Construction Handbook

Update 15 published December 2003
Update 14 published September 2003

Update 13 published May 2003
Update 12 published January 2003
Update 11 published October 2002
Update 10 published August 2002
Update 7 published July 2001
Update 4 published May 2000
Update 1 published April 1999
Please note: References to the masculine include, where appropriate, the feminine.
Extracts from Parry’s Valuation and Conversion Tables, A W Davidson (1989),

(Estates Gazette) reproduced by permission of the College of Estate Management
which owns the copyright.
Appendix A, Section 2.3 is reproduced from the Building Cost Information Service publication,
Standard Form of Cost Analysis: Principles, Instructions and Definitions (1969).
Published by RICS Business Services Limited

a wholly owned subsidiary of
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under the RICS Books imprint
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UK
No responsibility for loss occasioned to any person acting or refraining from

action as a result of the material included in this publication can be accepted by the
author or publisher.
ISBN 0 85406 865 1
© RICS Business Services Limited (RBS) December 2003. Copyright in all or part
of this publication rests with RBS, and save by prior consent of RBS, no part or parts
shall be reproduced by any means electronic, mechanical, photocopying, recording or
otherwise, now known or to be devised.
Typeset and printed by Q3 Print Project Management Ltd, Loughborough.

1998 FOREWORD
Knowledge is of two kinds: we know a subject ourselves, or we know
where we can find information upon it.
Samuel Johnson (1709–1784)
The fact that our profession serves a changing world increases the need for
it to rely on well thought-out and reliable practices and procedures. Events
move at an ever-increasing pace, imposing a requirement for quicker
response times. Modern communication methods such as facsimile and now
e-mail result in the need for information to be available almost instantly.
This is made more difficult by an industry growing in complexity and which
is subject to increasing customer expectations in terms of service and
quality.
The RICS has published this Surveyors’ Construction Handbook to help

surveyors meet these needs. It is intended to become an important source of
reliable information and guidance to all Chartered Surveyors who practise in
construction. Much of the excellent information produced by the divisions
in the past has now been updated for inclusion. Other material not yet
revised will be added. The whole will be regularly reviewed and updated as
necessary. RICS practice panels are continuing to produce information for
inclusion to make it a useful construction reference document.
We hope that this Handbook will become an invaluable aid to your

day-to-day activities.
Christopher Powell, FRICS

PRESID ENT, QUANTITY SURVEYORS DIVISION, 1997–98
Trevor Mole, FRICS

PRESID ENT, BUILDING SURVEYORS DIVISIO N, 1997–98
ACKNOWLEDGEMENTS
Professor Roy Morledge, Professor of Construction Procurement at The
Nottingham Trent University, for contributing the text of Part 3, Section 1.
Major D.R. Bassett, Royal Engineers, for his contribution to the research
underpinning the construction time charts in Part 3, Section 1; Central Unit for
Procurement, HM Treasury (now Office for Government Commerce), for
permission to use CUP guides extensively in the drafting of Part 1, Section 1
and Part 3, Section 1.
Alan Turner, JP FRICS ACIArb, author of Building Procurement, for

permission to use a number of the diagrams from his text in Part 3, Section 1.
CONTENTS
Foreword
Acknowledgements
List of Abbreviations
Introduction 1
A Aim and Scope of this Handbook 1
B Arrangement of Content 1
C Status of Content 2
D Currency of References 3
E Invitation 3
F Subscription Service 3
Part 1: The Client

Section 1.1: The Client’s Requirements and Roles 1
1.1.1 Establishing the Client’s Objectives 1
1.1.2 The Role for Independent Advice 3
1.1.3 Project Brief 3
1.1.4 The Client’s Role 4
1.1.5 The Client’s Responsibilities 6
1.1.6 Appointment of Project Manager (where appropriate) 8
1.1.7 Appointment of Consultants 8
1.1.8 Appointment of Constructors 9
Appendix A: Further Reading 1
Section 1.2: Value Engineering 1
Introduction 1
1.2.1 Why Value Engineering? 2
1.2.2 Applicability 2
1.2.3 At What Stage Should Value Engineering be Carried Out? 3
1.2.4 Who Should Carry Out Value Engineering? 4
1.2.5 How Long Should It Last? 5
1.2.6 Preparing for a Value Engineering Workshop 5
1.2.7 Functional Analysis of Design Relative to the Client’s
Requirements 5
1.2.8 Pricing the FAST Diagram 8
1.2.9 Presenting a Design Solution to a Value Engineering Workshop 8
1.2.10 The Workshop 8
1.2.11 Assessing the Value of the Workshop 9
1.2.12 Implementing the Results 10
1.2.13 Feedback from Post-Occupancy Evaluation 10
Appendix A: Health Centre Value Tree 1
Appendix B: Typical Example of a Value Engineering Process 1
Appendix C: Further Reading 1
The Surveyors’ Construction Handbook Contents (12/03) Page 1

Part 2: Construction Design and Economics
Section 2.1: Pre-contract Cost Planning and Cost Management 1
Introduction 1
2.1.1 Pre-contract Cost Planning and Cost Management 2
2.1.2 Preliminary Cost Studies and Feasibility Studies 4
2.1.3 Budget 4
2.1.4 The Cost Plan at Outline Proposals Stage 8
2.1.5 The Cost Plan at Scheme Design Stage 11
2.1.6 Cost Checking 13
2.1.7 Action after Receipt of Tenders 14
Appendix A: Sources of Cost Information 1
Appendix B: Format of Budget and Cost Plans 1
Appendix C: Element Unit Quantities Generation for Hypothetical
Buildings 1
Appendix D: Further Reading 1
Section 2.2: Life Cycle Costing 1

Introduction 1
2.2.1 The Client Context 1
2.2.2 The Life Cycle Costing Calculation 5
2.2.3 Tax Allowances, Incentives and Business Rates 10
2.2.4 Data Sources 14
2.2.5 Worked Examples 15
Appendix A: Residual Values 1
Appendix B: Obsolescence 1
Appendix C: Costs And Values 1
Appendix D: Glossary of Terms for Taxation 1
Appendix E: Examples of Items of Expenditure Likely to Attract
Taxation Allowances 1
Appendix F: Further Reading 1
Section 2.3: Elements for Buildings 1

Introduction 1
2.3.1 Elements 1
2.3.2 Elemental Cost Analysis 1
2.3.3 Other Uses 2
Appendix A: BCIS Standard Elements 1
Section 2.4: Design and Build - Guidance for Employer’s Agents 1

Introduction 1
2.4.1 Background 2
2.4.2 Contract Documentation 3
2.4.3 Additional Services 3
2.4.4 Employer’s Requirements and Contractor’s Proposals
(including contract sum analysis) 5
2.4.5 Design and Build Variants 6
2.4.6 Novation 8
Appendix A: Potential Services Associated with the Role
of Employer’s Agent 1
Appendix B: Employer’s Requirements/Contractor’s Proposal Checklist 1
Page 2 Contents (12/03) The Surveyors’ Construction Handbook

Section 2.5: The Chartered Surveyor as Lead Consultant 1
Introduction 1
2.5.1 Definitions: The Difference Between a Project Manager and
Lead Consultant 1
2.5.2 Benefits of Appointing a Chartered Surveyor as Lead Consultant 2
2.5.3 Issues to Consider before Undertaking the Role 3
2.5.4 Schedule of Lead Consultant Duties 3
Section 2.6 Defining Sustainable Construction 1

Introduction 1
2.6.1 Technology Swaps 2
2.6.2 How Can the Environment and Sustainability be Valued? 3
2.6.3 How Does This Effect the Construction Industry? 4
2.6.4 Green Building Materials 7
2.6.5 Whole Building Sustainability 8
2.6.6 The Government Line 9
2.6.7 What Might the Future Hold 11
Appendix A: Embodied Energy Content of Building Material 1
Appendix B: Useful Addresses 1
Part 3: Construction Planning and Procurement

Section 3.1: Developing an Appropriate Building Procurement Strategy 1
Introduction 1
3.1.1 The Client’s Role 2
3.1.2 Procurement Strategy 12
3.1.3 Selection of Most Appropriate Procurement Strategy 25
3.1.4 Implementation 29
Appendix A: Procurement Options 1
Section 3.2: Building Services Procurement 1

Introduction 1
3.2.1 Appointing the Building Services Designer 3
3.2.2 Design Coordination 11
3.2.3 Appointing a Building Services Contractor 19
3.2.4 Tender Documents 34
Appendix A: Typical Example 1
Part 4: Construction Administration and Management

Section 4.1: The Problems of Practical Completion 1
Introduction 1
4.1.1 What Happens in Practice 1
4.1.2 Standard Form Approaches 3
4.1.3 Effects of Practical Completion 13
4.1.4 Methods for Dealing with Practical Completion 14
4.1.5 Definitions 16
4.1.6 Subsidiary Issues 20
Appendix A: General Objectives to be Achieved at Practical
Completion for Small to Medium-sized Building Projects 1
Appendix B: Table of Cases 1
Appendix C: Further Reading 1

Section 4.2: Ascertaining the Amount of Loss and
Expense Incurred in Building Projects 1
Introduction 1
4.2.1 General Principles 1
4.2.2 Definitions 4
4.2.3 Entitlement 4
4.2.4 Ascertainment 7
4.2.5 Admissible Items 9
4.2.6 Inadmissible Items 13
Appendix A: Ascertaining the Cost of Running a Site 1
Appendix B: Disruption 1
Appendix C: Ascertaining the Cost of Head Office Overheads 1
Appendix D: Checklist of Items for which Loss and/or Expense are
Allowed 1
Appendix E: Checklist of Steps Required when Considering
Submissions by Contractor 1
Appendix F: Further Reading 1
Section 4.3: The Management of Risk 1
Introduction 1
4.3.1 Definitions 2
4.3.2 The Rationale for Risk Management in the Construction Process 2
4.3.3 The Risk Management Process 5
4.3.4 Summary 14
Section 4.4: Valuations for Interim Certificates 1
Introduction 1
4.4.1 Valuations 1
4.4.2 Assumptions 2
4.4.3 Valuation Under a JCT Contract: Background 3
4.4.4 Recommended Action at the Start of a Contract 4
4.4.5 Communications 5
4.4.6 Approach 6
4.4.7 Content of a Valuation 8
4.4.8 Administration 15
4.4.9 Special Situations 16
4.4.10 Other Contract Terms (relative to valuations) 17
4.4.11 Valuations Under Other Forms of Contract 18
Appendix B: JCT Definition of ‘Reasonable Proof’ 1
Appendix C: Example of Priced Activity Schedule 1
Section 4.5: Extension of Time 1
Introduction 1
4.5.1 Extension of Time Clauses 2
4.5.2 Assumptions 2
4.5.3 Extension of Time Under a JCT Contract 3
4.5.4 Notice by the Contractor of Delay to Progress 4
4.5.5 The Award of an Extension of Time during the Contract
Period and Before the Completion Date 5
4.5.6 The Award of an Extension of Time after the Completion Date 6
4.5.7 Relevant Events 7
4.5.8 Concurrent Delays 12
4.5.9 Consequential Entitlement 13
Page 4 Contents (12/03) The Surveyors’ Construction Handbook

4.5.10 Administration 13
4.5.11 Extension of Time under an ICE Contract 14
4.5.12 Extension of Time under a GC Works Contract 14
Part 5: Additional Guidance and Information

Section 5.1: Surveying Safely 1
Section 5.2: Construction (Design and Management) Information 1
5.2.1 Schedule of Sources of Useful CDM Information 2
Section 5.3: Built environment group roles and information 1
Section 5.4: Building Cost Information Service 1
5.4.3 BCIS Online 1
5.4.4 Other BCIS Publications and Services 2
5.4.5 Further details 4
Section 5.5: Building Occupancy Cost Information (BMI) 1
5.5.2 BMI Quarterly Cost Briefing 1
5.5.3 Building Maintenance Price Book 1
5.5.4 Special Reports for Benchmarking 2
5.5.5 News, Digests and Reports 2
Section 5.6: Electronic document storage – legal admissibility 1
Introduction 1
5.6.1 Code of Practice – DISC PD 0008: 1999 2
5.6.2 Weight of evidence and document destruction 3
5.6.3 Authenticity 3
5.6.4 Photocopies, microfilm and image processing 4
5.6.5 Document storage 4
5.6.6 Storage and access procedures 5
5.6.7 Format of the Code of Practice 6
5.6.8 Conclusion 20
Appendix A: Specimen form for recording scanning information 1
Appendix B: Specimen form for recording retrieval 1
Appendix C: References 1
Index 1

LIST OF ABBREVIATIONS
ABE Association of Building Engineers
ABI Association of British Insurers
ACA Association of Consultant Architects
ACE Association of Consulting Engineers
AQL Acceptable quality level
BCIS Building Cost Information Service
BEC Building Employers’ Confederation
BMI Building Maintenance Information
BRE Building Research Establishment
BRECSU Building Research Energy Conservation Support Unit
BREEAM Building Research Establishment Environmental
Assessment Method
BSI Building Standards’ Institution
BSRIA Building Services Research and Information Association
BWIC Builder’s Work in Connection
CA Contract Administrator
CAWS Common Arrangement of Works Section for Building
Works
CDM Construction (Design and Management)
CD-R Compact disc recordable
CECA Civil Engineering Contractors’ Association
CIB Construction Industry Board
CIBSE Chartered Institution of Building Services Engineers
CIC Construction Industry Council
CIRIA Construction Industry Research and Information
Association
CITES Control in Trade of Endangered Species
CCT Compulsory Competitive Tendering
CSM Chartered Surveyors Monthly
DBFO Design Build Fund and Operate
DoE Department of the Environment (now known as the
DETR)
DETR Department of the Environment, Transport and the
Regions (formerly the DoE)
DMS Document Management System
DOM Domestic Sub-Contract
EC European Commission
EU European Union
FAST Functional Analysis Systems Technique
FCEC Federation of Civil Engineering Contractors
GNP Gross National Product
HBF House Builders’ Federation
HMSO Her Majesty’s Stationery Office (now known as
The Stationery Office)
HSE Health and Safety Executive
IChemE Institution of Chemical Engineers
ICE Institution of Civil Engineers
IDMA Information and Document Management Association
The Surveyors’ Construction Handbook Abbreviations (10/02) Page 1

IFC Intermediage Form of Contract
JCT Joint Contracts Tribunal
LCC Life Cycle Costing
LQ Limiting quality
M&E Mechanical and Electrical
MERA Multiple Estimate Risk Anaylsis
MW Minor Works
NEC New Engineering Contract
NEDO National Economics Development Office
NJCC National Joint Consultative Committee for Building
NSC Nominated Sub-Contract
OMR Optical Mark Reading
PFI Private Finance Initiative
PSA Property Services Agency
RIBA Royal Institute of British Architects
RICS Royal Institution of Chartered Surveyors
VAT Value Added Tax
WCD With Contractor’s Design
WORM Write-Once-Read-Many
WRC Water Research Centre
Page 2 Abbreviations (10/02) The Surveyors’ Construction Handbook

I NTRODUCTION
INTRODUCTION
A Aim and Scope of this Handbook

A1 The aim of this Handbook is to help both building and quantity surveyors to
provide construction-related professional services effectively and efficiently.
It seeks to achieve this by providing guidance which reflects what is often
good custom and practice, and relevant information (including references to
other useful material). It should be appreciated that this Handbook does not
attempt comprehensive coverage of necessary or good practice. The
Handbook is addressed to surveyors providing services to clients (as defined),
not surveyors undertaking the role of the client’s representative who gives
instructions to surveyors on behalf of the Client.
A2 ‘Construction’ in this Handbook means new construction, conversion,

refurbishment works and alterations to the form of buildings, and also civil
engineering works. The contents of this Handbook apply across the complete
range of this definition unless otherwise stated. So ‘construction’ does not
embrace building surveys or building maintenance.
A3 ‘Client’ in this Handbook is used to include companies and their Directors or

Officers, Trusts and their Trustees, partners, managers and employees who
may instruct a surveyor.
A4 Throughout the Handbook, it is assumed that possession and necessary access

to the site are available and, in principle, the rights to construct the
development and use the buildings when constructed. The Handbook does not
cover project management services, obtaining planning permission and
building regulation approvals, or dispute resolution.
A5 The document is drafted on the basis of UK law and practice, although much
of it is relevant to practice elsewhere.
B Arrangement of Content
B1 After sets of Definitions and Abbreviations which apply throughout, the
Handbook is arranged in five Parts. The first four Parts represent sequential
phases of the construction process. The last Part, Part 5, provides Additional
Guidance and Information. Each part is followed by Further Reading, to
which the numbered cross references in the Parts apply.
B2 The first four Parts are as follows:
Part 1: The Client seeks to help surveyors to work with clients. It discusses the
establishment of their construction objectives and constraints, leading to the
The Surveyors’ Construction Handbook Introduction (4/98) Effective from 1/6/98 Page 1
I NTRODUCTION
development of construction briefs. It defines the client’s roles during the

construction process, and comments on the engagement of professionals
involved in the construction process.
Part 2: Construction Design and Economics covers development of the design

concept, feasibility studies, design and economics (including life-cycle
costing, risk assessment, and cost-value relationships), and confirmation of
the final design proposal.
Part 3 relates to Construction Planning and Procurement, i.e. to the time the
construction contract is placed.
Part 4 covers Construction Administration and Management, i.e. all

post-contract matters.
Any Appendices are situated at the end of each Part.
B3 An Index follows Part 5.
C Status of Content
C1 For convenience, Guidance and Information is integrated. Each paragraph is
prefixed with a G or an I to indicate its status.
C2 ‘Guidance’, as the word implies advice to Members of the RICS on aspects of

their profession. Where recommended for specific professional tasks,
procedures are intended to embody ‘best practice’, i.e. procedures which in
the opinion of the RICS meet a high standard of professional competence.
Members are not required to follow the advice and recommendations

contained in such paragraphs. They should, however, note the following
points.
Should an allegation of professional negligence be made against a surveyor,

the Court is likely to take account of the contents of any relevant guidance
notes published by the RICS in deciding whether or not the surveyor had acted
with reasonable competence.
In the opinion of the RICS, a Member conforming to the practices

recommended in this Note should have at least a partial defence to an
allegation of negligence by virtue of having followed those practices.
However, Members have the responsibility of deciding when it is appropriate
to follow the guidance. If the guidance has been followed in an appropriate
case, the Member will not necessarily be exonerated merely because the
recommendations were found in RICS Guidance.
Page 2 Introduction (4/98) Effective from 1/6/98 The Surveyors’ Construction Handbook
INTRODUCTION
On the other hand, it does not follow that a Member will be adjudged
negligent if he has not followed the practices recommended in this Handbook.
It is the responsibility of each individual surveyor to decide on the appropriate
procedure to follow in any professional task. However, where Members
depart from any practices recommended in this Handbook, they should do so
only for good reason. In the event of litigation, the Court may require them to
explain why they decided not to adopt a recommended practice.
In addition, Guidance Notes are relevant to professional competence in that

each surveyor should be up to date and should have informed himself of
Guidance Notes within a reasonable time of their promulgation.
C3 Material classified as ‘information’ is intended to provide information and

explanations to Members of the RICS on specific topics of relevance to the
profession. The function is not to recommend or advise on professional
procedures to be followed by surveyors. It is again, however, relevant to
professional competence to the extent that a surveyor should be up to date and
should have informed himself of such information within a reasonable time of
its promulgation.
Members should note that if an allegation of professional negligence is made

against a surveyor, the Court is likely to take account of the contents of any
relevant information published by the RICS in deciding whether or not the
surveyor has acted with reasonable competence.
D Currency of References
The cases cited and the editions quoted were up-to-date at the time of writing.
However, readers should check current rulings and additions.
E Invitation
RICS Books would welcome comments upon and suggestions for additions
and amendments to this Handbook. They should be provided in writing to
RICS Books Publishing, Surveyor Court, Westwood Business Park,
Coventry, CV4 8JE.
F Subscription Service
Any change of address should be notified to the address appearing below:
The Surveyors’ Construction Handbook Subscription Service

RICS Books
Surveyor Court
Coventry CV4 8JE
Tel: 020 7222 7000 ext 647
The Surveyors’ Construction Handbook Introduction (revised 10/01) Effective from 1/12/01 Page 3
PART 1, SECTION 1
PART ONE: THE CLIENT
SECTION 1: THE CLIENT’S REQUIREMENTS AND

ROLES
1.1.1 Establishing the Client’s Objectives

G 1.1.1.1 Client satisfaction will be maximised if the client’s objectives as established
in the business case for the project are met. The surveyor should be able to
assist with the development of the business case and the prioritisation of
project objectives (see 3.1.1.6 and 3.1.1.9).
G 1.1.1.2 The type of client will affect the criteria which must be met if the client is to
be satisfied with the project.
I 1.1.1.3 Owner occupiers are usually primarily concerned with building

performance in terms of functionality and costs in use. They may also be
concerned with image and building style. In this sense, value for money is a
key criterion. Developers, on the other hand, may be driven by market
conditions which enable the project to be let or sold at maximum
commercial advantage. They may be predominantly concerned with speed
rather than performance.
I 1.1.1.4 This is not to say that owner occupiers are unconcerned about time. Indeed,
certainty of completion date may be a key issue. Nor is it fair to suggest that
developers are unconcerned about building performance or cost. There are
market conditions where both of these issues may become important.
I 1.1.1.5 However, the client’s purpose in initiating a building project is usually

driven by the need for the project as a functional unit or as an investment.
There will usually be particular criteria for achievement which are critical or
important to each particular client. Possible objectives are as follows:
(a) Cost-related
• minimise capital cost
• maximise capital cost/value ratio
• maximise capital cost/worth to client ratio
• achieve necessary income cash flow profile
• minimise management costs
• minimise maintenance and insurance costs
• minimise tax liability
• respect capital cost constraint
• be energy efficient.
The Surveyors’ Construction Handbook Part 1, Section 1 (01/03) Effective from 1/3/03 Page 1
PART 1, SECTION 1
(b) Marketability
• maximise prompt or future disposal (freehold or otherwise).
(c) Use-related
• optimise operational requirements of intended occupier(s)
• provide greatest flexibility in potential uses
• reflect intended occupier’s requirements/preferences/ability to afford
• meet social/management/occupier’s special needs (e.g. disabled).
(d) Environmental
• minimise health and safety risks
• choose materials which reflect sustainability
• aesthetically please (e.g. impression on occupier’s customers)
• minimise any alterations to specific features
• reflect planning authority’s brief/policies
• minimise potential opposition
• reflect corporate style or personal preferences of proposed
occupier/employees
• maximise comfort of occupants
• minimise inconvenience to others during construction.
(e) Timing
• construct within a defined period
• minimise risks of delay during construction.
G 1.1.1.6 The importance of each of these criteria will be relative to the objectives of the
client, the business case for the project and to the extent to which he/she is
able to cope with risk (see 3.1.2.9). It is important that the client seek
investment appraisal advice in respect of the project and that the appraisal
considers ‘what if’ questions to ensure that the impact of changes of key
components in the appraisal is clearly understood. A chartered surveyor will
be able to assist the client in these matters. However, the giving of advice on
some of the requirements listed above is, of course, outside the competence of
the surveyor. Where such a particular requirement is important to the client
and outside the client’s expertise, the client should be advised to seek other
professional advice.
G 1.1.1.7 Many construction projects suffer from poor definition due to inadequate time
and thought being given at an early stage1. This is often because there is a
sense of urgency fuelled by the desire for an immediate solution. Investing
time at the beginning of a project in developing a complete definition taking
account of all the requirements will reduce the likelihood of changes later. The
later that changes are made in a project, the more they are likely to cost in both
direct and knock-on effects (see 3.1.4.14 and 3.1.2.14(f) & (g)).
1
Construction Industry Board, Briefing the Team, Thomas Telford Publishing, London, 1997.
Page 2 Part 1, Section 1 (01/03) Effective from 1/3/03 The Surveyors’ Construction Handbook
PART 1, SECTION 1
1.1.2 The Role for Independent Advice

