Types of Building Contract: 1. Lump Sum Contracts
Types of Building Contract: 1. Lump Sum Contracts
Building Contracts fall into three main categories, depending on the way in which the cost of the con
Where the price to be paid to the contractor is fixed in advance, subject to it being altered by addition
2. MEASUREMENT CONTRACTS
Where the price to be paid for the whole work is ascertained by measurement and valuation related t
6. Sub-contract for Sub-contractors: issued by the National Federation of Building Trades Employe
and Sub-contractors.
The Architect may nominate or appoint a sub-contractor (or supplier) to carry out duties on a project
reasonable objection.
A contract is made between the employer and the nominated sub-contractor or supplier. This is to en
of satisfactory standard and items such as insurances, completion on time and payments are controlle
DOMESTIC SUB-CONTRACTORS
A domestic sub-contractor is accepted to carry out work on a project by submitting a tender to the m
The main contractor therefore invites tenders and accepts the most reasonable in his opinion and is h
mistakes.
A domestic sub-contractor receives payment, for work carried out, from the main contractor in contra
payment directly from the employer.
NAMED SUB-CONTRACTORS
This is a combination of both Nominated and Domestic sub-contracts.
A list is made up of named sub-contractors and they are invited to tender for a contract. The price, w
with the main contract price and thus a total price for the contract is reached. This has the advantage
contractors who are approved by the Consulting Engineer and/or Client.
A named sub-contractor is paid through the main contractor as in domestic sub-contracts and the mai
contractor's work and progress on site.
ADM
Personnel
The following bodies and personnel are involved in the design and installation of buildings;
Architect
Building Services engineer
Civil Engineer
Structural engineer
Quantity Surveyor
Main contractor
Mechanical Services contractor / Electrical
contractor
Sub-contractors
Clerk of Works
The following personnel are involved in the design and installation of building services;
Technician engineer
Estimator
Buyer (sometimes also an Estimator)
Computer Aided Design (CAD) draughts
Clerk of Works
On site
Site engineer
Foreman
Contracts Ma
Charge hand
Operatives (
Sub-contract
Apprentices)
Contracts Managers are responsible for several contracts at any one time.
They are responsible for the total contract from start to finish, that is; procurement of contra
and completion.
A Contracts Managers job entails; liaison with clients, meetings with Architects and Engin
of tender documents and submitting claims, attending site meetings, monitoring spending a
monitoring progress and keeping the installation work on schedule.
The Contracts Manager should ensure that;
Interim payments are valued and submitted on time for monthly payment
out.
Variations are properly recorded, valued and paid for.
Testing & Commissioning is carried out.
Successful delivery and handover of the services installation.
Snagging is completed.
Practical Completion and Final Completion is carried out.
Site Managers are responsible for the overall running of one site and a building services S
responsible for the services installation on one site.
This job is one of overall control of labour and materials and the complete installation.
A Site Manager liaises closely with the Main Contractor, other contractors, Architect, Servic
Engineers and all other personnel on site.
The Site Manager monitors progress on site and ensures that the programme is adhered to
deadlines are met.
Also a Site Manager has responsibility for quality of workmanship and control of installation
Estimators evaluate the cost of all parts of the proposed building services installation.
Estimators often work for a contractor and their job is to estimate the total cost of the
services project. A final contract price can be obtained from this estimation and this is incorp
relevant contract tendering documents.
If the estimation is too high then the company will probably not win the bid for the contract.
Conversely if the bid is too low then the company may make no profit, so it is a responsible
Estimators divide up the building services installation into different parts to make it easier t
final price.
They also send out to suppliers for quotes for parts of the installation.
Estimators use various data resources (e.g. Spons Mechanical and Electrical Services Pri
Estimators Guide to Labour Times BSRIA Application Guide 2 / 76) to compile costs for vari
involved in services.
Also calculations are carried out to arrive at costs for materials, labour and plant.
For some contracts sub-contractors will be in negotiation with the estimator to arrive at eva
work to be carried out.
A compilation is made of all the estimations for all parts of the job, including all; extras, sund
overheads and this is sent to the Consultants or Architect for scrutiny.
