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SCHOOL OF ARCHITECTURE, BUILDING AND DESIGN

PROFESSIONAL PRACTICE 2 (QSB 3614)

SEMESTER 5

COURSEWORK NO. 2

BACHELOR OF QUANTITY SURVEYING (HONOURS)

NAME & STUDENT ID: NG SENG HE 0323037

HONG KAI YIN 0323361

LAU CHIN SHENG 0317899

SIONG JIA YII 0317239

LIU WEI QIAN 0322969

ABD’ALLAH SAIEF-UL-HAQQ

HOOSSAINSAEB 0324556

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TABLE OF CONTENT

A. Coursework No. 2 Questions 3~7

B. Question 1 answer 8~14

C. Question 2 answer 15~16

D. Question 3 answer 17~22

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SCHOOL OF ARCHITECTURE · BUILDING · DESIGN

Centre for Modern Architecture Studies in Southeast Asia

Bachelor of Quantity Surveying (Honours)

PROFESSIONAL PRACTICE [QSB 3614]

1. This assignment shall make up 15% weightage of the final marks.

2. This is a group assignment and shall be submitted in groups of 6 students.

3. Dateline for submission of this Coursework No. 2 is on or before 30th October 2017.

Coursework No. 2 – Preparation of Final Account.

You are appointed as the consulting Quantity Surveyor for a apartment project based on PAM Form of Contract 2006 (With Quantities). The summary of the Contract Sum is as follows:

Bill No. 1 – Preliminaries RM 2,250,000.00

Bill No. 2 – Building Works RM 31,450,000.00

Bill No. 3 – Local Infrastructure Works RM 6,130,000.00

Bill No. 4 – P.C. and Provisional Sums RM 7,870,000.00

Contract Sum RM 47,700,000.00

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Question 1.

The tender drawings shows the apartment entrance arch with guardhouse but no details were provided. The Architect had suggested that these items be listed as Provisional Sum. However you have forgot about this item and did not include it in your tender document. The contract was awarded without it. The director would also like to know the significance and implications of this omission by their office.

In addition, you are required to prepare a report to your director, explaining briefly the adjustments of the essential elements in your preparation of this project’s final account.

(25 marks)

Question 2.

In accordance with clause 30.10 of the contract, the contractor duly submitted his Final Accounts within 6 months after the issuance of the Certificate of Practical Completion. You are then required to assess this application and prepare the Final Account for the apartment project based of the following valuations and adjustments made to the Contract Sum:

(35 marks)

Information provided are as follows:

a. The Architect had granted the Contractor’s first application for extension of time and approved additional insurance premium amounting to RM 10,000.00 in accordance with clause 24 of the contract due to the delay in the completion of the works caused by the Employer’s late decision on the toilet design.

In his second application for extension of time, the Contractor submitted an loss and expense claim for RM200,000.00 in his Final Accounts to you. Since the delay event is not a relevant event listed in Clause 23.8, the Architect had rejected the Contractor’s second application.

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b. There are four variation orders carried out by the Contractor:

Addition Omission

i. Variation Order No. 1: RM 300,000.00 RM 200,000.00

Changes of toilet layout to

suit Employer’s requirements.

ii. Variation Order No. 2: RM 400,000.00 - New lift lobby at entrance.

iii. Variation Order No. 3:

Changes from premix roads RM 1,100,000.00 RM 900,000.00 to precast concrete paver blocks

iv. Variation Order No. 4:

Omission of glass partitions - RM 96,000.00

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c. The following are the nominated sub-contractor’s accounts:

Original P.C. & NSC’s

Provisional Sums final account

i.

Lift Services: Profit @ 2% Attendance as item

RM 1,700,000.00 RM 1,500,000.00

RM 34,000.00

RM 34,000.00

ii.

Air Conditioning Services: Profit @ 2%

Attendance as item

RM 1,200,000.00 RM 1,000,000.00

RM 24,000.00

RM 24,000.00

iii.

Electrical Services: Profit @ 2%

RM 1,600,000.00 RM 2,100,000.00

RM 32,000.00 Attendance as item RM 32,000.00

iv.

Provisional Sums: Entrance Porch

RM 1,270,000.00 RM 1,050,000.00

RM 6,670,000.00

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Question 3.

