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Procedia - Social and Behavioral Sciences 65 (2012) 697 – 703

International Congress on Interdisciplinary Business and Social Science 2012

(ICIBSoS 2012)

Framework for Enhancing Cost Management of Building

Services
Ganiyu Amuda Yusufa, Sarajul Fikri Mohamedb, Zakaria Mohd Yusofc, and
Mohd Saidin Misnand, *
a, b,c, d
Dpartment of Quantity Surveying, Faculty of Built Environment, Universiti Teknologi Malaysia, 81310, Skudai, Johor Bahru

Abstract

Cost is generally accepted as an essential ingredient of good design. However, the co-ordination and
integration of building services constitute a major problem in the procurement and cost management of
buildings coupled with gaps in knowledge by practitioners in the technology of building services.The
study proposed a generic framework for integrating quantity surveyors services in the procurement and
effective cost management of building services in Malaysia construction industry. The framework
requires early involvement of design consultants including specialist designers and quantity surveyors.
The most significant obstacle to the adoption of the framework is the industry commitment and the
client's readiness to pay for additional services.

© 2012
2012Published
PublishedbybyElsevier Ltd.Ltd. Selection and/or peer-review under responsibility of JIBES
Elsevier
Selection and/or
University, peer-review under responsibility of JIBES University, Jakarta
Jakarta

Keywords: Building Services; Co-ordination; Cost Management; Framework, integration.

*
Corresponding author. Tel.: +60167937400; fax: +607556615.
E-mail address: [email protected]: [email protected].

1877-0428 © 2012 Published by Elsevier Ltd.

Selection and/or peer-review under responsibility of JIBES University, Jakarta
doi:10.1016/j.sbspro.2012.11.186
698 Ganiyu Amuda Yusuf et al. / Procedia - Social and Behavioral Sciences 65 (2012) 697 – 703

1. Introduction

Cost is generally accepted as an essential ingredient of a good design and the main purpose of cost
planning is to obtain a properly balanced building which meet up with clients requirements. There is a
growing awareness of the importance of cost of building services. The cost of building services can
represent between 15 70% of the total cost of buildings depending on the purpose of building and the
sophistication of the building services. A major problem which has been identified was the lack of
requisite technical skill by quantity surveyors (QS) in the technology of building services, similarly,
consultant services engineers are not accustomed with the art of preparing necessary tender documents
for the procurement of building services (Dent, 1980; Michie, 1981; Nanayakkahara & Fitzsimmons,
1999; McCaffrey, 2011) Meanwhile, clients often engage cost consultants at the early stage of building
projects so as to get a reliable cost advice that will inform their business decision before committing fund
to any project (Fortune & Cox, 2005). The value of the cost advice given by the QS is the reliability of
early of the cost estimates (Swaffiel & Pasquire, 2000). This will provide a real opportunity to add value
to the clients business decisions. Therefore, the client will expect nothing but a reliable assessment of
anticipated project value which will aid strategic decision making.

In Malaysia, it is widely reported that there is no uniform method for preparing building services bills
of quantities (BoQ) and tender documents by industry practitioners , different consultants use different
method to present project details to contractors and other industry stakeholders without reference to the
rules standard method of measurement (SMM). Performance specifications and schedule of prices are
used to invite tenders, where BoQ are used there are often inconsistencies in the method of preparation
and the rules of measurement are spelt out in the preambles (Kumar, 2009; Sabaria, 2009). The problems
with this approach are that, tender evaluation is made difficult and the cost of tender to contractors
increases. At post contract stage, variation assessment and preparation of interim payment is complicated
leading to disputes, delays, time and cost overruns as well as unhappy client (Molloy 2007, CIDB 2009,
Sabaria 2009).

In the conventional practice, building services contractors receive information from the main
contractor, process client requirements at their individual organisation level without input from the client
and even designers (Hughes, 2003). Good ideas are held back by specialist contractors in order to gain
competitive advantage during the tender (Mathew & Howell, 2005). Leading to difficulties in optimising
design solutions and reliable estimates by the design team. One of the main reasons being that,
preparation of BoQ can only begin when certainty is established in the design (Potts 2004). Similarly, Al
Harbi et al., (1994), opined that estimates produced from incomplete project information that does not
give all the details is liable for inaccuracy. Therefore a window of opportunity is missed by the QS at the
early stage of building services design because of the lack of cost planning model to aid the value and
financial analysis of the design. In addition, the lump sums contained in the building services tender are
often not broken down into meaningful elements and few QS have the knowledge to assess the accuracy
of the estimates (Potts, 2008).