Buyers procure materials, plant and equipment for the building services installation.
They purchase materials at the best possible price to keep the project costs within budget a
tender sums for materials and equipment.
The buying procedure is often one of sending out enquiries about prices of materials and ob
quotes. When all the quotes are scrutinised then the lowest price is usually chosen for each
equipment or material.
Buyers should be aware of future price increases so that materials can be purchased at the
and should be able to negotiate discounts for bulk buying and customer loyalty.
Buyers organise delivery of materials to site, check quality of goods, return of damaged go
of plant after use.
Planners work mostly on site to draw up detailed plans of the work to be carried out in the s
installations. They compile information to construct a sequence of activities that comprises
installation. This information leads to drawing up a plan, usually in the form of the Programm
(see Planning and Programming section of these notes).
Planners often have to reschedule works to comply with the overall Building Programme or
account delays, slippage and even being ahead of schedule.
BILL OF QUANTITIES
THE PURPOSE OF A BILL OF QUANTITIES
The Standard Method of Measurement, 7th Edition, (SMM7) and the Code
Practice (MC), both agreed by the Royal Institution of Chartered Surveyors a
Employers Confederation, set outrules for the measurement and descrip
work.The SMM is a document which provides not only a uniform basis for me
work but also embodies the essentials of good practice.
If all bills of quantities are prepared in accordance with these rules then all pa
are aware of what is included and what is to be assumed. Without the use of su
the quality of bills of quantities can vary widely.
2.The preparation of the bill. This involves the calculation of volumes, area
the dimensions). Traditionally thiswas followed byabstractingto collec
together on another sheet called the Abstract Sheet.From this abstract the
This process is commonly known asworking-up.
TAKING OFF
Dimensions and quantities are scaled or read from drawings and entered in a re
on a specially ruled paper called'dimension paper'.
A typical form of dimension paper is shown below.
Thetimesingcolumn is used when there are several similar items having the s
measurements, and to indicate that the measurement is to be multiplied it will b
shown in the example below.
Measurements taken from drawings are set down in thedimension column.
The calculated volumes, areas, etc., of the measurements in the dimension colu
in thesquaring column.
The description of the work to which the dimensions apply is written in
thedescriptioncolumn.
There are two sets of columns in the width of a single A4 sheet as shown above.
work should be carried across the central vertical division. There is usually a nar
margin (not shown) on the left of the sheets.
Plumbing and engineering services are taken as part of the Finishings section an
part of the External Works section of the Take-off.
A typical example of part of a take-off is shown below:
The descriptions should beclear and conciseand include variables such as:
Physical dimensions, capacity, output, duty, pressure rating, material used, form
(e.g. sectional boiler), accessories, manufacturer's catalogue reference, British s
reference, other standard references, local agent, etc.
Some items are measured as'extra over',that is they are not to be priced at th
all their labour and materials, as these have to a certain extent already been me
example fittings such as bends and junctions to drain pipes are measured as 'ex
means that the pipe is measured along its full length including the fittings lengt
estimator when pricing the item assesses the extra cost for the fittings as'extr
length.
WORKING UP
ABSTRACTING
Abstract Sheets are ruled with a series of vertical lines which are spaced about 2
and usually double foolscap width. A typical Abstract Sheet is shown below but i
size.
For small building services projects it may be possible to avoid using the Abstrac
we don't use m3ofmaterial .Thelinear lengths of pipeworkandmaterialsandsq
materialsmay be measured from drawings and put onto the dimension paper an
from this to a Bill of Quantities.
The writing of the bill is theoreticallycopying out the descriptions and quan
the abstractor dimension paper. The bill of quantities has been traditionally di
work sections similar to those contained in the SMM as follows overleaf:
SMM DIVISIONS
SECTIONDESCRIPTION
APreliminaries/General conditions
CDemolition/Alteration/Renovation
DGroundwork
EIn situ concrete/Large precast concrete
FMasonry
GStructural/Carcassing metal/timber
HCladding/Covering
JWaterproofing
KLinings/Sheathing/Dry partitioning
LWindows/Doors/Stairs
MSurface finishes
NFurniture/Equipment
PBuilding fabric sundries
QPaving/Planting/Fencing/Site furniture
RDisposal systems
SPiped supply systems
TMechanical heating/cooling/refrigeration
UVentilation/Air conditioning systems
VElectrical supply/power/lighting systems
WCommunications/Security/Control systems
XTransport systems
YMechanical and electrical services.
