Estimating for Builders and Surveyors

Ross D Buchan, F W Eric Fleming, Fiona E K Grant

• Publisher: Routledge
• Year: 2012
• ISBN:
  9781136405075
• Edition: 2
• Topic: Architecture
• Subtopic: Architecture General

Written for students taking courses in building and surveying, 'Estimating for Builders and Surveyors' describes and explains the method used by the estimator to build up prices or rates for items described in the SMM7 format. Each chapter is a self-contained unit related to a particular element in the building. Worked examples throughout reflect both traditional and up-to-date technology. Written by an author team of academics and professional surveyors, this book continues to be an invaluable introduction to the subject of estimating.

	1

Introduction

The UK construction industry

The UK construction industry employs one in ten of the UK working population, containing approximately 200 000 contracting firms with half of this figure being composed of private individuals and one-person firms. During 1998 the value of output of the whole industry was £56.3 billion, representing 9 per cent of the GDP (Statistics, http://www.ciboard.org.uk/Stats/stats.htm, accessed 15/01/02).

From a report produced by the Department of Trade and Industry (The State of Construction Industry Report, Issue 12, published Autumn 2000, http://www.dti.gov.uk/construction/stat/soi/soi12.htm, accessed 15/01/02), it has been stated that the balance between new and repair and maintenance work reached a plateau after a period of domination by new work. The impact of the Government’s Spending Review 2000 (SR2000) allocates major investment to the areas of infrastructure and repair and maintenance, with housing and regeneration spending planned to increase by approximately 16 per cent per annum, between 2000 and 2001 and between 2003 and 2004. The Budget report of autumn 2000 introduced a number of policies to the significant benefit of construction work through a mixture of VAT incentives and stamp duty measures (The State of the Construction Industry Report, Issue 12, Department of Trade and Industry).

Rethinking Construction

The client’s, and very often the public’s, perception of the construction industry is one of poor management, poor quality, and poor value of products leading to poor service and resulting in premature repair and/or replacement. This negative image led to the UK government commissioning a report, which was completed by Sir John Egan, Chairman of the Construction Task Force, called ‘Rethinking Construction’ published in 1998. The key objectives of the report are to improve the industry’s performance through the application by clients and industry of best practice.

The principal areas recommended in the report include targets to be achieved in productivity, profits, defects and reduced accidents. To achieve these targets four strands (What is Rethinking Construction?, http://www.rethinkingconstruction.org/about/intro.htm, accessed 08/01/02) have been initiated and Demonstration Projects will be adopted, which exemplify some of the innovations advocated in Sir Egan’s report.

The four strands are:

1. The Movement for Innovation (M4I) which has established key performance indicators (KPIs) as a means of measuring and comparing construction company performance with the rest of the industry, and to assess improvement in the industry as a whole. The KPIs are divided into two sections, one to measure project performance, which includes client satisfaction with the product and the construction process, defects, predictability of cost and time, actual cost and time. The second section addresses company performance and measures profitability, productivity and safety.
2. The Housing Forum, which encompasses the private, public and social sectors, covers refurbishment, repairs and maintenance and new build. Its main goal is to gather together the various parties involved in the house building supply chain who are committed to change, innovation and renovation in construction. Using Demonstration Projects, experience in achieving quality, efficiency, sustainability and value for money in all sectors can be explored and developed with all the parties involved, i.e. house builders, professional institutions, landlords, local authorities, contractors, consultants and end users.
3. The Local Government Task Force (LGTF) was launched in March 2000 to advise local authorities on implementing the Rethinking Construction agenda. Various working groups were formed to address the issues and since their launch a number of publications have been produced. These include Repairs and Maintenance in Social Housing, The Best Value and Partnership Approaches to Procurement and the Rethinking Construction Implementation Toolkit which was launched in May 2001. The current forum of working groups is: Constructiononline, Building Control and Planning, Funding Streams and Wellbuilt.
4. The Central Government Task Force (CGTF) is chaired by HM Treasury and includes representatives from major Central Government Client Organizations, its role is to act as a pathfinder and head initiatives on best practice for government clients. The CGTF also provides information for the Office of Government Commerce, which has provided a series of guidelines to advise government clients on best practice. The guides hope to simplify, improve and drive forward best practice by improving central government procurement.