The focus of this study therefore, is to propose a framework for planning and controlling cost of
building services, whereby QS and consultant engineers can work together in collaboration with the
downstream supply chain to develop a reliable cost estimate for the procurement of building services
projects in a transforming economy. The objective of the study reported in this paper was to identify the
barriers to pre contract price forecast of building services and propose a standard based pricing
method for cost management of building services
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2. Cost Planning of Building Services.

The traditional method of sequential design development inhibits effective cost management of
building services because due consideration is not given to specialist designers and contractors. Pavitt &
Gibb (2003) considered that non involvement of specialist contractors in the downstream supply chain
always bring about serious problems during construction, especially at the interface between the building
services design team and building services contractor. They pointed out that this normally occurs
because of the following reasons:
The communication gap between designers is often caused by poor coordination of the various
design inputs
Lack of management of interfaces and blurred divisions of responsibility
Procurement of specialist contractors design (specialist contractors are not contractually
recognised as a member of the team).

3. Barriers to Effective cost Management of Building services.

Successful cost management of building services according to Rawlison et al., (2007) is affected by
design standards; physical constraints; coordination; design management; effective contractor
involvement; programming of works and commissioning. McCaffrey, (2010) describes the roles of the
building services quantity surveyors and identified some of the challenges they face in managing the cost
of building services project as : insufficient design; the nature of the installation; lack of understanding by
the main contractor; coordination of services; coordination of design; programming services; cost
management of services and commissioning.

3.1. Design related problems:

Murray (1997) identified incomplete design as one of the major factors inhibiting the measurement of
engineering services by quantity surveyors. Michie (1981) found that architect s training in building
services is limited and the services consultants are always appointed late during the design. Rawlison &
Dedman (2010) stated that most M&E work involves an element of design by downstream supply chain.
However, they are not usually reflected in contractual relationships according to Pavitt and Gibb (2003).

3.2. Co-ordination problems

This has to do with clashing of service works on site (for instance, plant rooms, duct layout). The
architects practical training on the subject of building services is less than optimum, therefore, they have
difficulty in fulfilling the coordination role giving the increasing content and complexity of engineering
services Michie,(1981), Gura,(1984). Baldwin and Chan (1994) Summarised the problems as: Design
related problems; coordination problems and procedural problems, they further outlined the probable
areas of conflict resulting from lack of coordination as follows: (1) Services conflicting with the structural
frame; (2) discrepancies in dimensioning as stated on different drawings (3) improper reservation of holes
(4) conflicts between two or more services; (5) differences between the dimensions of the actual
equipment and those in the detailed design; (6) differences in the location of equipment; (7) improper
arrangement for the sequence of works; (8) difficulties in the identification of access points and services
(9) difficulties in the support and fixing of services (10) insufficient space for the completion of adjacent
finishing works; and (11) difficulty in inspection, commissioning and maintenance.
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3.3. Impacts on Cost Management of Building Services

McCaffrey (2011) stated that variations and inaccurate estimation are major contractual cost issues
that often arises on engineering services within the construction team as a result of incomplete design or
coordination problems. In the first place, determining the impacts that variations can have on the contract
price and time can be arduous due to the interconnected nature of the construction work and the difficulty
in isolating factors to quantify those (Potts 20). Nevertheless, the most frequent effects of variation order
in engineering services contract has been identified as increase in project cost; rework and demolition;
delay and possible time overrun; increase in overhead expenses (Manzoor and Pheng, 2005; Bower,
2000). Sometimes when not properly administered, it can result to disputes between the contractor and
the client (McCaffrey, 2011). Leading to rework; delay to an overall program and extension of time; and
probable loss and expense claim by the contractor (Ibbs, 2005).

4. Adoption of Standard Based Pricing Mechanism for Building Services

To improve the quality of price forecast advice given by cost consultants, it is essential to consider
enhancement of the process itself. In order to improve the process of producing a building project price
forecast given in the early stages of design development, Skitmore (1991) suggested two approaches:
Developing entirely new estimating techniques or
Using detailed estimating techniques (e.g BoQ) in the early design stages.
Skitmore ,(1991), further, presented the general model of adopting detail estimating techniques as
comprising items, quantites and rates usually contained in priced BoQ as
n
P= i=1 q1r1
Where P represents the total cost/price, q and r, the item quantities and rates respectively, and subscripts
(i = 1, 2 n) denotes the items involved. Therefore, the calculation of P depends on two main factors:
Identification of the items, i and
Estimation of the parameter values, q and r.

