximising performance
Understanding project objectives
Efficient use of resources
Minimising cost / waste
Process of refining the performance and cost so as to produce optimum value for
money
Value Engineering
-
REACTIVE
Deliver required function at desired quality for least cost
Specific technique to optimise cost-effectiveness of an existing design
November 2008
87
Nadia Slattery
How?
o
Use resources more efficiently (people, time, money)
Establish lowest cost whilst retaining function
Drive out unnecessary cost
Life Cycle Costing

General:
-
Consideration of costs over the whole life of a building not just the capital costs i.e.
understanding both capital and running costs
Consideration of capital cost against maintenance costs / replacement costs
Understanding the clients requirements in terms of capital and lifetime costs
The 3 Rs Running, Repairs, Replacement
Example: uPVC -v- metal rainwater goods
Process:
-
Identify capital cost of alternative systems
Examine long term costs i.e. maintenance and replacement cycles
Speak to manufacturers or other specialists
Prepare recommendation
Whole Life Costing

-
The consideration of all relevant costs and revenues associated with the construction
and ownership of a building
Main Cost Headings to Consider:

-
Capital costs
o
Cost of the building
Associated site works
Infrastructure costs
Project on-costs i.e. fees, decanting costs etc
Life-cycle costs
o
Asset replacement for building and associated prelims and management

costs
Operational costs
o
Utilities
Cleaning
Administration
Security
Support services
Business costs i.e. rent, salaries and income
November 2008
88
Nadia Slattery
Maintenance costs
o
Planned service maintenance
Building fabric maintenance
Disposal costs
o
Including decommissioning the building at the end of its useful life
Capital Allowances
-
Incentive to encourage investment
Tax relief on capital expenditure for acquiring, constructing, refurbishing or fitting out
a property
Capital expenditure for qualifying items can be deducted from companies taxable
profit therefore reducing the tax bill
Who can claim?

o
Investors
Owners
Tenants for fitting out
Who cant claim?

o
Charities
Developers although can be used as an incentive to sell the building
Rate of deduction depends on nature of allowance
Plant and machinery
Asbestos removal
Blinds, carpets, suspended ceilings, raised floors
Demountable partitions
Loose furniture
Air con, hot water installation, BMS, lifts, security, fire
Door handles!
Enhanced capital allowances (100% first year allowance) for energy saving green
plant and machinery
Land remediation
o
150% relief
hydrocarbons, asbestos, fuel storage tanks, contaminated ground water
VAT
-
All building works subject to 17.5% VAT but
0% on new build residential, alterations to existing, conversions to residential and

charity work
0% on demolitions related to 0% rated construction, otherwise standard rate applies
5% on refurbishments, conversions and renovations
November 2008
89
Nadia Slattery
T062 Procurement & Tendering (Level 3)

Procurement
General:
-
Procurement The way in which a project is bought.
Procurement strategy can have a major impact on the time and cost of a project.
Procurement routes are traditional, design and build etc
Tender options are single stage, two-stage, open, negotiated etc
Key Procurement Considerations

-
Cost
o
Cost certainty
Importance of budget
Time
o
Is timescale worth a cost premium?
How important is commitment to programme?
Quality
o
Importance of quality
Control over subcontractors
Risk and Responsibility

o
Pay premium to avoid risks / risk profile of client
Single vs. multi point responsibility
Are client changes likely?
Level of design information
Contractor input
Complexity
Clients experience / knowledge
Clients required involvement
Life cycle costs / costs-in-use
i.e. end user client more concerned with buildings functionality and cost-in-use with quality
being primary concern
whereas, developer client more influenced by market conditions and being able to get best
product to market as quickly as possible with time being primary concern
COST + QUALITY
TRADITIONAL ( TIME)
COST + TIME
D&B ( QUALITY)
TIME + QUALITY
MANAGEMENT ( COST)
November 2008
90
Nadia Slattery
Risk Transfer
Employer
Shared
Contractor
Management
Traditional
D&B
Types of Procurement
Traditional
-
Contractors tender based on a complete design produced by consultants
May include provisional sums where there are gaps in the information
Assuming no significant changes, construction costs can be determined with

reasonable certainty before work begins
Pricing documents provided (i.e. BoQ, spec and drgs, schedule of rates)
Two variants are:

