What are Turnkey Projects?
A Turnkey project is the name given to a delivery method where a single contractor works with the client under
Top 4 Construction Procurement Routes Compared
A choice every employer will have to make when considering a construction project is what procurement route to choose. If
What Is Project Cash Flow In Construction?
One of the most common reasons companies go out of business is because they simply run out of cash. Construction
Construction Contracts Compared | Lump Sum, Cost Plus, Re-measurable & Target Cost
If you’ve ever had construction or maintenance work carried out in your home, then you already know the different ways
How To Create A Construction Risk Register
Managing risk is a key and vital element of any construction project and the effective reduction of risks tends to
Schedule of Rates (SoR) Explained
Schedule of rates or (SoR) for short, is a list of rates used to value work requiring payment. The type
Construction Tender Options | Differences Explained
As a Quantity Surveyor, we have a duty to provide value for money to our employer. This is done at all stages of the project life cycle, from tendering works to negotiating final accounts. In this article we’re going to look specifically at the different tender options available. Helping you establish the most suitable option for the project you’re working on. It’s easy for us to assume that there’s a one size fits all solution to how construction projects are managed. However, often this isn’t the case, especially when it comes to tendering. We have to consider many variables which impact how we tender the works. For example, what isthe time-frame? Are the works specialised? Are works under a fixed-term framework? Has the design been carried out? Or is the design yet to be completed? There’s going to be a differenttender option for each of these variables. So let’s dive into the different options available. Open Tendering Under this option, anyone can apply to tender for the works. This is often through an advert orthird party. This option provides a large pool of potential suppliers to choose from. This can either be seen as a benefit or disadvantage as much time is spent vetting returned tenders. However, contrary to this, it may give an opportunity to a suitable supplier who’d otherwise miss out on the other tender options. Selective Tendering This is where a selection of contractors will be invited to tender for certain works. This removes the vetting process normally required after tenders are received. There is certainty of the contractors competency at invitation to tender and this saves time and resource when evaluating the returned prices. This option is especially useful when the works are specialist or there are certain expectations from the client that few contractors can guarantee. Negotiated Tendering Under this option a single supplier is invited to tender and negotiated on price. This is often used when the works being carried out is specialist. It should be noted, although this option reduces the time spent during the tendering process, the competitive aspect of the process isremoved therefore risking reduced value for money. Serial Tendering Under this option a blank schedule of rates is submitted as part of the tender documents. The contractors return their tenders with the rates filled in. Tenders are then assessed based on the rates provided. This is useful for agreements where multiple similar projects are being carried out. The contractor will price their works for the projects based on the rates agreed at tender. Contractors are often inclined to submit lower rates to secure contracts and therefore increase value for money to the employer. Framework Tendering Under this arrangement potential suppliers have an agreed overarching contract which lasts acertain amount of time. During this time-frame, a client may wish to utilise their services for specific projects which they will procure under a call-off contract. The advantage to this is thattime is saved during the procurement process for each project. For example, let’s say you work for a client who is responsible for maintaining the highways in a region for the next 5 years. During this time there’s likely to be many projects encompassing the different elementsof maintaining the assets. Rather than going through a full tender process for each smaller project, under this agreement you can call on selected suppliers under the framework agreement to carry out the work. Sometimes, suppliers under the framework may even be required to submit competitive prices to win projects over other framework contractors. Single-Stage and Two-Stage Tendering Single stage is used when all the information is readily available for contractors to provide a robust price for carrying out works. This differs from two-stage where information may be incomplete at tender stage. Contractors would submit an initial price at the first stage, allowing work to begin and then a fixed price is negotiated later on. The latter method allows for early contractor involvement which contains its own cost-saving benefits. Why not check out our video on this subject?
Provisional Sums Explained
If you’re a Quantity Surveyor, you’ve most likely estimated or come across a provisional sum in a price. If you
Interim Valuation Process Explained – Quantity Surveying
In a pervious article we discussed the purpose of valuations in Quantity Surveying and how they serve the interim payment process during the lifecycle of a project. In this article, we are going to delve a little deeper into some of the practical steps on how valuations are carried out. This article has been made using the information provided by RICS in the Interim valuations and payments 1stedition, August 2015. The RICS states the following on the purpose of valuations: “The purpose
What are Interim Valuations? – Quantity Surveying
Valuations are a significant part of Quantity Surveying. Throughout your career, you’ll need to know how to carry out and assess valuations. In this 3 part series we’re going to be looking into what valuations are and why they are required (Part 1), the practical steps on how valuations are carried out (Part 2) and the interim payment process including terms, deadlines and UK law (Part 3). This article, which forms part 1 of the series will look into what valuations are and why they are required. The RICS provides the following definition for valuations. “Valuation is the process by which the quantity surveyor arrives at the value. It normally involves visiting site and checking that the work has been carried out by visual inspection and/or measurement.” The valuation of a construction project is important for many reasons. One of which is that it facilitates interim payments to be made to the contractor (these are known as external valuations). Another purpose, is for reconciling value against cost in the CVR (these are knownas internal valuations). In this video we’ll be exploring external valuations. External valuations are what interim payments are based on. Interim payments are vital for a construction projectswhich span over a longer duration as it enables on-going financing for the contractor, alleviating some of the pressure of finding adequate funds to maintain a positive cash flow. However, interim payments are not only just a convenience for the contractor who is carrying out the works, it’s also a requirement under UK law, something we will discuss more about in part 3. For now we’ll delve a little deeper into valuations. In this example, we’re going to assume the payment method is based on assessment against a Bill of Quantities. Usually, carried out on a monthly basis, the contractor’s Quantity Surveyor will carry out a realistic assessment of what work has been carried out on site to form part of the valuation. This is achieved using mixture of measurement and visual inspection. The quantities derived from this assessment are then multiplied by the agreed rates on the Bill of Quantities. The sum is then combined with a portion of the preliminaries to make up the external valuation. Other payment methods will require a slightly different approach. For example: · Activity schedule – where payment is made upon completion of certain activities, or · Cost based contract, where the contractor gets paid for cost which is deemed allowable under the contract, or · Fixed stage payments agreed at the start of the contract The type of payment method utilised will impact how the external valuation is carried out. However, the principle is the same. It determines what amount the contractor believes is due to be paid from the employer. The employer will then carry out their assessment on the valuation and follow this up with a payment notice/ certificate. It should be noted, the valuation is a reflection of the value from the start of the project up to the assessment date (not the value since the previous assessment date). Why not check out our video on this subject?