These sections are further sub-divided into, for example:
SECTIONDESCRIPTION
R11Foul drainage above ground
R12Drainage below ground
S10Cold water
S11Hot water
S12Hot and cold water (small scale)
S13Pressurised water
T10Gas/Oil fired boilers
T11Coal fired boilers
T30Medium temperature hot water heating
T31Low temperature hot water heating
T32Low temperature hot water heating (small scale)
T33Steam heating
T40Warm air heating
T41Warm air heating (small scale)
T42Local heating units
U10General supply/extract
U11Toilet extract
U12Kitchen extract
TENDERING
TENDER DOCUMENTS
Tender documents are required so that contractors can calculate a price for a project.
Tender documents may include:
1. Drawings
detailing the scope of the project
2. Specification
details of materials.
3. Bill of Quantities all materials itemised
4. Contract
legal documents
Sometimes on smaller projects the tender documents can be simplified to drawings and specification
1. The specification tender form or contract
2. Summary of tender showing contract price
3. Conditions of tendering
4. Conditions of Contract including Terms of Contract,
5. VAT, Increases in cost, insurance, contingencies
PRELIMINARIES
Sometimes preliminary clauses are used in tender documents to set out items that need to be priced o
eventualities on site. These may include:
1. Plant, tools and vehicles
2. Scaffolding
3.
4.
5.
6.
PROVISIONAL SUMS
During the preparation of tender documents allowance is often made for costs that cannot be
defined.
For example when areas have to be excavated or part of the work is hidden a provisional sum can
for this.
An example in building services may be; an underground heating pipe is to be replaced at corrod
cannot be detailed until the pipework is exposed and examined. A provisional sum could be inc
documents so that this hidden and inaccessible work can be allowed for.
Another definition of Provisional Sum is a monetary amount for work for which the full extent or
determined precisely at the time of preparing tender documents.
The Provisional Sum is taken into account in the Specification or Bill of Quantities.
Prime Cost (PC) sums include work or materials by a specialist contractor or statutory body, e.g. g
and sewer connections.
A P.C. sum may be included in contract documents for items such as;
1. Structural steelwork
2. Windows
3. Lifts
4. Generators
5. DOE water connection
The P.C. sum will have a cost associated with it that has already been determined. When a new hous
may be a P.C. sum for the kitchen or bathroom.
The main difference between provisional and P.C. sums is; provisional sums are estimated to allow
whereas P.C. sums are already accurately priced by a specialist.
If a provisional sum is not used then the amount is not paid to the contractor.
DAYWORKS
Sometimes when all or part of a project cannot be defined or calculated or the scope of the work
system of paying the contractor for work done on a daily basis is used. This is called dayworks.
Examples of dayworks are similar to those for provisional sums but a particularly difficult or tricky
out and charged by the contractor to the client as dayworks.
If it is agreed that work should be competed using the dayworks system then the contractor will co
daily basis to include; labour, materials and plant. An agreed percentage is added to each of these
overheads and profit.
Sometimes information from a Bill of Quantities or a Schedule of Rates can be used to calculate da
example of this is pipe fitting where the time taken for the activity is already ascertained in a s
Pricing book) thus avoiding arguments about costs.
SCHEDULE OF RATES
This can be used where the exact amount of work to be carried out is not known.
The contractor is generally required to insert rates in the schedule for the listed items of work.
Approximate quantities are sometime inserted to give the tenderer some idea of the the scope of the w
The all-in rate means that everything incurred in the employ of an operative is included in a
includes:
1. Basic pay per hour
2. Tax
3. Allowances
4. Holiday pay
5. National insurance
6. Contractors insurance
7. Sick pay
8. Training levy
For example a tradesman may have an all-in rate of 15.50 per hour but the basic pay rate is
difference comes from all the additions listed above.
Once the all-in rate is calculated then this can be used in a Bill of Quantities or Schedule of rates
prices for projects.