G 1.1.2.1 With the potential for the involvement of many consultants and/or
constructors in a project and the range of contracts associated with their
employment, all but the most experienced client may need advice. The advice
offered should be informed and unbiased and it should be based upon a logical
analysis of the needs of the client, the type and character of the project and the
range of appropriate strategies available.
G 1.1.2.2 This advice can be offered by a member of the client’s design team or can be
a separate function. It may be more difficult for a design team member to
remain impartial in carrying out this process and it is recommended that any
expert retained should be solely for this purpose. This function can be
identified as the role of the principal adviser and may encompass:
• Assistance in preparing the business case (the business case)

underpinning the project
• Identifying the needs and requirements (briefing)
of the client
• Defining the project (project definition)
• Matching needs and project characteristics (procurement strategy)
with appropriate procurement strategy
• Facilitating the associated selection and (implementation)
contractual processes and policies
I 1.1.2.3 Possible sources for the appointment of independent advisers include suitably
qualified and experienced construction professionals such as chartered
surveyors.
1.1.3 Project Brief

G 1.1.3.1 The importance of a clear project brief to the successful completion of the
project and in ensuring appropriate performance of the project cannot be over
emphasised. The inexperienced client will need professional help in the
preparation of the brief. The project brief is a comprehensive statement of the
client’s requirements for the project based on close consultation between the
client and users and based upon the parameters established (see 3.1.1.10 and
3.1.1.12).
The project brief may include:
(a) project description;
(b) how it fits into the client’s corporate plan (e.g. it may be part of a larger
planned development);
PART 1, SECTION 1
(c) number of people that are to occupy the building, together with their space
requirements;
(d) schedule of accommodation and quality of internal environment;
(e) standards;
(f) equipment and special services/requirements;
(g) when the building needs to be available for use;
(h) quality and cost limitations;
(i) life span;
(j) site; and
(k) statutory controls.
G 1.1.3.2 This is the initial control document for the early planning of the project;
without it, little constructive work can be done. If all the information required
for the project brief is not readily available, it is better to issue it in an
incomplete form and to update it progressively1.
1.1.4 The Client’s Role

G 1.1.4.1 This section briefly explains the client’s responsibilities through the life of a
construction project. In carrying out their role, clients, depending on their
knowledge and expertise, will need help from their professional advisers,
project managers and other consultants, whose roles are also explained in this
handbook. This section aims to outline the client’s task in setting policy and
formulating strategy, and explains how it should be carried out.
G 1.1.4.2 The success of any project will depend upon the motivation given by the
client. Experienced clients may take a leading role in the procurement process;
less experienced clients will need to seek advice or to appoint advisers to
assist them. Where projects are of a large or complex nature it may be
advisable to consider the appointment of a project manager.
G 1.1.4.3 Effective management is vital in any construction project. The client’s prime
role is to establish a structure for the management of the project and to make
sure that it works. A crucial part of any effective management structure is
efficient communication. To perform effectively, all parties must have timely
1
PART 1, SECTION 1
access to all information relevant to their tasks and the project’s objectives and
status (see 3.1.4.11).
G 1.1.4.4 The client has substantial influence on the design of the project in respect both
of functional efficiency and of overall appearance, and, therefore, has to take
particular care to:
(a) understand fully the purpose of the building; ensure that the requirements
of the users are accommodated; and communicate those requirements to the
designers (see 3.1.1.10); and
(b) appoint designers with proven ability in designing buildings which satisfy
users’ requirements and harmonise with and contribute to the quality of the
built environment. The selection of the right people is emphasised as a key to
success (see 3.1.4.8).
G 1.1.4.5 The accompanying figure indicates the activities in the procurement process
and when activities are usually performed. As can be seen, the client’s role is
significant, with a wide range of activities to perform and implement before
both the design and the construction processes. In the performance of these
activities, the client can expect to be supported and advised by his/her adviser
or (if appointed) the project manager. More detail for each of these activities
can be found in the section of this handbook indicated in brackets in the
figure.
PART 1, SECTION 1
FIGURE TO INDICATE THE ACTIVITIES IN THE P ROCUREMENT PROCESS
Pre-Design Phase Pre-Construction Phase Construction Post-Construction
Client’s Role Develop business case for Procurement strategy Design overview Commissioning
project (3.1.1.9) (3.1.1.13) (3.1.4.12) (3.1.1.17)
Appoint adviser Design overview* Cost control overview Occupation and takeover
(3.1.1.6) (3.1.4.12) (3.1.4.13) (3.1.1.18)
Define client’s Cost Control overview* Time control overview

responsibilities (3.1.1.7) (3.1.4.13) (3.1.4.14)
Project Brief Whole-life Costs Quality control overview

(3.1.1.12) (3.1.4.15) (3.1.4.18)
Appointment of PM (if Value Engineering Change control

appropriate) (3.1.4.7) (3.1.4.17) overview
(3.1.4.19)
Appointment of design and Time control overview*
cost consultants (3.1.4.8) (3.1.4.14)
Procurement strategy* Quality control overview*

(3.1.1.13) (3.1.4.18)
Value management Appointment of constructors

(3.1.4.16) (3.1.4.9)
Confirming the business

case (3.1.1.9)
Procurement Procurement strategy

Strategy development (3.1.2)
Implementation Resources (Client) Contractual arrangements Systems and controls

(3.1.4.3–5) (3.1.4.10) (3.1.4.11)
Organisational structure Systems and controls

(3.1.4.6) (3.1.4.11)
Contractual arrangements*
(3.1.4.10)
Systems and controls*

(3.1.4.11)
Implementation policy
(3.1.4.2)
* Indicates the activity will continue into the next phase

() Indicates the section of this document referring to the activity in more detail
1.1.5 The Client’s Responsibilities

G 1.1.5.1 The client should set policy and outline strategy including:
(a) setting and prioritising the project objectives within the business plan;
(b) planing to meet the objectives (the pre-design phase);
(c) implementing the plans (the pre-construction phase);
(d) controlling their implementation (the construction phase);
PART 1, SECTION 1
(e) arbitrating between conflicting demands; and
(f) evaluating the complete project against the objectives (the

post-construction phase).
G 1.1.5.2 The client also has a dual management function:
(a) to manage the client input; to co-ordinate functional and administrative

needs; to resolve conflicts; to act as the formal point of contact for the project
(see 3.1.4.11); and
(b) to supply the technical expertise, to assess, procure, monitor and control
the external resources needed to implement the project (see 3.1.4.3–5).
G 1.1.5.3 In particular, the client should be satisfied that:
(a) the project brief is comprehensive and clear and has the full support of the
users1&2 (see 3.1.1.12);
(b) any constraints demanded by the project funder(s) are known and their
impact understood;
(c) the critical assumptions made in preparing the initial estimates and
programmes are valid, realistic and achievable (see 3.1.1.9);
(d) cost estimates are comprehensive and include all capital and resource
costs;
(e) allowances made in the feasibility and viability assessments to cover

possible risks are sufficient (contingency allowance);
(f) substantial sensitivity analysis and ‘what if’ studies have been carried out
to assess the effect of possible changed criteria on the viability of the project;
and
(g) plans are in place for adequate project management including systems for
cost, time, quality and change control.
G 1.1.5.4 The client should also co-ordinate and resolve conflicts between all interested
sections of the client organisation including (see 3.1.4.6):
(a) user groups – who will work in the building;
1 Kelly, J., MacPherson, S., and Male, S. (1992), The Briefing Process: A Review and Critique, RICS, Department of
Building Engineering and Surveying, Heriot Watt University. This document is out of print.
2
PART 1, SECTION 1
(b) specialist groups – responsible for technical systems within the building,
e.g. communications, computers;
(c) facilities management – who will manage the completed building

including maintenance and security;
(d) finance and accounts – who will plan and control expenditure and pay bills
as they arise; and
(e) legal advisers – who will advise on and monitor the client’s formal
relationships with outside parties.
G 1.1.5.5 The client is responsible for ensuring that all necessary decisions are made on
time. Timely decisions are necessary to avoid delays and increased costs: the
decision-making process requires as much planning and management as any
other activity. This will include (see 3.1.4.11):
(a) scheduling the key decisions to be made;
(b) identifying the decision makers and their required procedures;
(c) ascertaining the time required for making decisions;
(d) establishing a formal programme for decisions;
(e) warning decision makers regarding forthcoming submissions – making

sure items are on the agenda;
(f) preparing on time fully detailed submissions and/or presentations in full

compliance with procedural requirements;
(g) following up submissions throughout the decision making process; and
(h) promptly communicating decisions made to the parties affected by

them.
1.1.6 Appointment of Project Manager (where appropriate)

(see 3.1.4.7)
G 1.1.6.1 Due to the complexity of modern buildings and the potentially large number
of parties involved in the process the client may wish to appoint a single
person to draw the process together and manage it to ensure that the overall
performance, time, cost and quality requirements are achieved. The project
manager may be a member of the client organisation who is given sole, or
predominant, responsibility for the project. Project management practices also
exist to enable appointment to be made on a consultancy basis. In this case,
PART 1, SECTION 1
selection should be based upon resources, reputation, and price; and services
should be clearly identified.
G 1.1.6.2 It should be emphasised that the role of the project manager should be to act
as part of the client organisation.
1.1.7 Appointment of Consultants (see 3.1.4.8)

G The process of selecting and appointing the design team and the cost
consultant is carried out by the client who may seek the advice of his/her
advisers. The terms and conditions of these appointments are governed by the
procurement strategy adopted for the project.
1.1.8 Appointment of Constructors (see 3.1.4.9)

G The selection of those who will actually construct the project is often key to a
successful outcome. Selection should always be on quality as well as price and
ideally the procurement strategy governing when they are appointed should
facilitate the early involvement of constructors in the design process.
The selection of procurement strategy is a complex one and is referred to in

Part 3 section 1 of this handbook.
PART 1, SECTION 1, APPENDIX A
Appendix A: Further Reading

Construction Industry Board, Briefing the Team, Thomas Telford Publishing, London,
1997
Construction Industry Board, Partnering in the Team, Thomas Telford Publishing,

London, 1997
Construction Industry Board, Selecting Consultants for the Team: Balancing Quality
and Price, Thomas Telford Publishing, London, 1997
Construction Industry Council, The Procurement of Professional Services: Guidelines

for the Value Assessment of Competitive Tenders, CIC, London, 1997
European Construction Institute, Partnering in the Public Sector: a Toolkit for the
Implementation of Post-Award, Project Specific Partnering on Construction Projects,
ECI, Loughborough, 1997
Kelly, J., MacPherson, S., and Male, S., The Briefing Process: A Review and Critique,
RICS, Department of Building Engineering and Surveying, Heriot Watt University,
1992. This document is out of print.
The Surveyors’ Construction Handbook Part 1, Section 1 Effective from 1/3/03 Page 1
Appendix A (01/03)
PART 1, SECTION 2
PART ONE: THE CLIENT
SECTION 2: VALUE ENGINEERING
Introduction
Value management (and within it, value engineering) is a structured method
of eliminating waste from a client’s brief and from the design on a
construction project before binding commitments are made. Used to deliver
more effective and better quality buildings, for example, through taking
unnecessary costs out of designs, value management ensures a clearer
understanding of the brief by all project participants and improves team
working. According to the Construction Task Force report, ‘Rethinking
Construction’ (published by the DETR in July 1998) it is practiced by up to a
quarter of the construction industry in the UK. The report also estimates that
while the objective of value management is to increase value, it can also
reduce costs by up to 10 per cent.
Value management is the wider term used in the UK to describe the overall
structured team-based approach to a construction project. It involves clearly
defining the client’s strategic objectives, considering optimum design
solutions within the context of the client’s business objectives and deciding
which of these provides the optimum lifetime value to the client, as well as a
review of the whole process after occupancy. Value management includes
value engineering as part of this process.
Value engineering is a ‘systematic approach to delivering the required

functions to the required quality at the least cost’, i.e. a method of ensuring
that the client gets the best possible value for money in terms of safety,
performance and delivery targets. It is a structured form of consensus
decision making that compares and assesses the design solutions against the
value systems declared by the client.
This section of the handbook looks at the carrying out of a value engineering
exercise during the early design phase of a project, i.e. an evaluation of design
solutions against the client’s brief. Value engineering, as described here, can
be a stand-alone exercise (a value engineering workshop) or may be part of an
overall value management process.
In describing the value engineering process this section aims to assist

surveyors both in advising clients on the use of value engineering and taking
part in a value engineering exercise as part of the design team. It is not
intended for surveyors acting as value engineering facilitators and makes no
attempt to address the very particular skills required for this role.
PART 1, S ECTION 2
G 1.2.1 Why Value Engineering?

1.2.1.1 Value engineering has grown in popularity for the simple reason that it
actually works. Construction projects can often take on a life of their own
when members of the design team become focused on their own particular
problems and time constraints. Consequently, the true objectives of the client
get lost along the way. Value engineering relates design proposals directly
back to a client’s business, thus ensuring that a management system is in place
which forces designers to justify their decisions when tested against the
client’s required function.
1.2.1.2 A value engineering exercise can only relate design proposals to a client’s
business requirements if early value management studies have encapsulated
these requirements within the brief. If a value engineering exercise is carried
out in isolation from any strategic review of the project requirements, it can
only act as a functional assessment of the technical design solutions and their
relative cost. However, even in this limited function it can still be very useful.
G 1.2.2 Applicability
1.2.2.1 The technique of value engineering can be employed on any project. However,
more complicated and higher value buildings are likely to benefit the most
(see figure 1). This is because it is more difficult to develop the design brief
in such instances and consequently a design solution may be adopted without
being questioned, usually because of time constraints placed upon the
designers.
Figure 1: Projects Benefiting from Value Engineering
High
Essential
Complexity
Optional
Low
Low High
Value
1.2.2.2 Many client organisations will only undertake value engineering on schemes
over a certain value. For example, Railtrack will carry out the technique on
projects valued at £250,000 or more and Northumbrian Water will only
consider it for projects worth over £1m. Despite this, there is no reason why
the process should not be applied to smaller schemes. Furthermore, value
engineering will be invaluable where repetitive schemes are being considered
PART 1, SECTION 2
as improvements and savings can be incorporated into future schemes. They

can also be tested in practice, leading to the sort of continuous improvement
recommended by the ‘Rethinking Construction’ report.
1.2.2.3 Value engineering works irrespective of the procurement route taken. It is a

discipline upon the design team members and the clients who appoint them.
Where the contractor is mainly responsible for the design, for example, design
and build, develop and construct or PFI projects, the technique is just as
appropriate in ensuring that a well-defined statement of requirements is first
established and that subsequent design solutions address the function of the
building most economically.
G 1.2.3 At What Stage Should Value Engineering be Carried Out?
1.2.3.1 The greatest benefits can be obtained by commencing the VE process at the
earliest possible stage. Once it has been established that the client’s needs will
best be met through a construction project the purpose of the first VE exercise
should be to inform the brief. When an experienced client has prepared the
brief, or a value management exercise has already examined the client’s
requirements, the value engineering exercise (which will address the proposed
design solutions) is best done towards the end of the ‘scheme design’. Several
workshops may be necessary at each of the crucial decision-making stages of
a project:
(a) A first exercise (a functional analysis of requirements), to define the

project needs and inform the brief, could be carried out as early as ‘option
appraisal’, and since this could generate the greatest benefit to the client the
timing is crucial. Carry it out too early and not enough will be known about
the problems associated with the building function, whereas too late and
minds become set on the solutions formulated by the design team.
(b) A review of the project at ‘outline design’ could be conducted to ensure

that the decisions taken earlier have been implemented or, if changed, that
they still meet the functional requirements.
(c) Another review (a functional analysis of the solutions) would then be

carried out at ‘scheme design’ to test individual building elements involving
traditional cost planning/life cycle costing techniques.
1.2.3.2 This section of the handbook considers the evaluation of a design at the end of
the scheme design phase, but the process will be the same whenever it is
carried out. The ‘objectives’ of the project should remain the same throughout
the process and they should be validated at the beginning of each workshop.
The objectives of each workshop may be different. If the project objectives do
change the whole direction of the project will need to reassessed.
1.2.3.3 It is important that time for the value engineering process and any resultant
redesign is included in the scheme design programme at the outset.
The Surveyors’ Construction Handbook Part 1, Section 2 (revised 10/01) Effective from 1/12/01 Page 3
PART 1, SECTION 2
G 1.2.4 Who Should Carry Out Value Engineering?
1.2.4.1 It is strongly recommended that a value engineering exercise is organized by

an experienced value management facilitator to ensure that the value
engineering participants retain their objectivity and that an unbiased approach
is maintained.
1.2.4.2 The value engineering participants should represent the principal stakeholders
in the project namely, the client, the building users and the design team
(designer, engineers and quantity surveyor) and also the contractor, where
applicable. It is important that each of the participants have the authority to
make decisions at the workshop. It may also be appropriate to include clients’
advisers, for example, letting agents or rating valuers.
The participants should be those who can make decisions and provide
information related to the specific aims and objectives of the workshop. These
may include:
• those people with responsibility for the needs of the business;
• those with specific responsibility for development, design and

implementation of the operation/project;
• those with responsibility for the management and/or maintenance of the

operation; and
• those who will be affected by the outcome.
Different stakeholders will be required to participate at different stages of the

project.
1.2.4.3 The optimum size of a value engineering panel would depend upon the
complexity of the project as well as the skills of the facilitator. However, it is
considered that panels of more than twelve members are difficult to manage.
Panels with fewer than four members could be considered ineffective.
However, it is important that all stakeholders are represented even if this
results in a larger group.
1.2.4.4 It is common practice in North America to appoint an outside team of

consultants to question the design team’s solutions. However, this practice has
been known to cause resentment between the project team and the external
advisers and might therefore compromise the final design solutions. It is
considered that an experienced facilitator independent of the design team,
with an appropriately briefed panel, will ensure that the design team’s
solutions are adequately tested at the workshop.
Page 4 Part 1, Section 2 (revised 10/01) Effective from 1/12/01 The Surveyors’ Construction Handbook
PART 1, SECTION 2
G 1.2.5 How Long Should It Last?
1.2.5.1 The length of time taken over the value engineering workshop will depend on
the complexity of the project and the level of design detail that has been
completed.
1.2.5.2 The ‘40-hour workshop’ is the classic industrial value engineering standard.
However, two-day workshops at key points during the design process are
more common in the UK construction industry.
G 1.2.6 Preparing for a Value Engineering Workshop
1.2.6.1 Prior to the workshop, it is most important that an agenda is agreed by the
panel and distributed by the facilitator.
1.2.6.2 In addition to an agenda, a functional analysis of the client’s requirements

should be drawn up.
The client’s value criteria will have been developed in the first value
management workshop. With each successive workshop these criteria will be
developed further into a function diagram. This should be included in the
workshop handbook. If it is to be developed further this will take place as part
of the information stage of the workshop.
The functional analysis should always be generated by the client

representatives with the help of the other members of the workshop. It is the
role of the facilitator to facilitate this process, not to take part in it.
All participants must be prepared to propose and challenge design solutions.

The input of all participants (not just those who are experts in a particular
discipline) is one of the strengths of the VE process and should be encouraged
by the facilitator.
G 1.2.7 Functional Analysis of Design Relative to the Client’s

Requirements
1.2.7.1 It should be understood that it is not possible to find meaningful alternatives

to a technical solution without first identifying the function required of it.
1.2.7.2 Functional analysis is any technique designed to appraise value by careful

analysis of function. This can be simple ‘creative session’ of the functions and
possible alternatives, but the most common method is using a functional
analysis systems technique (FAST) diagram.
1.2.7.3 The FAST system uses a ‘function diagram’ which identifies the basic
function ‘what is required’ on the left-hand side and more detailed secondary
functions working from left to right until all the means of achieving these
PART 1, SECTION 2
functions ‘how are they to be fulfilled’ are identified on the right. See figure 2
for an example of a FAST diagram. It should be understood that this is a
broad-brush technique.
The objective of functional analysis is to produce a complete description of

the end purpose of the design in terms of what it must do.
Reference is sometimes made to different types of FAST diagram: Classical

FAST, Technical FAST or Customer/Task FAST.
The original FAST diagram was a presentation of the user-related and

product-related functions of a design solution. It was a technique used to
assemble the functions of a product in a hierarchy and to assess ‘why’ and
‘how’ they are delivered. This is known as a Classical FAST.
Subsequently it was recognized that all functions did not fit into the flow logic
so it was decided to separate out the functions that are always active, whether
the product is operational or not. It was also decided to separate out those
functions that only occur one time regardless of repetitiveness of the process.
This diagram describes what a product, element or component must do and is
known as a Technical FAST.
It was then recognized that, ideally, it is the customer who should determine
the value of the product and that the FAST diagram should include the
customer/user in the development of value study projects. The resulting FAST
Figure 2: FAST Diagram
PART 1, SECTION 2
diagram has become known as a Customer or Task FAST. It is this concept

from which the Value Tree has developed.
All FAST diagrams should include a scope line on the left-hand side of the
diagram. The scope line limits the area of the project on which attention is
being focused. The scope is the portion of the project that is selected for the
value study.
The FAST model displays functions in a logical sequence and tests their
dependency. It does not indicate how a function should be performed.
There is no such thing as a correct FAST model, only a valid FAST model.
1.2.7.4 Most practitioners insist that functions are defined in terms of ‘active
verb/measurable noun (or phrase)’ combinations, for example, ‘minimize
energy consumption’. This improves clarity, helps all panel members develop
a shared understanding and promotes the examination process. These should
be interrogated by asking ‘why’ the client requires this in order to examine
how it should be achieved.
1.2.7.5 The process of setting up a FAST diagram is of matching the functional

elements of the building (object functions) to the client’s required functions
(user functions). The functional requirements need to be broken down until
they are reflected in elements which can be priced (and built). This process is
called ‘functional decomposition’. For example, the requirement for increased
energy efficiency might be provided by increased levels of insulation which
might be achieved by changes to all or any of roof, walls, floor, windows and
doors or finishes. The number of levels ‘of decomposition’ required cannot be
predetermined.
1.2.7.6 VALUE TREE
A Value Tree is a diagram that describes the business driver (mission) for a
project or need and the criteria that need to be satisfied in order to achieve it.
A Value Tree should be developed at an early stage in order to inform the
brief. However, it can be developed at any stage in order to confirm the brief.
It will generally be carried out by the client organization in order to establish
whether a project is the solution to their needs. The criteria are then developed
further into the functions required in order to achieve them. The scope line for
a project will begin to the right of the Value Tree.
1.2.7.7 Appendix A gives an example of part of a Value Tree and a FAST diagram for
a health centre.
Function elements (object functions) are defined in the BCIS publication,

