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- Herausgeber: John Wiley & Sons
- Kategorie: Wissenschaft und neue Technologien
- Sprache: Englisch
The essential, authoritative guide to providing accurate, systematic, and reliable estimating for construction projects--newly revised Pricing and bidding for construction work is at the heart of every construction business, and in the minds of construction consultants' poor bids lead to poor performance and nobody wins. New Code of Estimating Practice examines the processes of estimating and pricing, providing best practice guidelines for those involved in procuring and pricing construction works, both in the public and private sectors. It embodies principles that are applicable to any project regardless of size or complexity. This authoritative guide has been completely rewritten to include much more contextual and educational material as well as the code of practice. It covers changes in estimating practice; the bidding process; the fundamentals in formulating a bid; the pre-qualification process; procurement options; contractual arrangements and legal issues; preliminaries; temporary works; cost estimating techniques; risk management; logistics; resource and production planning; computer-aided estimating; information and time planning; resource planning and pricing; preparation of an estimator's report; bid assembly and adjudication; pre-production planning and processes; and site production. * Established standard for the construction industry, providing the only code of practice on construction estimating * Prepared under the auspices of the Chartered Institute of Building and endorsed by a range of other professional bodies * Completely rewritten since the 7th edition, to include much more contextual and educational material, as well as the core code of practice New Code of Estimating Practice is an important book for construction contractors, specialist contractors, quantity surveyors/cost consultants, and for students of construction and quantity surveying.
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Veröffentlichungsjahr: 2018
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Table of Contents
Cover
Title page
Copyright
Foreword
Glossary
Code of estimating and tendering practice – principles and proceduresMarch 2018
Foreword
Introduction and scope
Procurement
e‐Procurement
Pre‐qualification
Types of tender
The decision to tender
Tender documents
Bid preparation and pricing
The tender
Bid timetable
Enquiry documents to specialty constructors/suppliers
Risks
Qualifying the tender
Bid submission and evaluation
Errors and Omissions in the tender
Section One: Principles – the theory and background
Chapter 1: Introduction
1.1 An imprecise science
1.2 Data, information, and knowledge in estimating
1.3 Experience, instinct, gut feel, intuition and bias
1.4 Optimism bias
Chapter 2: The Fundamentals
2.1 Tender and bid
2.2 Pricing
2.3 Profitability
2.4 Types of tender
2.5 Tender award
2.6 The difference between procurement and tendering
2.7 Methods of procurement
Chapter 3: Changes driving estimating practice
3.1 Digitisation
3.2 E‐Tendering
3.3 Legislation and taxation
3.4 Bureaucracy
3.5 Competition and winning work
3.6 Specialisation
3.7 New technologies and off‐site production
3.8 New methods of procurement
3.9 Best value
Chapter 4: The bid process
4.1 Work breakdown structure
4.2 Underlying principles
Qualifying the tender
Chapter 5: Health and safety
5.1 Introduction
5.2 Estimating the cost of health and safety
Chapter 6: The pre‐qualification process
6.1 Introduction
6.2 Bidding for public sector projects
Chapter 7: Procurement, selection, contractual arrangements and legal issues
7.1 Methods of procurement
7.2 Two‐stage tendering
7.9 Selection processes
7.10 Integrated design and construction
7.11 E‐procurement
7.12 E‐auctions
7.13 Abnormally low tenders
Chapter 8: Preliminaries
8.1 Site establishment
8.2 Insurances, bonds and so on
8.3 Site records
8.4 Fees and charges
8.5 Compliance
8.6 Environmental management
8.7 Wastewater treatment system
8.8 Waste management
8.9 Waste disposal, sorting and storage
8.10 Setting out
8.11 Control and protection
8.12 Completion and post‐completion requirements
8.13 Contingencies
8.14 Management and staff
Chapter 9: Temporary Works
9.1 Introduction
9.2 Temporary works management
9.3 Temporary works co‐ordinator (TWC)
9.4 Temporary works supervisor
9.5 Temporary works register
9.6 Temporary works design brief
9.7 Scaffolding
9.8 Falsework
9.9 Formwork
9.10 Earthworks
9.11 Temporary services
9.12 Façade retention
9.13 Structures – design and loading
9.14 Plant foundations
9.15 Protection on‐site
9.16 Traffic management
9.17 Temporary access for vehicles and pedestrians
9.18 Barriers for pedestrians and vehicles
9.19 Haul roads
9.20 Works associated with any ordnance uncovered
9.21 Signage
9.22 Protection of adjacent properties
Chapter 10: Cost‐estimating techniques
Analytical/composite unit rate estimating
10.1 Approximate quantities
10.2 Cost planning
Chapter 11: Private finance initiative/public–private partnerships/build, operate and transfer, and whole‐life costing
Chapter 12: Risk management
12.1 Background
12.2 Risk analysis
12.3 Cost estimating accuracy
Chapter 13: Logistics
13.1 Materials logistics plan
13.2 Materials management
13.3 Personnel management and health and safety
13.4 Plant, tools and equipment – maintenance and management
13.5 Transportation
13.6 Traffic management
Chapter 14: Resource and production planning
14.1 Planning techniques
14.2 Resource planning
14.3 Time – its perception and impact on the estimating process
Chapter 15: Computer‐aided cost estimating
Chapter 16: BIM and the estimating process
16.1 Overview
Section Two: Processes – the practice