Explain the basis on how the following variations may be finalised and priced during the Final

Account stage:

a. Relocation of an already installed timber door including sealing up the wall opening.

Agreed at the site meeting for Contractor to claim based on Dayworks for labour, material and plant.

(10 marks)

b. Contractor need to provide computer equipment in the Preliminaries section but item was left unpriced, i.e. BQ item was left blank in the rate/amount column in the contract document. Subsequently, this item was omitted by the Architect.

(10 marks)

c. A wash trough as required and priced in the Preliminaries section was not constructed due to site constraints imposed later by the Employer. However, the vehicles leaving the site during construction were always kept clean including the public roads using water jet washing and full-timed workers.

(10 marks)

d. Mistake was made in the price for excavation through rocks at RM 15 per m3. Item was not rationalised during contract documentation. However, original quantity in BQ is 100 m3 but re-measured quantity is 2,000 m3. The Contractor submitted a claim for revised rates of RM 150 per m3 for the total quantity of 2,000 m3.

(10 marks)

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QUESTION 1 ANSWER

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Final Account is the document showing the adjustments of the contract sum issued under

clause 30.10. Clause 30.10 of the PAM Contract 2006 states that final account showing the

necessary adjustment of the contract sum and the final account shall be completed by quantity

surveyor within 6 months after receipt of all necessary documents, drawings and site data from

contractor. It is a financial document indicating the final value of the works executed by Contractor

and his sub-contractors.

The purpose of Final Account is to establish the final contract value or final construction

cost of the project. It also paves the way for the Architect to issue the Final Certificate and establish

the final sum payable by the Employer or owing from the Contractor. A complete Final Account

shall include the following elements:

1. Variation Works (clause 11.6)

2. Remeasurement of Provisional Quantities (clause 11.6(f))

3. Omission of P.C. and Provisional Sum (clause 30.11(c))

4. Adding-back of NSC’s and NS’ final accounts (clause 30.11(c))

5. Adjustment of profit and attendance (clause 30.11 (c))

6. Adjustment of Provisional Sum based on actual expended and omitted if not

expended

7. Additional expenses claims (clause 11.7)

8. Loss and Expense claim (clause 24.4)

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Variation Works

Variation works often arise in the construction stage. According to clause 11.1, it is the

alteration or modification of the design, quality and quantity of the Works. Variation works are

the only thing that can contractually change the contract sum, which must first be formally

instructed by an Architect through issuing Architect’s Instruction in writing form, and in

specifically prepared form with “Architect’s Instruction” title and serial numbering as accordance

to Clause 2.2. There are six rules to be applied in six different situations when undergoes the

valuation of variation work as stated in Clause 11.6(a)-(f). Quantity Surveyor is required to

determine the most suitable rules to be applied in the valuation of work.

Remeasurement of Provisional Quantities

Clause 11.6(f) indicates that provisional quantities in the bills may also be an important

element in the Final Account. It shall be remeasured based on the actual quantities executed and

valued based on the contract rates and prices. For example, the actual quantities of piling work or

excavation work are barely known at the early stage of construction. Thus, the final amount

payable to the Contractor shall be based on the quantities that has been remeasured upon the

completion of the particular work.

Prime Cost and Provisional Sum

Prime Cost sum and Provisional sum are also the essential elements in the Final Account.

Prime Cost sum are the sum of specialist work done by nominated sub-contractors which normally

includes a percentage of profit and attendance, whereas Provisional sum is the allowance for some

specific works which its quantities are not completely verifiable and cannot be itemized in the Bill

of Quantities yet. Provisional sum is still to be included in the Bill of Quantities even though its

quantities are not finalized.

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Taking this case as an example:

There are no details provided for the apartment entrance arch with guardhouse. However,

provisional sums of this element are still required to be included in the Bill of Quantities as it may

provide awareness to the client’s budget and allows for cost control purpose. On the Contractor

side, Contractor need to include the provisional sum works so that he/she may plan the working

programme to be done within the stipulated date. If the provisional sum is not included in the

contract, dispute may arise and Contractor may be entitled to claim for Extension of Time.

Architect is also required to issue an Architect’s Instruction to the Contractor for the execution of

variation of work.