o
Sequential contractor submits tender once design is fixed
Accelerated contractor appointed at an early stage in design process
Advantages
-
Disadvantages
Design led so high level of design
quality
-
No overlap between design and

construction
Reasonable price certainty at contract
award
Design risk is with client (he directly

employs team)
Single point of contractual contact
Relative lack of flexibility
Contract has strong commitment to
Often adversarial relationships
complete on time (LADs apply)
dependant on culture of team
Contractor assumes financial risk
Poor info can lead to conflict
With BoQ, vos easy to price
No buildability input from contractor
Contractor carries programme and

financial risk
Reasonable price certainty from outset
Contractor has strong commitment to

complete on time
Single point of contractual contract
If BoQ, variations can be priced easily
November 2008
91
Nadia Slattery
Design and Build

-
Contractors assumes the risk and responsibility for designing and building the project
in return for a lump sum
Design team appointed to compile clients brief and produce set of ERs
ERs must be sufficiently comprehensive to explain precise needs of client
ERs must give contractors freedom to make use of their design, technical and
management expertise
Tenderers return their Contractors Proposals (CPs)
In standard contract CPs take precedence over ERs, unless amended (as DL do)
Tender return should include a Contract Sum Analysis to aid tender evaluation and
future valuations
Employers Agent appointed to represent the Clients interests
Original design team may be novated or contractor may appoint his own team
Variants include:
o
Direct a designer/contractor is appointed without competition
Competitive limited nr of contractors submit tender in competition
Develop and construct contractors develop and complete the design
GMP contractors offer a GMP and share any savings
Advantages
-
Disadvantages
Single point of responsibility
Client changes can be difficult to value

and expensive
Design and construction risk rests with
contractor
Client has to commit before detailed

design is complete
Inherent buildability is achieved
Bids may be difficult to compare
Price certainty achieved before
No design overview process unless client
construction starts
-
appoints consultants to do so
Design and construction overlapped
May be difficult for client to prepare an

adequate brief
Client as less control over

aesthetic/quality
Tenders are costly to prepare so needs to

be of reasonable value to interest
contractors
Novation
o
the contractor accepts responsibility for whole project, including the initial
work carried out prior to novation
client may employ another designer to examine the scheme from his
perspective
November 2008
92
Nadia Slattery
Construction Management
-
Client employs services of a Construction Manager as a member of the design team
All individual trade package contracts are placed directly with client
CM has no contractual links with the trade contractors
No single point of responsibility for risk
CM programmes and coordinates the design and construction activities and offers
buildability advice
CM offers professional expertise without assuming financial or programme risk
Suitable for large and complex projects
Advantages
-
Disadvantages
Design and construction overlapped so
programme reduced
-
package placed
Allows for buildability and programme
advice
-
Tendered contracts should achieve
Breakdown of traditionally adversarial
Trade packages can be let
Interfaces between packages must be

managed carefully
Open book procedure for tendering
packages
-
Strict time and information control is

required
competitively or negotiated
-
Client (not CM) is responsible for cost or

time
barriers
-
Requires an informed and proactive client

to be successful
more competitive prices

-
Price certainty not achieved until last
Flaws in design may not become

apparent until a later date
Decision on appointments of TCs made
Multi point accountability
CM prime costs (e.g. prelims) must be
jointly by designers and CM

-
Changes can be accommodated later

i.e. tenant fit-out
controlled due to risk of duplication of

costs with TCs
Management Contracting
-
Client employs services of a Management Contractor as member of the design team
MC sits contractually between the Client and trade contractors
MC takes responsibility for the works without actually carrying out the works
Suitable for medium/large projects where design information is not available at starton-site
Advantages
-
Disadvantages
Single point responsibility
Price certainty not achieved until last

package placed
Design and construction overlapped so
November 2008
93
Requires an informed and proactive client
Nadia Slattery
programme reduced
-
to be successful
Allows for buildability and programme
advice
-
Client and design team are remote from

trade contractors
Breakdown of traditionally adversarial
Less open book than CM
Client (not MC) is responsible for cost
barriers
-
Trade packages are let competitively

and transparently
Changes can be accommodated later

i.e. tenant fit-out
Unlike CM, MC carries out most of

administrative work
Facility to agree a lump sum for MCs

organisation costs
MC responsible for time (LADs apply)
Guaranteed Maximum Price (GMP)