Chapter 1: Consider and assess
1.1 Receive preliminary enquiry
1.2 Consider order backlog/new orders
1.3 Decision to tender (bid or no bid)
1.4 Project information, schedule and questionnaire
1.5 Consider client and consultant team and project delivery availability
1.6 Assessment criteria – lowest price/quality and so on
1.7 The likely competition
Chapter 2: Information and time planning
2.1 Works specialty/works contractor enquiries
2.2 The bid team
2.3 Produce bid timetable/strategy
2.4 Examine documents – contract, design, bonds, warranties and insurance
2.5 Site visit – utilities, ground conditions, adjacent properties and so on
2.6 Method statement/logistics plan
Chapter 3: Contract terms and conditions
3.1 Special employer requirements and modifications to standard clauses
Chapter 4: Resource planning and pricing
4.1 Pricing the works
4.2 Establish unit rates – labour and plant
4.3 Establish unit rates – labour, materials and plant
Apprenticeship Levy 2017
4.4 Labour cost issues – a summary
4.5 Build‐up unit rates
4.6 Gang sizes for activities
4.7 Allocation of costs
4.8 All‐in rates for plant and equipment
4.9 Select materials and specialty contractors’ quotations
4.10 Specialty contractor quotations
4.11 Provisional sums – defined and undefined
4.13 Daywork
4.14 Pricing the preliminaries
4.15 Add allowances
Chapter 5: Prepare estimator’s report
Chapter 6: Examine and consider
6.1 Examine preliminaries
6.2 Requests for further information
6.3 Examine method and tender programme
6.4 Examine resource costs
6.5 Consider the competition for the project in the market
6.6 Consider cash flow and capital requirements for the project
Chapter 7: Bid assembly and adjudication
7.1 Finalise the pricing
7.2 Bid adjudication/final review
7.3 Qualification of any special items of tender
Chapter 8: Pre‐production planning and processes
8.1 Develop a detailed method statement
8.2 Develop production planning schedule
8.3 Allocate resources
8.4 Obtain licences and so on from local authority and utilities organisation
8.5 Ordering of long lead‐time materials, plant and equipment
8.6 Request for further information from consultants and specialty contractors
8.7 Pre‐production schedule prior to work commencement
8.8 Check conditions of contract award
Chapter 9: Site production
9.1 Pricing change and variation orders
9.2 Appointment of specialist contractors
9.3 Estimating and pricing contractual claims
9.4 Production of final account
9.5 Cost–value reconciliation
Bibliography and References
Index
End User License Agreement
List of Tables
Chapter 5: Health and safety
Table 5.1 Categories of health and safety costs and their components.
Chapter 6: The pre‐qualification process
Table 6.1 Example of a checklist for PAS 91 process – to be compiled by the bid team.
Chapter: Preliminaries
Table 8.1 Example of a checklist for WRAP’s Net Waste Tool.
Table 8.2 Surveying and setting out tools and equipment.
Table 8.3 Contingency estimating methods.
Chapter 9: Temporary Works
Table 9.1 The different levels of risk in temporary works.
Table 9.2 Categories of design check (BS 5975).
Table 9.3 The scaffold structures needing a bespoke design.
Table 9.4 Soil properties – bulking and shrinking.
Chapter 14: Resource and production planning
Table 14.1 A checklist of items to be considered when designing the schedule.
Chapter 1: Consider and assess
Table 1.1 The factors considered by the contractor in the decision to tender.
Chapter 2: Information and time planning
Table 2.1 Points to be considered on a site visit.
Chapter 3: Contract terms and conditions
Table 3.1 The contracts most commonly used in the UK.
Chapter 4: Resource planning and pricing
Table 4.1 Rates per hour and per week – CIJC rates valid from July 2017.
Table 4.2 Gang sizes with the relevant production and unit rates.
Table 4.3 Decisions when considering plant costs.
Table 4.4 Allowances to be made in establishing plant costs.
Table 4.5 General attendance facilities.
Table 4.6 The impact on different activities in a range of weather conditions.
List of Illustrations
Chapter 1: Introduction
Figure 1.1 The interpretation of probability‐related terms.
Chapter 4: The bid process
Figure 4.1 The estimating honeycomb.
Chapter 5: Health and safety
Figure 5.1 CDM (2015) regulations.
Figure 5.2 The hierarchy in CDM (2015).
Chapter 6: The pre‐qualification process
Figure 6.1 The flowcharts for the restricted and competitive dialogue procedures.
Figure 6.2 The criteria considered in a PQQ.
Chapter 7: Procurement, selection, contractual arrangements and legal issues
Figure 7.1 The procurement honeycomb.
Figure 7.2 Procurement routes.
Figure 7.3 The different types of concession contracts.
Figure 7.4 The apportionment of risk for different procurement types.
Figure 7.5 The different types of concessions and their level of contractor/public sector risk.
Chapter 8: Preliminaries
Figure 8.1 The preliminaries honeycomb.
Figure 8.2 Breakdown of the preliminaries.
Figure 8.3 The site establishment honeycomb.
Figure 8.4 Ecology species assessment calendar.
Figure 8.5 An example of an SWMP data sheet.
Figure 8.6 The three stages of the SMART Waste plan.
Figure 8.7 The management and staff honeycomb.
Chapter 9: Temporary Works
Figure 9.1 The temporary works honeycomb.
Figure 9.2 An example of a TW design brief.
Figure 9.3 An example TW design certificate.
Figure 9.4 An example TW design check certificate.
Figure 9.5 A generator providing a temporary electrical supply.
Chapter 10: Cost‐estimating techniques
Figure 10.1 The different methods of estimating.
Figure 10.2 An example of cost plan estimating.
Figure 10.3 Stages in the pre‐contract phase of a construction project.
Figure 10.4 An example of a concept design capital cost plan (m
2
method).
Figure 10.5 A top‐down design‐to‐cost plan.