Standard Form of Cost Analysis: Principles, Instructions and Definitions and
in Section 2.3 of this handbook.
A typical example of a value engineering process is included in Appendix B.
PART 1, SECTION 2
G 1.2.8 Pricing the FAST Diagram
1.2.8.1 As the FAST diagram progresses and different solutions are found, it becomes
possible to establish alternative costs for achieving a given function.
However, it is important that all functions are clearly defined if costs of
alternative proposals are to be meaningful. Also, it should be remembered that
it is the design solutions to the functional requirements that are being priced
and compared to the value and importance that the client puts on that function.
For example, the client can identify the value of savings from reduced energy
consumption or may rank this as important for other reasons. The value
engineering team’s task is to put a price on the various design solutions
suggested that will achieve this end. It is creativity in finding the most
economical solution that is the essence of the value engineering exercise.
1.2.8.2 Fees and value added tax (VAT) and other financial and fiscal matters may
also need to be considered.
G 1.2.9 Presenting a Design Solution to a Value Engineering Workshop
1.2.9.1 Design solutions should be presented as designers normally would to any

panel of users. However, they should expect to be questioned quite
extensively. They should keep an open mind and maintain objectivity in
justifying their proposals because the objective is to find the most
cost-effective solution, not to criticize for the sake of it. On the other hand,
designers should be prepared to stand by their design solution if they think it
is correct for the function being considered.
G 1.2.10 The Workshop
1.2.10.1 A value engineering workshop will work through phases of information,

speculation, evaluation, development and presentation:
(a) The ‘information phase’ identifies the spaces, elements and components in
terms of the functions they fulfill. It asks the questions about what is the prime
function of an element?; what are it’s subsidiary functions?; what does it
cost?; what is it’s value? It is at this stage that the FAST diagram is developed
and it is against the background of this information that the value engineering
evaluation will be made.
(b) ‘Speculation’ is the brainstorming stage which will generate the ideas from
which solutions will be developed. It is important that each member of the
panel thinks positively. The facilitator will ensure that no one is allowed to
become overly critical of another member’s contribution in order that ideas
flow. All ideas should be logged at this stage. However, in order to encourage
idea building, they should not be analysed or rejected. It is important that the
underlying functions of suggestions for improvement are listed for evaluation
later. Design solutions should not be developed at this stage to ensure that
PART 1, SECTION 2
‘what is to be achieved’ is properly addressed. All optional solutions should

only be considered at the evaluation stage.
(c) ‘Evaluation’ is the analysis of the ideas generated by the earlier

speculation. Again, a positive feeling will be encouraged by the facilitator
with advantages/disadvantages being discussed in an even-handed manner. At
this stage some ideas will be rejected and the best taken forward. It is essential
to ensure that all the ramifications of any suggested changes should be
considered. For example, if the exercise has suggested a change to a piece of
M&E equipment, the effects on the control management systems and
structural requirements must also be considered.
Life cycle costing can be an important factor in the process when considering
optional solutions but the criticality of this aspect will hinge on the client’s
philosophy.
(d) ‘Development’ of the ideas to be taken forward will be initiated at the

meeting and a programme established for completion of this stage. Often the
detailed development including life cycle costing, if appropriate, will be
continued beyond the initial meeting and the outcome presented to a
subsequent meeting for the panel to determine which design options to adopt.
(e) ‘Presentation’ takes the form of a report prepared by the facilitator which
records in some detail all elements of the study and concludes with those
options to be incorporated in the developed design. This report is normally
presented to the client by the value engineering panel at a meeting held within
one or two weeks of the date of the workshop.
1.2.10.2 The workshop should focus on expensive items or ‘mismatches’, for example,
parts of the FAST diagram which are important to the client but which have
been allocated little money or have cost a lot of money but do not contribute
to the function.
G 1.2.11 Assessing the Value of the Workshop
1.2.11.1 Areas for research/change identified at the workshop could be grouped into
three categories:
(i) those that are removed/changed and result in reduced cost;
(ii) those that are added/changed and result in additional cost; and
(iii) those that are identified for investigation but not implemented
1.2.11.2 The financial benefit should then be identified against all elements within
categories (i) or (ii).
1.2.11.3 A major benefit of the workshop which will be enjoyed by the panel members
is a better understanding of the project functions and common ownership of
the team-based designs solutions which have evolved.
PART 1, SECTION 2
G 1.2.12 Implementing the Results
1.2.12.1 The value engineering panel’s decisions are recommendations that need to be
accepted by all stakeholders. Those stakeholders that are not part of the panel
are likely to have a right to comment before decisions are adopted.
1.2.12.2 Once the workshop’s proposals have been sanctioned by the client, decisions
should be fed back to the design team, briefing those members whose work is
affected as to why the changes were made.
1.2.12.3 If necessary, amendments to the design brief, design programme and scope of
professional team’s brief should be incorporated into these documents.
G 1.2.13 Feedback from Post-Occupancy Evaluation
1.2.13.1 It is important for any client to carry out a project review to demonstrate how
project objectives have been achieved and particular problems overcome. As
part of the project evaluation process, it should be established whether the
project represents best value for money and whether or not key design changes
made as a result of value engineering have achieved the benefits expected.
These should always be set against the cost of carrying out the exercise.
Appendix A: Health Centre Value Tree
Appendix A (revised 10/01)
PART 1, S ECTION 2, A PPENDIX B
Appendix B: Typical Example of a Value Engineering Process

B1 BACKGROUND
A retail client with a regular development programme for a series of new

stores (typical size 8,000m2) entered into a partnering agreement with key
members of the construction team for four new projects.
To encourage value engineering, the partnering contractors share in any

savings that relate to any accepted proposals.
For two of these projects the client opted for a design and build contract for
the services installations (mechanical, sprinklers and electrical).
In an effort to reduce costs and ultimately add value to the schemes, the client
set a target of reducing the costs on these projects by 10 per cent, with no
material effect on quality or health and safety.
To set a benchmark for this reduction model cost plan costs for a typical store
(derived from historical records) were modified to suit the new scheme
layouts. Allowances were included for any items that were classified as ‘site
specific’ (e.g. acoustic requirements stipulated by the district surveyor). Cost
plan figures were based on the client’s current specification.
Due to the volume of developments undertaken by the client and the repetitive
nature of the works, the savings generated by value engineering can be
incorporated in any future schemes.
B2 SPECIFIC EXAMPLE: VENTILATION TO SALES FLOOR
The original design was based on previous solutions and included ‘traditional’
ventilation.
At the ‘information phase’, the functional requirement, including the need for
ventilation, was examined against the client’s desire to reduce capital costs.
This identified that a high proportion of the cost of the mechanical installation
related to the provision of ventilation to the sales floor of the store (plant,
distribution ductwork, diffusers, etc.)
At the ‘speculation phase’, the client’s engineering department worked closely

with the mechanical partnering contractor to consider alternative methods of
ventilating the sales floor of the store.
The alternative method of ventilation proposed was of the displacement type.

With displacement ventilation, air is only conditioned at the level at which
occupiers are breathing. Air is introduced at low level and at low velocity.
Natural convection currents are utilised to remove excess heat and pollutants
out of the occupied zone. There is a saving in the amount of ductwork
required, as only two runs of ductwork are needed on the sales floor. (The
Appendix B (12/99)
traditional method is designed for four separate branches of ductwork.) The

new specification requires diffusers of the displacement type, with the facility
of automatically varying the air throw pattern whether in heating or cooling
mode.
Furthermore, the proposed system required ventilation to the occupied zone

only rather than the full building space. This has resulted in capital cost
savings on plant and in the likely running costs of the system.
The evaluation identified significant savings.
Summary of Value Engineering Exercise
Original installation: Traditional ventilation
Value engineering proposal: Displacement ventilation
Benefits: Saving on air handling plant size

Saving on chiller plant size
Saving on sales floor ductwork
Savings on capital cost: Air handling plant 10%

Chiller plant 5%
Ductwork and diffusers 25%
At the ‘development phase’, the proposed method was discussed with other
members of the design team to ensure that any impact on the other building
elements, the project programme and the interface with other subcontractors
were taken into account.
Page 2 Part 1, Section 2 Effective from 1/1/00 The Surveyors’ Construction Handbook
Appendix B (12/99)
PART 1, SECTION 2, APPENDIX C
Appendix C: Further Reading

British Standards Institute. Value Engineering, Value Analysis Vocabulary – Part 1:
Value Analysis and Functional Analysis, BS EN 1325–1 1997, British Standards
Institute, London, 2000.
Building Cost Information Service. Elements for Design and Build, BCIS Ltd, 1996
Building Cost Information Service. Standard Form of Cost Analysis; Principles,

Instructions and Definitions, BCIS Ltd, 1969 (Reprinted 1997)
Connaughton, John, N., Green, Stuart, D., Construction Industry Research and
Information Association. Value Management in Construction: A Client’s Guide,
CIRIA, London, 1996
Dell’isola, Alphonse. Value Engineering in the Construction Industry, Van Nostrand

Reinhold Co., New York, 1983
Dell’isola, Alphonse. Value Engineering: Practical Software Applications for Design,

Construction, Maintenance and Operations, R. S. Means & Co., Kingston, MA, 1997
Green, Stuart, D. and Popper, Peter, A. Value Engineering: The Search for
Unnecessary Cost, Chartered Institute of Building, Berkshire, 1990
Institution of Civil Engineers. Creating Value in Enginering, Thomas Telford

Publishing, London, 1996
Kelly, John and Male, Stephen. A Study of Value Management and Quantity Surveying
Practice, RICS Books, Coventry, 1988
Kelly, J.R. and Male, S.P. A Study of Value Engineering and Quantity Surveying
Practice, Heriott-Watt University, Edinburgh, 1989
Kelly, J.R. and Male, S.P., Heriot-Watt University, Department of Building

Engineering and Surveying, Royal Institution of Chartered Surveyors. The Practice of
Value Management: Enhancing Value or Cutting Cost? RICS, London, 1991
Law, Alastair, G. An Introduction to Value Engineering: A New Technique in

Technology Assessment and Evalution, Alastair G. Law, Washington DC, 1981
May, Susan, C., College of Estate Management. Value Engineering and Value
Management: A CPD Study Pack, College of Estate Management, Reading, 1994
Mole, Kelly, Fernie, Grongvist and Bowles. The Value Management Benchmark:
Good Practice Framework for Clients and Practitioners. Thomas Telford Publishing,
London 1998
Norton, Brian, R. and McElligott, William, C. Value Management in Construction: A

Practical Guide, Macmillan, Basingstoke, 1995
Appendix C (revised 10/01)
Palmer, Angela. A Critique of Value Management, Chartered Institute of Building,

Berkshire, 1990
Royal Institution of Chartered Surveyors. Value and the Client (papers presented at a
conference held at the RICS on 29 January 1992), RICS, London, 1992
Smith, J., Jackson, N., Wyatt, R., Smyth, H., Beck, M., Chapman, K., Shirazi, A.,
Hampson, K., Royal Institution of Chartered Surveyors. Can Any Facilitator Run a
Value Engineering Workshop? RICS, London, 1998
Zimmerman, Larry, W. and Hart, Glen, D. Value Engineering: A Practical Approach

for Owners, Designers and Contractors, Van Nostrand Reinhold & Co, New York,
1982
Appendix C (10/01)
PART 2, SECTION 1
PART TWO: CONSTRUCTION DESIGN AND ECONOMICS
SECTION 1: PRE-CONTRACT COST PLANNING AND

COST MANAGEMENT
Introduction
This Section of the Handbook sets out procedures which enable pre-contract
cost management of building projects to be carried out from the client’s brief,
through the various design stages to the acceptance of a contractor’s tender.
Control of costs can only be achieved by the actions of the whole project team,
including the client. The quantity surveyor’s role is to facilitate the design
process by systematic application of cost criteria so as to maintain a sensible
and economic relationship between cost, quality, utility and appearance which
thus helps in achieving the client’s requirements within the agreed budget.
The information and guidance which follow are based on a traditionally

procured new-build project, but varying client requirements and different
procurement methods may prevent implementation of some aspects of the
following procedures. In practice, the design of the elements may proceed at
different speeds and the stages described here may overlap. However, the
principles of budget, cost plan, cost checks and reconciliation should be
adhered to whenever possible. (See the figure showing the outline of the cost
planning procedure.)
On projects where non-traditional procurement routes are used, the

responsibility for developing the cost plan may change but the stages
suggested here remain appropriate. For example, on Design and Build (D&B)
schemes, the client’s quantity surveyor will be responsible for the cost plan at
feasibility and outline proposal stage and the D&B contractor’s quantity
surveyor will be responsible for developing the cost plan with the contractor’s
design team to produce the tender.
The process described would apply to refurbishment or conversion schemes

and the elemental approach would be suitable even if all elements were not
required.
The procedures are not designed for use with civil engineering projects, but
should provide a framework appropriate to civil engineering needs.
PART 2, SECTION 1
2.1.1 Pre-contract Cost Planning and Cost Management

I 2.1.1.1 DEFINITION
Pre-contract cost planning is the technique by which the budget is allocated to
the various elements of an intended building project to provide the design
team with a balanced cost framework within which to produce a successful
design. It allows for the redistribution of the budget between elements as the
design develops.
Cost management is the total process which ensures that the contract sum is
within the client’s approved budget or cost limit. It is the process of helping
the design team design to a cost rather than the quantity surveyor costing a
design.
PART 2, SECTION 1
G 2.1.1.2 OBJECTIVES
(a) To ensure that the client obtains an economical and efficient project in
accordance with the agreed brief and budget;
(b) to make the design process more efficient, thus reducing the time needed
to produce a successful design;
(c) to ensure that all requirements arising from the client’s brief to the design
team are included in the cost planning process (e.g. the engineering services
should also be subject to the cost planning process); and
(d) to advise the client and members of the design team of cost-in-use or
life-cycle costing techniques.
G 2.1.1.3 GENERALLY
(a) A general principle applies throughout the cost planning process that any
agreed budget or cost limit is seen as the maximum cost, and the quantity
surveyor should, at all times, work with the other design team members to
satisfy the client at a lower cost if possible, whilst still maintaining the desired
objectives for quality and function.
(b) If, at any time, sums have been included in the approved budget, for
example, for abnormal site costs which subsequently are found to have been
wholly or partially unnecessary, the consequential saving should always be
notified to the client.
G 2.1.1.4 DESIGN STAGES

References to Design Stages are to the RIBA Plan of Work (taken from the
RIBA Handbook of Architectural Practice and Management) and refer to the
main stages through which a project design typically passes. The links to the
cost planning procedures outlined in this section are summarised here:
Design Stages Quantity Surveyor
Stage B: Feasibility Prepare feasibility studies and determine

the budget
Stage C: Outline Proposals Consider with client and design team

alternative strategies and prepare cost plan
Stage D: Scheme Design Carry out cost checks and update cost plan
if necessary
Stage E: Detail Design
Stage F: Production Information Carry out cost checks
Stage H: Tender Action Prepare reconciliation statement
PART 2, SECTION 1
I 2.1.1.5 VALUE ENGINEERING

A value engineering exercise may be carried out on all or part of the design
during the design process. (For further details see part 1, section 2 of this
handbook.)
This might affect both the client’s requirements and the chosen design
solution and changes would, therefore, affect the budget and the cost plan.
2.1.2 Preliminary cost studies and feasibility studies
G 2.1.2.1 It is recommended, as a matter of importance, that before and during the

formulation of the client’s brief (Design Stage B: Feasibility), the quantity
surveyor, in consultation with other members of the design team and the
client, should undertake such feasibility studies as may be necessary to ensure
that the client’s requirements can be reasonably accommodated within the
finance that is available for the project. The client’s budget is established as a
result of these studies. (See 2.1.3.)
2.1.3 Budget
Budget is the total expenditure authorised by the client which is the
responsibility of the design team at the end of the feasibility stage (Design
Stage B).
(a) To establish the limit of expenditure necessary to meet the client’s brief.
The client’s and project’s status with regard to VAT (Value Added Tax) will
also need to be established;
(b) to provide the client with a statement of the likely area and quality of
building, which is achievable within the limit of expenditure;
(c) to provide a statement of the recommended methods of construction and of

the contractual procedures to achieve the required occupation date; and
(d) to provide the client with alternative budgets for different occupation dates
and qualities of building, if appropriate.
G 2.1.3.3 INFORMATION REQUIREMENTS
(a) The ideal requirements from the client and members of the project team
to the quantity surveyor are given below. On projects where this level of
information is not available, the quantity surveyor should state clearly any
assumptions made. It is possible to produce a typical elemental estimate for
PART 2, SECTION 1
a particular type of building from very little information, but it is important to

clarify as many information issues as possible before such an estimate is
accepted as the budget for a particular project.
(b) Information required from the client:

• location of the site; availability of the site for commencement of
construction work;
• in conjunction with the designer, architect or building surveyor, a
schedule of accommodation;
• names of other similar buildings of broadly suitable quality if
appropriate;
• the required occupation date or phased occupation dates;
• any specific requirements relating to life-cycle costs;
• any specific requirements as to specification and/or procedures;
• requirements in respect of the treatment of inflation;
• instructions regarding Construction (Design and Management)
Regulations; and
• the client’s VAT status and any other tax matters which may affect the
overall cost of the project.
(c) Information required from the designer, architect, building surveyor, or

other source:
• approximate location of the building on the site;
• advice on necessary storey heights for any specialist areas shown on
schedule of accommodation;
• advice on statutory regulations;
• advice on routes of public sewers and the like;
• designer’s concept of building; and
• names of similar projects previously designed by the practice.
(d) Information required from the structural engineer:

• advice on probable ground conditions;
• advice on probable floor loadings; and
• any information on structural solutions.
(e) Information required from the services engineer:

• advice on areas of building which will require specialist engineering
services;
• any information on the types of systems; and
• advice on availability of public utility services.
Note: If the quantity surveyor is not responsible for cost planning the
engineering services, this should be clearly stated in the budget and cost plan.
The information from the quantity surveyor to the design team is as follows:
PART 2, SECTION 1
(An example of a format for the quantity surveyor’s report is given in

Appendix B to this Section.)
(f) Information to be provided to the client involves a report containing:

• the budget, with alternative proposals if appropriate;
• a statement of the basis of the budget calculation including any
important assumptions made;
• a statement setting out the programme for design and construction on
which the budget is based;
• an outline cash-flow forecast;
• a statement of any items not included; and
• assumptions in respect of inflation forecasts and current/future market
conditions.
(g) Information to be provided to the designer:

• a copy of the report sent to the client; and
• a more detailed statement of the quantity and quality parameters
included in the calculations.
(h) Information to be provided to other consultants:

• such quantity and quality parameters as relate to their area of design.
G 2.1.3.4 METHODS OF PREPARATION
(a) The method of preparation depends on the type of project involved.

Unusual projects, projects of great complexity and projects containing a large
element of alterations are more difficult to budget accurately at an early stage.
(b) For most types of project, it is possible to build up an elemental budget

using the parameters set out under G 2.1.3.5. This can be based on cost
information from previous projects, from the RICS Building Cost Information
Service (BCIS), other published sources, or on an appropriate cost model.
(c) The main elemental quantities of hypothetical buildings can be generated

using agreed parameters, to which rates applicable to agreed quality and
performance standards can be applied. An example of a method of calculating
hypothetical quantities is described in Appendix C to this Section.
(d) Once the budget has been established, it provides the first cost plan for the
project, and the framework for the actual design to be developed.
G 2.1.3.5 STATEMENT OF QUANTITY AND QUALITY PARAMETERS
The main parameters which should normally be incorporated in the

calculation are as follows (the list is not exhaustive):
PART 2, SECTION 1
(a) Quantity
• in addition to the briefed areas, a statement of the allowances (e.g.
circulation) used to calculate a gross floor area;
• the number of storeys of a possible solution;
• the storey height(s);
• the square index or wall/floor ratio (see appendix C to this section);
• the density of vertical division or partition/floor ratio (see appendix C
to this section);
• proportion of window area;
• floor loadings;
• thermal resistance values of fabric;
• air change rates;
• heating and hot-water loads;
• lighting levels;
• total electrical load;
• areas of the brief with special functions of significant cost;
• road area and number of car parking spaces;
• paved pedestrian areas; and
• length of boundary walls or fencing.
(b) Quality
• A general statement of quality and specification which relates to the
rates used for the budget calculation. This should cover specifically at
least the following: foundations, roof, external walls, floors and
vertical circulation, internal vertical division, internal finishes,
lighting and other services. External works should include roads,
paths, landscape, boundary walls and fences, and service mains,
planting and the like.
G 2.1.3.6 INFLATION
(a) The prediction of future inflation may not be necessary for some clients,
and a statement of cost at current prices may be adequate. Where an
assessment of inflation is required for more than a few months ahead, a range
of probable inflation is best provided. This can be calculated using
predictions published, for example by BCIS or the Department of Trade and
Industry. The assumptions upon which the prediction is made should be
stated.
(b) Some clients, particularly in the public sector, have their own inflation
controls. Where the client requests that a particular level of inflation be
included in the budget, the quantity surveyor should inform the client if he or
she believes it to be unrealistic.
G 2.1.3.7 COST REPORTING

If at any time during the design process it becomes apparent that the agreed
budget is likely to be exceeded without the brief being changed, the client
should be informed and instructions requested. Likewise, if it becomes
PART 2, SECTION 1
apparent that the whole of the agreed budget will not be required, the client
should be informed.
2.1.4 The cost plan at outline proposals stage
The cost plan at outline proposals stage is a statement of the probable cost of
the project at Design Stage C which sets out the cost targets for the main
elements of a building, together with their approximate quantity and quality
parameters.
(a) To describe, together with the outline proposal drawings, the chosen
distribution of the resources within the budget to provide a balanced design to
meet the client’s needs;
(b) to set cost targets for the main elements so that, as the design develops, the
targets can be checked and adjustments made so that the overall cost of the
project is managed within the budget;
(c) to provide the design team with controls which communicate the costs,
quantity, quality and time parameters to be followed; and
(d) to provide the opportunity for consideration of life-cycle costs.

The basic information requirements from the members of the project team to
be provided to the quantity surveyor are as follows:
(a) Information required from the client:

• the budget. Where alternative budgets have been quoted in the budget
report, the client should state the preferred alternative;
• confirmation of the programme for design and construction times stated
in the budget report;
• confirmation of the brief;
• acceptance or variation of any other matters within the budget report;
and
• authority to proceed.
(b) Information required from the designer:

• outline drawings of the building and site works indicating alternative
solutions; and
• an indication of the preferred specification for the main elements.
(c) Information required from the structural engineer:

• outline proposals or alternative structural solutions.
PART 2, SECTION 1
(d) Information required from the services engineer:

• outline proposals for installations, indicating any alternative systems;
and
• an indication of the preferred specification, after acceptance by the
designer of its visual implications.
(e) Information required from specialist consultants:

• outline proposals.
The basic information requirements from the quantity surveyor to the design
team are as follows:

(f) Information to be provided to the client involves a report containing:

• a statement of cost;
• a broad indication of the specification;
• a statement of floor areas;
• a request for decisions on any alternative proposals and/or procurement
routes, with advice thereon;
• an updated cash-flow forecast;
• allowances for contingencies and design reserve; and
• an update of inflation projections.