-
A lump sum contract under which there are no adjustment of tender price except for
client variations
Contractor allows for design development risk in his tender
Can be single or two-stage
Savings made on packages are shared on an agreed basis pain/gain share but
extras are the contractors responsibility
Client variations are a cost to the client.
Advantages
Disadvantages
Price certainty and control
Risk client pays too much
Contractor carries design development
Risk of high tender value as client is
risk
-
Pre-agreement of changes
Greater control of overspending
Quicker settlement of final account
paying for contractors risk allowance

-
Scope changes tend to be exploited
Design and Manage

-
Combination of design and build and management contracts
A single firm is appointed to design and manage the building but construction work is
tendered to specialist contractors
Contractor-led design and management is more common than consultant-led
Client will normally employ an independent Architect and QS to protect their interest
in terms of quality and cost
November 2008
94
Nadia Slattery
Turnkey
-
One company appointed to deliver building (the product) from inception to

completion right up to the client moving in
A one-stop shop solution
Design-build-finance-operate (DBFO)
Build-operate-transfer (BOT)
Build-own-operate-transfer (BOOT)
Measured Term
-
Used on major maintenance projects
Contract will apply loosely to predefined work
Often limited to a fixed timescale
Serial Contracting
-
Development of the system of negotiating further contracts where a firm has

successfully completed a contract for a project of a similar type
Initially contractors tender competitively for a single project, on the legal

understanding that a number of other similar projects will be automatically awarded
using the same prices
Only adjustment would be for fluctuations in price to cover inflation
Conditions usually included to prohibit awarding of further work in case of poor

performance
Should result in lower prices for client
Suitable for school building projects, restaurant chains etc
Prime Cost / Reimbursable

-
Contractor carries out works and is paid actual cost of labour, plant and materials
plus either a pre-agreed percentage or fixed fee to cover his establishment costs and
OH&P
Suitable for maintenance or refurbishment works where extent is unknown until

exposed or emergency work or resolution of a difficult project
Can be carried out as target cost (see below)
Advantages
Disadvantages
Enables early start on site
No time or cost certainty
No premiums for abnormal risks in
No incentive for efficiency
Difficult to monitor true costs
tender
-
Flexibility to alter design, programme

and quantum of work
November 2008
95
Nadia Slattery
Target Cost
-
Contractor receives a bonus if contract completed under the target but a penalty if its
over
Public Private Partnership PPP

-
Generic term for relationships formed between private sector and public bodies
Often with aim of introducing private sector resources/expertise in order to help

deliver public sector assets and services
Private Finance Initiative PFI

-
A form of PPP
Also a form of contracting or procurement the hallmarks of which are:

o
A long term service contract between a public sector body and private sector
operator
Provision of capital assets and associated services by the operator
A single unitary payment from the local authority which covers investment
and services
The integration of DBFO into the operators proposals
Allocation of risk to party best able to manage and price it
Service delivery against performance standards set out in an output spec
A performance related payment mechanism
An off balance sheet treatment for the LA so any investment delivered

through the project does not count against borrowing consents
o
-
Support from central govt delivered through PFI credits
The objectives of PFI can be described as:

o
Risk transfer risk transferred from public to private sectors
Value for money greater level of innovation and entrepreneurial input by

the private sector should improve quality and value for money
Funding transferring financial risks to private sector reduces impact on

public sector borrowing requirements
Advantages
Disadvantages
Risk transfer
Scope for inappropriate allocation of risks
Value for money
Loss of control
Funding requirements reduced
Definition of functional/service
requirements is crucial
Partnering
-
Project partnering one-off project
Strategic partnering series of projects, long term relationship
November 2008
96
Nadia Slattery
Structured management approach to enable team working across common

contractual boundaries
Mutual aims and objectives
Requires transparency and openness in matters such as cost and performance
Agreed method of problem resolution
The agreement requires commitment
Search for continuous measured improvement
Ideal when there is a flow of future projects
Framework Agreements
-
Preferential costs and rates for long term delivery arrangement
Repeat work
Only negotiate once, rates secured
Guarantee of work stream for contractor
Non-adversarial
Doesnt always deliver value for money
----------------------------------------------------------------------------------------------------------------
Tendering
General:
-
Tendering The way in which a contractor is selected.
Procurement routes are traditional, design and build etc
Tender options are single stage, two-stage, open, negotiated etc
Key Tendering Considerations