Figure 10.6 A typical design‐to‐cost report.
Chapter 12: Risk management
Figure 12.1 Risk matrix.
Figure 12.2 The four steps to risk management.
Figure 12.3 The process of ‘feeding’ the risk register and updating it.
Figure 12.4 The estimating funnel.
Chapter 13: Logistics
Figure 13.1 The key logistics process areas.
Figure 13.2 The logistics honeycomb.
Figure 13.3 Construction logistics plan.
Chapter 14: Resource and production planning
Figure 14.1 An example of a network diagram.
Chapter 1: Consider and assess
Figure 1.1 Overview of the factors involved in the decision to tender.
Chapter 2: Information and time planning
Figure 2.1 The interdependency between contractors and specialty contractors.
Figure 2.2 Method statement template – an example.
Chapter 4: Resource planning and pricing
Figure 4.1 The cost build‐up.
Figure 4.2 The pricing honeycomb.
Figure 4.3 The services offered by the UK Met Office.
Figure 4.4 An example of a location‐based report.
Figure 4.5 An example of a station‐based downtime summary.
Guide
Cover
Table of Contents
Foreword
Begin Reading
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New Code of Estimating Practice
The Chartered Institute of Building
Roger FlanaganCarol Jewell
This edition first published 2018
© 2018 John Wiley & Sons Ltd
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While the publisher and authors have used their best efforts in preparing this work, they make no representations or warranties with respect to the accuracy or completeness of the contents of this work and specifically disclaim all warranties, including without limitation any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives, written sales materials or promotional statements for this work. The fact that an organization, website, or product is referred to in this work as a citation and/or potential source of further information does not mean that the publisher and authors endorse the information or services the organization, website, or product may provide or recommendations it may make. This work is sold with the understanding that the publisher is not engaged in rendering professional services. The advice and strategies contained herein may not be suitable for your situation. You should consult with a specialist where appropriate. Further, readers should be aware that websites listed in this work may have changed or disappeared between when this work was written and when it is read. Neither the publisher nor authors shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.
Library of Congress Cataloging-in-Publication Data applied for
Paperback ISBN: 9781119329466
Cover design by Wiley
Cover image: © Zephyr18/Gettyimages
Foreword
Developments in technology and the globalisation of supply chains have changed our industry in ways that were unimaginable a generation ago, and they continue to shape our industry and challenge us to find new ways of working.
The modern construction project is often a complex undertaking that depends on a highly skilled international workforce, access to products and services from around the world and the expertise to co‐ordinate and manage a process that is, by its nature, risky.
For a construction company, the consequences of getting it wrong can be catastrophic. Now, more than ever, there is a need to understand why projects go wrong and to act to ensure that lessons learned are applied to future projects.
Understanding how the price and performance risk inherent in construction projects is managed is key, and this means looking more closely at the process of estimating and tendering.
This New CIOB Code of Estimating and Tendering Practice examines that process and provides best practice guidelines for those involved in procuring and pricing tenders for construction works both in the public and private sectors. The principles that it describes are applicable to any project regardless of size or complexity.
I commend this publication as part of the CIOB’s ongoing commitment to raising standards of professionalism in our industry.
Paul Nash MSc PPCIOB
Past President 2016‐17
Glossary
This glossary gives explanations of the terms used in this book and in the general field of construction cost estimating.
All‐in labour rate
a rate which includes payments to operatives and associated costs which arise directly from the employment of labour.
All‐in material rate
a rate which includes the cost of material delivered to site, waste, unloading, handling, storage and preparing for use.
All‐in mechanical plant rate
a rate which includes the costs originating from the ownership or hire of plant, together with the operating costs of fuel, driver and insurance.
Approved contractors
those who have demonstrated that they have the expertise, resources, ability and desire to tender for a proposed project. Selection of such contractors is normally by pre‐selection procedures.
Attendance
the labour, plant, materials and/or other facilities provided by main contractors for the benefit of sub‐contractors/specialty contractors, for which they normally bear no cost.
Awarding authority
the public sector body (department agency, NHS Trust, local authority etc.), which is procuring a service through the private finance initiative (PFI).
Base cost estimate
an estimate of the cost of the project without cost risk, uncertainty and inflation. The basis on which the base cost estimate has been prepared needs to be recorded and understood.
Base date of cost data
the date on which rates and prices contained within a cost analysis or benchmark analyses are taken as the base date for calculations.
Benchmarking
a procedure for testing whether the standard and price of services is consistent with the market standard, without any formal competitive tendering. This is usually adopted during the project concession period to ensure facility management services continue to represent value for money.
Bid bond
a written form of security executed by the bidder as principal and by a surety for guaranteeing that the bidder will sign the contract if awarded the contract for the stated bid amount.
Bid rigging
this arises when some or all of the bidders in a competitive tender attempt to frustrate the purpose of the competitive tender by limiting the degree of competition in it. Bid rigging is illegal and considered to be a form of corruption.
Bill of quantities (BoQ)
a document prepared by the cost consultant to provide project‐specific measured quantities of the items of work identified by the drawings and specifications in the tender documentation. The BoQ forms part of the contract documents in many countries.
BIM (Building Information Modelling)
the process of generating and managing data about the building during its lifecycle. Typically, BIM uses three‐dimensional, real‐time, dynamic building modelling software to increase productivity in the design and construction stages.
Buildability
the extent to which the design of a building facilitates ease of construction subject to the overall requirements of a completed building.
CDM regulations
Construction (Design and Management) Regulations 2015
concern the management of health and safety. These regulations impose duties on clients, planning supervisors, designers and contractors.