Adding-back of NSC’s and NS’ final accounts

The profits of Prime Cost sum and Provisional sum shall be omitted from the final account

as stated in Clause 30.11 (c). This is because these sums are the estimation of Quantity Surveyor

in the early stage and are subjected to change. The awarded nominated sub-contractors to execute

the work shall submit the Final Account along with pro-rata amount of profit. It is then being added

back based on Clause 30.11(c). The final adjustment will be made after the completion of works.

Adjustment of Profit and Attendance

Contractors are required to allow a percentage of profit and attendance for the Prime Cost

sum. The percentage varies based on the risk and workload of the specialist work. However, the

percentage of the profit will be adjusted in the final account based on pro-rata of the amount

payable to the Nominated Sub-Contractors instead of using the original percentage of profit

according to Clause 30.11(c). As for attendance, it is to ensure the Contractor to provide specific

services required by sub-contractors. It is usually in the form of lump sum or fixed amount basis.

Thus, the attendance in the final account shall be the same as in the contract.

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Adjustment of Provisional Sum

As mentioned earlier, Provisional sum is an estimation by Quantity Surveyor in the early

stage for the specifics works or elements which have insufficient details to quantify them. In the

final account stage, the provisional sum estimated shall be adjusted based on the actual expended

as stated in Clause 30.11(d). If the provisional sum estimated is larger than the actual expended,

an omission shall be made. In contrast, if the actual expended is larger than the provisional sum,

an addition shall be made accordingly.

Additional Expenses Claim

When the contractor incurs additional expenses on the variation works, Clause 11.7 allows

the contractor to claim for the additional expenses and include the sum into the Final Account.

There are a 2 steps procedure the Contractor must follow in order to claim for the additiona l

expenses based on Clause 11.7(a) & (b). First, Contractor must submit a written notice to the

Architect for the intention to claim for additional expenses supported with all necessary

calculations. Such notice shall be given within 28 Days of the issuance of the Architect’s

Instruction to execute the variation of work. The next step is the Contractor shall send the complete

particulars of the claim to the Architect and Quantity Surveying within 28 Days upon the

completion of the variation of work.

Loss and Expense Claim

The Contractor is able to claim for the loss and/or expense when he/she has incurred the

loss and/or expense due to the regular progress of work has been materially affected. The matters

that may materially affected the progress of work are stated in Clause 24.3. The Contractor must

also follow a 2-step procedure to claim for the loss and/or expense according to Clause 24.1(a) &

(b). The 2-step procedure is quite similar to the claim for additional expenses. The amount of loss

and/or expenses approved by the Architect shall then be included in the contract sum and Final

Account accordingly based on Clause 24.4.

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Significance and Implication of Omission

According to Pam contract 2006 Clause 11, the item that were forgotten to include in the

provisional sum which are the apartment entrance arch with guardhouse will then be treated as a

variation. This is because refer to Clause 11.1(a), it expresses the term ‘variation’ as the addition,

omission or substitution of any work. Hence, in this case it is applicable to treat the forgotten item

mentioned above as an addition of work to the project. Furthermore, refer to Clause 11.4 which

stated the Architect shall issue AI (Architect’s Instruction) in regard to expenditure of provisiona l

sum included in the Contract Bills. In Clause 11.2, the architect may issue an AI ordering a

variation or sanctioning any variation to allow the contractor to carry out the such works as

instructed by architect with due diligence and expedition.

Other than that, according to Clause 11.6(f), in respect of Provisional quantity, the quantity

stated in the Contract Documents shall be re-measured by the Quantity surveyor based on the

actual quantities executed. In this case, the apartment entrance arch and guardhouse are considered

as provisional quantities and according to Clause 11.6(a), where the item that with similar

character to the project/work, executed under similar conditions as and does not significantly

change the quantity of work as set out in the Contract Documents, the rate and price in the Contract

Document shall determine the valuation. On the other hand, refer to Clause 11.6(c) where work is

not of a similar character to work as set out in the contract documents, the valuation shall be at fair

market rates and prices determined by the Quantity surveyor, meaning to say if there is any new

item/work that is no any similar item/work that covered or included in Contract Document, the

Quantity Surveyor shall determine the valuation based on fair market rates and prices.