-
Nature, size, complexity of project
Value of main contract
Public or private client
Time period allowed
Competition is desirable
Negotiation involves a premium cost (of 5%-20%)
Tender documents must be
The most detailed possible
The most accurate possible
Have the least amount of items unresolved
The best basis for contract management
The best basis for cost control
Published codes of procedure (NJCC, CIB, JCT)
November 2008
97
Nadia Slattery
Types of Tendering
Open / Competitive Tendering
-
Client wants to obtain unrestricted tenders
Seldom used today as recognised it is a wasteful practice
Tenders attract a premium due to low success rate
Advantages
-
Disadvantages
Cheapest tender available (in theory)
but high tendering costs due to low
No control over suitability and

competence of firms who tender
success rate
Most reputable contractors avoid it
Generally accepted that large time and

cost overrun
Single Stage Selective Tendering

-
Competitive tenders sought on basis of completed design
Contractors selected for their competence and interest in job
Ability to select appropriate nr of tenderers (4 to 6)
Costs reduced as higher success rate
Employer ought to be able to accept lowest bona fide tenderer
Advantages
-
Disadvantages
Tenderers selected on competence and
interest
-
Longer programme as design must be

completed first
Costs reduced
Two-Stage Selective Tendering

-
Competitive tenders first sought on basis of preliminary tendering documents,

covering preliminary design information
Contractor selected on basis of cost of prelims and OH&P and a pre-construction fee
based on provisional sum allowances for works
Works are then packaged and tendered during pre-construction phase
Contract sum agreed at an appropriate time
Potential for GMP
Allows early appointment of contractor to work in parallel with design team
Ideal for achieving buildability
Premium paid for negotiations
Nr of tenderers at first stage 4 to 6
November 2008
98
Nadia Slattery
Advantages
-
Disadvantages
Early appointment of contractor, to work
alongside design team
Cost premium as invariably preliminary

tendering document is inadequate or
circumstances change significantly
Risk premium can occur as certain items

are not tied down until contract sum is
agreed
Negotiated
-
Single contractor selected to negotiate price with
Can negotiate with more than one contractor for competitiveness
Early contractor involvement
Allows flexibility of design development as construction proceeds
Less cost certainty prior to commitment
Main contractor competition eliminated but subcontractors tendered in competition
Advantages
Disadvantages
Early contractor involvement
Less cost certainty before commitment
Allows flexibility for design development
Cost premium to be paid
Possibility of developing better
Main Contractor competition is eliminated
relationships with team
but up to 80% of tender can be obtained

in competition from sub-contractor
-
Possibility of delay if contract negotiations

are protracted
Dutch Auction (also known as reverse bidding)

-
Tenderers in an auction situation, in knowledge of lowest tender / required sum
In competition against one another
Offering lower tender sums with no change in scope of works
May have a detrimental effect on quality of finished building
No method behind cost cutting
Can make contractors claim conscious during contract period
E-Tendering
-
Electronic exchange of tender documents
Reduces admin
More sustainable and streamlined process
Quicker
Cheaper RICS guidance note exists
November 2008
99
Nadia Slattery
Joint Venture Tendering

-
Partnership between two or more companies
Each participating company has joint and several liability for the contractual
obligations to the employer
Serial Tendering
-
Series of contracts let to a single contractor
The individual projects tend to be of same size
Where possible cost benefits should be established during competitive stage of

tender process
Disadvantage can be when projects differ in scope requiring cost effect of differences
to be ascertained
Term Contract
-
Employer agrees to order and indefinite amount of work during a fixed period
Useful of maintenance contracts where employer has large amount of property

requiring periodic renovation
Gives employer a simple method of procurement for individual projects
Contract can be terminated without incurring sanction

o
Employer can cease to issue fresh orders for work
Contractor can refuse to accept further work orders
OJEU (Official Journal of European Union)

-
For public works / services / supplies
Contracts awarded on basis of lowest price of most economically advantageous

tender
Requires publication of contract notice in the OJEU is estimated value:

o
5,150,000 for public works (central govt bodies)
133,000 for public services / supplies (central govt bodies)
Tendering Codes and Practice Notes