Component
a small self‐contained part of a building, constructed from a number of smaller parts, and designed to perform a particular function, for example, a window or a pump. It is a measured item that forms part of an element or a sub‐element which is cost estimated to ascertain the cost target for an element or a sub‐element.
Construction inflation
an upward movement in the average level of prices and/or costs. An allowance for any fluctuations in labour, plant and equipment and materials prices needs to be made in the cost estimate/plan. See Tender inflation
.
Consultants
the client’s or contractor’s advisers on design, engineering, cost and other matters. Such advisers may include project managers, architects, engineers, quantity surveyors, accountants, bankers or other persons having expertise of specific areas.
Contingency sum
an undefined provisional sum of money required by the employer to be included in the tender sum for unknown work.
Contingency period
a period of time allocated in the tender works programme for contractor’s time‐risk events.
Contractor’s estimate
net estimated cost of carrying out the works for submission to management at the final review meeting.
Cost
the estimated cost of the physical production of work. (Note: Estimated cost should not be confused with historical cost; historical cost is the cost of construction which is revealed only after the work has been executed.)
Cost breakdown structure (CBS)
the separation of items, resources, tasks and projects and their associated costs, cost targets and values. The ability to separate costs provides greater financial control. Comparisons of estimated against actual cost for individual items ensure that those items that result in loss and those that make a profit can be identified.
Cost checks (cost check or cost checking)
this is a method of controlling the cost of a project within a pre‐determined sum, during the design process. It includes the preparation of the cost plan and the subsequent stages of cost checking.
Cost control
the monitoring of costs for comparison with the project budget in order that control decisions can be taken.
Cost limit (or authorised budget or approved estimate)
the maximum expenditure that the employer is prepared to make in relation to the completed building.
Cost per functional unit (or functional unit cost)
the unit rate which, when multiplied by the number of functional units, gives the total building works estimate (i.e. works cost estimate less main contractor’s preliminaries and main contractor’s overheads and profit). The total recommended cost limit (i.e. cost limit, including inflation) can also be expressed as a cost per functional unit when reporting costs.
Cost per m
2
of gross internal floor area (or cost/m
2
of GIFA)
the unit rate which, when multiplied by the gross internal floor area (GIFA), gives the total building works estimate (i.e. works cost estimate less main contractor’s preliminaries and main contractor’s overheads and profit). Other cost estimates that form part of an order of cost estimate or a cost plan, should also be converted to costs/m
2
of GIFA when reporting costs to the employer and project team (i.e. to express cost targets for group elements, elements, sub‐elements, as well as the cost limit). They are also used in cost analyses and benchmarking as a means of documenting costs of previously completed building projects.
Cost plan
the report or budget prepared by a Quantity Surveyor for the purpose of establishing managing the budget for the elemental categories.
Cost records
records of historical costs and notes of the conditions prevailing when such costs were incurred.
Cost target
a pre‐estimate of the most likely outturn cost for the project as defined in the contract documentation. In a bill of quantities, it is the total expenditure for an element or work package.
Credit for materials
a refund offered by the contractor to the employer in return for the benefit of taking ownership of materials, goods, items, mechanical and electrical plant and equipment, etc. arising from demolition or strip‐out works.
Critical path method
a technique used to predict project duration by analysing which sequence of activities has the least amount of scheduling flexibility. Early dates are figured by a forward pass using a specific start date, while late dates are figured by using a backward pass starting from a completion date.
Daywork
payment agreement to undertake work for the price of the labour and materials, with a percentage to cover overheads and profit. The method is generally used for unforeseen events or variations where the work was not specified in detail within the contract or were not covered due to the circumstances. Where work is undertaken using this method, the daywork sheets, describing the work done, material used, and the labour, are signed off at the end of the day, or period of work, by the resident engineer, clerk of works or client representative.
Defined provisional sum
for a defined provisional sum, contractors must be given full information about the nature and extent of the work. They are required to make provision in their tender works programme for an adequate duration and sequence for the work together with associated preliminaries. See Provisional sums
.
Deflation
a downward movement in the average level of prices and/or costs (i.e. the opposite of deflation). It is included as an allowance in the order of cost estimate or cost plan for fluctuations in the basic prices of labour, plant and equipment and materials
.
See Tender inflation and Construction inflation
.
Design and build contracts
where project documents are compiled with the contractor’s design obligations relating to the whole of the works in mind.
Design Management
the management of the process of design. It is the responsibility of the design manager to ensure that necessary framework is in place to allow the design team to produce fully coordinated and complete information in a timely manner. Design management can be undertaken by the design team or the construction team.
Design team
architects, engineers and technology specialists responsible for the conceptual design aspects of a building, structure or facility and their development into drawings, specifications and instructions required for construction and associated processes. The design team is a part of the project team.
Director’s adjustment
a reduction or addition to the tender price, derived by the contractor’s estimating team, judged by the director(s) of the contractor.
Domestic sub‐contractors
sub‐contractors selected and employed by a contractor.
Down time (or standing time)
the period of time that the plant is not operating. This may be due to breakdown, servicing time or an inability to operate due to other factors.
E‐procurement
a public procurement procedure initiated, conducted and/or concluded using electronic means, that is, using electronic equipment for the processing and storage of data, in particular through the Internet.
E‐tendering
an electronic system, described as a set of functionalities, to support the tendering processes.
Effective rate
the price rate calculated by dividing a gang cost by the number of productive operatives in the gang.
Element
buildings are divided into elements (e.g. foundations, external envelope, roofs etc.). An element is that part of any building that always performs the same function irrespective of its construction or specification. A separate cost target can be established for each element.