• a copy of the documents sent to the client; and
• the cost plan with target costs for each element.
(h) Information to be provided to other consultants:

• such quality and quantity parameters as relate to their design
responsibilities and target costs.
(a) The method of preparation should be appropriate to the level of detail

available for each element and may be:
• the measurement of approximate quantities and the application of rates
to the quantities generated;
• comparison of the requirements with analyses of previous projects of a
similar character;
• use of appropriate cost models; and/or
• a mixture of the above methods.
(b) Evaluation should be made of the alternative forms of construction, or

systems, of the ‘key’ elements, e.g. structural elements, and service
installations. The ‘key’ elements on each project will vary. However, they are
likely to be those with major financial consequences, and to include the
structural and service elements.
PART 2, SECTION 1

The quantity surveyor’s statement should include the following:
(a) Quantity
Confirmation of information provided at budget stage with the addition of:
• the areas of the accommodation divided into use classification (e.g.
office/classroom space, sanitary accommodation space, plant-room
space, circulation space), totalled to give gross floor area; and
• a schedule of those items for which lump sum allowances have been
incorporated and a note on the sources of this information.
(b) Quality
• a statement of quality and specification, in a similar format to that
provided at budget stage, expanded to incorporate additional
information. The parameters should follow those included at the budget
stage, and where possible, be based upon the outline drawings and
preferred specifications.
G 2.1.4.6 DESIGN AND CONSTRUCTION PERIOD
(a) In establishing the outline cost plan, it is recommended that the quantity
surveyor take account of proposals made by the other members of the design
team and their effects upon both the design and construction programmes.
(b) If completion dates are critical, components and/or systems should be

selected with a view to the availability of acceptable alternatives so as to avoid
supply difficulties.
G 2.1.4.7 CONTROLLING CHANGES TO THE COST PLAN
Should a change be proposed to the outline cost plan, or to the scope of the
work, the following procedures should be implemented:
• all relevant members of the design team should be informed;
• the designer should confirm his agreement, in principle, to the
proposal;
• no proposal should be incorporated into the cost plan without the
agreement of the quantity surveyor, and his confirmation or otherwise
that the proposal can be met within the elemental target;
• where the proposal involves additional cost over the elemental target,
or would cause the total budget to be exceeded, the quantity surveyor
should identify to the design team alternative savings that are available
in order to maintain the overall budget;
• the quantity surveyor should take into account, when considering a
proposed change, any likely effect on the design and construction
programme;
• in all considerations of alternative proposals, the use of consultants for
additional work should take into account any consequential addition to
professional fees. In particular, this applies to consulting engineers,
whose fees are calculated only on specific parts of the project; and
PART 2, SECTION 1
• upon the determination of a proposed change, the quantity surveyor

should communicate to the client and all members of the design team,
the effects of such change and provide an updated cost plan.
G 2.1.4.8 INFLATION
Any changes in inflation forecasts should be reported periodically.
2.1.5 The Cost Plan at Scheme Design Stage

Note: If the cost plan has been produced at an earlier design stage only
updating may be required.
The cost plan at scheme design stage is a statement of the cost of a selected
design at Design Stage D which details the cost targets for all elements of a
building, together with the quantity and quality parameters described by the
scheme drawings and specifications.
(a) To set out for the design team the actual distribution of resources described
by the scheme design;
(b) To set cost targets for all the elements so that, as the detail design develops,
the targets are checked and adjustments made in order that the overall cost of
the project is managed within the budget; and
(c) To provide the whole design team with a control document which
describes, in detail, the costs, quantity, quality and time parameters which
have been adopted.

The information to be provided to the quantity surveyor is as follows:

• confirmation or otherwise that the cost plan prepared at the outline
stage is accepted;
• confirmation of the brief;
• an indication of any preferred alternatives in a previous cost plan;
• acceptance or variation of any other matters within the previous cost
plan report; and
• authority to proceed.
(b) Information required from the designer:

• scheme drawings and scheme specifications.
(c) Information required from the structural engineer;

• scheme drawings and scheme specifications;
PART 2, SECTION 1
• confirmation of floor loadings and the like; and

• provisional indication of reinforcement weights, where appropriate.
(d) Information required from the services engineer:

• scheme drawings and scheme specifications; and
• detailed design parameters, e.g. heat loads, and electrical loads.
(e) Information required from specialist consultants:

• scheme drawings and scheme specifications.
The basic information requirements from the quantity surveyor to the design
team are as follows:

(f) Information to be provided to the client, involves a report containing:

• a statement of the cost;
• a statement of the specification;
• a statement of the floor areas;
• a statement of the proposed design and construction programme;
• a cash-flow forecast, where appropriate;
• a statement of the relevant life-cycle costs, where appropriate; and
• an update of inflation forecasts.

• a copy of documents sent to the client; and
• the cost plan with target costs for each element.
(h) Information to be provided to the other consultants:

• such quality and quantity parameters as relate to their area of design
and their target costs.
(a) The method of preparation is normally by measurement of approximate

quantities from the proposed scheme drawings. The degree of detail to be
measured should relate to the cost significance of the elements in the particular
design. The pricing should be similarly related. Some elements may still be
most suitably priced on an elemental unit rate basis, where the cost significance
is low. Major elements will normally need to be priced in greater detail.
(b) The preliminary engineering and specialist services scheme drawings and
outline specification notes will be required from the consulting engineers,
from which approximate quantities of equipment can be measured and priced
using all-in rates. Pipework and cables will normally still need to be priced on
an overall basis relating to floor area or service points at this stage. This
ensures that the likely implications of the builder’s work are understood by the
design team and the costs are taken into account.
PART 2, SECTION 1

The quantity surveyor’s statement should include the following:
(a) Quantity
confirmation of the information provided at outline proposal stage
(b) Quality
a statement of quality and specification based on scheme drawings in
sufficient detail to provide control of the production information drawings by
the designer and consultants
(c) Life-cycle information

a statement of the likely relevant maintenance, cleaning, and running costs
which are required or implied by the scheme design proposals and the
expected life of major components.
G 2.1.5.6 CONTROLLING CHANGES TO THE COST PLAN

The principles have been described in G 2.1.4.7.
G 2.1.5.7 INFLATION
Any changes in inflation forecasts should be reported.
2.1.6 Cost Checking

Cost checking is the process of calculating the costs of specific design
proposals and comparing them with the cost plan during the whole design
process (Design Stages D–F).
(a) To confirm that as the design develops, the cost remains within the budget;
and
(b) To reduce the abortive design work and lost time caused through
proceeding too far in the design process before realisation that the budget will
be exceeded.
2.1.6.3 PRINCIPLES
(a) The methods will vary according to the stage reached in the design process.
Normally, however, this takes the form of measurement of approximate
quantities from the consultants’ drawings to provide a check on the quantity
and quality of parameters set down in the appropriate cost plan. The gross
floor area should always be the first check at any stage.
(b) The dominant considerations in deciding the priorities for cost checking
elements are as follows:
PART 2, SECTION 1
• the cost significance of an element related to the total cost of the

project; and
• the known variability in cost of any element. Should a wide range of
cost be possible in an element, it becomes necessary to cost check it
before checking any elements of low variability but of the same overall
cost significance.
G 2.1.6.4 IDENTIFICATION AND NOTIFICATION OF EXCESS COSTS
(a) It is recommended that judgement be applied before notifying the designer

of possible excess expenditure in a particular element. If an excess revealed
during cost checking is of such significance that it is highly improbable that
compensating savings are available elsewhere, then such excess should be
reported immediately and the design team be asked to consider modification
of the cost plan. If, however, the excess (or saving) revealed in an element is
relatively small and there are still a number of elements to be checked, it is
usually more appropriate to advise the designer of the difference and to
suggest that action is held until other cost checks have been carried out.
(b) It is important for the quantity surveyor to maintain records of the cost
checking process, and to set down in summary the value of the elements cost
checked compared with the cost plan targets. Identification of the drawings
and information upon which the cost check has been based is also important.
2.1.7 Action after Receipt of Tenders

G 2.1.7.1 DEFINITION
(a) Action after receipt of tenders is that required at the tender stage (Design
Stage H) in analysing each tender and updating information for the client and
consultants.
(b) The following points should be noted:

• In most cases, sound cost planning will produce tenders within budget.
If, due to market conditions or late changes in designs and
specification, adjustments need to be made to a tender, information on
potential savings will need to be identified by the design team; and
• If there are significant changes from the initial tender documents,
consideration should be given to the need for seeking revised tenders.
(a) To obtain a contract sum within the approved budget; and
(b) To provide suitable analyses for future projects.
PART 2, SECTION 1

Information to be provided to the quantity surveyor is as follows:

• acceptance of potential savings, if required;
• details in respect of any analyses required. (Where the client body is a
Public Authority or similar, where standard analyses are always
required, consideration of this matter should be given during the
preparation of the Bills of Quantities); and
• permission to submit analyses to BCIS if appropriate.
(b) Information required from the designer, architect, building surveyor and
other consultants;
• a provisional list of potential areas of saving (to be considered during
tendering period and before tender acceptance); and
• a detailed list of drawings and other sources of data from which to
determine actual savings, if required.
(c) Information required from other sources:

• indexing of the tender by BCIS to establish confirmation of tender
levels, if appropriate.
The basic information requirements from the quantity surveyor are as follows:
(d) Information to be provided to the client involves a report containing:

• a statement of the cost reconciled to the latest budget;
• any further information in respect of the construction programme; and
• an updated preliminary cash-flow forecast, where appropriate.
(e) Information to be provided to the designer:

• a copy of documents sent to the client; and
• a detailed reconciliation between the tender and the latest cost plan.
(f) Information to be provided to the other consultants:

• such information as relates to their area of design and associated costs.
Appendix A: Sources of cost information

A1 OBJECTIVE
To ensure that all costs used are up to date and accurate.
A2 SOURCES
A2.1 Elemental cost analysis

• in-house cost analyses of previous projects;
• Building Cost Information Service (BCIS); and
• Architects’ Journal.
A2.2 Unit rate information

• in-house priced bills of quantities;
• specialist suppliers’ quotations;
• Spon’s (E & FN Spon) – a range of price books covering most areas of
construction;
• Laxton’s – a range of price books covering most areas of construction;
• Ti Wessex – a range of price books covering most areas of construction;
• Griffiths Building Price Book;
• Building Maintenance Information’s Building Maintenance Price Book;
and
• Glenigan Cost Information Services – Material Price Guides.
Note: Current editions of price books are available from RICS Books.
A2.3 Published indices

• tender indices and cost studies on regional variations – BCIS;
• the published indices of the Department of Trade and Industry;
• Price Adjustment Formulae for Construction Contracts (NEDO) Indices –
Department of the Environment, Transport and the Regions;
• Architects’ Journal; and
• Building.
A3 The use of published information
The following points should be considered carefully when using any of the
above information:
• differential rates of inflation on various aspects/elements of the
building;
• acute shortages in specific trades at different times;
• regional variations;
• market conditions applicable to information based on project specific
information such as elemental cost analyses and bills of quantities;
• external published information;
The Surveyors’ Construction Handbook Part 2, Section 1, Effective from 1/7/03 Page 1
Appendix A (05/03)
• consideration of the tender period of the analysis and its relationship to the
current project’s tender period;
• high levels of inflation demand constant checking and revision of rates and
prices;
• the assumption that cost information in elemental cost analysis is tendered
price information, whereas a significant amount could be in prime cost or
provisional sums;
• initial quotations from specialists are likely to be low;
• building regulations can be statutorily amended, e.g. energy conservation
measures have increased the ‘U’ value (a measurement of thermal
resistance) requirements for insulation properties of roofs and walls. Care
must therefore be taken to ensure that the analysis used is consistent with
current building standards;
• firm price or fluctuating contract terms;
• special planning conditions applying either to the analysed or to the
current project; and
• site-specific constraints in either the analysed or current project.
Page 2 Part 2, Section 1, Effective from 1/7/03 The Surveyors’ Construction Handbook
Appendix A (05/03)
PART 2, SECTION 1, APPENDIX B
Appendix B: Format of budget and cost plans

B1 OBJECTIVE
B1.1 To communicate clearly the basis of the budget and cost plans to the client,
designer and consultants.
B2 FORMAT
B2.1 The presentation of information to the client and design team should be of a
high standard. Budget and cost plans result from the application of a high level
of professional skill, and the format of documents should reflect the
importance that the profession attaches to this service.
B2.2 The example format included here is intended to be an example of good

practice showing the main areas of information that may require coverage.
The presentation and content will need to be adjusted to meet the specific
requirements of individual organisations and their clients. The ‘Report to
Client and Design Team’ is intended as a guide as to what can be provided to
a client to ensure that there is a clear statement of the budget or cost limits, its
inclusions and exclusions, together with the total programme to which the
budget relates and the standards which have been used in its calculation.
These are client orientated. Provision is made for the quantity surveyor to
suggest alternatives which the client may wish to consider. A copy of
information sent to the client should also be sent to the design team.
B2.3 Additional information to be sent to the design team once the cost plan is
prepared is set out in the ‘Report to the Design Team’. The main parameters
affecting the cost targets should be clearly set out.
B2.4 The level of detail to be included in these documents should relate to the size
and complexity of projects. Simple projects may require less information than
shown in the example; complex projects significantly more.
Appendix B (05/03)
REPORT TO CLIENT AND DESIGN TEAM (referred to in B2.2 of this appendix)
CONSTRUCTION BUDGET AND PROGRAMME

Client
Project
Location
Budget serial number:
COSTS (for basis see sheet .......)
Price base date:
New building work:
Site works:
Alterations:
Construction costs (at stated price base)
Estimate inflation to probable tender date of
Construction costs at tender
Estimated increased costs payable to

contractors during construction period
Construction costs at completion
Professional fees of all consultants

including expenses
Value Added Tax – On construction %
On fee %
Total budget of construction works and fees
Exclusions from budget
Appendix B (05/03)
zzz
REPORT TO CLIENT AND DESIGN TEAM (continued)
TIME
Preliminary/Final Programme (weeks)
as Budget Cost Alternative 1 Alternative 2
0 0 0
Client decision to accept budget and proceed
Final brief and scheme design approved
Receipt of first tenders
Formation of contract
Construction commencement
Client occupation: phase

phase
phase
phase
Total Cost Variation (including fees)
Contractor and/or construction implications of programme
The alternative time scales shown make the following assumptions:
Alternative 1
Alternative 2
CASH FLOW – FORECAST

Quarterly from acceptance of budget and authority to proceed (including fees)
1Q 2Q 3Q 4Q 5Q 6Q 7Q 8Q 9Q 10Q 11Q 12Q Balance Total
As Budget Cost
Alternative 1
Alternative 2
Note: All figures in thousands Construction commencement quarter indicated by ‘C

’Occupation quarter indicated by ‘O’ Balance shown normally payable during first year of occupation
Appendix B (4/98)
BASIS OF BUDGET
Areas
Schedule of accommodation Area m2 Min. floor to Max. floor Comment

ceiling height (m) loadings – kN/m2
TOTAL FLOOR AREA
Quality Standards
External elevations:
Internal finishes:
Heating & ventilation:
Lighting:
Site works:
Other (specify):
Exclusions from budget:
Appendix B (4/98)
Alternative standards
Alternatives Cost: Comment

extra/saving
Budget prepared by:
Signature: ____________________________________________ Date: ____________________
Firm: ____________________________________________
____________________________________________
____________________________________________
____________________________________________
Appendix B (05/03)
REPORT TO DESIGN TEAM (referred to in B2.3 of this appendix)
TECHNICAL QUANTITY AND QUALITY PARAMETERS
Budget serial number
BUILDING
Quantity
Gross floor area m2
Maximum square index (Perimeter on plan m.)
No. of storeys Floor to ceiling heights:

lowest floor m.
intermediate floors m.
highest floor m.
Floor/roof zone m.
Calculated external wall/floor ratio Proportion of glazed external wall area %
Density of vertical division (length of partitions and internal walls measured over
door openings m.)
Calculated partition/floor ratio
Lifts Number Type

____________________________ ____________________ _______________________________
Stairs: number of flights
Structural
Ground bearing pressure kN/m2 Ground water level
Floor loadings: Ground kN/m2 (maximum live)

Intermediate kN/m2 (maximum live)
Highest kN/m2 (maximum live)
Roof loading: kN/m2 (maximum live)
Environmental
Fabric ‘U’ values: Roof W/m2°C
Walls (average) W/m2°C
Ground floor W/m2°C
Air change rates and air temperature

(Specify spaces and rates/hour and minimum temperatures)
Heating load kW ( W/m2)
Hot water load kW
Appendix B (05/03)
REPORT
REPORT TO DESIGN
TO CLIENT TEAM
AND DESIGN (continued)
TEAM (continued)
TECHNICAL QUANTITY AND QUALITY PARAMETERS (continued)
Lighting levels
(Specify spaces, lux level and load in W/m2)
Total lighting load kW ( w/m2)
Total power load kW ( w/m2)
Special areas with higher than average service or other costs (specify)
Other
External Works
Site area hectares
Road area m2 Car Parking: Number of spaces No.
Area m2
Pedestrian paved area m2
Boundary walls or fencing m2
Other
If quantities calculated from drawings state drawing number(s) etc.
Appendix B (4/98)
REPORT
REPORT TO DESIGN
TO CLIENT TEAM
AND DESIGN (continued)
TEAM (continued)
COST PLAN Building: .....................................................................................................
Element Total cost Cost per m2 Element unit Element unit

quantity rate
1 Substructure
2A Frame
2B Upper floors
2C Roof
2D Stairs
2E External walls
2F Windows and external doors
2G Internal walls and partitions
2H Internal doors
2 Superstructure
3A Wall finishes
3B Floor finishes
3C Ceiling finishes
Internal finishes
4 Fittings
5A Sanitary appliances
5B Services equipment
5C Disposal installations
5D Water installations
5E Heat source
5F Space heating and air treatment
5G Ventilating systems
5H Electrical installations
5I Gas installations
5J Lift and conveyor installations
5K Protective installations
5L Communications installations
5M Special installations
5N Builder’s work in connection
5O Builder’s profit and attendance
5 Services
Building sub-total
6A Site works
6B Drainage
6C External services
6D Minor building works
6 External works
7 Preliminaries
Total (less contingencies)
8 Contingencies
Construction costs
Appendix B (4/98)
REPORT
REPORT TO DESIGN
TO CLIENT TEAM
AND DESIGN TEAM (continued)
(continued)
COST PLAN Building: .....................................................................................................
Elements Specification included in Alternatives Cost + or –

budget/cost plan
1 Substructure
2A Frame
2B Upper floors
2C Roof
2D Stairs
2E External walls
2H Internal doors
3A Wall finishes
3B Floor finishes
3C Ceiling finishes
4 Fittings and furnishings
Appendix B (4/98)
REPORT
REPORT TO DESIGN
TO CLIENT TEAM
(continued)
SPECIFICATION Building: ................................................................................................
Elements Specification included in Alternatives Cost + or –

budget/cost plan
5E Heat source
5L Communication installations
5N Builder’s work in connection with

services
5O Builder’s profit and attendance on

services
6A Site work
6B Drainage
6D Minor building works
Appendix B (4/98)
REPORT
REPORT TO DESIGN
TO CLIENT TEAM
(continued)
COST TARGETS
Building: .......................................................... Price base: ............................................ 19 ...............
Elements Parameter Rate Target cost Cost per m2
Appendix B (4/98)
Appendix C: Element Unit Quantities Generation for Hypothetical

Buildings
Where very little quantity information is available at the early stages of a project,
estimates of elemental quantities can be produced using standard formulae and typical
assumptions. Some of the most common formulae and some worked examples are
given here.
WALL TO FLOOR RATIO
This is a simple method of expressing the relationship of the external walls to internal
floor area. It is the ratio of the area of external walls (including windows and doors) to
the gross internal floor area.
Formula w = e where e = area of external walls including

A windows and doors
A = gross internal floor area
w = wall to floor ratio
SQUARE INDEX
This is an alternative way of expressing the relationship between the floor area and the
external walls. It describes the degree to which the perimeter length of an actual
building exceeds that of a building of the same area which is a perfect square. Any
single storey building can be described, as can also multi-storey buildings, with a
constant shape on each floor.
Formula s = p where p = perimeter length on plan

—
4í a a = area on plan (not the gross floor area in
multi-storey buildings)
s = square index
DENSITY OF VERTICAL DIVISION
This density provides a coarse measure of the amount of partitioning, loadbearing

walls, etc. that a building contains. As the formula includes the perimeter of the
building, it takes into account the contribution to the enclosure of spaces that this
makes.
Formula d = ( 1–2 åp) + L where p = sum of the perimeter lengths of a

building measured on each floor
A
L = total length of partitions, etc. measured
over doors
A = gross internal floor area
d = density of vertical division
Appendix C (4/98)
Example of element quantity generation for a hypothetical building

ASSUMPTIONS
From brief, gross floor area = 1350 m2 (including circulation)

Site area dictates a two storey solution = 2 storeys
Average floor to ceiling height: 2.7 m.
Assumed floor/roof zone: 0.6 m.
Square index*: 1.4
Wall to floor ratio*: 0.7
Percentage of windows and doors in external walls*: 30%
Density of vertical division*: 0.3
Area of ground floor = 675 m2
* These parameters can be based on information from typical or similar schemes.
The quantities calculated in this, or similar ways, can then be used with selected
element unit rates to calculate budgets and cost plans for projects in the earliest stages
of design, or for checking the approximate cost difference of alternative design
solutions.
† A percentage can be used to split ‘wall’ from ‘window’, e.g. window and door area
= external walls × w = 945 m2 × 30% = 284 m2.
Appendix C (4/98)
where A= gross floor area

n= number of storeys
a= ground floor area
s= square index
f= floor to wall ratio
d= density of vertical division
w= percentage of windows and doors in external walls.
Appendix C (4/98)
PART 2, SECTION 1, APPENDIX D
Appendix D: Further reading

A selection of further reading is given below. Whilst not comprehensive it is
considered to be appropriate. Copies of articles and older books are available from the
RICS Library whilst current books are available from RICS Books
(www.ricsbooks.com).
BOOKS
Ahuja, H. N., Successful Construction Cost Control, John Wiley & Sons, New York,
1980
Ashworth, A. and Hogg, K., Willis’s Practice and Procedure for the Quantity
Surveyor (11th edition), Blackwell Science, Oxford, 2001
Ashworth, A., Building Economics and Cost Control: Worked Solutions,
Butterworths, London, 1983
Ashworth, A., Contractual Procedures in the Construction Industry (4th edition),
Longman, 2001
Ashworth, A., Cost Studies of Buildings (3rd edition), Longman, Harlow, 1999
Ashworth, A., Pre-Contract Studies: Development, Economics, Tendering and
Estimating (2nd edition), Blackwell, Oxford, 2002
Bathurst, P. E. and Butler, D. A., Building Cost Control Techniques and Economics
(2nd edition), Heinemann, London, 1980
Brandon, P. (ed.), Building Cost Techniques: New Directions, E & FN Spon, London,
1982
Brandon, P. S. (ed.), Building Cost Modelling and Computers, E & FN Spon, London,
1987
Buchan, R. D., Fleming, F. W. E. and Grant, F. E. K., Estimating for Builders and
Surveyors (2nd edition), Butterworth Heinemann, Oxford, 2003
Building Cost Information Service, Elements for Design and Build, BCIS, Kingston
upon Thames, 1996
Building Cost Information Service, Standard Form of Cost Analysis: Principles,
Instructions and Definitions, RICS, 1969 (reprinted August 2001)
Cartlidge, D. P. and Mehrtens, I. N., Practical Cost Planning: A Guide for Surveyors
and Architects, Hutchinson, London, 1982
Chudley, R. and Greeno, R., Building Construction Handbook (4th edition),
Butterworth Heinemann, Oxford, 2001
Ferry, D. J., Ferry, J. D. and Brandon, P. S., Cost Planning of Buildings (7th edition),
Blackwell Science, 1999
Egan, J. and Construction Task Force, Rethinking Construction, DETR, London, 1998
Gruneberg, S. L. and Weight, D. H., Feasibility Studies in Construction, Mitchell,

London, 1990
Appendix D (05/03)
Hackett, M. et al., Pre-Contract Practice and Contract Administration for the Building
Team (9th edition), Blackwell, Oxford, 2002
Hall, F. and Greeno, R., Building Services Handbook (2nd edition), Butterworth
Heinemann, Oxford, 2003
Institution of Civil Engineers, Management of International Construction Projects,

Thomas Telford, London, 1985
Jaggar, D. et al., Building Design Cost Management, Blackwell, Oxford, 2002
Jaggar, D. and Morton, R., Design and the Economics of Building, E & FN Spon,
London, 1995
Jaggar, D. M. and Liverpool John Moores University, Civil Engineering Cost Analysis
(CECA), BCIS, Kingston upon Thames, 1997
Kelly, J. et al., Best Value in Construction, Blackwell, Oxford, 2002
Kharbanda, O. P., Stallworthy, E. A. and Williams, L. F., Project Cost Control in

Action (2nd edition), Gower Technical Press, Aldershot, 1987
Latham, M. and Department of the Environment, Constructing the Team: Joint Review
of Procurement and Contractual Arrangements in the United Kingdom Construction
Industry: Final Report July 1994, HMSO, London, 1994
Masterman, J., Introduction to Building Procurement Systems (2nd edition), Spon
Press, 2001
McCabe, S., Benchmarking in Construction, Blackwell Science, Oxford, 2001
Miller, F., Building and Civil Engineering Cost-Value Comparisons, Ruthtrek