NJCC Codes of Procedure for Single Stage Tendering
-
Produced by National Joint Consultative Committee for Building
NJCC voluntarily dissolved in 27 June 2006 but code still used
Recommends that, irrespective of the size of the contract, tender list should contain
not more than six names
Recommends the lowest valid tender is recommended to employer for acceptance
November 2008
100
Nadia Slattery
Construction Industry Board Code of Practice for Selection of Main Contractors

-
Published by CIB in May 1997
Not as widely adopted as NJCC code
CIB ceased to exist on 29 June 2001 but code still published
Both publications codify the principles of good practice relating to selection of contractors
from preliminary enquiry to notification of results.
JCT Practice Note 6

-
Produced by Joint Contracts Tribunal
Intended to be successor to NJCC
Primarily concerned with main contract tendering procedure
Identifies procedure for tendering
Recommends that:
Construct only maximum of 6, ideally 3 or 4 tenderers
Design and Construct maximum of 3 tenderers
JCT recommends that the lowest or best value, valid tender is accepted should be
recommended to employer for acceptance
Tender Process
-
Preliminary enquiry (by letter) to proposed tenderers to confirm their interest
Prequalification
Tender procedure:
Tender documents and invitation
Tender period
Tender compliance
Tender assessment
o
Opening tenders
Examination and adjustment of the priced document
Negotiation
Tender report
Notification of results
Compilation of Tender Lists

Points to consider when selecting contractors to tender:
-
Experience of similar contracts
Experience of chosen procurement / contractual route
Past experience
o
Past projects (type, size and complexity)
Past performance (on time / on budget / approach)
November 2008
101
Nadia Slattery
Competence
Reputation for quality / QA policy
Reputation for timeous completion
Reputation for claims
Financial stability (credit check / accounts / turnover)
Size of company
Age of company
H&S policy and record
Current workload
Compilation of Tender Documents

Traditional:
-
Invitation letter
Instructions to tenderers
Form of tender
Certificate of bona fide tender
Design information (drawings / specification)
Pre-construction information
Preliminaries
Pricing document
BoQ
Schedule of works
Mini bill (an abbreviated summary of descriptions and quantities)
Conditions of contract
o
Amendments
Bonds
Warranties
Return envelope / label
Design and Build:

-
Invitation letter
Form of tender
Certificate of bona fide tender
Employers requirements
Concept design information
Programme
Pre-construction information
Preliminaries
Contract sum analysis for contractor to price
Return envelope / label
November 2008
102
Nadia Slattery
Action during Tender Period

-
Withdrawal
o
Extension
o
Refer to client
Queries
o
Keep a record
Notify all tenderers of response to prevent any unfair advantage
Correspondence
o
Refer to client
Keep a record of all correspondence with tenderers
Mid-Tender Interviews
o
Relatively common in tendering CM/MC trade contract packages
Less common (or necessary) on lump sum tenders
Record meeting
Communicate any questions/answers in writing to all tenderers
Any variations made to tender documentation during the tender period must
be sent in writing to all tenderers
Each tenderer must confirm in writing that the variation has been reflected in
their tender
Pre-Tender Estimate
o
Can take two forms
Adjust cost plan to reflect cost checks on the tender docs
Price the tender pricing document (particularly where BoQ or

schedules)
Late Tenders
o
Compromise tender procedure
Should not be accepted
Opening Tenders
-
Open in front of client representative and/or design team
Record results on tender opening form and all present must sign
Circulate to design team
Check forms of tender
Check certificate of bona fide tender
Carry out tender analysis
Examining Tenders
-
Check all necessary information has been submitted
Check documentation has been completed correctly
Check amendments notified to tenderer have been made
November 2008
103
Nadia Slattery
Check no unauthorised amendments have been made
Check all items have been priced
Check total in pricing documents equals total on form of tender
Checking pricing document is mathematically correct
Check everything priced in sufficient detail
Check rates and prices are reasonable and sensible
Check pricing is consistent throughout document
Check daywork percentages are reasonable
Check allowance for bonds are reasonable
Resolve qualifications
Check proposals for contractor designed work
Tender Analysis
-
Arithmetical errors:
o
Alternative 1 Correction not permitted
Alternative 2 Correction is permitted
Stand by original figure or withdraw
Stand by original figure, withdraw or amend (genuine error)
Front loaded tenders:

o
Not a pricing error
Request contractor removes front loading
If refuse, tender is not bona fide
Could use Advanced Payment Bond as an alternative
Tender evaluation
o
Comparison of tenders
Check for errors / inconsistencies
Compare with PTE
Check for qualifications
Include plugs where tenderers not priced element so comparing like-for-like
Contractor advises an error in clients favour?