Element unit quantity (EUQ)
the unit of measurement relates solely to the quantity of the element or sub‐element (e.g. the area of the external walls, the area of windows and external doors and the number of internal doors).
Element unit rate (EUR)
calculated by dividing the total cost of an element by the element unit quantity (EUQ). EURs include the cost of all materials, labour, plant, subcontractor’s preliminaries, subcontractor’s design fees and subcontractor’s overheads and profit. They exclude main contractor’s preliminaries, main contractor’s overheads and profit and other allowances, such as project/design team fees, other development/project costs, risk allowances and inflation. These items should be assessed separately.
Elemental cost analysis (or cost analysis)
a full appraisal of costs of previously constructed buildings. The aim of the analysis is to provide reliable information to assist in the accurate estimation of costs for future buildings. It provides a product‐based cost model, providing data on which initial elemental estimates and elemental cost plans can be based.
Elemental cost plan (or cost plan)
the critical breakdown of the cost limit for the building(s) into cost targets for each element of the building(s). It provides a statement of how the design team proposes to distribute the available budget among the elements of the building, and a frame of reference from which to develop the design and maintain cost control. It also provides both a work breakdown structure (WBS) and a cost breakdown structure (CBS), which, by codifying, can be used to redistribute work in elements to construction works packages for the purpose of procurement.
Elemental method
a budget setting technique which considers the major elements of a building and provides an order of cost estimate based on an elemental breakdown of a building project. The elemental method can also be used to develop an initial cost model as a prerequisite to developing an elemental cost plan. The method involves the use of element unit quantities (EUQ) and element unit rates (EUR).
Employer
the owner and/or the developer of the building; in some cases the ultimate user. The terms senior responsible owner (SRO) and project sponsor are used by central civil government and the defence sector; being the representatives empowered to manage the building project and make project‐specific decisions.
Enabling works
a generic description for site preparation works that might take place prior to work under the main construction contract. For example:
Demolition,
Site clearance,
Tree protection,
Diversion and/or disconnection of existing site services,
Geotechnical and exploratory ground investigation,
Decoupling from existing buildings and
Decontamination.
Estimating
the technical process of predicting the costs of construction.
Estimator
a person performing the estimating function in a construction organisation. Such a person may be a specialist or he/she may carry out the estimating function in conjunction with other functions, such as quantity surveying, buying, planning or general management.
Estimate base date
the date on which the cost limit is established as a basis for calculating inflation, changes or other related variances.
Facilitating works
specialist work that needs to be completed before any construction of the facility can begin; for example, removal of hazardous material.
Facilitating works estimate
the sum of the cost targets within the ‘Facilitating works’ group element. It excludes the building works estimate, as well as those related to main contractor’s preliminaries, main contractor’s overheads, profit/design team fees estimate, other development/project costs estimate and risk allowances. See Group element.
Final review
the action taken by management to convert an estimate into a tender. Also commonly known as ‘appraisal’, ‘settlement’ or ‘adjudication’.
Firm price contract
a contract where the price is agreed and fixed before construction starts.
Fixed charge
charge for work, the cost of which is to be considered independent of duration.
Fixed price contract
a contract where the price is agreed and fixed before construction starts. The term ‘firm price’ is used to denote more precisely a contract which will not be subject to fluctuations.
Fluctuations
the increase or decrease in cost of labour, plant, materials and/or overhead costs which may occur during a contract.
Formal cost plan
the elemental cost plan which is reported to the employer on completion of a specific Work Stage (RIBA) or OGC Gateway.
Formal cost plan stage
the point at which the quantity surveyor/cost manager formally submits an elemental cost plan to the employer for consideration. The formal cost plan stages are interlinked with the appropriate RIBA Work Stages and OGC Gateways.
Functional unit
a unit of measurement used to represent the prime use of a building or part of a building (e.g. per bed space, per house and per m
2
of retail area). It also includes all associated circulation space.
Functional unit method
a budget‐setting technique which consists of selecting a suitable standard functional unit of use for the project, and multiplying the projected number of units by an appropriate cost per functional unit, such as cost per bed space in a hospital.
Gang cost
a grouping of labour costs to include principal and supporting labour associated with a particular trade. It may also include items of plant.
General plant
part of a contractor’s project overhead calculation for plant excluded from unit rate calculations and which is available as a general facility on site. Durations for general plant are usually taken from the tender programme.
Gross external area (GEA)
the sum of the floor areas contained within the building measured to the external face of the external walls, at each floor level.
Gross internal floor area (GIFA) (or gross internal area (GIA))
the floor area contained within the building measured to the internal face of the external walls at each floor level.
Group element
the main headings used to describe the facets of an elemental cost plan (i.e. Substructure; Superstructure; Internal finishes; Fittings, furnishings and equipment; Services; Complete buildings and building units; Work to existing buildings; External works; Facilitating works; Main contractor’s preliminaries; Main contractor’s overheads and profit; Project/design team fees; Other development/project costs; Risks; and Inflation).
Head office overheads
the cost of administering a company and providing off‐site services. The apportionment of head office overheads, to individual projects or as a percentage of company turnover, is decided by management as part of management policy.
JCT
The Joint Contacts Tribunal, responsible for producing the standard forms of building contract.
Labour‐only sub‐contractors
sub‐contractors whose services are limited to the provision of labour.
Lump sum contract
a fixed price contract where contractors undertake to be responsible for executing the complete contract work for a stated total sum of money.
Main contractor (or prime/principal contractor)
the party who has the main contract with the client is responsible for the work on site and the employment of specialty/subcontractors and specialists necessary to complete the construction work. Some contractual arrangements may result in contractors being employed directly by the client; in such cases, the main contractor would be the party responsible for the majority of the construction work.