Building Services installations can be divided into First and Second fix for both mechanical and elec
The main stages of production may include the following.
Electrical Services
First Fix
1.
Installing trunking, conduit, trays, baskets, cable ladders, cables
(Containment systems)
2.
Recessed boxes, tracking walls.
3.
Incoming utilities
4.
Possible distribution boards
5.
Temporary supplies
6.
Marking out services and holes
Second Fix
1.
2.
3.
4.
5.
6.
7.
1.
2.
3.
4.
Fix supports
Incoming services
Install underfloor pipes
Install main ductwork routes
Mechanical Services
First Fix
5.
6.
7.
1.
2.
3.
4.
5.
6.
7.
8.
Second Fix
The BSRIA Application Guide 11/98 Project management handbook for building services gives fur
stages for building services installations.
Activity lists are as described below.
For example, the building services installer should state clearly the content of 1st, 2nd and final fix a
append these descriptions to his method statement.
Once the main stages of production have been listed then this information can be used to complete a
works.
Planning is one of the basic principles of management and has been defined as the deliberate conside
a project in order to evolve the best method of achieving a stated objective.
Without planning, wasteful, unproductive time is unavoidable and last minute, ill considered decis
management. In planning, a logical attempt is made to foresee and forestall those events, which
stated objective - to finish the project on time and make a profit.
If planning is to be effective some control must be exercised over the plan. As work progresse
plan. Various graphical programming methods are available to form the basis for planning an
organisation and control of the following factors:
1.
2.
3.
4.
5.
6.
7.
Money
Labour
Materials
Plant
Sub-contractors
Information
Quality
Example 1
Draw a Programme of Works for the following Project.
Erect a prefabricated building on a concrete slab, fit shelves and paint the exterior.
The size of the building is known at the outset, and therefore there is no need to await erection befor
Use the following activities only, each activity must be wholly completed before any successor can b
___________________________________________
ACTIVITY
TIME in days
___________________________________________
Prepare ground
2
Lay slab
1
Order materials for slab
1
Delivery of slab materials
1
Erect building
2
Order building
1
Delivery of building
4
Paint exterior
1
Prepare shelves
4
Fit shelves
2
_____________________________________________
The following table can be used to draw a bar chart programme.
Rising prices, high interest rates and restrictions on use of capital have caused employers to deman
accept cost as an element in design as well as accurately forecast overall costs.
This involves close collaboration between the architect and quantity surveyor and other professional
COSTS TO BE CONTROLLED
The following is a list of costs to be controlled:
1. Materials
2. Labour
3. Overheads
The labour and materials associated with a project can be controlled in several ways.
Careful planning and programming of the project will help to control these elements.
One method that can be employed is just in time management
This ensures that both labour and materials are available just at the right time.
For this to happen an accurate programme should be used to calculate the labour requirement at all t
The materials required at any time during a project can be ascertained from drawings, specifications
ordered in time for installation.
The draw back of this method is that there is little room for error and if it is misjudged then tradesm
materials to install.
One of the advantages of just in time management is that materials do not have to be stored fo
reducing risk of loss and theft.
PROFIT
The profit for a particular contract may be calculated as the total sum of money remaining from inco
work done including general overheads.
Profit
Income
- Project Cost
- Overheads
PROFIT MARGIN
This can be expressed as a percentage of the cost of the work done.
Profit Margin =
Profit
Project Cost
x 100%
The Project Cost or the cost of the work done may or may not include overheads
this should be made clear when giving a figure for profit margin.
In practice the profit margin may be from 2% to 5% for many projects.
Example 1
Calculate the profit and profit margin for a project given the following information.
DATA:
Monthly Incomes totalled
=
155,000
Total Materials cost
=
48,500
Total Labour cost
=
74,200
Total Company overheads
=
7,800
Total Site overheads
=
16,250
ANSWER
Total overheads =
7,800 + 16,250
= 24,050
Project Cost
=
48,500 + 74,200
= 122,700
Profit
=
Income - Project Cost - Overheads
Profit
=
155,000 - 122,700 24,050
Profit
=
8,250
Profit Margin
Profit Margin
=
=
=
Profit /
Project Cost x 100%
8,250 / 122,700 x 100%
6.72 % say 6.7 %
Example 2
Calculate the profit and profit margin for a project given the following information.