o
Inform client
Generally dont accept as seen as an extension to tender period
Check if genuine
If yes, extend to other contractors tender period
If no, recommend rejection
Assessing D&B tenders:

o
Check CPs meet ERs
Interview tenderers to fully establish their proposals
November 2008
104
Nadia Slattery
Reasons to Re-Tender
-
Not enough tenders returned
Procedure was compromised in some way
Significant design changes
Note: NJCC does not recommend re-tendering price alone
Tender Reports
Should be completed without delay, taking account for:
-
Tender acceptance period
Clients procedure for authorising acceptance of a tender
Project programme
Content should include:

-
Basis of tender
o
Brief description of works
Form of contract
Pricing documentation
Tender period
Extensions / addendum to tender
Tenders invited
o
Original list
Substitute tenderers
Returned tenders
Alternative tenders
Review of tenders
o
Lowest valid tender
Reasons for rejecting lowest tender
Errors / qualifications
Resolution / outstanding issues
Comment on pricing level
Anticipated contract sum

o
Adjustments to tender
Contract sum build up
Reconciliation with PTE

o
Calculation of comparable sum
Comment / explanation of variance
November 2008
105
Nadia Slattery
Recommendation
o
Project teams view
Issues to be resolved
Risks
Also maybe:
o
Potential savings
Financial status of tenderers
Best Value
-
Concept that has come out of the Local Government Act (1999)
Sets out requirements that are expected
Concept being managed by the Audit Commission
It is a challenging performance framework placed on Local Authorities
Four Cs of best value:

o
Challenging
Comparing
Competing
Consulting
Supply Chain Management

-
No commonly accepted definition of supply chain management
Linkage of companies to turn series of basic materials, products or services into a

finished product for the client
Parties in the supply chain have a long-term objective to work together to deliver
added value to the client
Benefits of a well-managed supply chain include:

o
Simplification
Swifter project / product delivery
Risk reduction
Cost savings, sometimes significant
Improved visibility of the workload
Economies of scale for all parties
Traditional forms of procurement rely on choosing from a large number of suppliers,

with the aim of maintaining supplier competition and driving down costs
Supply-chain management has aim of setting up long-term relationships with

suppliers to develop leaner, value-adding and more efficient ways of working
Suppliers are encouraged to adopt similar managed relationships with their

suppliers, and so on ideally down the tiers of supply
November 2008
106
Nadia Slattery
Lean Construction
-
A derivative of the lean manufacturing process
A philosophy that is about managing and improving the construction process to

deliver profitably what the customer requires
Concerned with elimination of waste activities and processes that create no added
value
Doing more for less
Lean thinking delivering what clients want, on time and with zero defects
Lean principles:
o
Elimination of all kinds of waste
Specify value from the perspective of the ultimate customer
Identify the process that delivers what the customer values - the value stream
Eliminate all non-added value steps
Make remaining added value steps flow without interruption by managing

interfaces
Let the customer pull i.e. manufacture when needed adopt philosophy of
JIT management
o
-
Pursue perfection through continuous improvement
Lean construction techniques have been successfully applied in other industries
November 2008
107
Nadia Slattery
T067 Project Financial Control & Reporting (Level 3)

All Covered Elsewhere:
-
Post Contract Cost Control
Change Control Procedures / Change Control Forms
Cost Reporting / Cash Flows
Final Accounts
Loss & Expense
Risk Management
Value Management
Benchmarking / Best Value
November 2008
108
Nadia Slattery
T074 Quantification & Costing of Construction Works (Level 3)

Methods of Measurement
Why do we have SMM7?
-
Recognised method of measurement
More detailed
Less risk of omitting an item
Clarity as to what is deemed to be included
Code of Measuring Practice

-
Produced by RICS
Definitions for GEA, GIA, NIA
Recognised definitions
Clarity as to what is deemed to be included
Measurement from first principals