Main contractor’s overheads
the main contractor’s fixed costs associated with running the company including salaries, operating expenses etc., proportioned to each building contract.
Main contractor’s preliminaries
the cost to the main contractor of running a site. These include the costs associated with management and staff, site establishment, temporary services, security, safety and environmental protection, control and protection, common user mechanical plant, common user temporary works, the maintenance of site records, completion and post‐completion requirements, cleaning, fees and charges, sites services and insurances, bonds, guarantees and warranties. Main contractors’ preliminaries exclude costs associated with subcontractors’ or work package contractors’ preliminaries.
Management
those responsible for the function of general management and having the responsibility for making the decision to tender and for reviewing tenders.
Market testing
a procedure for re‐pricing the provision of services on a periodic basis by means of a competitive tender.
Mark‐up
the sum added to a cost estimate, following the final review meeting, to arrive at a tender sum. Mark‐up will include margin, allowances for exceptional risks, and adjustments for commercial matters such as financing charges, cash flow, opportunities (scope) and competition. There may be a requirement for main contractor’s discount when tendering as a sub‐contractor, and value‐added tax when required in the tender instructions.
Master construction programme
the name given to the contractor’s overall programme for the works under the JCT form of contract. The programme should contain no more than 2,000 activities of durations no greater than 1.5 times the progress reporting period, or it will be too cumbersome to maintain. It should be a critical path network and show, among other things, all contract requirements of dates for possession and completion, the sequence of planned durations, the logic of the principal activities and the critical path (or paths) to every completion date.
Method statement
a statement of the construction methods and resources to be employed in executing construction work. This statement is normally closely linked to a tender programme.
Net internal area (NIA)
the usable area within a building measured to the internal face of the perimeter walls at each floor level.
New Rules of Measurement (NRM)
published by the Royal Institution of Chartered Surveyors (RICS), they provide a standard set of measurement rules for estimating, cost planning, procurement and whole‐life costing for construction projects.
Nominated sub‐contractor/supplier
a sub‐contractor/supplier whose final selection and approval is made by the client or client’s advisers. See Prime cost.
Off‐site Pre‐fabrication
the use of a specially designed manufacturing facility to construct building modules that are delivered directly to the site. Design for manufacture and assembly (DfMA) is specified more frequently. Design for manufacture and assembly includes the use of prefabrication and off‐site manufacture, which includes modular or volumetric units, flat‐pack, or panel systems using standard components. The key principle is to leverage benefits by using standardised, repeatable processes and designs. Standardisation also leads to rationalisation, and optimisation.
Open competitive tendering
an impartial method of procurement whereby contractors are invited through advertisements to apply for tender documents. The number of tenderers is not usually limited, and reputation and ability to execute the work satisfactorily are not always considered.
Option cost
an estimate of the cost of alternative design solutions to achieve the employer’s objectives, so that they can be compared and appraised. Option costs will be incorporated in the overarching cost report.
Order of cost estimate
the determination of possible cost of a building(s) early in design stage in relation to the employer’s fundamental requirements. This takes place prior to preparation of a full set of working drawings or bills of quantities and forms the initial build‐up to the cost planning process.
Other development/project costs
costs that are not necessarily directly associated with the cost of constructing the building, but form part of the total cost of the building project to the employer (e.g. land acquisition costs, fees for letting agents, marketing costs and contributions associated with planning permissions).
Output specification
the specification that sets out the requirements in non‐prescriptive terms, so that the tenderers can determine how to provide the services.
Overheads and profit
see Main contractor’s overheads and profit.
PDM (Precedence diagram method)
a method of constructing a logic network using nodes to represent the activities and connecting them by lines that show dependencies.
PFI (Private finance initiative)
initially developed by the United Kingdom to provide financial support for public–private partnerships between the public and private sectors. It has now been adopted throughout the world as part of a wider programme for privatisation and deregulation driven by corporations and governments and international bodies.
Post‐tender estimate
prepared after all the construction tenders have been received and evaluated. It is based on the outcome of any post‐tender negotiations, including the resolution of any tender qualifications and tender price adjustments. The post‐tender estimate will include the actual known construction costs and any residual risks.
Preliminaries
the costs of running a site as a whole rather than any particular zone or any particular activities. They are sometimes referred to as site overheads (or in the United States as ‘field costs’). Thus, it is essential that each case is inspected individually to determine which resources are affected by a delay or disruption irrespective of how the contractor has priced the resource. See Main contractor’s preliminaries
.
Pre‐qualification
the provision by a contractor of information as part of a pre‐selection process. An application by a contractor to be included on a select list of tenderers.
Pre‐selection
the establishment of a list of contractors with suitable experience, resources, ability and desire to execute a project, bearing in mind the character, size, location and timing of a project.
Pre‐tender estimate
a cost estimate prepared immediately before calling tenders for construction.
Prime cost sum (PC sum)
the amount included in a contract for work that is foreseen but cannot be accurately specified at the time the tender documents are issued.
Procurement
the process which creates, manages and fulfils contracts related to the provision of supplies, services or engineering and construction works, the hiring of anything, disposals and the acquisition or granting of any rights and concessions.
Profit
the amount of money that remains after all project and company expenses have been paid. This can be assessed either as a return on the investment or as compensation for the risk assumed by the construction company owners.
Project team
employer, project manager, quantity surveyor/cost manager, design team and all other consultants responsible for the delivery of the building project on time, on cost and to the required performance criteria (design and quality). The project team will include the main contractor where the main contractor has been engaged by the employer to provide pre‐construction services.