Sustainability

The construction industry is very limited in contributing to sustainability of the environment and there are potential areas where improvement could be made. In 1999 the Government published ‘A better quality of life – a strategy for sustainable development in the United Kingdom’ which set out a strategy to achieve an increased quality of life.

It was recognized that the construction industry has an essential and important role in addressing these issues through improving the quality of life, by providing safe, secure buildings for people to live and work in, and by ensuring that the industry itself works in a sustainable way, conserving resources, reducing pollution and waste and valuing its workforce (Sustainable Construction, http://www.dti.gov.uk/construction/sustain/index.htm, accessed 10/01/02).

A publication by the Government was produced following consultation with the industry in April 2000, ‘Building a better quality of life – a strategy for more sustainable construction’, with a review on progress being produced in October 2001. It was reported that progress was being achieved and measured using KPIs, although in some areas research was required to provide the tools and guidance on sustainable building practice and information on design advice.

Introduction to estimating

Regardless of size, shape or function of any proposed work, a method of producing an accurate estimate of the project is essential. A contractor cannot afford to make an unrealistic offer to a client who is instructing the work being undertaken. Estimating is the process of pricing work based on the information/specification and/or drawings available in preparation of submitting an offer to carry out the work for a specified sum of money.

This specified sum is known as the ‘tender sum’ and will be made in the context of a form of contract, which will include the condition under which the specified sum may be varied. The estimator must be confident that the tender sum is accurate as the standard form of building contracts does not permit the contractor to recover additional sums of money from the client due to errors in the estimating process.

This book describes the methods used by an estimator to compile prices or rates for items described in Standard Method of Measurement, 7th Edition (SMM7) format. Also included are chapters covering computer-aided estimating, tender strategy, cash flow and prefabricated structures.

Each chapter is a self-contained unit and, notwithstanding the fact that prices in the chapters interrelate, chapters can be read singly and in any order.

The invitation to tender

The method by which the client invites a contractor to tender can arise in various ways depending upon how simple or complex the work is and its value.

Verbal or written outline description

For straightforward low-value work, i.e. electrical wiring of a small house extension or, perhaps on a larger scale the external decorating of windows for an office, the client will generally invite the contractor to view the work, detail the specification/requirements to be carried out, and wait for the contractor to submit an offer.

It is then the responsibility of the contractor’s estimator to measure the work, price it and make an offer which is based on the contractors’ own terms and conditions. The offer may also contain details of specification but the contractor, in this situation, will be bound to carry out the work based upon the normal trade practice of the time.

Drawings, specifications and a form of contract

As work becomes more complex and detailed (for example, a family home or small factory unit) an architect will traditionally be appointed by the client, who will be instructed to design and complete drawings along with a specification and details of the standard form of contract. This information will be submitted to a contractor who will measure the quantities of work, price it and make an offer based upon the information received from the architect.

Complete design and build service

Alternatively, the client can approach a contractor and invite an offer for the complete works including the design and construction. Usually reserved for the type of work described in the previous paragraph, the design and build method of tendering is becoming more common and the scale of projects is becoming more complex. A procedure for the selection of a design/build contractor is described later in this chapter.

Drawings, bill of quantities and a form of contract

Medium and large-scale projects require a structured procedure to monitor and control the various aspects and individuals involved in the construction of projects. The main role of leading the design team and co-ordinating the various professionals involved has traditionally been the architect’s, although more recently other construction professionals are taking on this responsibility. The design team leader is approached by a client with a list of requirements, known as the ‘client’s brief’; this information is used to produce the initial sketch designs. This preliminary design work allows the quantity surveyor to arrive at a cost estimate or tender value based on the client’s brief. Depending upon how specific the information obtained from the client is and the detail of the sketch design, the initial tender value may differ considerably from the final account due to the minimal detail available at the initial stages.