Presume the total cost for the entrance arch and guardhouse is RM 20,000 and in Bill No.4

PC and Provisional Sums with the consist of 10% in contingencies. The amount allocate in

contingencies is then be able to cover the cost of the entrance arch and guardhouse. However, if

there are no contingencies allowed in Bill No.4. then the addition of cost will be treated as a

variation order and the contract sum will be increased. Therefore, the final contract sum is

RM47,720,000.00

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Besides, the act of treating the apartment arch and guardhouse as a VO will also granting

a chance to contractor to claim for Extension of Time (EOT) which we can refer from Clause 23.1,

if the contractor is of the opinion that the completion of the Works is or will be delayed beyond

the Completion Date by of the Relevant Events stated in Clause 23.8 (In this case is refer to Clause

23.8(g), which is compliance with Ai issued by the Architect under Clauses 1.4,11.2 and 21.4) he

may apply for an extension of time with the provided procedure stated in the PAM. Hence,

although the completion date is over, the employer is still didn’t entitle to impose Liquidated

damages because of the valid entitlement of EOT for contractor.

In conclusion, the consequences caused by the mistake/error made by the Quantity

Surveyor is tremendously affected to both parties which are employer and contractor in the way in

contracture dispute or delaying the completion date. Moreover, due to this incident. The reputation

of the quantity surveying consultant firm will be affected and the employer will lose their faith

toward the firm.

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QUESTION 2 ANSWER

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Project : Construction and Completion of Apartment

Employer : Professional Development Sdn Bhd

Contractor : Smart Builder Corporation

FINAL ACCOUNT

1.0 Original Contract Sum

2.0 Less: P.C. & Provisional Sums

RM

RM

47,700,000.00

2.1 Lift Services 1,700,000.00

2.2 Air Conditioning Services 1,200,000.00

2.3 Electrical Services 1,600,000.00

2.4 Provisional Sums: Entrance Porch 1,270,000.00

2.5 Contingencies 1,920,000.00

7,690,000.00 7,690,000.00

2.6 Profit and Attendance

a. Profit @ 2% of RM 4,500,000.00 90,000.00

b. Attendance @ lump sum 90,000.00

180,000.00 180,000.00

Total Builder's works 55,570,000.00

3.0 Add: Variation Works (V.O. Nos 1 - 4)

Total Additions 1,800,000.00

Total Omissions 1,196,000.00

Nett Additions 604,000.00 604,000.00

56,174,000.00

4.0 Add back: NSCs' Final Account

4.1 Lift Services 1,500,000.00

4.2 Air Conditioning Services 1,000,000.00

4.3 Electrical Services 2,100,000.00

4.4 Provisional Sums: Entrance Porch 1,050,000.00

5,650,000.00 5,650,000.00

4.5 Profit and Attendance

a. Profit @ 2% of RM 5,650,000.00 113,000.00

b. Attendance @ lump sum 113,000.00

226,000.00 226,000.00

5.0 Contractual Claims:

Additional Expenses 10,000.00

FINAL CONTRACT VALUE 62,060,000.00

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QUESTION 3 ANSWER

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Question 3

Explain the basis on how the following variations may be finalised and priced during the Final

Account stage:

a. Relocation of an already installed timber door including sealing up the wall opening. Agreed

at the site meeting for Contractor to claim based on Dayworks for labour, material and plant.

Based on the situation mentioned above, the relocation of an already installed timber door

including with sealing up the wall opening is considered as work cannot be properly

measured and valued in accordance with Clause 11.6 (a), (b) or (c), the Contractor shall be

allowed to claim the daywork rates in the Contract Documents according to Clause 11.6

(d)(i) or actual cost plus 15% if there are no such daywork rates in the Contract Documents

Clause 11.6 (d)(ii).

The relocation of an already installed timber work includes the works for removal of timber

door, making a new opening for the door and sealing up the previous wall opening. Removal

of timber door and making of a new opening requires general labourers and incurred labour

cost. On the other hand, the sealing materials like bricks, cement and sand, plaster and paint

where the rates are according to the rates stated in the Bill of Quantities. As regards to the

rates, the Quantity Surveyor shall refer the breakdown rates stated in the Bill of Quantities as

the basis of new rates for the sealing up of wall opening for the material used such as bricks,

cement and sand, plaster and paint. The labourers involved would be bricklayer, plasterer

and painter. For the relocation of timber door, there will be no additional construction plant

needed to carry out the works.