However, the accuracy of estimates of P is dependent solely on the combined accuracy of these 2
factors. In detail estimating, the identification of items and the parameter value q and r are contained in
the bills of quantities. Each of these items is complete with the descriptions of materials, labour and
workmanship for the work (qualitative information) and its quantity (parameter value q) (Seeley, 1997).
The cost (parameter value r ) of executing each item of work is often derived from the qualitative
information provided in the BoQ. The methods of identifying these items (item classification); the cost
significant information that will aid the generation of parameter value r ; as well as the unit of
measurement for generating parameter q are contained in the rules of a SMM.

The implication of earlier assertion is that the accuracy of the parameter values q and r can be
enhanced by the information contained in the BoQ if the preparation is based on the detail rules of SMM.
BoQ contains items of work necessary for the execution of a building project. These items of work are
expressed in qualitative and quantitative term aspect of every constituent part of a proposed construction
project. The process of appropriately identifying the items as well as parameter values q and r for
effective price estimating are set out in the SMM. The SMM is usually set within the legal framework of
construction contracts.
 Ganiyu Amuda Yusuf et al. / Procedia - Social and Behavioral Sciences 65 (2012) 696 – 703 701

4.1. Identification of items and parameter values.

BoQ is a document detailing the qualitative and quantitative aspects of every item of a proposed
construction project (Potts, 2008). Each of these items is complete with the description of material, labour
and workmanship for the work and its quantity (Seeley, 1997). The way in which this information should
be described, classified and inserted in the BoQ are set out and detailed in SMM. Dell Isola (2002)
observed that the description of item's attributes for the purpose of price estimating and effective cost
control can take the following forms:
Functional: - what purpose is the component serving?
What material or materials make up the component?
Location:- where in the building is the component located?
Installation:- what methods are used to install or construct the component?
Dimensional:- what are the physical dimensions of the component?
Quantitative: - how many of the components exist within the building, and how much of the
material making up the component are used?
Qualitative: - what are the qualitative and performance properties of the component,
including physical form, appearance, and capacity and so on.

4.2. Estimation of the parameter values, q and r .

A reliable price estimating requires the use of an acceptable standard framework to effectively
communicate information from projects to projects as well as among project participants (Dell lsola,
2002). Adoption of Standard Based pricing mechanism can provide more benefit but this implies that:
The architect will prepare full architectural Drawings;
The structural engineer will produce full structural information;
Mechanical & electrical will produce detail services information;
All information required from named subcontractor will be incorporated and
All specialist designers will produce detailed information on their aspect of the work.
The Quantity surveyor in collaboration with consultant engineer should prepare a bill of quantities
and collate all tender documents in line with SMM.

Upon conclusion of tendering exercise and prior to award, an appraisal of tender documents submitted
will be carried out by the quantity surveyors. Therefore, the following aspect should be negotiated
because of their probable impact on the project.

Programme of work: - a comparison with the Client s expectation on programme of work to reveal the
possibility of implementation. In addition, implications of time allowed for execution of each aspect of
work and lead time for supply and installations of equipment would have to be reviewed in view of any
subsequent change order.

Bill of quantities/Elemental Cost Breakdown:- the bill will be negotiated item by item to ensure that
rates are properly distributed, are not too high and are reasonable for execution of items of work against
which they are inserted. Cost breakdown of works that cannot be detail into a bill of quantities will be
negotiated based on work packages.

Schedule of rates/Prices: - Schedule of rates will also be analysed to ensure that it conforms to the bill
and cost breakdown. This will serve as a basis for valuing variations of work that are not originally
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contained in the documents. The percentage mark up on labour, materials, plant and equipments
including contractors overhead and profit will be determined and negotiated. This point represents a hard
gate and agreement reached here will serve as basis for administering variation and managing the
execution of the entire building services aspect of a project.
Conclusion

There is a general agreement that systematic cost information is critical for effective cost management
of building services. The adoption of a standard method of measurement is a viable option to achieve this.
However, the generic framework proposed for enhancing cost management of building services is a
preliminary outline of something that should be developed into a precise tool allowing reliable forecast of
building services cost. The outcome of the framework would be of particular value to clients and other
project stakeholders in the construction industry but implementing the framework will require early
collaboration between the consultant services engineer, specialist designers and quantity surveyors.
However, the question arises that would the client be ready to pay for the co-ordination and integration of
parties required in generating a more reliable cost estimate for building services.

Acknowledgements

The authors acknowledge Research Management Centre of Universiti Teknologi Malaysia for
sponsoring this research under Vote no 02H06.

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