DATA:
Project duration
=
12 months
Total Materials cost
=
134,800
Total Labour cost
=
275,200
Total Company overheads
=
44,900
Total Site overheads
=
87,250
Monthly Incomes:
Month
Income
Month
Income
Mar
12,400
Sept
37,800
Apr
34,000
Oct
67,500
May
45,000
Nov
62,800
Jun
47,700
Dec
89,700
Jul
Aug
75,400
Jan
27,500
56,200
Feb
23,200
TOTAL INCOME
Total overheads
Profit
=
=
=
=
=
579,200
44,900 + 87,250
132,150
PROJECT OVERHEADS
This is the cost of administering a project and providing general plant, site staff, facilities and site ba
Overheads include:
1.
Staff
2.
Transport 3.
Overtime
4.
Training
5.
Welfare
6.
7.
8.
9.
10.
11.
12.
13.
15.
16.
17.
Accommodation A sub-contractor may be charged by the main contractor for site office
Site transport
plant to and from site, trucks, dumpers, etc.
Large plant buying, hiring, fuel.
Small plant tools, drills, compressor.
Scaffolding buy or hire.
Temporary services
all incoming services.
Services charges electricity, telephone, water, gas.
Defects liability cost
probable cost is related to labour and materials value.
14. Hand over and cleaning quotation from cleaning company may be poss
Security
lock-ups, store, security company.
Signage
sign boards, notices, and advertising.
Cleaning site periodic removal of rubbish.
18.
19.
Entertainment
Sundry items
promotions, parties.
testing apparatus and materials.
On a large construction project a distinction is usually made between site overheads and company o
The contractor may be reimbursed for his site overheads by means of the contract preliminaries o
rates in a Bill of Quantities.
Company overheads can be calculated separately, and are a budgeted amount calculated on the anti
offices, equipment, stationary and the like.
Typical overheads are 5% to 7.5% of project cost.
Typical site overheads are 10% to 20% of project cost.
Sometimes company overheads are calculated as a percentage of annual turnover for accounting proc
PLANT
Estimating for the plant element depends on whether the contractor owns or has to hire the required m
OWNED PLANT
An hourly rate for the machinery should be calculated based on the following:
1.
Depreciation
2.
3.
This will give a total annual cost for owning the machine.
An hourly rate can be arrived at by dividing this annual cost by the number of hours the machine
from the plant records.
HIRED PLANT
A true hire charge should be worked out based on the total time that the plant is hired against th
productive work.
Example 3
1.(a) Calculate whether it is cheaper to hire or buy a pipe threading machine for steel pipes.
1.(b) Calculate the hourly rate for buying and hiring the machine.
DATA:
Length of contract
=
18 months or 72 working weeks
Cost of machine new
=
6500.00
Depreciation
=
50% per annum.
Repairs / maintenance
=
480.00 per annum.
Hire charge per week
=
85.00
Interest rate
=
5%
Plant records show productive machine usage to be 10 hours per 40 hour working
week on average.
ANSWER 1.(a)
Buying
Capital Expenditure
Depreciation
=
=
6500.00
4875.00 ( 50% + 25% = 75% x 6500 )
Residual value
1625.00
Repairs
=
720.00 ( 480 x 1.5 years )
Lost interest on capital outlay =
325.00 ( 5% x 6500 = 325 )
Final cost
Final cost
Final cost
=
=
=
Hiring
85 per week x 72 weeks = 6120.00
Therefore it is cheaper to purchase the machine @ 6500.00 since it will have a residual value at the
ANSWER 1.(b)
The annual hours of machine usage are: (10/40) x (72/1.5) = 480 hours per annum.
Buying the machine costs:
5920 / 480
6120 / 480
Example 4
Calculate whether it is cheaper to hire or buy a mini excavator given the following information.
DATA:
Length of contract
Cost of machine new
Depreciation
Repairs / maintenance
Hire charge per week
Interest rate
=
=
=
=
=
=
25 weeks
18,000.00
20% in the first 10 weeks then 0.5% per week.