In either case of Clause 11.6 (d)(i) or Clause 11.6 (d)(ii), the Contractor then shall provide

voucher specifying the time spent daily on the work, the workers’ names, materials,

scaffolding and transport used. This voucher has to be signed by the Site Agent and verified

by the Site Staff and deliver to the Architect and Quantity Surveyor at weekly intervals with

the final records delivered not later than fourteen (14) Days after the relocation of timber

door has been completed.

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b. Contractor need to provide computer equipment in the Preliminaries section but item was left

unpriced, i.e. BQ item was left blank in the rate/amount column in the contract document.

Subsequently, this item was omitted by the Architect.

When item is left unpriced in the Preliminaries section, it is deemed to be included in the

tender price as lump sum. Under Clause 11.6 (a), where work is of a similar character to, is

executed under similar conditions as, and does not significantly change the quantity of work

as set out in the Contract Documents, the rates and prices in the Contract Documents shall

determine the valuation. The omitting of computer is of a similar character, executed under

similar conditions and does not significantly change the quantity of work, therefore, the

Quantity Surveyor shall omit the cost of computer equipment based on current fair market

price or cost from previous contract documents of similar projects.

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c. A wash trough as required and priced in the Preliminaries section was not constructed due to

site constraints imposed later by the Employer. However, the vehicles leaving the site during

construction were always kept clean including the public roads using water jet washing and

full-timed workers.

The total value of wash trough listed in the prelim should be eliminated entirely. After that, a

variation order should be provided for this particular wash trough item where it is in

accordance with Clause 11.6 (d) as it met the pre-condition of work that could not be

properly measured and valued. This clause dictates that it should apply the said daywork

rates stated in the contract or actual cost with an additional 15%. With that said, it should be

noted that this only applies if it meets the criteria or pre-condition that the works executed

cannot be properly measured or valued.

For example, the total amount of water that has been used to wash the trucks cannot be

properly quantified because there is no dedicated water meter for this item, they share the

water meter with other amenities. This is a type of reimbursement to the Contractor with a

certain amount of profits. However, if there are daywork rates stated in the contract, then it

should be used for the valuation including a profit percentage for the Contractor. Finally, the

works that are executed shall be recorded and verified by the Site Staff and be certified by

the Consultants and Architects.

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d. Mistake was made in the price for excavation through rocks at RM 15 per m3. Item was not

rationalised during contract documentation. However, original quantity in BQ is 100 m3 but

re-measured quantity is 2,000 m3. The Contractor submitted a claim for revised rates of RM

150 per m3 for the total quantity of 2,000 m3.

Based on the situation, rock excavation has been priced wrongly for RM15 per m3 and the

revised rate is RM 150 per m3. The quantity for rock excavation is measured wrongly as

well. 100 m3 is recorded in Bills of Quantities instead of 2000 m3. In this case, Contractor

will face a lost due to the irrationalised rates priced during contract documentation and the

quantity measured initially. Therefore, Contractor has the right to claim his loss and expense

on the outstanding work for revised rate.

Clause 11.6 (b) empowers that where work is of a similar character to work as set out in the

contract doc but is not executed under similar conditions or is executed under similar

conditions but there is a significant change in the quantity of work carried out, the rates and

prices in the contract doc shall be basis for determining valuation which shall include a fair

adjustment in the rates to take into account such difference. It means that Contractor can

claim it by using the contract rates and price but with fair adjustment to the rates for the

difference with pre-conditions: (a) the work must be of similar character but it is not

executed under similar conditions; (b) the work must be of similar character but significant

change in the quantity of work.

Hence, the revised amount that has been adjusted and to be claimed by Contractor is RM

286,500 following by the calculation below.

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Calculation:

a) RM 15 per m3

100 m3 x RM 15 per m3 = RM 1,500

b) RM 150 per m3

1900 m3 x RM 150 per m3 = RM 285,000

Revised rates

= RM 1,500 + RM 285,000

= RM 286,500