Limited, Herne Bay, 1992
Neil, J. N., Constructing Cost Estimating for Project Control, Prentice Hall Inc., New
Jersey, 1982
Nisbet, J., Estimating and Cost Control, Batsford, London, 1961

Pilcher, R., Project Cost Control in Construction (2nd edition), Blackwell Scientific
Publications Ltd, Oxford, 1994
Royal Institution of Chartered Surveyors, Developing an Appropriate Building
Procurement Strategy (see part 3, section 1 of this handbook)
Seeley, I. H., Building Economics: Appraisal and Control of Building Design Cost and
Efficiency (4th edition), Macmillan, Basingstoke, 1996
Stone, P. A., Building Design Evaluation: Costs in Use (3rd edition), Spon, 1980
Stone, P. A., Building Economy, Design Production and Organisation (3rd edition),
Pergamon Press, Oxford, 1983
Strategic Forum for Construction, Accelerating Change, Rethinking Construction,

2002
Ward, S. A., Cost Engineering for Effective Project Control, John Wiley & Sons, New
York, 1992
Appendix D (05/03)
Wilson, R. M. S., Cost Control Handbook (2nd edition), Gower Publishing, Aldershot,
1983
ARTICLES AND REPORTS
Abdullah, R. Z. and Tyler, A. H., ‘Meeting the Problems of Cost Control Systems’,
Building Technology & Management, 24(4) August/September 1988, 14–16(3)
Baxendale, A. T., Integration of Time and Cost Control, Chartered Institute of
Building (Construction Papers 7), Ascot, 1992
Betts, M. and Gunner, J., ‘Consultant Cost Control in The Pacific Rim’, Cost
Engineering, 34 (1) January 1992, 17–24(8)
Bowen, P. and Edwards, P., ‘Interpersonal Communication in Cost Planning During
the Building Design Phase’, Construction Management & Economics, (1996) 14,
395–404(10)
Costing Services, Building Services, 14(11) November 1992, 25–31(7)
Farrow, J. J. and Rutter, D. K., Performance Setting and Monitoring on Building Projects
for Contractors, Chartered Institute of Building (Construction Papers 67), Ascot, 1996
Ferry, D. J. O. and Flanagan, R., Life Cycle Costing: a Radical Approach, CIRIA
Report 122, Construction Industry Research and Information Association, London,
1991
Gilmour, J. and Skitmore, M., ‘A New Approach to Early Stage Estimating’,
Chartered Quantity Surveyor, 11(9) May 1989, 36–38(2)
Kaka, A. P. and Price, A. D. F., ‘Modelling Standard Cost Commitment Curves for
Contractors’ Cash Flow Forecasting’, Construction Management & Economics, 11(4)
July 1993, 271–283(13)
Ministry of Education Building Bulletin No. 4, Cost Study, first edition March 1951,
second edition March 1957, third edition 1972
Ministry of Public Building and Works/International Tutor Machines Ltd, ‘Cost
Control in Building Design’, R and D Building Management Handbook 4, HMSO,
London, 1968
Morris, A., ‘A Rational Approach to Cost’, Building, 260(7889) 21 April 1995, 33(1)
Skitmore, M. et al., ‘The Accuracy of Construction Price Forecasts’, University of
Salford, Salford, 1990
Southgate, T., ‘A New Approach’, Chartered Quantity Surveyor, 11(3) November
1988, 35–36
Watson, B., ‘Cost Planning Engineering Services Contracts’, Cost Engineer, 28(4)
1990, 8–10(3)
Watson, K., ‘Procurement – the Key Area for Cost Control’, Construction Computing,
(52) April 1996, 12–13(2)
Appendix D (05/03)
PART 2, SECTION 2
PART TWO: CONSTRUCTION DESIGN & ECONOMICS
I SECTION 2: LIFE CYCLE COSTING
Introduction
It is becoming increasingly important that investment appraisal uses a whole
life approach in a more systematic way than at present. Major construction
clients are now insisting upon an analysis of life cycle costs and not just
capital costs.
The life cycle cost (LCC) of an asset is defined as the present value of the total
cost of that asset over its operating life (including initial capital cost,
occupation costs, operating costs and the cost or benefit of the eventual
disposal of the asset at the end of its life).
Life cycle cost techniques can be used, for example, to:
• evaluate design options at the elemental or component level;

• evaluate total building options, for example refurbishment versus new
build;
• determine optimum maintenance strategies;
• analyse relocation strategies; and
• determine sinking fund requirements to finance planned maintenance
programmes.
Worked examples for the above are included in 2.2.5.
The objective of this Section is to inform chartered surveyors of the increasing

need to adopt life cycle costing (2.2.1) and to introduce them to the techniques
and their application.
2.2.1 The Client Context
2.2.1.1 Following the recession of the early 1990s construction clients are generally
more streamlined and competitive and some recognise that their ongoing
property costs may provide them with the business ‘edge’ they need. There is
therefore increased attention to life cycle costing. The following Sub-sections
expand on this trend by covering recent changes in the industry and their
effect on LCC.
2.2.1.2 VALUE ENGINEERING

Value engineering involves preparing structured option appraisals during the
design process so demonstrating value for money for clients. Its use is
PART 2, SECTION 2
increasing and with it comes the opportunity and need for LCC to be part of
the options appraisal criteria.
2.2.1.3 THE LATHAM REPORT

Sir Michael Latham’s report Constructing the Team1, calls for a 30% real
reduction in construction costs. This statement includes life cycle costs. The
report also strongly advocates the need to ‘build right first time’ in which
environment life cycle cost calculations (involving assumptions about future
maintenance) have more credibility.
2.2.1.4 CONSTRUCTION (DESIGN AND MANAGEMENT) REGULATIONS 1994

The Construction (Design and Management) Regulations 1994 place a
specific duty upon clients and their designers to consider the potential hazards
associated with the construction process during design, and furthermore to
consider the health and safety implications of maintaining the structure when
complete. Such increased focus on maintenance may therefore encourage
greater consideration of maintenance costs. This principle is enshrined in
Regulation 13(2)(a)(i) and (ii) which states:
“(2) Every designer shall:
(a) ensure that any design he prepares and which he is aware will be
used for the purposes of construction work includes among the
design considerations adequate regard to the need:
(i) to avoid foreseeable risks to the health and safety of any

person at work carrying out construction work or
cleaning work in or on the structure at any time, or of
any person who may be affected by the work of such a
person at work,
(ii) to combat at source risks to the health and safety of any

person at work carrying out construction work or
cleaning work in or on the structure at any time, or of
any person who may be affected by the work of such a
person at work.”
It follows that the selection of materials for certain elements of a structure that
may involve maintenance, (particularly where access to those elements
involves working at height), complies with the spirit of Regulation 13. For
example, the selection of PVCu window frames with ‘easy clean’ hinges
involves limited maintenance and allows cleaning from the inside. Similarly
marble flooring is cheaper than cork tiles over a 60-year period and while the
decision to use marble is economically sound it also removes health hazards
1
Latham, M., Sir, (1994), Constructing the Team: Joint Review of Procurement and Contractual
Arrangements in the United Kingdom Construction Industry: Final Report, HMSO London
PART 2, SECTION 2
associated with fumes and vapour when cork has to be resealed. In purely
capital cost terms, the selection of the materials referred to above may be more
expensive than their traditional counterparts.
The use of life cycle costing places initial capital cost in the context of future
maintenance expenditure, and helps justify decisions which have beneficial
health and safety implications.
2.2.1.5 THE PRIVATE FINANCE INITIATIVE (PFI)

The PFI is driven by a cash flow which is achieved by the private sector
provider delivering a service to the client. This service will include the
management of a building which should be heated, cooled, lighted, cleaned,
maintained, secured, insured and renovated. This cash flow should
sufficiently cover all costs and outgoings, leaving the provider with a surplus
or profit which should be commensurate with his risk exposure.
It is therefore critical that the provider accurately predicts the cost in use of the
service or the facility over its operational life so that he can calculate the cash
flows generated by the assets over the term of the contract. Such data is vital
so as to negotiate the complexities of the contract to both parties’ satisfaction.
To assist this process some suppliers give guaranteed long-term costs, e.g. for
lifts and kitchen equipment. By reducing costs over this term it should be
financially viable for the private sector to provide a service to the public sector
and to achieve an acceptable return.
Life cycle costs and their accurate prediction, control and reduction are critical
to the successful performance of a PFI deal.
2.2.1. ENERGY EFFICIENCY ISSUES IN RELATION TO BUILDING PROJECTS

Studies by the Building Research Establishment through the BRECSU
(Building Research Energy Conservation Support Unit) ‘Best Practice
Programme’ have found that energy consumed to heat, light and service
buildings accounts for almost half of the UK’s energy bill, and there is
considerable scope to reduce it. Office buildings were found to have the
highest energy costs, especially prestigious, air conditioned property
(typically £20/m2 per year in 1991 compared to £15/m2 for the same ‘best
practice’ office).
There is common feeling that property overheads are too large, with energy
bills contributing significantly to the operating costs. Energy costs are
potentially one of the most controllable items of overheads and life cycle
costing can be used as a tool for predicting the benefits of investment in
energy efficiency. Typical investments for analysis would be economic
thickness of insulation, energy efficient services, building energy
management system installations, intelligent buildings, energy conscious
refurbishment of buildings and passive cooling techniques versus air
conditioned design. For example, a manufacturer can supply a light bulb some
ten times more expensive than a normal one, however, it lasts longer, uses less
PART 2, SECTION 2
electricity and performs better. Similarly, condensing gas boilers can save
10–20% of fossil fuel bills with pay back in five years.
It is also worth noting that oil is becoming increasingly harder to extract and
environmental concerns generally will increase in the very near future.
Sainsbury has been the first grocery retailer to produce an environmental
report and recognises that energy probably accounts for its single biggest
direct environmental impact. Significantly it is also the third largest
controllable cost in running a typical supermarket.
2.2.1.7 MECHANICAL AND ELECTRICAL BUILDING SERVICES

The increasing capital cost significance and complexity of M & E services has
resulted in greater cost emphasis during the early design stages. Such costing
is increasingly carried out by a specialist Quantity Surveyor so bringing
greater opportunity to focus on M & E life cycle costs which are a significant
proportion of a building’s cost in use, accounted for by the operation, energy
use and replacement costs associated with the M & E installations.
2.2.1.8 BUILDING SUSTAINABILITY

If there is to be a conscious shift of opinion towards sustainable buildings i.e.
those which have a viable life expectancy beyond their initial designed use,
then there has to be a simultaneous re-examination of a building’s costs in use
or perhaps more correctly costs in uses.
Buildings have not been traditionally designed for anything beyond their
immediate requirement. However, as more are being converted to alternative
uses it is probably only a matter of time before investors in property call for
properties to be constructed with a view to extending the building’s usable
life, e.g. conversion to house a growing less mobile and aged population. Such
consideration is more valid the shorter the predicted current building life, e.g.
some light industrial units for English Partnerships have been designed for a
ten-year life. Similarly, Hertfordshire County Council have housing and
nursing homes with a 20-year life expectancy.
Such a concept will require building layouts and structures to be more flexible
with maintenance, re-servicing and conversion to alternative uses being
simplified and made more economical. A cost in use study at design stage may
justify larger bay sizes, raised flooring or greater storey heights to demonstrate
continual viability for future generations.
A cost in use study would explore the economics involved of using a building
for its notional design life and for its intended use in the usual way. However,
supplementary investigations would explore potential alternative uses for the
building and the conversion cost (and possibly the cost in use for a further
notional period). If sufficient consideration were to be given at the initial
design stage for potential future uses of a building, it could be used to
demonstrate the continued asset value of the property and go a considerable
PART 2, SECTION 2
way to minimising the obsolescent properties which currently dominate

certain market sectors.
2.2.2 The Life Cycle Costing Calculation

INTRODUCTION
The calculation generally involves the appraisal of options, each option
having different capital and future costs. To determine and analyse the future
costs it is necessary to establish:
• the building life;

• the discount rate (which, expressed simply, is the difference between the
interest and inflation rate and is used to convert future payments to
present values);
• the cost and frequency of future payments (at the component, elemental
or total building level as appropriate);
• any tax implications (see 2.2.3).
2.2.2.1 THE BUILDING LIFE

An essential element of life cycle costing is defining the life cycle period to be
adopted. An assessment must therefore be made of the life of the investment –
‘building life’.
Typically the relevant building life will be the period over which the
organisation, for whom the study is being conducted, will be expected to hold
an interest in the building, and would take into account the residual value.
At the end of the life of a building, the building (or component) and the land
will have a residual value. In the case of relatively short life cycles or high
value land, residual values can be very significant factors in determining the
optimum life cycle cost options. Residual values are briefly discussed in
Appendix A (and worked example 2.2.5.3 includes a residual value in the
calculation).
When the building life is assessed to be over 40 years, the precise life is not
critical for the purposes of life cycle costing (as discounting, explained below,
minimises the effect of such future payments). In cases where calculations are
based on a relatively short building life, say 20 years or less, the assessment of
the time horizons must be considered with special care.
Building life is influenced by obsolescence, the causes of which are

summarised in Appendix B.
2.2.2.2 THE DISCOUNT RATE

The life cycle cost technique is concerned with the assessment of the time
stream of costs and revenues that will flow throughout the life of a
construction project option.
PART 2, SECTION 2
As ‘money today’ has a different value from ‘money tomorrow’ or ‘money in

ten years’ time’, a technique has to be adopted that will express future costs or
revenues in present values. The process of converting ‘future money’ to
‘present money’ is called discounting.
Discounting involves establishing the discount rate to be used. In making the

decision on a discount rate for a particular project, some judgement will need
to be made about the degree of risk return (interest) and the likely levels of
future inflation rates.
Interest rates are particular to the client and the degree of risk. It is therefore
essential to involve the client (and his accountant if appropriate) in the process
and reach agreement on the discount rate to be used.
Economists, accountants and clients will all have different views about future
levels of inflation and interest rates. Some forecasters may take the view that
as different categories of cost inflate at different rates, these differences
should be taken into account in setting discount rates. These diversities of
view ‘before the fact’ make it difficult to recommend any firm guidelines for
surveyors to adopt for selecting discount rates.
There are two main approaches to discounting:
(a) use a rate which ‘implies’ inflation of future costs and values (in this case
future costs and values will be priced at today’s prices);
(b) use a rate which requires an ‘explicit treatment’ of inflation in relation to

future costs and values, (in this case future costs and values will be priced at
today’s prices and adjusted by a factor to reflect future inflation).
It is suggested that it is easier to deal with the former situation where future
costs and values are assessed at current prices. Three approaches on the
selection of discount rates are given for guidance purposes and in each the
future costs are priced at current prices.
2.2.2.3 DISCOUNT RATE METHODS
(a) Test Discount Rate
In the absence of better information it is recommended that a test discount rate

should be used.
This recommendation is based on the assumption that when inflation rates are
reasonably low, i.e. less than 15%, there is quite a stable relationship between
inflation and the bank base interest rate, implying a real discount rate of
between 4% and 5% (i.e. the interest rate is 4 to 5% greater than inflation). It
is recommended that in the circumstances, where no better information is
PART 2, SECTION 2
available, a test discount rate of 4% is used. This method is often adopted in

the public sector where minimal risk associated with the investment is
assumed.
(b) No risk return discount rate

Investment in long-term Treasury Bonds can be assumed as having no risk,
and are a good reflection of the return to be expected on other investments
where there is no risk. Therefore the discount rate can be taken as the Treasury
Bond rate less an allowance for the expected rate of inflation. On this basis the
discount rate would be assessed as:
Treasury Bond rate of return 8%

Less
Inflation 5%
——
No risk return discount rate 3%
——
(c) Average risk premium discount rate

The average return on equities reflects the interest required on an average risk.
The excess of this rate of return over that expected from the above Treasury
Bonds can then be taken as the premium expected for the average risk. On this
basis the average risk premium could therefore be calculated as:
Average equity rate return 16%

Less
Treasury Bond rate 8%
——–
Average risk premium discount rate 8%
——–
Therefore if construction is deemed to be half as risky as equities, the discount

rate for construction investment could be assessed as:
No risk return 3%
Construction premium risk (8% × ½) 4%
——–
Average construction risk return discount rate 7%
——–
(d) A further approach to establishing a discount rate is to analyse transactions

involving the sale of comparable properties, and to utilise the ‘all risks’ yield
as the discount rate.
In the examples of the calculation of discount rates, concurrent interest and

inflation rates have been added and subtracted in order to clarify the
methodology. This is mathematically imprecise. The actual calculation will
need to be compounded.
PART 2, SECTION 2
In the ‘no risk return discount rate’ method, for example, the calculation
should be as follows:
Treasury Bond rate of return 8%

Inflation rate 5%
Discount rate (i.e. Treasury Bond rate net of inflation
(1 = Treasury Bond rate)

= ——————————— – 1
(1 + Inflation rate)
1.08
= —— – 1
1.05
= 0.02857
= 2.857%
The same methodology should be adopted for actual calculations using other
methods. As an approximation however this may be ignored.
(e) In summary, the effect of future payments on an LCC calculation is in

inverse proportion to the level of discount rates i.e. the higher the discount rate
the less effect future payments have on the LCC calculation. For example, a
risk taking client is less likely to spend money on the building to reduce future
costs since he can use this money to get a higher return elsewhere.
Selection of a suitable discount rate is crucial as it can overwhelm all other

decisions.
Once the discount rate is established valuation tables can be used to convert
future payments to present value. For example, the present value of £100 to be
paid in five years’ time at a discount rate of £4% =
£100 × 0.82192 (from valuation tables at 2.2.5.7 ‘present value of £1’) =

£82.19
Such conversion of future payments to present value provides a basis for

comparing alternative expenditures.
2.2.2.4 THE COST AND FREQUENCY OF FUTURE PAYMENTS

The costs are generally dealt with using current prices (using the discount rate
to allow for inflation), with assumptions made regarding when payments will
occur in the future. 2.2.4 includes possible sources for such data.
Depending upon requirements, some calculations will be relatively

straightforward (see the option appraisal exercise for internal doors as shown
PART 2, SECTION 2
in the worked examples). However, all expenditure throughout the life of the
building could be included if the total building analysis were required.
The major categories of costs are:

• capital costs
• financing costs
• operation costs
• annual maintenance costs
• intermittent maintenance, replacement and alterations costs
• occupancy costs
• residual values and disposal costs.
An expanded check list of costs is given in Appendix C.
Estimates for these costs will be based upon assumptions about future events
and should be clearly stated. Indeed an additional advantage of life cycle
costing is that it requires design assumptions to be stated explicitly rather than
implied.
Although current costs are generally used, it is important that future cost
assessment should reflect any expected divergence of a specific cost from the
level of inflation allowed in the discount rate. For example, it would be unwise
to assume that market conditions would remain unchanged for any extended
period when tender levels for building work are very depressed. Some
allowance should therefore be made to adjust current building prices to more
normal market conditions when pricing future building work.
The level of detail used will be dictated by the availability of information and
the requirements of the client.
The following costs for each category should be considered and where
necessary established with the client.
(a) Capital costs – include land, building, professional fees, furniture and
equipment, or permanent improvements thereto, which form assets for the
business to use in its operation, with an intended useful life of more than one
year. The significance of any tax benefits and grants should be established
with the client.
(b) Financing costs – the method of funding the project should include, inter
alia, the cost effect of alternative sources of funds, the future flexibility of
funds in terms of amounts and sources, and gearing. Consideration should also
be given to
• the accounting effect of capital employed;
• construction period finance charges and long-term finance costs; and
• the taxation implications of the various options.
PART 2, SECTION 2
(c) Operation costs – include estimates of rent, rates, energy costs, cleaning
costs, building related staffing costs and other staffing costs.
(d) Annual maintenance costs – average maintenance costs are available but
once details of design are completed, a more relevant estimate can be
produced based on information obtained from manufacturers or maintenance
managers.
(e) Intermittent maintenance, replacement and alteration costs – replacement

costs can be produced using normal cost estimating techniques.
In seeking a realistic assessment of the life of materials and components,

reference should be made to manufacturers, maintenance managers and other
sources of such data (as discussed in 2.2.4).
(f) Occupancy costs – the cost of performing the function for which the
building is intended (e.g. producing motor vehicles). Occupancy costs are
distinguished from operation costs, as they relate to costs attributable to a
specific process undertaken by the client, which may change within the life of
the building. As an example, a car manufacturer may change to the production
of heavy goods vehicles. This would impact on his occupancy costs, whereas
his building related operation costs could be relatively unchanged. Some
clients might not require the surveyor to take these costs into account, as not
relating directly to the building.
(g) Residual values and disposal costs – estimate of the resale value and the
cost of disposing of the building, plant, land and other assets after the expiry
of the life cycle. Many buildings, particularly those with an ‘open market
value’ will have a significant residual value. Care should be taken in assessing
this value as it can have a major effect on the life cycle costing calculations
(see Appendix A).
2.2.3 Tax Allowances, Incentives and Business Rates

INTRODUCTION
This Sub-section deals with the effect of taxation allowances and incentives
available for expenditure upon property and construction applicable in the
United Kingdom to date, during the life of the asset. A glossary of terms is
included in Appendix D.
Currently, legislation offers tax relief by allowing expenditure upon certain

assets to be depreciated, and to be offset against a private commercial
organisation’s taxable profits.
Tax relief is available on both capital and revenue expenditure. Capital costs
receive this relief by way of capital allowances which are deductible items
from the taxpayer’s taxation liability account. Maintenance costs are a charge
on the profit and loss account, which again reduces the tax payable.
PART 2, SECTION 2
The significance of tax relief depends upon the amount of allowable

expenditure. This varies considerably, being dependent upon the type and
function of the asset, its design and sophistication (particularly in respect of
services) and whether or not the project is a new building or a refurbishment.
The impact of tax relief on the life cycle evaluation lessens proportionately
with the ratio of allowable expenditure to the total expenditure and the timing
of relief, which is dependent on the annual rate of taxation allowances. For
example, a new oil refinery will have a greater proportion of allowance than a
shop unit shell. It is also worth noting that capital allowances tend to be
greater on plant than on buildings, so making the use of efficient plant more
attractive than increasing the thermal efficiency of the building.
The impact of tax relief should be sensitively tested at the earliest possible
stage. A detailed estimate of the allowable expenditure should only be
prepared if tax relief is found to be significant.
2.2.3.1 The following example shows the net discounted cost, after tax relief, of
£1,000 spent on differing types of expenditure.
Where capital
Where capital allowances are Relief given
allowances are allowed on 100% on
allowed on 50% of of capital maintenance
No relief capital expenditure expenditure 100%
£ £ £ £
Expenditure 1,000 1,000 1,000 1,000
Tax relief assuming 35% 1111 222 350

Corporation Tax
Net discounted cost after 1,000 889 778 650

tax relief
1
i.e. 50% of £1,000 × 25% reducing balance × 35% Corporation Tax with future allowances discounted at
10% per annum (a discounting calculation is required in order to establish the above figures).
2.2.3.2 TYPES OF ALLOWANCES
The types of allowances and rates of depreciation often change.
Following the Finance Act 1985, capital allowances available that relate to
Real Property were as follows:
PART 2, SECTION 2
Allowable expenditure Timing or percentage per annum

Plant and machinery 25% (reducing balancing)
Industrial buildings 4% (straight line)
Agricultural buildings 4% (straight line)
Dredging 4% (straight line)
Scientific research 100%
Cemeteries and crematoria Ratio based upon grave spaces used
Dwelling houses let on assured tenancies –
only expenditure expended prior to
1 April 1987 4% (straight line)
Hotels 4% (straight line)
Enterprise zone building expenditure 100%
Mining and certain related construction works 40% plus a ratio based upon usable life
Subsequent to the Finance Act 1997 first year allowances were changed and at
the time of writing were still being finalised.
In certain circumstances allowances may be at a higher rate i.e. they relate to

specific incentives, certain assisted projects or expenditure relates to a
transitional period e.g. terms of the Finance Act 1984 (applicable until 31
March 1987).
Different types of allowances, initial, first year and writing down are
explained in the Glossary of Terms (Appendix D).
Straight line allowances are calculated as a percentage of original cost and at