-
Quantify labour, plant and materials required to complete the works
Star Rate
-
Where works cannot be valued simply from contract rates, a star rate is built up using
contract rates as a basis
Bills of Quantities
BoQ consists of:
-
Preliminaries
Preambles (description of materials and workmanship to be employed)
Measured works
Provisional sums
PC sums
Dayworks
Appendices (bonds, warranties etc)
Advantages
Disadvantages
Easier post-contract cost control
Expensive
Easier tender analysis
Time consuming
Good for large, complex projects
Schedule of Rates
-
Nature and full extent of works unknown
November 2008
109
Nadia Slattery
Preliminaries
-
Measured in accordance with SMM7
Consists of:
Description of the nature of the works
Project particulars
Details of documentation
Contract details / bonds / warranties
Management procedures
QA procedures
Health and safety
Fixed costs
o
Paid when expended
Site set up and establishment, hoardings etc
Time related costs

o
Paid proportionate to contract period
Site staff and management, plant hire etc
Normally 8% - 15% of construction cost
Send to architect and client for verification
Prime Cost Sums

-
Presentation in accordance with SMM7 clause A51 (cross refers general rule 10.3)
Sum of money to be expended on works by nominated subcontractors or goods by

nominated suppliers
Contractor to add for profit and attendance
The following information shall be provided:

o
The nature and construction of the work
A statement of how and where the work is fixed to the building and what
other work is to be fixed thereto
Quantities which indicate the scope and extent of the work
Any specific limitations and the like in section A35
CA authorises expenditure
Provisional Sums
-
Work that cannot be accurately measured at tender stage (SMM7 rule 10)
Defined and measured in accordance with SMM7 clause A54 (in accordance with
general rule 10):
o
Defined Provisional Sum
where the item of work can be described and approximately

quantified to the extent that the contractor can make allowances
November 2008
110
Nadia Slattery
within their prelims and programme for the work
Items of Defined Work, accurately described in accordance with

SMM7 rule 10.3-4
Where execution differs from bill description, the effect on prelims and other
work will be treated as a variation
Undefined Provisional Sum
where the scope of work is unknown and cannot be adequately

described therefore the contractor is not able to make allowances
within their prelims or programme
SMM7 rule 10.6 states that contractor is deemed to have made no

allowance for programming and prelims in his tender
Expenditure results in EOT with prelims.
When calculating prov sums, allowance should be made for fluctuations up to point
work is carried out
CA authorises expenditure
Contractor Designed Portions

-
Where items of work to be designed by contractor
Contractor assumes design responsibility for those works
ERs set out criteria contractor must satisfy
Normally where there are interacting items of work
Tender return to include contractors proposals
CPs take precedence over ERs
Performance Specified Works

-
Sets out criteria contractor must satisfy
Only suitable for works of a simple nature or where non critical to visual outcomes
JCT05 omits separate clause for performance specified work

o
But provisions for contractor designed works remain largely unchanged
Just that now, all works requiring contractor design to be subject of full CDP
Tender return to include contractors statement as to how PS will be met
Statement takes precedence over PS
Makes it difficult to compare tenders
Increases tender period
November 2008
111
Nadia Slattery
Post-Contract Financial Reporting

General:
-
Overview of clients current financial commitment to project
Forecast of anticipated final expenditure
Final costs v original and current approved budgets
Used to outline, monitor and forecast project costs
Format:
-
Executive summary (including status of contingency allowance)
Basis
Exclusions
Risks
Adjustment of provisional sums
Variations instructed
Variations anticipated
Loss and Expense
November 2008
112
Nadia Slattery
T010 Commercial Management of Construction (Level 3)

-
Estimating
Establishing Budgets
Cash Flows
Reporting Financial Progress against Budget
Procurement of Labour
Procurement of Plant and Materials
Procurement of Sub-Contracts
Financial Management of Sub-Contracts
Financial Management of Multiple Projects
November 2008
113
Nadia Slattery
T016 Contract Administration (Level 3)

-
Standard Forms of Contract JCT, GC Works, ICE, NEC/ECC, ACA (PPC2000) etc
Roles and Responsibilities of Parties client, contractor, designers, QS
Roles and Responsibilities of Person Administering the Contract e.g. CA, Architect,
EA, PM, Engineer etc
Co-ordination of Parties
Design Co-ordination
Planning and Building Control
Health and Safety CDM
Monitoring Progress
Monitoring Quality
Insurances
Bonds / PCGs
Third Party Rights
Payment Provisions
Change Procedures
Sectional Completion / Partial Possession
Nominated / Named Subcontractors
Extensions of Time / Loss and Expense
Materials On / Off Site
Determination
Liquidated and Ascertained Damages
Defects Liability Period
November 2008
114
Nadia Slattery
Topical / Current Issues

