QSociety

12 ways quantity surveyors save costs on projects

1. Competitive Bidding: Quantity surveyors help clients select competitive contractors and suppliers through the bidding process. This ensures that clients receive quality services and materials at the best possible prices.

2. Cost Estimation and Budgeting: Quantity surveyors provide accurate cost estimates and budgets at the project's outset. By having a clear understanding of costs upfront, clients can make informed decisions about project scope, materials, and design, potentially reducing unnecessary expenses.

3. Negotiating Contracts: Negotiating favorable contracts with contractors, subcontractors, and suppliers is a key skill of quantity surveyors. They can secure lower prices, favorable payment terms, and penalty clauses for delays or quality issues.

4. Value Engineering: They identify opportunities for cost savings through value engineering. This involves proposing alternative materials, construction methods, or designs that maintain or enhance project quality while reducing costs.

5. Cost Control: Throughout the project, quantity surveyors monitor costs and expenditures. By identifying cost overruns or variances early, they can implement corrective measures to keep the project within budget.

6. Risk Management: Quantity surveyors assess and manage project risks, which can include unforeseen delays, material price fluctuations, or design changes. By addressing these risks proactively, they minimize potential financial impacts on the client.

7. Change Order Management: They carefully evaluate change orders and variations to ensure they are justified and priced fairly. This prevents unnecessary cost increases due to undocumented changes.

8. Invoice Review: Quantity surveyors review contractor and supplier invoices to verify the accuracy of charges and ensure compliance with contract terms.

9. Quality Assurance: By monitoring construction quality and compliance with specifications, quantity surveyors help prevent rework and costly defects that can arise from subpar workmanship.

10. Life Cycle Cost Analysis: They consider the long-term costs of materials and systems, helping clients make informed decisions about investments that may have higher initial costs but lower operating and maintenance costs over the life of the building.

11. Claims Avoidance: Quantity surveyors work to prevent disputes and claims by ensuring that contract documents are clear and both parties understand their obligations. Avoiding disputes can save significant legal and administrative costs.

12. Post-Completion Audits: After project completion, quantity surveyors conduct audits to ensure that all project costs align with the agreed-upon terms and that any discrepancies are resolved.

MATERIAL RECONCILIATION

All construction projects require various material for incorporation and completion of work. These materials could be procured by the Employer or the contractor. In some cases the employer instructs that certain materials would be issued by him and the contractor should quote for the work accordingly. In other cases the employer may provide authority for procuring of materials to the contractor.
In both these cases, the material need to be accounted in the bills for payment. Non reconciliation will result in delay in clearance of bills as well as recoveries as per conditions of contract.
Here, Material Reconciliation will be discussed briefly, considering above both aspects.
Material Reconciliation - Simply, Material reconciliation will be done to analyze and compare the actual used amount of material with planned amount of material.
Importance of Material Reconciliation
To have an account of actual consumption of Materials.
Control of Wastage or Excess Material Consumption.
To know the measures to be taken to minimize wastage.
Important for cash smoothing.
To use as an evidence of usage of client supplied materials.
Using this report, maximum allowable quantity of material per each item, unauthorized use of material, work progress up to the date and profit and loss of each item can be identified.
The purpose of the Material Reconciliation Report - Material Reconciliation report is a summary document which exposed the balance of material at store and the usage of materials for completed work. Situations or types of projects where this report is commonly used - Normally, this report is prepared for materials which are supplied by the client & this will be used as an evidence of the usage of material. In addition, Material Reconciliation is used as a mechanism to monitor the cost of a project also. Generally, material reconciliation report will be submitted to the client at the end of every month along with the IPA.
Documents used to prepare Material Reconciliation Report – Store Keeper Records are used to identify the received quantity, issued quantity and balance quantity at yard or store. Daily Progress Report is used to measure the work done and the used materials in a particular month.

Material Reconciliation Formats can be varied according to the purpose as well as site to site.

LETTER OF CREDIT

When everything depends on buying and selling, letter of credit is an important financial tool. Specifically, a letter of credit is a letter from a bank guaranteeing a seller will receive payment from the buyer in the correct amount and on time. The reason a letter of credit is so important is that if the buyer is unable to pay, the bank must cover the full amount of the purchase.
Further, a letter of credit is a letter from a third party, usually a bank or financial institution, promising to pay the seller for goods purchased by its customer. Mainly used in long distance and international transactions, letters of credit are usually sent to the seller once verification is received that the goods have been shipped.
Following are the process of Letter of credit,
Step 1 - Issuance of LC - After the parties to the trade agree on the contract and the use of LC, the importer applies to the issuing bank to issue an LC in favor of the exporter. The LC is sent by the issuing bank to the advising bank.
Step 2 - Shipping of goods - After receipt of the LC, the exporter is expected to verify the same to their satisfaction and initiate the goods shipping process.
Step 3 - Providing Documents to the confirming bank - After the goods are shipped, the exporter presents the documents to the advising/confirming bank.
Step 4 - Settlement of payment from importer and possession of goods - The bank, in turn, sends them to the issuing bank and the amount is paid, accepted, or negotiated. The issuing bank verifies the documents and obtains payment from the importer.
In summary, we can see that LC can be used in procurement to provide security for buyers making payments to suppliers.

Tender Bond Vs Performance Bond :

Bid/Tender Bond:

A bid/tender bond comes into play to prevent the contractor for backing out in Tender stage. If a contractor is awarded a project after a successful bid, a bid bond ensures that they abide by the bid they made.

The basic function of a bid/tender is to provide assurance to the project owner that the bidder is not only qualified, but will take their tender seriously and follow through on their bid.

If client realize that contractor didn’t bid enough and can’t afford the project, the client can then take legal action against the contractor

Performance Bond:

A Performance Bond guarantees that the contractor will perform its obligations to the client/employer according to the terms and conditions of the contract. This type of bond protects clients from unsatisfactory or incomplete work.

The basic function of a performance bond is to provide financial protection to the client/employer in the event of default on the part of the contractor.

If a contractor doesn’t do quality work or simply doesn’t finish the job, a performance bond allows the client/employer to take legal action against the contractor.

-copied

FIDIC 1999 Red Book Clauses ~

Method of Measurement and Net Actual Quantity

Some standard contract forms in the absence of standard Method of Measurement, state that measurement shall be made as per net quantity of each item, without allowance added for bulking, shrinkage or waste.

Correct or not?

Isn't that a bit of a broad term?

What about openings in walls regarding finishing works for example, excavation and backfilling, soil compaction, shrinkage and waste of aggregates and so on?! To mention just a few. Add more ...

Often, Net Actual Quantity doesn't correspond with Net Actual Price!