4% the allowance is spread evenly over 25 years. A reducing balance
computation is achieved each year by first deducting all previous allowance
amounts from original cost and then applying the allowable percentage to the
balance, i.e. 25% in the first year, 25% of 75% in the second, and so on. While
the building itself may be subject to a 4% straight line allowance the plant and
machinery in the building will receive a 25% reducing balance.
It should be noted that the significant part of capital allowance relief on a 25%
reducing balance basis comes in the first five to seven years. This is included
in the above example where the tax relief amount is a product of the
incremental annual writing down allowance, discounted.
Regional development grants (or their Northern Ireland equivalent) may also
be available. These are not treated as taxable and may be disregarded when
assessing the capital cost upon which tax relief is calculated.
Currently the running and maintenance costs of an asset are deductible in full
(i.e. 100% allowance) against taxable profits in the year of expenditure.
2.2.3.3 VALUE ADDED TAX (VAT)

Capital allowances are given against the net capital cost to the taxpayer.
Therefore, as VAT is part of that capital cost, clients will incur differing
overall capital expenditure for the same item depending upon whether they
can or cannot recover, or recover only a proportion of, the VAT.
PART 2, SECTION 2
2.2.3.4 CALCULATION OF THE EFFECT OF CAPITAL AND REVENUE ALLOWANCES

Before calculating the effect of taxation allowances, certain parameters need
to be ascertained:
(a) the Corporation Tax and allowances rate that will be current at the date of
construction of first use;
(b) the future Corporation Tax and allowance rate at the date of replacement;
(c) the Corporation Tax rate current at dates between date of construction of
first use and the date of replacement, against which revenue running costs can
be charged;
(d) whether the owner will be liable to tax during the period between the date
of construction or first use and the date of replacement, and if the owner will
have sufficient taxable profits to use the allowances generated in any one year.
(e) whether the item’s economic life will be shorter than the tax write down
period. This will either generate an added write down amount when it is
demolished, or if the item or building is to be sold at the end of its economic
life, its profit or loss on cost. These circumstances will generate a taxable
profit or loss on proceeds above or below the tax write down value and will
attract a balancing adjustment;
(f) the value of the balancing allowances, charges or taxable profits needs to
be considered against the relevant Corporation Tax rate;
(g) the impact of these adjustments therefore needs to be taken into account in
the life cycle costing assessment.
Caution is further necessary as there are specific restrictions. The recipient has
to prove to the Inland Revenue that he qualifies for allowances (i.e. the
entitlements are aimed at providing incentives for commercial organisations
and therefore expenditure upon residential property is largely excluded.
Entitlements are also restricted between connected persons).
2.2.3.5 DYNAMICS
The surveyor should therefore appreciate the variables and frequent changes
that occur in respect to the application of taxation allowances.
These arise because:
(a) the Government uses taxation to impose fiscal policy and influence the
economy and therefore statutes are introduced amending previous rates of
depreciation, regulations and entitlements;
(b) the interpretation of entitlement is affected by case law precedents.
PART 2, SECTION 2
(c) the Inland Revenue practices and extra statutory concessions develop to
address specific issues or vagaries.
2.2.3.6 APPLICATIONS
Taxation allowances provide the opportunity for innovative funding
arrangements whereby the tax relief can be ‘exported’ to a party who can
enjoy more benefit from the entitlement.
They also need to be advised during property transfers so the relevant

balancing adjustments can be calculated and the purchasers advised of their
proper entitlements.
2.2.3.7 WORKED EXAMPLES

Worked example 2.2.5.3 summarises the effect of capital and revenue
allowances. Worked example 2.2.5.6 includes a detailed calculation of the
capital and revenue allowances.
Business Rates
Large plant and machinery regarded as an integral part of the building can
attract additional rates which can be influenced by design niceties (such as how
the plant is covered over). Expert advice should be sought in such a situation.
Further reading for taxation
Tolley’s Capital Allowances, Tolley Publishing Co. Ltd – generally published

annually.
Butterworths Yellow Tax Handbook, Butterworth & Co. (Publishers) Ltd –

abstract of Statutes
Tax Statutes and Statutory Instruments, CCH Editions Ltd – incorporating

extra statutory concessions
2.2.4 Data Sources

Lack of data in a suitable format for maintenance, replacement and energy
costs is said to be a significant reason for LCC rarely being carried out at
present. Notwithstanding this, Building Surveyors and Facility Managers will
often have valuable in-house data. Furthermore, professional judgement
should not be disregarded.
LCC calculations require information regarding the durability of

materials/components, and/or energy costs. Lack of such accurate data in a
suitable format may affect the credibility of the LCC calculation. However,
while historic data is useful, reality is dependent upon individual design,
installation and usage as well as technical development.
PART 2, SECTION 2
Whilst the selection of data sources given in Appendix F is not

comprehensive, it gives an indication of the level of information available.
Trade literature which is a prime source of detailed information is not
included.
2.2.5 Worked Examples

INTRODUCTION
Life cycle costing can be used in numerous situations. The intention of this
Sub-section is to give the reader an appreciation of its application, as used by
surveyors in practice, and the relative complexities of associated calculations,
ranging from a simple elemental option appraisal to complex total building
analyses.
The examples follow in order of complexity, worked examples 2.2.5.1 and

2.2.5.2 will readily convey the principles of life cycle costing including
discounting. The remainder consider more detailed scenarios.
2.2.5.1 DESIGN OPTION: INTERNAL DOORS

This example is kindly provided by Messrs Gardiner & Theobald, Chartered
Quantity Surveyors. The objective is to evaluate four comparative
specifications over a building life of 60 years using a discount rate of 4% (7%
interest rate less 3% inflation rate). The information is summarised in the table
below with an explanation of the calculation for option 1 detailed at (a) to (d)
below. Any tax implications are excluded.
(a) The present value for purchasing the doors is obviously the same as the
capital cost: £35,000
(b) For the annual running costs:

• £10.89/m2 × 20 m2 = £218
• £218 incurred every year for 60 years at 4% discount
= £218 × 22.6* = £4,927 present value
(c) For maintenance the present cost of £6,040 for new ironmongery and
repainting taking place in, say Year 12 at 4% discount
= £6,040 × 0.62459** = £3,773
(d) The replacement cost after 40 years

= £35,000 (present cost) × 0.20828** = £7,290
• The total present value of the capital cost, annual running cost,
maintenance and replacement costs
= £57,037 showing option 1 is the most expensive life cycle cost
* from valuation tables at 2.2.5.7 (year’s purchase or present value of £1
per period)
**from valuation tables at 2.2.5.7 (present value of £1)
PART 2, SECTION 2
PROJECT: Life Cycle Model SHEET NUMBER: LCCM5

ELEMENT: Internal Doors
Unit: 20 m2
OPTION 1 OPTION 2 OPTION 3 OPTION 4
PROJECT LIFE 60 Years Aluminium Glazed Hardwood Glazed Softwood Metal
Discount Rate 4.00% per annum Vision Panels
Finish Life Finish Life Finish Life Finish Life
40 Years 30 Years 20 Years 30 Years
Discount Rate 4.00% per annum
(Interest Rate (7%), Inflation (3%)) Maintenance Maintenance Maintenance Maintenance
Period Period Period Period
COSTS Estimated Present Estimated Present Estimated Present Estimated Present
Cost Value Cost Value Cost Value Cost Value
Capital Costs
Aluminium Glazed £ 1750.00 m2 35,000 35,000
Hardwood Glazed
Vision Panels £ 1000.00 m2 20,000 20,000
Softwood £ 700.00 m2 14,000 14,000
Metal £ 850.00 m2 17,000 17,000
Contingency – – – –
Total Year 1 Capital Costs 35,000 20,000 14,000 17,000
Annual Running Costs
Aluminium Glazed £ 10.89 m2 218 4,927
Hardwood Glazed
Vision Panels £ 9.99 m2 200 4,520
Softwood £ 5.90 m2 118 2,670
Metal £ 17.99 m2 360 8,140
Total Annual Running Costs 13,068 4,927 11,988 4,520 7,080 2,670 21,588 8,140
Maintenance Year Present
Cost
OPTION 1 Repaint 4 340 340 291
Repaint 8 340 340 248
New ironmongery
Repaint 12 6,040 6,040 3,773
Repaint 16 340 340 182
Repaint 20 340 340 155
New ironmongery
Repaint 24 6,040 6,040 2,356
Repaint 28 340 340 113
Repaint 32 340 340 97
New ironmongery
Repaint 36 6,040 6,040 1,472
Repaint 40 340 340 71
Repaint 44 340 340 61
New ironmongery
Repaint 48 6,040 6,040 919
Repaint 52 340 340 44
Repaint 56 340 340 38
Repaint 8 300 300 219
New ironmongery
Repaint 12 6,000 6,000 3,748
Repaint 16 300 300 160
Repaint 20 300 300 137
New ironmongery
Repaint 24 6,000 6,000 2,341
Repaint 28 300 300 100
Repaint 32 300 300 86
New ironmongery
Repaint 36 6,000 6,000 1,462
Repaint 40 300 300 62
Repaint 44 300 300 53
PART 2, SECTION 2
PROJECT: Life Cycle Model (continued SHEET NUMBER: LCCM5

ELEMENT: Internal Doors
Unit: 20 m2
PROJECT LIFE 60 Years Aluminium Glazed Hardwood Glazed Softwood Metal
Discount Rate 4.00% per annum Vision Panels
(Interest Rate (7%), Inflation (3%)) Maintenance Maintenance Maintenance Maintenance
Cost
New ironmongery
Repaint 48 6,000 6,000 913
Repaint 52 300 300 39
Repaint 56 300 300 33
Repaint 8 320 320 234
New ironmongery
Repaint 12 3,820 3,820 2,386
Repaint 16 320 320 171
Repaint 20 320 320 146
New ironmongery
Repaint 24 3,820 3,820 1,490
Repaint 28 320 320 107
Repaint 32 320 320 91
New ironmongery
Repaint 36 3,820 3,820 931
Repaint 40 320 320 67
Repaint 44 320 320 57
New ironmongery
Repaint 48 3,820 3,820 581
Repaint 52 320 320 42
Repaint 56 320 320 36
Repaint 8 300 300 219
Repaint 12 6,100 6,100 3,810
Repaint 16 300 300 160
Repaint 20 300 300 137
Repaint 24 6,100 6,100 2,380
Repaint 28 300 300 100
Repaint 32 300 300 86
Repaint 36 6,100 6,100 1,486
Repaint 40 300 300 62
Repaint 44 300 300 53
Repaint 48 6,100 6,100 928
Repaint 52 300 300 39
Repaint 56 300 300 33
Replacement Year Present 6,100 3,810
Cost
OPTION 1 40 35,000 35,000 7,290
OPTION 2 30 20,000 20,000 6,166
OPTION 3 20 14,000 14,000 6,389
40 14,000 14,000 2,916
OPTION 4 30 17,000 17,000 5,241
Total Maintenance/Replacement Costs 62,560 17,109 47,000 15,776 46,480 15,917 44,400 14,993
Total Running Costs 75,628 22,037 58,988 20,297 53,560 18,586 65,988 23,132
Total Net Present Value of Life Cycle Costs 57,037 40,297 32,586 40,132
PART 2, SECTION 2
2.2.5.2 BUILDING SERVICES DESIGN OPTION: AIR CONDITIONING AND UNDER FLOOR
TRUNKING VERSUS HOT WATER HEATING AND RING MAIN ELECTRICS
This example is again provided by Messrs Gardiner & Theobald. The

objective is to evaluate the above options for a building of 3,000 m2 floor area,
a life of 60 years and a discount rate of 4% (7% interest less 3% inflation). The
information is summarised overleaf with the methodology for the calculation
being exactly as that for the previous example. Any taxation implications are
excluded.
PART 2, SECTION 2
Element: Services
Unit: 3,000 m2

PROJECT LIFE 60 Years Air Conditioning HW Heating &
Discount Rate 4% per annum U/Floor Trunking Ring Main Electrics

15 Years 25 Years
(Interest Rate (7%), Inflation (3%) Maintenance Maintenance Maintenance Maintenance
5 Years 7 Years Years Years

Capital Cost
Air Conditioning U/Floor Trunking £ 250 m2 750,000 750,000
HW Heating & Ring Main Electric £ 150 m2 450,000 450,000
Contingency 5% 37,500 22,500
Total Year 1 Capital Costs 787,500 472,500
Annual Running Costs

Air Conditioning U/Floor Trunking £ 25.00 m2 75,000 1,696,762
HW Heating & Ring Main Electric £ 5.00 m2 15,000 339,352
Total Annual Costs 4,500,000 1,696,762 900,000 339,352

Cost
OPTION 1 5 5,000 5,000 4,110
Overhall Equipment 10 5,000 5,000 3,378
Overhall Equipment 45 5,000 5,000 856
OPTION 2 7 2,000 2,000 1,520
Genearl repaint/repair 14 2,000 2,000 1,155
Genearl repaint/repair 21 2,000 2,000 878
OPTION 3
OPTION 4
Replacement Year Present
Cost
OPTION 1 15 600,000 600,000 333,159
30 600,000 600,000 184,991
45 600,000 600,000 102,719
OPTION 2 25 300,000 300,000 112,535
50 300,000 300,000 42,214
OPTION 3
OPTION 4
Total Maintenance/Replacement Costs 1,855,000 641,278 616,000 160,375
Total Running Costs 6,355,000 2,338,040 1,516,000 499,728
Total Net Present Value of Life

Cycle Cost 3,125,540 972,228
PART 2, SECTION 2
2.2.5.3 MAINTENANCE OPTION: WITH/WITHOUT CLEANING GANTRY
This example is kindly provided by Gerald Hall.
The following figure compares two options, firstly to provide the cleaning
gantry and secondly to omit the gantry. The capital cost and costs associated
with anticipated maintenance were calculated by using normal cost estimating
techniques.
Assumed criteria:
– Building Life 25 years

– VAT assumed to remain at current levels with the client
being an ‘end user’ under VAT rules 17.5%
– Gantry capital cost £30,000
– The gantry will have a residual value £2,000
– Capital cost for opening lights in lieu of gantry £5,000
– Discount rate (assuming the interest rate will average 11%
over 25 years and the inflation rate 6%) 5%
– Corporation Tax 33%
Taxation Calculation
The capital cost for plant and machinery receives a 25% reducing balance.
Maintenance and running costs receive 100% allowance.
Year 1 with gantry calculation:

£
Capital £35,250 × 25% × 33% = 2,908
Maintenance £881 × 33% = 291
——–
3,199
——–
Year 2 with gantry calculation:
£
Capital £35,250 less 25% × 25% × 33% = 2,181
Maintenance £881 × 33% = 291
——–
2,472
——–
The methodology applies for the rest of the 25 years as summarised overleaf.
The client initially considered that the gantry would pay for itself due to
savings in maintenance and cleaning cost.
However:
with gantry investment £36,510 present value

without gantry investment £26,447 present value
COMPARATIVE COMPONENT LIFE CYCLE COSTING CLIENT:
PROJECT TITLE: Retail Development/Shopping Mall
JOB NO:
OPTION: Cleaning ‘with’ gantry – curtain walling to new facace
Costs TOTAL VAT 17.5% TOTAL Less tax NET TOTAL Present value PRESENT CUMULATIVE
Year Capital Financing Operation Maintenance Occupacy Disposal/ inc VAT allowance of VALUE PRESENT
residual value £1 VALUE
Annual Intermittent
@ 5%
0 30,000 – – – – – – 30,000 5,250 35,250 0 35,250 1.000 35,250 35,250
1 – – – 750 – – – 750 131 881 3,199 (2,318) 0.952 (2,207) 33,043
The Surveyors’ Construction Handbook

2 – – – 750 – – – 750 131 881 2,472 (1,591) 0.907 (1,443) 31,600
3 – – – 750 250 – – 1,000 175 1,175 2,024 (849) 0.864 (733) 30,866
4 – – – 750 – – – 750 131 881 1,518 (637) 0.823 (524) 30,343
5 – – – 750 – – – 750 131 881 1,211 (330) 0.784 (258) 30,084
6 – – – 750 1,750 – – 2,500 438 2,938 1,660 1,278 0.746 953 31,037
7 – – – 750 – – – 750 131 881 808 73 0.711 52 31,089
8 – – – 750 – – – 750 131 881 679 202 0.677 137 31,226
9 – – – 750 250 – – 1,000 175 1,175 679 496 0.645 320 31,546
10 – – – 750 – – – 750 131 881 509 372 0.614 229 31,775
11 – – – 750 – – – 750 131 881 454 427 0.585 250 32,024
12 – – – 750 1,750 – – 2,500 438 2,938 1,092 1,846 0.557 1,028 33,052
13 – – – 750 – – – 750 131 881 383 498 0.530 264 33,316
Part 2, Section 2 (4/99)

14 – – – 750 – – – 750 131 881 360 521 0.505 263 33,580
15 – – – 750 250 – – 1,000 175 1,175 440 735 0.481 354 33,933
16 – – – 750 – – – 750 131 881 330 551 0.458 253 34,186
17 – – – 750 – – – 750 131 881 320 561 0.436 245 34,431
18 – – – 750 1,750 – – 2,500 438 2,938 991 1,947 0.416 809 35,239
19 – – – 750 – – – 750 131 881 307 574 0.396 227 35,467
20 – – – 750 – – – 750 131 881 303 578 0.377 218 35,685
21 – – – 750 250 – – 1,000 175 1,175 397 778 0.359 279 35,964
22 – – – 750 – – – 750 131 881 298 583 0.342 199 36,163
23 – – – 750 – – – 750 131 881 296 585 0.326 191 36,354
Effective from 1/6/99

24 – – – 750 1,750 – – 2,500 438 2,938 973 1,965 0.310 609 36,963
25 – – – 750 – – (2,000) (1,250) 131 (1,119) 311 (1,430) 0.295 (422) 36,541
TOTAL PRESENT VALUE AT END OF INVESTMENT LIFE 36,541

PART 2, SECTION 2
Page 21
COMPARATIVE COMPONENT LIFE CYCLE COSTING (continuation of table on page 21)
Page 22
6 Capital cost as plant and machinery with 100% tax allowance – £
FORECASTER’S ASSUMPTIONS i.e. 1st year 2,908
PART 2, SECTION 2
1 The capital cost includes allowances for preliminaries and associated builders 7 Maintenance and running costs with 100% allowance – ie 1st year 291
work. ———
total 3,199
2 Details of the maintenance requirements and cost estimates can be provided
8 Taxation allowances are subject to negotiation and agreement.
upon request.
9 Discount rate:
3 The life cycle costing is based on an agreed investment life of 25 years.
(i) Interest rate – 11% average over 25 years;

4 It is assumed that VAT will remain at around 17.5% and the client is the ‘end (ii) Inflation rate – 7% average over 25 years;
user’ under VAT rules. (1 + 11%)
—————
5 There are disposal cost advantages with this option. (1 + 7%) – 1 × 100% = 5% discount rate.

COMPARATIVE COMPONENT LIFE CYCLE COSTING CLIENT:
PROJECT TITLE: Retail Development/Shopping Mall
JOB NO:
OPTION: Cleaning ‘with’ gantry – curtain walling to new facace
Costs TOTAL VAT 17.5% TOTAL Less tax NET TOTAL Present value PRESENT CUMULATIVE
Year Capital Financing Operation Maintenance Occupacy Disposal/ inc VAT allowance of VALUE PRESENT
residual value £1 VALUE
Annual Intermittent
@ 5%
0 5,000 – – – – – – 5,000 875 5,875 0 5,875 1.000 5.875 5,875
1 – – – 1,500 – – – 1,500 263 1,763 582 1,181 0.952 1,124 6,999
2 – – – 1,500 – – – 1,500 263 1,763 582 1,181 0.907 1,071 8,070
3 – – – 1,500 – – – 1,500 263 1,763 582 1,181 0.864 1,020 9,090
4 – – – 1,500 – – – 1,500 263 1,763 582 1,181 0.823 971 10,061
5 – – – 1,500 – – – 1,500 263 1,763 582 1,181 0.784 925 10,986
6 – – – 1,500 1,500 – – 3,000 263 3,525 1,163 2,362 0.746 1,763 12,749
7 – – – 1,500 – – – 1,500 263 1,763 582 1,181 0.711 839 13,587
8 – – – 1,500 – – – 1,500 263 1,763 582 1,181 0.677 799 14,386
9 – – – 1,500 – – – 1,500 263 1,763 582 1,181 0.645 761 15,147
10 – – – 1,500 – – – 1,500 263 1,763 582 1,181 0.614 725 15,872
11 – – – 1,500 – – – 1,500 263 1,763 582 1,181 0.585 690 16,562
12 – – – 1,500 – – – 6,500 1,138 7,638 2,521 5,117 0.557 2,849 19,411
13 – – – 1,500 – – – 1,500 263 1,763 582 1,181 0.530 626 20,037
14 – – – 1,500 – – – 1,500 263 1,763 582 1,181 0.505 596 20,634
15 – – – 1,500 – – – 1,500 263 1,763 582 1,181 0.481 568 21,202
16 – – – 1,500 – – – 1,500 263 1,763 582 1,181 0.458 541 21,742
17 – – – 1,500 – – – 1,500 263 1,763 582 1,181 0.436 515 22,257
18 – – – 1,500 1,500 – – 3,000 525 3,525 1,163 2,362 0.416 981 23,239
19 – – – 1,500 – – – 1,500 263 1,763 582 1,181 0.396 467 23,706
20 – – – 1,500 – – – 1,500 263 1,763 582 1,181 0.377 445 24,151
21 – – – 1,500 – – – 1,500 263 1,763 582 1,181 0.359 424 24,575
22 – – – 1,500 – – – 1,500 263 1,763 582 1,181 0.342 404 24,978
23 – – – 1,500 – – – 1,500 263 1,763 582 1,181 0.326 384 25,363
24 – – – 1,500 1,500 – – 3,000 263 3,525 1,163 2,362 0.310 732 26,095
25 – – – 1,500 – – – 1,500 263 1,763 582 1,181 0.295 349 26,444
TOTAL PRESENT VALUE AT END OF INVESTMENT LIFE 26,444

COMPARATIVE COMPONENT LIFE CYCLE COSTING (continuation of table on page 23)
Page 24
6 Capital cost as plant and machinery with 100% tax allowance – NIL
FORECASTER’S ASSUMPTIONS
7 Maintenance and running costs with 100% allowance.
PART 2, SECTION 2
1 The capital cost includes allowances for opening lights now required, without 8 Taxation allowances are subject to negotiation and agreement.
capital allowances.
9 Discount rate:
2 Details of the maintenance requirements and cost estimates can be provided
(i) Interest rate – 11% average over 25 years;
upon request.
(ii) Inflation rate – 7% average over 25 years;
3 The life cycle costing is based on an agreed investment life of 25 years. (1 + 11%)
—————

4 It is assumed that VAT will remain at around 17.5% and the client is the ‘end (1 + 7%) – 1 × 100% = 5% discount rate.
user’ under VAT rules.
5 There are disposal cost advantages with this option.