Current Market Conditions
-
Credit crunch
o
Difficult to get finance
Less demand for office space
UK housing market declining
Schemes less viable
Construction work slowing
Commercial orders 30% lower than same time last year
Predict activity to decrease 7% over next 3 years
Increased competition for work
TPI reducing
BCI increasing
Squeeze on contractors profit but competition still high
Lawyers predict increase in adjudication as a result
Insolvency set to increase
Emerging markets demand

o
Growth forecasts only scaled back modestly
Firm economic performance predicted
Commodity prices increasing
Demand for goods (i.e. steelwork) remains high
Current Materials Prices

-
Concrete
o
80 100/t to increase 10% in January due to increase in fuel and energy

costs
Reinforcement
o
Supply currently at 750 800/t, overall 1,300 - 1,350/t
More than doubled in 2008
o
-
Increase in European scrap prices by 95%
Escalating demand from Middle East
Prices predicted to drop by end of 2008
Steelwork
o
Prices increased by 60/t in April
Further increase of 80/t expected in 3Q and again in 4Q
November 2008
115

Nadia Slattery Revision Document - at 06.11.08

Diunggah oleh

Informasi Dokumen

Judul Asli

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

Nadia Slattery Revision Document - at 06.11.08

Diunggah oleh

Hak Cipta:

Format Tersedia

Nadia Slattery

APC Revision Document

M001 Accounting Principles & Procedures (Level 1)

M002 Business Planning (Level 1)

M006 Conflict Avoidance, Management & Dispute Resolution (Level 1)

M007 Data Management (Level 1)

M009 Sustainability (Level 1)

M010 Team Working (Level 1)

M003 Client Care (Level 2)

M004 Communication & Negotiation (Level 2)

M008 Health & Safety (Level 2)

M005 Conduct Rules, Ethics & Professional Practice (Level 3)

T013 Construction Technology & Environmental Services (Level 3)

T017 Contract Practice (Level 3)

T022 Design Economics & Cost Planning (Level 3)

T062 Procurement & Tendering (Level 3)

T067 Project Financial Control & Reporting (Level 3)

T074 Quantification & Costing of Construction Works (Level 3)

T010 Commercial Management of Construction (Level 3)

T016 Contract Administration (Level 3)

Topical / Current Issues

Building Cost Index

Cash Flow Forecast

Extension or reduction to Date for Completion stated in the

Co-ordinated project information.

If works cannot be properly valued by measurement then

Energy Performance Cert

Regular progress of the works is materially affected by a

Standards of what is right and wrong in terms of obligations,

Excepted Risks include radiations, contamination by

Used to benchmark projects against set of standards.

Any defect which becomes apparent after the end of the

New Civil Procedure Rules

Profit & Loss Statement

Consideration of costs over the whole life of a building not just

Insurance to indemnify client in event of financial loss due to

Insurance provided by a Joint Names Policy to cover physical

M001 Accounting Principles & Procedures (Level 1)

Usually from the sale of goods and services to customers

Assets debt = net worth (value)

A snapshot of a companys financial condition

Use to value a company

Use to evaluate creditworthiness

Profit and Loss Account

Evaluates relative strength or weaknesses of potential investment

Return on equity indicates firms profitability and potential growth

CIS Scheme introduced from October 2007

Verification service to address issue of counterfeiting of old style registration

Self-employed individuals working as sole traders

Limited liability partnerships (LLPs)

Revenue and Capital Expenditure

M002 Business Planning (Level 1)

Principles of Law Parliament, legislation, tort, common law etc

Short/Long Term Strategies

Five Year Plans

Business Support Services administration, secretarial, HR, IT etc

Staffing Levels recruitment/turnover

How does your business ensure it is making a profit?

Resource forward planners

Financial management software

M006 Conflict Avoidance, Management & Dispute Resolution (Level 1)

2005 dropped arbitration in favour of litigation

Litigation has improved, judges at the construction courts are often