If the predicted tender value is acceptable to the client, the architect will proceed with the detailed design in conjunction with structural, mechanical and electrical engineers and other consultants. The detailed design is given to the quantity surveyor who will prepare a list of all works involved called the ‘bill of quantities’, which contains the specification and the measured items of work calculated in accordance with a set of rules for measurement. He will also prepare a breakdown of the costs.

The set of rules for measurement is compiled by agreement between the Royal Institution of Chartered Surveyors (RICS) and Construction Confederation (CC). This set of rules, termed the Standard Method of Measurement for Building Works, was first compiled in 1922 and is currently in its 7th edition (SMM7), which was published in 1998. Scottish practice used the Scottish Mode of Measurement until 1963, when SMM5 was adopted for use in Scotland. Since then, both SMM6 and currently SMM7 have been accepted for use in Scotland.

SMM7 enables a project to be broken down into measurable work items. It contains rules of inclusions and exclusions of certain elements, which are known as coverage rules. It is important for the contractor’s estimator to be familiar with these rules as under- or overpricing may result if it is thought an item of work is deemed included or not. For example, in the groundwork rules, D20.6, ‘Working space allowance to excavations’ is measured in m² and is deemed to include the cost of work associated with ‘Additional earthwork support, disposal, backfilling, work below ground water level and breaking out’ (C2). An estimator who does not realize the extent of the ‘deemed to be included’ items might underprice this item.

Once completed by the quantity surveyor, the bill of quantities is sent with the drawings to the contractor. It is the function of the contractor’s estimator to price the items of work measured in accordance with SMM7, allowing for items with cost implications due to the coverage rules as ‘deemed to be included’.

Due to the nature, value and complexity of a project, the invitation to tender will be expressed in one of the four ways described above.

The estimating method

On receipt of the instructions, specification, drawings, bill of quantities and standard form of contract from the client’s representative, the contractor’s estimator’s task is to price the project and produce an estimate. Initially the estimator will subdivide the work into individual sections to be priced. With a bill of quantities the work will have been submitted to the estimator in sections, if not, the estimator must prepare these sections for pricing.

Sections or packages of the project, which are to be carried out by subcontractors, will be identified by the contractor’s estimator. To ensure competition several subcontractors will be invited to tender for each of the work packages and will send to each a copy of the relevant section of the bill of quantities. The successful tenderer’s prices will, with an addition for the contractor’s overheads and profit, be incorporated into the contractor’s offer.

The remainder of the work will ...

Table of contents

• Front Cover
• Half Title
• Title
• Copyright
• Contents
• Author's note
• Preface
• Note
• Chapter 1: Introduction
• Chapter 2: The cost of labour
• Chapter 3: Mechanical plant
• Chapter 4: Preliminaries
• Chapter 5: Excavation and filling
• Chapter 6: Concrete work
• Chapter 7: Brickwork and blockwork
• Chapter 8: Underpinning
• Chapter 9: Roof coverings
• Chapter 10: Asphalt work
• Chapter 11: Woodwork carpentry: first fixings
• Chapter 12: Woodwork joinery: second fixings and finishings
• Chapter 13: Woodwork carpentry: first fixings
• Chapter 14: Plumbing installations
• Chapter 15: Linings, partitions and surface finishes
• Chapter 16: Glazing
• Chapter 17: Decorative papers and painting
• Chapter 18: Drainage
• Chapter 19: Electrical work
• Chapter 20: Analogous rates
• Chapter 21: Information technology
• Chapter 22: Tender strategy
• Appendix A: Cost of mortars, renders and fine aggregate screeds
• Index