PART 2, SECTION 2
2.2.5.4 HOUSING SINKING FUND (BASED UPON COSTED PLANNED MAINTENANCE)

(a) Background
This example is kindly provided by Ian Sloan of Armour Construction
Consultants.
Housing Associations and Co-operatives in Scotland generally request that

their investment/sinking fund requirements are prepared in accordance with
the Scottish Federation of Housing Associations’ (SFHA) ‘Planned
Maintenance and Repairs (Revised), Guidance Booklet No 3’ published in
January 1997.
There are various ways of presenting the data. One method widely accepted is
shown below, on two spreadsheets, a Planned Maintenance Programme, and a
‘costed’ Planned Maintenance Programme which establishes in this case the
present value of future costs.
The spreadsheets can be ‘fine tuned’ to meet specific client requirements. In

due course they can be adapted to allow historical information to be fed into
the programme, which then allows actual costs and maintenance periods
incurred to form the basis of the life cycle costs, thereby providing a more
accurate projection.
(b) Brief
The client needed to establish the capital to be invested for a new build
housing project to cover all maintenance and repairs for the next 60 years. The
discount rate is 6%.
An example of the calculation shown overleaf is:
Year 15, total maintenance and repair expenditure at current prices
= £9,013
£9,013 × 0.41726* = £3,761
i.e. £3,761 would have to be invested now for 15 years at 6% compound

interest in order to meet the costs in Year 15 of £9,013. In summary £24,942
would have to be invested now at 6% to cover all maintenance and repairs for
the next 60 years.
The data could also be presented as an annual sinking fund e.g. the amount to
be invested for each of 15 years at 6% compound interest in order to meet the
costs in Year 15 of £9,013 is:
£9,013 × 0.04296** = £387
* from valuation tables at 2.2.5.7 (present value of £1)

** from valuation tables at 2.2.5.7 (annual sinking fund)
PLANNED MAINTENANCE PROGRAMME KEY 1 = Inspect/Consider < = Inspect and Remedy T = Test until / = Inspect &
replacement
Page 26
EXAMPLE 1 = Renewal/Replacement < = until Replacement / = Decorate
Date Printed 02/12/98 Cumulative
CODE ELEMENT SUB-ELEMENT COMPONENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Cost
1.1 STRUCTURE 1.1.1. Roofs Timber < < < < < < 0
PART 2, SECTION 2
1.1.2. Floors Timber < < < < < < 0

STRUC-
1.1.3. Openings Concrete/Brick < < < < < < 0
TURE
1.2 STAIRS 1.2.1. Stairs Timber < < < < < < 0
1.2.2. Handrails etc Timber < < < < < < 0
2.1 ROOF 2.1.1. Roof Tiles etc Concrete Tiles < < < < < < < < < < < < < < < < < < < 1 < < < < < < < < < < 0
2.1.2. Flashings Lead < < < < < < < < < 1 < < < < < < < < < 1 < < < < < < < < < 1 0
2.1.3. Gutters etc UPVC < < < < < < < < < < < < < < 1 < < < < < < < < < < < < < < 1 0
2.2 EXTERNAL WALLS 2.2.1. Walls Facing Brick < < < < < 0

2.2.2. Rendering < < < < < < 0
2.2.3. Ventilation < < < < < < 0
EXT 2.3 WINDOWS 2.3.1. Window Op Timber/Glass < < < < < < < < < < < < < < < < < < < 1 < < < < < < < < < < 0
FABRIC 2.3.2. Pointing < < < < < < < < < < < < < < < < < < < 1 < < < < < < < < < < 0
2.3.3. Painting / / / / / / / / / / 0
2.3.4. Ironmongery < < < < < < < < < 1 < < < < < < < < < 1 < < < < < < < < < 1 0
2.4 EXTERNAL DOORS 2.4.1. Door Operation Timber/Metal < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < 0
2.4.2. Pointing < < < < < < 1 < < < 0
2.4.3. Painting / / / / / / / / / / 0
2.4.4. Ironmongery < < < < < 1 < < < < < < < < < 1 < < < < < < < < < 1 0

3.1 INTERNAL WALLS 3.1.1. Walls & Open’s Brick/pboard < < < < < < 0
3.1.2. Wall Tiling Ceramic < < 1 < < <
3.2 CEILINGS 3.2.1. Ceilings Plasterboard < < < < < < 0
INT
3.3 FLOORS 3.3.1. Flooring Timber/Vinyl < < 1 < < 1 0
FABRIC
3.3.2. Skirtings Timber < < < < < < 0
3.4 DOORS 3.4.1. Door Operation Timber < < < < < < < < < < < < < < < < < < < < < < < < < < < < < 1 0
3.4.2. Ironmongery < < < < < < < < < < < < < < 1 < < < < < < < < < < < < < < 1 0
FITTS 4.1 FITTINGS & FURNISH 4.1.1. Kitchen Units Units/Worktops < < < < < < < < < 1 < < < < < < < < < 1 < < < < < < < < < 1 0
FURN 4.1.2. Grab rails etc < < < < < < < < < 1 < < < < < < < < < 1 < < < < < < < < < 1 0
5.1 SANITARY APPLIANCES 5.1.1. Sanitary ware Wcs, baths, whbs < < < < < < < < < < < < < < 1 < < < < < < < < < < < < < < 1 0
5.2 SERVICES EQUIPMENT 5.2.1. Kitchen sinks Stainless steel < < < < < < < < < 1 < < < < < < < < < 1 < < < < < < < < < 1 0
5.3 WATER SUPPLY 5.3.1. Water storage < < < < < < 0
5.3.2. Water pipes etc T T T T T T 0
5.3.3. Insulation < < < < < < 0
SERVICES
5.4.1. INTERNAL DRAINAGE 5.4.2.1. Pipes & Fittns T T T T T T 0
5.4.2. DISPOSAL INST 5.4.1.1. Pipes & Fittns T T T T T T 0
5.5 HEAT SOURCE 5.5.1. Radiators/fires T T 1 T T 1 0
5.6 HEAT SYSTEM 5.6.1. Boilers/equipment < < < < < < < < < 1 < < < < < < < < < 1 < < < < < < < < < 1 0
5.7 VENTILATION 5.7.1. Fans etc < < < < < < < < < 1 < < < < < < < < < 1 < < < < < < < < < 1 0

PLANNED MAINTENANCE PROGRAMME KEY 1 = Inspect/Consider < = Inspect and Remedy T = Test until / = Inspect &
EXAMPLE (Continued) 1 = Renewal/Replacement < = until Replacement replacement / = Decorate
Date Printed 02/12/98 Cumulative
5.8 ELECTRICAL INST 5.8.1. Power and lighting < < 1 < < 1 0
5.8.2. Switchgear < < 1 < < 1 0
5.8.3. External Lighting Close Light < 1 < 1 < 1 0
5.9 GAS INSTALLATION 5.9.1. Equipment & supply T T T T T 1 0
SER- 5.10 LIFT INSTALLATION – 0
VICES
5.11 PROTECTIVE INST 5.11.1. TV system etc T 1 T 1 T 1 0
5.11.2. Smoke detectors < < < < 1 < < < < 1 < < < < 1 < < < < 1 < < < < 1 < < < < 1 0

5.1.2 COMMUNICATION 5.12.1. Door entry < < < < < < < < < 1 < < < < < < < < < 1 < < < < < < < < < 1 0
5.12.2 Telephones T T 1 T T 1 0
6.1.1 LANDSCAPING 6.1.1.1. Roads, footpaths < < < < < < < < < < < < < < 1 < < < < < < < < < < < < < < 1 0
6.1.1.2. Grass/planting < < < < < < < < < < < < < < < < < < < < < < < < < < < < < 1 0
6.1.2 BOUNDARIES & 6.1.2.1. Fences and gates < < / < < / < < / < < / < < 1 < < / < < / < < / < < / < < 1 0
EXT
ENCLOSURES 6.1.2.2. Walls etc < < < < < < 0
WORKS
6.1.2.3. Clothes poles / / / / 1 / / / / 1 0
6.2 DRAINAGE 6.2.1. Pipes & fittings < < < < < 1 0
6.2.2. Manholes etc < < < < < < 0
6.3 EXTERNAL SERVICES 6.3.1. Ducts & cables < < < < < 1 0
6.4 OUTBUILDINGS 6.4.1. Binstores/platts < < < < < 1 0
COST IN ,000’s of £ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

PART 2, SECTION 2
Page 27
PLANNED MAINTENANCE PROGRAMME (COSTED)
EXAMPLE Date Printed 02/12/98 Years Cumulative
Page 28
1.1 Structure 1.1.1. Roofs Timber 50 50 50 50 50 50 300
1.1.2. Floors ) Timber ) 100 100 100 100 100 100 600
PART 2, SECTION 2
STRUC- 1.1.3. Openings ) Concrete/Brick ) 0

TURE 1.2 Stairs 1.2.1. Stairs Timber 25 25 25 25 25 25 150
1.2.2. Handrails etc Timber 140 140 0
2.1 Roof 2.1.1. Roof Tiles etc Concrete Tiles 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 2380 75 75 75 75 75 75 75 75 75 75 4,555
2.1.2. Flashings Lead 20 20 20 20 20 20 20 20 20 150 20 20 20 20 20 20 20 20 20 150 20 20 20 20 20 20 20 20 20 150 990
2.1.3. Gutters etc UPVC 20 20 20 20 20 20 20 20 20 20 20 20 20 20 220 20 20 20 20 20 20 20 20 20 20 20 20 20 20 220 1,000
2.2 External walls 2.2.1. Walls Facing Brick 20 20 20 20 20 20 120
2.2.2. Rendering inc inc inc inc inc inc 0

2.2.3. Ventilation inc inc inc inc inc inc 0
2.3 Windows 2.3.1. Window Op Timber/Glass 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 2100 10 10 10 10 10 10 10 10 10 10 2,390
EXT
FABRIC 2.3.2. Pointing 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 inc 10 10 10 10 10 10 10 10 10 10 290
2.3.3. Painting 100 100 100 100 100 100 100 100 100 100 1,000
2.3.4. Ironmongery inc inc inc inc inc inc inc inc inc 210 inc inc inc inc inc inc inc inc inc inc inc inc inc inc inc inc inc inc inc 210 420
2.4 External doors 2.4.1 Door Operation Timber/Metal 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 400 5 5 5 5 5 5 5 5 5 5 545
2.4.2. Pointing 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 inc 5 5 5 5 5 5 5 5 5 5 145
2.4.3. Painting 60 60 60 60 60 60 inc 60 60 60 540
2.4.4. Ironmongery inc inc inc inc inc inc inc inc inc 60 inc inc inc inc inc inc inc inc inc inc inc inc inc inc inc inc inc inc inc 60 120
3.1 Internal walls 3.1.1. Walls & Open’s Brick/pboard 10 10 10 10 10 10 60

3.1.2. Wall Tiling Ceramic inc inc 275 inc inc 275 550
3.2 Ceilings 3.2.1. Ceilings Plasterboard 20 20 20 20 20 20 120
INT 3.3 Floors 3.3.1. Flooring Timber/Vinyl 50 50 290 50 50 290 780
FABRIC 3.3.2. Skirtings Timber inc inc inc inc inc inc 0
3.4 Doors 3.4.1. Door Operation Timber 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 83 1200 3,607
3.4.2. Ironmongery inc inc inc inc inc inc inc inc inc inc inc inc inc inc 480 inc inc inc inc inc inc inc inc inc inc inc inc inc inc 480 960
4.1 Fittings & Furnish 4.1.1. Kitchen Units Units/Worktops 60 60 60 60 60 60 60 60 60 800 60 60 60 60 60 60 60 60 60 800 60 60 60 60 60 60 60 60 60 800 4,020
FITTS
FURN 4.1.2. Grab rails etc 10 10 10 10 10 10 10 10 10 200 10 10 10 10 10 10 10 10 10 200 10 10 10 10 10 10 10 10 10 200 870
5.1 Sanitary Appliances 5.1.1. Sanitary ware Wcs, baths, whbs 5 5 5 5 5 5 5 5 5 5 5 5 5 5 450 5 5 5 5 5 5 5 5 5 5 5 5 5 5 450 1,040
5.2 Services Equipment 5.2.1. Kitchen sinks Stainless steel inc inc inc inc inc inc inc inc inc 160 inc inc inc inc 5 inc inc inc inc 160 inc inc inc inc inc inc inc inc inc 160 485
5.3 Water Supply 5.3.1. Water storage 125 125 125 125 125 250 875
5.3.2. Water pipes etc inc inc inc inc inc 125 125
5.3.3. Insulation inc inc inc inc inc inc 0
SER- 5.4.1 Internal drainage 5.4.2.1. Pipes & Fittns 60 60 60 60 60 60 360
VICES 5.4.2 Disposal inst 5.4.1.1. Pipes & Fittns inc inc inc inc inc inc 0
5.5 Heat source 5.1.1. Radiators/fires 20 20 650 20 20 650 1,380
5.6 Heat system 5.6.1. Boilers/equipment 40 40 40 40 40 40 40 40 40 750 40 40 40 40 40 40 40 40 40 750 40 40 40 40 40 40 40 40 40 750 3,330
5.7 Ventilation 5.7.1. Fans etc 5 5 5 5 5 5 5 5 5 200 5 5 5 5 5 5 5 5 5 200 5 5 5 5 5 5 5 5 5 200 735
5.8 Electrical inst 5.8.1. Power and lighting 100 100 1500 100 100 1500 3,400

PLANNED MAINTENANCE PROGRAMME (COSTED) (Continued)
EXAMPLE Date Printed 02/12/98 Years Cumulative

5.8.2. Switchgear inc inc inc inc inc inc 0
5.8.3. External Lighting Close Light inc 100 inc 100 inc inc 200
5.9 Gas installation 5.9.1. Equipment & supply 25 25 25 25 25 25 150
5.10 Lift installation – 0
SER-
VICES 5.11 Protective inst 5.11.1. TV system etc 25 150 25 150 25 150 525
5.11.2. Smoke detectors 10 10 10 10 75 10 10 10 10 75 10 10 10 10 75 10 10 10 10 75 10 10 10 10 75 10 10 10 10 75 690
5.1.2 Communication 5.12.1. Door entry n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 0
5.12.2. Telephones 10 10 100 10 10 100 240 0

6.1.1 Landscaping 6.1.1.1. Roads, footpaths 50 50 50 50 50 50 50 50 50 50 50 50 50 50 500 50 50 50 50 50 50 50 50 50 50 50 50 50 50 500 2,400
6.1.1.2. Grass/planting 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 750 3,650
6.1.2 Boundaries & Enclosures 6.1.2.1. Fences and gates 10 10 500 10 10 500 10 10 500 10 10 500 10 10 3000 10 10 500 10 10 500 10 10 500 10 10 500 10 10 3000 10,200
6.1.2.2. Walls etc 50 50 50 50 50 50 300
EXT 6.1.2.3. Clothes poles 40 40 40 40 200 40 40 40 40 750 1,270
WORKS
6.2 Drainage 6.2.1. Pipes & fittings 100 100 100 100 100 500 1,000
6.2.2. Manholes etc inc inc inc inc inc inc 0
6.3 External services 6.3.1. Ducts & cables 25 25 25 25 25 400 525
6.4 Outbuildings 6.4.1. Binstores/platts 50 50 50 50 50 500 750
TOTAL COST PER YEAR £ 518 518 1208 518 1448 1208 518 518 1208 4068 518 1208 518 518 9013 518 518 1208 518 8673 1048 518 518 1208 1448 518 1208 518 518 15460 57,902 (Yrs 1–30)
PRESENT VALUE 489 461 1014 410 1082 852 344 325 715 2272 273 600 243 229 3761 204 192 423 171 2704 308 144 136 298 337 114 251 101 96 2692 21241 Yrs 1–30)
(at discount rate of 6%)
Repeat Years 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 (Yrs 31–60)

Current Cost per yr 518 518 1208 518 1448 1208 518 518 1208 4068 518 1208 518 518 9013 518 518 1208 518 8673 1048 518 518 1208 1448 518 1208 518 518 15460 £57902 £115804
(Current cost)
Present Value 85 80 177 71 188 148 60 57 124 395 48 105 42 40 655 36 33 74 30 471 54 25 24 52 59 20 44 18 17 469 £3701 £24942
(Present Value)

PART 2, SECTION 2
Page 29
PART 2, SECTION 2
2.2.5.5 CENTRALISATION OF OFFICES STUDY

(a) Brief
This example is kindly provided by Gerald Hall.
The client wished to investigate a centralisation (of offices) strategy as a

means to improve business efficiency in an increasingly competitive market.
The offices were originally spread out over three main sites.
Three options were identified:
• do nothing, although this would require repair and refurbishment of the

existing offices;
• centralise at location A and construct additional new offices;
• centralise at location B and construct additional new offices;
(b) Capital Costs

These were calculated using traditional cost estimating and included cyclical
capital costs. The distinction between cyclical capital costs and cyclical
maintenance costs is often vague, those costs in excess of £10,000 are
included in the capital cost element under the assumption they would be part
of the capital cost programme.
Relocation costs (labour and plant required to transport office equipment,

stores, machinery, compound materials and stationery items) are included
under Year 0 on the assumption they would be complete within 12 months and
a contingency for new furniture included.
(c) Revenue Costs

• fuel: the energy manager provided existing costs which were used as the
basis for the new proposal;
• water costs were excluded (the client was a water company);
• maintenance costs under £10,000;
• rates were not provided by the client by the deadline and are therefore
excluded;
• cleaning costs are based on existing cleaning costs and judgement;
• security costs are based on existing security costs and judgement;
• operation costs for this client included waste removal, water coolers,
sanitary hire, mail collections, fire prevention, telephones, hygiene,
insurances. Again this was based on existing client data plus judgement.
Even with constant staff numbers these costs reduce with centralisation;
• staffing costs were excluded as they would remain constant.
(d) Capital Income

Options 2 and 3 will free up existing space for sale and rent which are included
as a deduction against expenditure.
(e) Discount Rates

In accordance with the client guidelines the investment horizon is 40 years and
the discount rate 8%.
PART 2, SECTION 2
(f) Tax Implications

Tax allowances have been excluded on the basis that this study is a minor part
of the overall company business and assumptions are not appropriate.
However it is worth noting that:
• Value Added Tax on all capital costs would affect the financial benefits
of options 2 and 3 which require considerable capital expenditure;
• Capital Allowances would help support options 2 and 3.
(g) Renewal and Refurbishment Costs

General building refurbishment has been allowed in ten-year cycles; electrical
and mechanical plant replaced after 20 years with a refurbishment after ten
years or mid-life; felt roofs replaced after 20 years; profiled metal decking,
windows and doors after 30 years. All costs are calculated using traditional
cost estimating and included as present costs.
(h) Cost Comparison

The detailed calculation is summarised over for option 2 which is the most
cost effective over 40 years.
Year 0 Expenditure Year 40 Net Present Value

£ £
Option 1 £203,000 £1,960,950
Option 2 £1,164,900 £1,607,896
Option 3 £1,262,100 £1,843,068
(i) Sensitivity Analysis

An analysis of different discount rates and time frame confirm option 2 as the
most favourable.
Discount Life Cycle Option 1 Option 2 Option 3

Rates £ £ £
6% 0 287,900 1,164,900 1,262,100
6% 20 1,859,000 1,593,000 1,826,100
6% 40 2,444,420 1,762,522 2,047,091
8% 0 287,900 1,164,900 1,262,100
8% 20 1,614,000 1,515,000 1,721,100
8% 40 1,960,950 1,607,896 1,843,068
10% 0 287,900 1,164,900 1,262,100
10% 20 1,423,000 1,451,000 1,638,100
10% 40 1,632,562 1,506,721 1,709,146
CLIENT WATER COMPANY LIMITED
JOB TITLE CENTRALISATION OF AREA OFFICE STUDY
Page 32
JOB NO 3985
DATE 29th MARCH 1996
YEAR (SEPT 1996) 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 Total Value
PART 2, SECTION 2
£’000 £000
Capital Costs
Building Works 1176 0 0 0 0 0 0 0 0 0 190 0 0 0 0 0 0 0 0 0 300 0 0 0 0 0 0 0 0 0 393 0 0 0 0 0 0 0 0 0 310 2,369
Relocation Costs 15.5 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 16
Furniture 8.5 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 9
Value 1200 0 0 0 0 0 0 0 0 0 190 0 0 0 0 0 0 0 0 0 300 0 0 0 0 0 0 0 0 0 393 0 0 0 0 0 0 0 0 0 310 2,393
Capital Income

Annual Rental -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -7.5 -308
Land Sale -55 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -55
Value -62.5 -7.5 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -8 -363
Revenue Costs
Fuel 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 57
Water 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Maintenance 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 492
Rates 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Cleaning 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 70
Security 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 291
Operation Costs 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 213
Staff Costs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Value 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4 1,123
Net Cash Flow 1164.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 209.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 319.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 412.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 19.9 329.9 0
Present Value of £1 @ 8% 1 0.93 0.86 0.79 0.74 0.68 0.63 0.58 0.54 0.5 0.46 0.43 0.4 0.37 0.34 0.32 0.29 0.27 0.25 0.23 0.21 0.2 0.18 0.17 0.16 0.15 0.14 0.13 0.12 0.11 0.1 0.09 0.09 0.08 0.07 0.07 0.06 0.06 0.05 0.05 0.05
NET PRESENT VALUE 1165 18 17 16 15 14 13 12 11 10 97 9 8 7 7 6 6 5 5 5 69 4 4 3 3 3 3 2 2 2 41 2 2 2 1 1 1 1 1 1 15 1608
EXPENDITURE NVP£=1,607,896

PART 2, SECTION 2
2.2.5.6 TOTAL BUILDING OPTION: DEMOLISH AND REBUILD VERSUS REFURBISHMENT

(a) Brief
The life cycle cost appraisal is to evaluate the life cycle cost effects of the
following options:
• demolish existing building and rebuild to the client’s specific

requirements incorporating ‘all-air’ air conditioning systems;
• refurbish the existing building to meet, as far as practicable, the client’s
requirements, re-using existing systems wherever possible.
The appraisal is to include all taxation implications for comparative purposes.
VAT is to be included as the client is VAT-exempt.
The following costs are to be excluded:
– costs associated with the purchase of land;

– financing charges associated with the redevelopment;
– costs associated with the removal and temporary re-housing of staff
during the construction period;
– occupancy costs;
– residual values of land or buildings.
(b) Discount Rate

The building is in owner-occupation and the client’s accountants have advised
the use of a long-term government stock interest rate of 7%.
The client has been advised that an inflation rate of 3% is a reasonable

assessment.
The discount rate calculation is as follows
[(1.07) – 1]
—— × 100 = 3.88%
[(1.03) – 1]
The client has agreed that the discount rate can be rounded to 4%.
(c) Building Life

It has been agreed with the client to use a 20-year life cycle.
(d) Description of Existing Building

Late 1950s office block of multi-storey framed construction with curtain wall
cladding to front and rear. Solid party walls to both sides. Single-storey
concrete basement.
(e) Description of Existing Engineering Services

Gas-fired low pressure hot water boiler situated in basement serving perimeter
convector system with warm air ventilation to central parts of the building.
Fluorescent luminaires to all office areas and tungsten fittings to circulation.
PART 2, SECTION 2
(f) Condition of the Existing Building

The building is structurally sound with few defects; however, it is in a poor
state of decorative repair.
(g) Basic Requirements of the Redevelopment

Gross internal area 1500 m2
Ratio of net to gross internal area 70%
Number of occupants 110
Ratio of occupants to net internal floor area 9.7 m2
External wall area (excluding party walls) 700 m2
The adjacent buildings will continue to remain in use as offices during and
after the development.
The structural engineers have advised that no work is required to party walls,
other than temporary shoring.
(h) Summary
Net Present Value
£k
OPTION A
demolish existing building and rebuild to the
client’s specific requirements, incorporating
‘all air’ air conditioning systems; 3889
OPTION B
refurbish the existing building to meet as far as
practicable, the client’s requirements, re-using
systems wherever possible. 2177
———
% difference (A extra on B) 79%
———
The net present value is a key factor in the option appraisal. However other
less tangible benefits and disadvantages of each option should be carefully
considered in relation to the business objectives. It is also recommended that
a sensitivity analysis be carried out, for instance to look at different discount
rates and time frames.
The calculation of the above is detailed below.
LIFE CYCLE COST SUMMARY
OPTION A 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Year
Costs £k £k £k £k £k £k £k £k £k £k £k £k £k £k £1 £k £k £k £k £k £k
Capital 2154 - - - - - - - - - - - - - - - - - - - -
Financing - - - - - - - - - - - - - - - - - - - - -
Operation - 104 104 104 104 104 104 104 104 104 104 104 104 104 104 104 104 104 104 104 104