400.00 per service, 1 service required.
200.00
5% per annum
ANSWER
Buying
Capital Expenditure
Depreciation
=
=
18,000.00
4950.00 ( 20% + (15 x 0.5%) = 27.5% x 18,000 )
Residual value
13,050.00
Repairs
=
400.00
Lost interest on capital outlay =
433.00
Final cost =
Final cost =
Final cost =
Hiring
200 per week x 25 weeks = 5000.00
Therefore it is cheaper to hire the machine.
Large steel pipes with insulation and electrical cable trays and trun
co-coordinator can sort it out.
20.The turning radius for 300mm wide cable tray is about 1 met
The radius for most steel welded bends in only about 1 1/2times the
21.A welded steel pipe route can easily cost twice as much to in
accommodate other services. Carefulplanningis the answer.
Programming
Reducing Waste.
Reducing waste of building services materials is an important factor in keeping costs to a
minimum.
Two common causes of waste are excess materials that can not be used
and damaged materials that cannot be installed.
Material wastage can be caused by;
A system should be set up on site to ensure that wastage is minimised. A typical Loss
Prevention system would include the following;
Information Flow
Information is critical in any area of building and construction and building services is no ex
A building services engineer needs to provide information to the architect, quantity surveyor
structural engineer.
Also a building services engineer needs to obtain information from the above design team s
services can be adequately designed.
Weight of plant
A building services contractor and building services engineer should have a system of infor
that keeps both parties up to date and in possession of latest drawings and specifications.
As well as contract documents and Building Regulations there are general legal requiremen
Contractor.
One of these includes possession of site.
Possession of site is linked to the commencement of works.
The Contractor should commence works as soon as is reasonably possible after the date o
commencement has been notified by the Architect or Engineer.
Statutory requirements relating to the possession of a site are usually concerned with neglig
Under common law, the occupier of a site has a duty to protect certain categories of visitors
the hazards that may be present.
The occupier is a person who has some degree of control over the site.
This could be the owner or client or in the construction industry, the Main Contractor.
The Main Contractor therefore must take reasonable care of the safety of all persons who e
for the purposes for which they are permitted to be there.
This duty of care includes; the construction areas, storage areas, vehicles and plant, lifts an
scaffolding.
After the Main Contractor has taken possession of the site he has obligations to employees
The Health and Safety at Work Act (1974) puts the responsibility on employees to ensure s
conditions for all people on site including visitors.
The Main Contractor should have a health and safety policy that is available to all employee
Safety at Work Act - Section 2-(3).
This should state the duties and responsibilities of all levels of management, supervision an
The Main Contractor should ensure;
o
o
o
o
A safe working environment - Health & Safety at Work Act - Section 2-(1)
All necessary instruction, training and supervision
All necessary personal protective equipment
Suitable and well maintained plant and equipment - Section 2-(2).
As well as contract documents and Building Regulations there are general legal requiremen
One of these includes possession of site.
Possession of site is linked to the commencement of works.
The Contractor should commence works as soon as is reasonably possible after the date o
notified by the Architect or Engineer.
Statutory requirements relating to the possession of a site are usually concerned with neglig
Under common law, the occupier of a site has a duty to protect certain categories of visitors
present.
The occupier is a person who has some degree of control over the site.
This could be the owner or client or in the construction industry, the Main Contractor.
The Main Contractor therefore must take reasonable care of the safety of all persons who e
for which they are permitted to be there.
This duty of care includes; the construction areas, storage areas, vehicles and plant, lifts an
After the Main Contractor has taken possession of the site he has obligations to employees
The Health and Safety at Work Act (1974) puts the responsibility on employees to ensure s
people on site including visitors.
The Main Contractor should have a health and safety policy that is available to all employee
- Section 2-(3).
This should state the duties and responsibilities of all levels of management, supervision an
The Main Contractor should ensure;
o
o
o
o
A safe working environment - Health & Safety at Work Act - Section 2-(1)
All necessary instruction, training and supervision
All necessary personal protective equipment
Suitable and well maintained plant and equipment - Section 2-(2).