Project/design team fee(s)
the cost of design, including consultants’ fees and contractors’ design and pre‐construction fees, for example, management and staff, specialist support services, temporary accommodation services and facilities charges and the main contractor’s overheads and profits.
Project/design team fees estimate
the total estimated cost of all project/design team fees at the estimate base date (i.e. excluding tender inflation and construction inflation).
Project overheads
(sometimes referred to as site overheads, general cost items or expenses). The cost of these site‐specific project costs that cannot be allocated to individual activities and that are not included in all‐in or composite rates. Amongst other things, these costs may include site management, huts, safety precautions, job‐related insurances, bonding costs, telephone, water, electricity costs etc. The essential characteristic is that these overheads serve more than one activity, for example, tower cranes, skips, general site labour etc. However, in practice, some resources that could be allocated to an activity, for example, scaffolding for falsework, are included in the preliminaries because of the contractor’s preferred method of pricing. See also Main contractor’s preliminaries and Preliminaries
.
Provisional quantity
a quantity included in the Bill of Quantities for works whose nature and scope cannot be entirely foreseen or defined at the time of tendering.
Provisional sums
the New Rules of Measurement for Building Works (NRM) provides for sums that may be included in tender documents for work which cannot be measured at the tender stage. These sums are inclusive of overheads and profit allowances. There are two types of provisional sum: ‘defined’ and ‘undefined’. See Defined provisional sums
and
Undefined provisional sums
.
Public sector comparator (PSC)
an assessment of the scheme which includes capital costs, operating costs and third‐party revenues. The PSC is a benchmark against which value for money can be gauged. Clients use technical advisors to produce a reference project: sometimes called the public sector scheme (PSS).
Qualified tender
where the contractor qualifies the tender in some defined way to reflect the contractor’s concerns/requirements/suggestions (see
Variant bid).
Residual risk (or retained risk)
the risk that remains after all efforts have been made to mitigate or eliminate risks associated with the project. A risk assessment may identify a residual risk, but the risk is not completely controllable.
RIBA Plan of Work
the definitive UK model for the building design and construction process. The Plan comprises eight work stages, each with clear boundaries, and details the tasks and outputs required at each stage.
RIBA Work Stage
the stage into which the process of designing building projects and administering building contracts may be divided. Some variations of the RIBA Work Stages apply for design and build procurement.
Risk
the likelihood of an uncertain event occurring, such as variation, an accident, additional costs, exceptionally inclement weather, price fluctuations. In a contract, items described as contractors’ risk are those that the contractor takes on. They are additional technical, contractual, financial and managerial responsibilities which form part of the contractor’s formal obligations.
Risk allowance
the amount added to the base cost estimate for items that cannot be precisely predicted to arrive at an allowance that reflects the potential risk.
Risk register (or risk log)
a list of risks (or opportunities), their value and probability of occurrence.
Scope
opportunities to improve the financial, commercial or business aims of a construction organisation.
Selective tendering
a method of selecting tenderers and obtaining tenders whereby a limited number of contractors are invited to tender. The tender list is made up of contractors who are considered suitable and able to carry out the work. This suitability is usually determined by pre‐selection procedures.
Service level specification
the specification given in the agreed project agreement setting out the standard to which the service must be provided. This is accompanied by an agreed performance monitoring regime.
Settlement
the action taken by management to convert an estimate into a tender. Also commonly known as ‘appraisal’ or ‘final review’.
Settlement meeting
a timetable for the preparation of an estimate, all necessary supporting actions and for the subsequent conversion of the estimate into a tender.
Short‐term programme
the name given to the contractor’s strategic work programme.
Site boundary
the perimeter of the land and building that is under the control of the contractor during the construction and development period. The boundary forms the outer edge of the site area where construction operations take place without permission of neighbouring landowners.
Standing plant
plant retained on site which is not working but for which a contractor is still liable.
Statutory undertaker
organisations, such as water, gas, electricity and telecommunications companies, that are authorised by statute to construct and operate public utility undertakings.
Sub‐contractor
company or individual who is employed by the main contractor to undertake work. The work is part of the contract that has been awarded by the client to the main contractor under a subcontract; also known as specialist, works, trade, work package and labour only contractors.
Sub‐contractor’s preliminaries
those preliminaries that relate specifically to building work to be carried out by a subcontractor. The associated costs should be included in the unit rates applied to sub‐elements and individual components.
Sub‐element
group elements are divided into elements and further divided into sub‐elements. These require separate cost targets to be established.
Temporary works
resources needed for non‐permanent work. Some temporary works such as formwork are measured in a bill of quantity, others such as hoardings are normally excluded from unit rate calculations because they are common to a number of activities and their durations are taken from the tender programme.
Tender
a sum of money, time and other conditions required by a tenderer to complete the specified construction work. For design and build, the term tender includes design (Contractor’s Proposals) and price (Contract Sum Analysis).
Tender Adjudication
the process of converting the contractor’s estimate into a tender bid. See Final review
.
Tender inflation
included as an allowance in the order of cost estimate or cost plan for changes in the basic prices of labour, plant, equipment and materials in the period between the estimate base date and the tender return date.
Tender documents
documents provided for the information of tenderers, in order to establish a common basis for their offers.
Tender preparation programme
resourced activity schedule outlining programme for preparation and submission of tender.
Tender settlement
the conversion of a bid cost into a tender taking the commercial interests of the contractor into account. See Settlement
.
Tender timetable
a programme for the preparation of an estimate, which needs to show not only each item of work in the tender process, but also the person responsible and the associated times/dates.
Tender works programme
a programme for the project resulting from the information available at the tender stage. It should not be relied upon for construction purposes but may be the basis for the construction master programme. Its purpose is to demonstrate that the contractor intends to comply with the data constraints listed in the tender documents and, where a contract period is not specified, it will indicate the completion date. Hence, the duration over which the time‐related site costs must be included in the tender. It should be prepared as a critical path network in order to identify critical work activities and delivery dates of client‐supplied information, goods and materials. It is not uncommon for the tender documents to require the tender works programme to be submitted with the tender.
Tendering
a separate and subsequent commercial function based upon the estimate.
Time‐related charge
is for work, the cost of which is to be considered dependent on duration.
Total development cost
the cost limit (including inflation i.e. the total of the works cost estimate, the project/design team fees estimate, other development/project costs estimates, tender inflation and construction inflation) for the building project.
TUPE
the Transfer of Undertakings (Protection of Employment) Regulations 1981.
Turnkey contracts
a turnkey contract is a business arrangement whereby a project is delivered in a completed state. Therefore, rather than contracting with various parties to develop a project in stages, an client enters into a contract with one party (normally a developer or a contractor) to finish the entire project without any further input from the client. The developer or contractor is separate from the client, and the project is handed over only once it is fully operational. In effect, the developer or contractor is finishing the project and ‘turning the key’ over to the client. This type of arrangement can be used for construction projects ranging from single buildings to large‐scale developments.
Unavailability
the test for determining deductions from unitary payment by reference to standards for the provision of the facility for private finance initiative (PFI) projects.
Undefined provisional sum
a sum typically used to make contingent provision for possible expenditure on elements of work which cannot be wholly foreseen at tender stage or cannot be quantified. A client’s contingency sum is deemed to be an undefined provisional sum.
Unit rate(s)
price applied per unit of works, goods or services (e.g. cost per m, cost per m
2
and cost per m
3
). The term also includes costs/m
2
of GIFA and cost per functional unit (or functional unit cost) in a PPP/PFI arrangement.
Unitary payment
the payment by the awarding authority to the project company for the provision of the facility under a PPP agreement.
Variant bid
a bid which does not comply with the prescribed requirements of the awarding authority for a reference bid, but which a tenderer is proposing as offering better value for money.
Work breakdown structure (WBS)
a task‐oriented breakdown, which defines the work packages and tasks at a level above that defined in the networks and schedules. The WBS initiates the development of the Organizational Breakdown Structure (OBS) and the Cost Breakdown Structure (CBS). It also provides the foundation for determining earned value and activity networks.
Working Rule Agreement (WRA)
national working rules for the building industry produced by the UK National Joint Council for the Building Industry.
Work package contractor
a specialist contractor who undertakes particular identifiable aspects of work within the building project; for example, ground works, cladding, mechanical engineering services, electrical engineering services, lifts, soft landscape works or labour only. Depending on the contract strategy, works contractors can be employed directly by the employer or by the main contractor.
Works cost estimate
the combined total estimated cost of the building works estimate, the main contractor’s preliminaries and the main contractor’s overheads and profit prepared using current prices at the time the estimate is prepared (or updated). The works cost estimate contains no allowance for project/design team fees, other development/project costs, risk allowances, tender inflation and construction inflation
Works package contractor’s preliminaries
preliminaries that relate specifically to the work that is to be carried out by a works package contractor.
Code of estimating and tendering practice – principles and proceduresMarch 2018
Foreword
The CIOB's New Code of Estimating Practice (CoEP) builds upon previous versions of the CIOB Code of Estimating Practice, and provides members and other professionals with summary guidance for the estimating process and accepted good practice.
The CoEP reflects the changing practices of estimating, pricing, bidding and tendering for work in the construction sector. It sets out the underlying principles that can assist estimators in pricing projects, and professionals engaged in pricing and bid preparation to establish and maintain a set of procedures for estimating, tailored to the needs of their particular company. The principles are equally applicable to public and private sector building and civil engineering works, and for use by micro, small, medium and large constructors for small to large projects. It recognises the importance of all the stakeholders in the construction process.
Estimates/bids require the highest principles of ethical conduct to ensure the protection of the public, clients, employers and others in the industry and related professions. Good practice in a competitive environment is essential to maintain the professionalism of estimating, something the Institute takes very seriously.
Chris Blythe OBE
Chief Executive, CIOB
March 2018
1 Introduction and scope
1.1 This Code of Estimating and Tendering Practice embodies the principles and procedures outlined in the New Code of Estimating Practice. It sets out a best practice guide.
1.2 The New Code of Estimating Practice provides guidance to construction organisations, consultants and clients/owners/employers/project sponsors for all types and sizes of projects:
Estimators that undertake the pricing working for constructors,
1
specialty contractors, suppliers and specialists in the supply chain.
Consultants who provide forecasts and estimates for proposed construction work.
Clients
2
who procure projects, need an understanding of how the estimating process produces the final price and seek confidence that any estimate has been professionally prepared to the highest possible standards.
Educators and trainers who need to understand the detailed issues in estimating and the broad context in which the discipline is applied.
1.3 The term ‘tender’ and ‘bid’ are often used interchangeably. However, ‘bid’ is increasingly used by the offerer (the supply side), and the term ‘tender’ used on the procurement side (the buyer). The bid is the process of preparing the price for the work; the tender is the formal offer.
1.4 The tenderer is the person or organisation bidding for the work; this includes the terms builder, service provider, constructor, lead contractor, principal contractor, general contractor and supplier. The client must treat a tenderer equally, openly, fairly and honestly. The principle of tendering is to ensure that true competition is achieved, comprising a simple price assessment or more complex evaluation embodying quality, safety, environmental, ethical, technical and other factors.
1.5 The tendering process must be competitive, equitable, fair, transparent and cost‐effective.