Maintenance:
annual - 27 27 27 27 27 27 27 27 27 27 27 27 27 27 27 27 27 27 27 27
intermittent - - - - - 6 3 - - - 62 3 21 - - 22 3 - - - 86
Occupancy - - - - - - - - - - - - - - - - - - - - -
Disposal/residual value - - - - - - - - - - - - - - - - - - - - -
Total 2154 131 131 131 131 137 134 131 131 131 193 134 152 131 131 153 134 131 131 131 217
VAT 17½% 377 23 23 23 23 24 23 23 23 23 34 23 27 23 23 27 23 23 23 23 40
Total (inc VAT) 2531 154 154 154 154 161 157 154 154 154 227 152 179 154 154 180 157 154 154 154 257
0 102 88 78 70 67 61 57 55 53 74 52 55 48 48 56 49 48 48 48 80

Less Tax allowance
NET TOTAL 2531 52 66 76 84 94 96 97 99 101 153 105 124 106 106 124 108 106 106 106 177
Present value of £1 at 4% 1 .9615 .9246 .8890 .8548 .8219 .7903 .7599 .7307 .7026 .6756 .6496 .6246 .6006 .5775 .5553 .5339 .5134 .4936 .4746 .4564
Present value 2531 50 61 68 72 77 76 74 72 71 103 68 77 64 61 69 58 54 52 50 81
TOTAL NET PRESENT VALUE £3889k

PART 2, SECTION 2
Page 35
LIFE CYCLE COST SUMMARY
Page 36
OPTION B
Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
PART 2, SECTION 2
Costs £k £k £k £k £k £k £k £k £k £k £k £k £k £k £1 £k £k £k £k £k £k
Capital 904 - - - - - - - - - - - - - - - - - - - -
Financing - - - - - - - - - - - - - - - - - - - - -
Operation - 89 89 89 89 89 89 89 89 89 89 89 89 89 89 89 89 89 89 89 89
Maintenance:

annual - 15 15 15 15 15 15 15 15 15 15 15 15 15 15 15 15 15 15 15 15
intermittent - - - - - 17 3 - - - 45 3 21 - - 32 3 - - 69
Occupancy - - - - - - - - - - - - - - - - - - - - -
Disposal/residual value - - - - - - - - - - - - - - - - - - - - -
Total 904 104 104 104 104 121 107 104 104 104 149 107 125 104 104 136 107 104 104 104 173
VAT 17.5% 158 18 18 18 18 21 19 18 18 18 26 19 22 18 18 24 19 18 18 18 30

Total (inc VAT) 1062 122 122 122 122 142 126 122 122 122 175 126 147 122 122 160 126 122 122 122 203
Less Tax allowance 0 75 66 59 54 56 48 44 43 42 57 41 46 38 38 50 39 38 38 38 63
NET TOTAL 1062 47 56 63 68 86 78 78 79 80 118 85 101 84 84 110 87 84 84 84 140
Present value of £1 at 4% 1 .9615 .9246 .8890 .8548 .8219 .7903 .7599 .7307 .7026 .6756 .6496 .6246 .6006 .5775 .5553 .5339 .5134 .4936 .4746 .4564
Present value 1062 45 52 56 58 71 62 59 58 56 80 55 63 50 49 61 46 43 41 40 64
TOTAL NET PRESENT VALUE £2177k

PART 2, SECTION 2
CAPITAL
OPTION A OPTION B
GFA: 1500 m2 Total cost £/m2GFA Total cost £/m2GFA

Elemental Cost Plan £k £ £k £
Demolition 70.0 47.0 14.0 9.0
Substructure 42.0 28.0 – –
Superstructure 315.0 210.0 17.5 12.0
External walls 490.0 327.0 101.0 67.0
Internal walls 14.5 10.0 54.0 36.0
Internal finishings 84.0 56.0 105.0 70.0
Fittings/fixtures 2.0 1.0 – –
Sanitary appliances 9.5 6.0 9.5 6.0
Public Health services 21.0 14.0 21.0 14.0
Mechanical services 252.0 168.0 94.5 63.0
Electrical services 147.0 98.0 126.0 84.0
Lift installation 77.0 51.0 91.0 60.0
External work 21.0 14.0 7.0 5.0
Drainage 8.5 6.0 3.0 2.0
Sub-total 1553.5 1036.0 643.5 429.0
Preliminaries 232.0 15% 96.5 15%

(% of sub-total)
Contingencies 46.5 3% 19.5 3%

(% of sub-total)
Total construction cost 1833.0 1222.0 759.5 506.0
Professional fees( 321.0 17.5% 144.5 19%

% of construction cost)
Total capital costs to 2154.0 904.0

life cycle cost summary
PART 2, SECTION 2
OPERATION
OPTION A OPTION B
£ per annum £ per annum
Energy see next page 13617 9964
Cleaning
OPTION A 10500
Budget allowance £7.00 per m2
OPTION B
NB: existing building materials more 13500

labour intensive for cleaning
Rates (including water rates)
OPTION A 75000
OPTION B 63000
NB: air conditioned building attracts

higher rates
Insurance
Building fabric replacement
OPTION A
Budget allowance 0.2% of building cost 4308
(£2154)
OPTION B
OPTION B 1808
Budget allowance 0.2% of building cost
(£904)
Total operation costs 103425 88272
Total £k to life cycle cost summary 104 89
ENERGY
SYSTEM OPTION A OPTION B
Building Diversity Unit Area Energy Area Energy

usage energy rate rate
cost
(hrs per (%) (p/kwh) m2 w/m2 kwh* £ per m2 w/m2 kwh* £ per
annum) (a) annum annum
(b) (c) (d) (e) (f) (g) (d) (e) (f) (g)

f × c/100 f × c/100
Gas
Heating – Option A 2000 50 1.076** 1500 160 240,000 2582 1500 190 285,000 3067
Electricity
Lighting 2200 80 5.50 1500 20 52,800 2904 1500 20 52,800 2904
Small Power 2200 100 5.50 1500 10 33,000 1815 1500 10 33,000 1815
Power for mechanical services 2200 60 5.50 1500 58*** 114,840 6316 1500 20 3 9,600 2178

13617 9964
Total energy costs to operation costs summary
*NB: formula for kwh = area (d) × energy rate (e) × unit energy cost (c) × building usage (a) × diversity (b)
1000
** Gas Board rate per therm 30p

1 therm = 27.8 kwh

rate per kwh = 35.2/27.8 = 1.076
*** Assume cooling load 120 watts/m2

Conversion rate electricity to cooling 2.5:1
Therefore w/m2 for cooling 120/2.5 = 48 + 10 (other mechanical plant) = 58
PART 2, SECTION 2
Page 39
PART 2, SECTION 2
ANNUAL MAINTENANCE
OPTION A OPTION B
£/m2 £ per annum £/m2 £ per annum
General building maintenance 4.00 6000 4.00 6000
Engineering services maintenance 12.00* 18000 4.00 6000
Lifts – service agreement 1.50 2250 1.50 2250
Total annual maintenance costs £26,250 £14,250
Total £k to life cycle cost summary £27k £15k
* NB: full air conditioning maintenance for

Option A
INTERMITTENT MAINTENANCE
OPTION A
Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Costs £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k
Roof renewal – – – – – – – – – – – – – – – – – – – – 10
External decoration (fire escapes only) – – – – – 0.5 – – – – 0.5 – – – – 0.5 – – – – 0.5
Internal finishings:
carpets – – – – – – 3.0 – – – – 3.0 21 – – – 3.0 – – – 14
paintwork, etc. – – – – – 5.5 – – – – 5.5 – – – – 5.5 – – – – 5.5

Engineering services:
mechanical (equipment) – – – – – – – – – – 42 – – – – – – – – – 42
electrical (luminaires) – – – – – – – – – – 14 – – – – – – – – – 14
lifts (major overhaul) – – – – – – – – – – – – – – – 15.5 – – – – –
Totals – – – – – 6 3 – – – 62 3.0 21 – – 21.5 3.0 – – – 86
Total £k to life cycle cost summary – – – – – 6 3 – – – 62 3 21 – – 22 3 – – – 86
OPTION B
Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Costs £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k

Roof renewal – – – – – – – – – – – – – – – – – – – – 10
External decoration (facades, etc.) – – – – – 11 – – – – 11 – – – – 11 – – – – 11
Internal finishings:
carpets – – – – – – 3.0 – – – – 3.0 21 – – – 3.0 – – – 14
paintwork, etc. – – – – – 5.5 – – – – 5.5 – – – – 5.5 – – – – 5.5
Engineering services:
mechanical (equipment) – – – – – – – – – – 14 – – – – – – – – – 14
electrical (luminaires) – – – – – – – – – – 14 – – – – – – – – – 14
lifts (major overhaul) – – – – – – – – – – – – – – – 15.5 – – – – –

Totals – – – – – 16.5 3.0 – – – 44.5 3.0 21 – – 32 3.0 – – – 68.5
Total £k to life cycle cost summary – – – – – 17 3.0 – – – 45 3 21 – – 32 3 – – – 69
PART 2, SECTION 2
Page 41
PART 2, SECTION 2
TAX
VAT CHARGEABLE
VALUE VAT RATE OPTION A OPTION B
£k % £k £k
OPTION A Capital costs 1833 17½ 320.8

Fees 321 17½ 56.2
OPTION B Capital costs 759.5 17½ 132.9

Fees 144.5 17½ 25.3
Total VAT to 377 158.2

capital costs
Total £k to 377 158

life cycle
cost
summary
VAT is chargeable directly on all running costs items and appears on the summary.
Corporation Tax
The client currently pays corporation tax at the rate of 31%.
This percentage has been assumed for all calculations.
Tax allowance - running costs

100% tax deductible based upon total inclusive of VAT*, e.g. running cost £100
VAT £17.50
Total £117.50
Tax allowance @ 31% £36.43
Tax allowance - capital costs

Certain capital items are classified as plant and machinery (see appendix E) and are tax deductible at a rate of 25% per annum
on reducing balance, e.g. capital item £10,000
First year tax allowance 10,000 × 25% × 31%
Second year tax allowance 7,500 × 25% × 31%
Tax allowances can only be allowed one year in arrears.
*NB. This is only applicable when the client is an end user and exempt from VAT. If, in the course of his business, the client can
claim back VAT he cannot claim tax relief on this portion of his costs.
TAX ALLOWANCE
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
£k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k £k
OPTION A
Capital allowances
Total allowances see next page
£696k (inc VAT) @ 25% p.a.

reducing balance – 174 131 98 73 55 41 31 23 17 13 10 – – – – – – – – –
Running cost allowances
From LCC summary (inc VAT) 154 154 154 154 161 157 154 154 154 227 157 179 154 154 150 157 154 154 154 257
Total 328 285 252 227 216 198 185 177 171 240 167 179 154 154 180 157 154 154 154 257
Apply current tax rate 31%
Total £k to LCC summary 102 88 78 70 67 61 57 55 53 74 52 55 48 48 56 49 48 48 48 80
OPTION B
Capital allowances
Total allowances see next page

£482.1k (inc VAT) @ 25% p.a.
reducing balance – 121 90 68 51 38 29 21 16 12 9 7 – – – – – – – – –
Running cost allowances
From LCC summary (inc VAT) 122 122 122 122 142 126 122 122 122 175 126 147 122 122 160 126 122 122 122 203
Total 243 212 190 173 180 155 143 138 134 184 133 147 122 122 160 126 122 122 122 203
Apply current tax rate 31%
Total £k to LCC summary 75 66 59 54 56 48 44 43 42 57 41 46 38 38 50 39 38 38 38 63

PART 2, SECTION 2
Page 43
PART 2, SECTION 2
CAPITAL ALLOWANCE Proposed capital allowance for taxation purposes

Subject to negotiation and agreement with the Inland Revenue on evidence of eventual costs
OPTION A OPTION B
GFA: 1500 m2 Total cost % tax allowable Tax allowable Total cost % tax allowable Tax Remarks
£k £k £k £k £k allowable £k
Elemental cost plan
Demolition 70 – – 14 – –
Substructure 42 – – – – –
Superstructure 315 – – 17.5 30 5.3 BWIC allowable on refurbishment
External walls 490 – – 101 – –
Internal walls 14.5 – – 54 30 16.2 BWIC allowable on refurbishment
Internal finishings 84 – – 105 – –
Fittings/fixtures 2.0 20 0.4 – – –
Sanitary appliances 9.5 100 9.5 9.5 100 9.5
Public Health services 21 – – 21 – –
Mechanical services 252 100 252.0 94.5 100 94.5
Electrical services 147 60 88.2 126 60 75.6 Office lighting and associated
switchgear not allowable
Lift installation 77 100 77.0 91 100 91.0
External work 21 – – 7 – –
Drainage 8.5 – – 3 – –
Sub-total 1553.5 27.5 427.1 634.5 45.4 292.1
Preliminaries (% of sub-total) 233 27.5 64.1 96.5 45.4 43.8 Taken on proportion of
construction costs
Contingencies (% of sub-total) 46.5 27.5 12.8 19.5 45.4 8.9
Total construction cost 1833 759.5
Professional fees 321 27.5 88.3 144.5 45.4 65.6
(% of construction cost)
VAT 377 27.5 103.7 158 45.4 71.7 Option A – Fees only
Total tax-allowable capital costs 696 482.1
to previous page
PART 2, SECTION 2
2.2.5.7 A SELECTION FROM PARRY’S VALUATION AND INVESTMENT TABLES

(for full tables rewference is made to Parry’s Valuation and Investment Tables, A
W Davidson (1989), (111th Edition) (Estates Gazette)
No Income Tax YEARS’ PURCHASE Single Rate

RATE PER CENT
Years 2 3 4 5 6 7 8
1 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259
2 1.9416 1.9135 1.8861 1.8594 1.8334 1.8080 1.7833
3 2.8839 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771
4 3.8077 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121
5 4.7135 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927
6 5.6014 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229
7 6.4720 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064
8 7.3255 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466
9 8.1622 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469
10 8.9826 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101
11 9.7868 9.2526 8.7605 8.3064 7.8869 7.4987 7.1390
12 10.5753 9.9540 9.3851 8.8633 8.3838 7.9427 7.5361
13 11.3484 10.6350 9.9856 9.3936 8.8527 8.3577 7.9038
14 12.1062 11.2961 10.5631 9.8986 9.2950 8.7455 8.2442
15 12.8493 11.9379 11.1184 10.3797 9.7122 9.1079 8.5595
16 13.5777 12.5611 11.6523 10.8378 10.1059 9.4466 8.8514
17 14.2919 13.1661 12.1657 11.2741 10.4773 9.7632 9.1216
18 14.9920 13.7535 12.6593 11.6896 10.8276 10.0591 9.3719
19 15.6785 14.3238 13.1339 12.0853 11.1581 10.3356 9.6036
20 16.3514 14.8775 13.5903 12.4622 11.4699 10.5940 9.8181
21 17.0112 15.4150 14.0292 12.8212 11.7641 10.8355 10.0168
22 17.6580 15.9369 14.4511 13.1630 12.0416 11.0612 10.2007
23 18.2922 16.4436 14.8568 13.4886 12.3034 11.2722 10.3711
24 18.9139 16.9355 15.2470 13.7986 12.5504 11.4693 10.5288
25 19.5235 17.4131 15.6221 14.0939 12.7834 11.6536 10.6748
26 20.1210 17.8768 15.9828 14.3752 13.0032 11.8258 10.8100
27 20.7069 18.3270 16.3296 14.6430 13.2105 11.9867 10.9352
28 21.2813 18.7641 16.6631 14.8981 13.4062 12.1371 11.0511
29 21.8444 19.1885 16.9837 15.1411 13.5907 12.2777 11.1584
30 22.3965 19.6004 17.2920 15.3725 13.7648 12.4090 11.2578
31 22.9377 20.0004 17.5885 15.5928 13.9291 12.5318 11.3498
32 23.4683 20.3888 17.8736 15.8027 14.0840 12.6466 11.4350
33 23.9886 20.7658 18.1476 16.0025 14.2302 12.7538 11.5139
34 24.4986 21.1318 18.4112 16.1929 14.3681 12.8540 11.5869
35 24.9986 21.4872 18.6646 16.3742 14.4982 12.9477 11.6546
36 25.4888 21.8323 18.9083 16.5469 14.6210 13.0352 11.7172
37 25.9695 22.1672 19.1426 16.7113 14.7368 13.1170 11.7752
38 26.4406 22.4925 19.3679 16.8679 14.8460 13.1935 11.8289
39 26.9026 22.8082 19.5845 17.0170 14.9491 13.2649 11.8786
40 27.3555 23.1148 19.7928 17.1591 15.0463 13.3317 11.9246
41 27.7995 23.4124 19.9931 17.2944 15.1380 13.3941 11.9672
42 28.2348 23.7014 20.1856 17.4232 15.2245 13.4524 12.0067
43 28.6616 23.9819 20.3708 17.5459 15.3062 13.5070 12.0432
44 29.0800 24.2543 20.5488 17.6628 15.3832 13.5579 12.0771
45 29.4902 24.5187 20.7200 17.7741 15.4558 13.6055 12.1084
46 29.8923 24.7754 20.8847 17.8801 15.5244 13.6500 12.1374
47 30.2866 25.0247 21.0429 17.9810 15.5890 13.6916 12.1643
48 30.6731 25.2667 21.1951 18.0772 15.6500 13.7305 12.1891
49 31.0521 25.5017 21.3415 18.1687 15.7076 13.7668 12.2122
50 31.4236 25.7298 21.4822 18.2559 15.7619 13.8007 12.2335
60 34.7609 27.6756 22.6235 18.9293 16.1614 14.0392 12.3766
PART 2, SECTION 2
No Income Tax PRESENT VALUE OF £1

RATE PER CENT
Years 2 3 4 5 6 7 8
1 .9803922 .9708738 .9615385 .9523810 .9433962 .9345794 .9259259
2 .9611688 .9425959 .9245562 .9070295 .8899964 .8734387 .8573388
3 .9423223 .9151417 .8889964 .8638376 .8396193 .8162979 .7938322
4 .9238454 .8884870 .8548042 .8227025 .7920937 .7628952 .7350299
5 .9057308 .8626088 .8219271 .7835262 .7472582 .7129862 .6805832
6 .8879714 .8374843 .7903145 .7462154 .7049605 .6663422 .6301696
7 .8705602 .8130915 .7599178 .7106813 .6650571 .6227497 .5834904
8 .8534904 .7894092 .7306902 .6768394 .6274124 .5820091 .5402689
9 .8367553 .7664167 .7025867 .6446089 .5918985 .5439337 .5002490
10 .8203483 .7440939 .6755642 .6139133 .5583948 .5083493 .4631935
11 .8042630 .7224213 .6495809 .5846793 .5267875 .4750928 .4288829
12 .7884932 .7013799 .6245970 .5568374 .4969694 .4440120 .3971138
13 .7730325 .6809513 .6005741 .5303214 .4688390 .4149644 .3676979
14 .7578750 .6611178 .5774751 .5050680 .4423010 .3878172 .3404610
15 .7430147 .6418619 .5552645 .4810171 .4172651 .3624460 .3152417
16 .7284458 .6231669 .5339082 .4581115 .3936463 .3387346 .2918905
17 .7141626 .6050164 .5133732 .4362967 .3713644 .3165744 .2702690
18 .7001594 .5873946 .4936281 .41552-7 .3503438 .2958639 .2502490
19 .6864308 .5702860 .4746424 .3957340 .3305130 .2765083 .2317121
20 .6729713 .5536758 .4563869 .3768895 .3118047 .2584190 .2145482
21 .6597758 .5375493 .4388336 .3589424 .2941554 .2415131 .1986557
22 .6468390 .5218925 .4219554 .3418499 .2775051 .2257132 .1839405
23 .6341559 .5066917 .4057263 .3255713 .2617973 .2109469 .1703153
24 .6217215 .4919337 .3901215 .3100679 .2469785 .1971466 .1576993
25 6095309 .4776056 .3751168 .2953028 .2329986 .1842492 .1460179
26 .5975793 .4636947 .3606892 .2812407 .2198100 .1721955 .1352018
27 .5858620 .4501891 .3468166 .2678483 .2073680 .1609304 .1251868
28 .5743746 .4370768 .3334775 .2550936 .1956301 .1504022 .1159137
29 .5631123 .4243464 .3206514 .2429463 .1845567 .1405628 .1073275
30 .5520709 .4119868 .3083187 .2313774 .1741101 .1313671 .0993773
31 .5412460 .3999871 .2964603 .2203595 .1642548 .1227730 .0920160
32 .5306333 .3883370 .2850579 .2098662 .1549574 .1147411 .0852000
33 .5202287 .3770262 .2740942 .1998725 .1461862 .1072347 .0788889
34 .5100282 .3660449 .2635521 .1903548 .1379115 .1002193 .0730453
35 .5000276 .3553834 .2534155 .1812903 .1301052 .0936629 .0676345
36 .4902232 .3450324 .2436687 .1726574 .1227408 .0875355 .0626246
37 .4806109 .3349829 .2342968 .1644356 .1157932 .0818088 .0579857
38 .4711872 .3252262 .2252854 .1566054 .1092389 .0764569 .0536905
39 .4619482 .3157535 .2166206 .1491480 .1030555 .0714550 .0497134
40 .4528904 .3065568 .2082890 .1420457 .0972222 .0667804 .0460309
41 .4440102 .2976280 .2002779 .1352816 .0917190 .0624116 .0426212
42 .4353041 .2889592 .1925749 .1288396 .0865274 .0583286 .0394641
43 .4267688 .2805429 .1851682 .1227044 .0816296 .0545127 .0365408
44 .4184007 .2723718 .1780463 .1168613 .0770091 .0509464 .0338341
45 .4101968 .2644386 .1711984 .1112965 .0726501 .0476135 .0313279
46 .4021537 .2567365 .1646139 .1059967 .0685378 .0444986 .0290073
47 .3942684 .2492588 .1582826 .1009492 .0646583 .0415875 .0268586
48 .3865376 .2419988 .1521948 .0961421 .0609984 .0388668 .0248691
49 .3789584 .2349503 .1463411 .0915639 .0575457 .0363241 .0230269
50 .3715279 .2281071 .1407126 .0872037 .0542884 .0339478 .0213212
60 .3047823 .1697331 .0950604 .0535355 .0303143 .0172573 .0098759
PART 2, SECTION 2
No Income Tax ANNUAL SINKING FUND FOR THE REDEMPTION OF £1 CAPITAL INVESTED
RATE PER CENT
Years 2 3 4 5 6 7 8
1 1.0000000 1.0000000 1.0000000 1.0000000 1.0000000 1.0000000 1.0000000
2 .4950495 .4926108 .4901961 .4878049 .4854369 .4830918 .4807692
3 .3267547 .3235304 .3203485 .3172086 .3141098 .3110517 .3080335
4 .2426238 .2390270 .2354900 .2320118 .2285915 .2252281 .2219208
5 .1921584 .1883546 .1846271 .1809748 .1773964 .1738907 .1704565
6 .1585258 .1545975 .1507619 .1470175 .1433626 .1397958 .1363154
7 .1345120 .1305064 .1266096 .1228198 .1191350 .1155532 .1120724
8 .1165098 .1124564 .1085278 .1047218 .1010359 .0974678 .0940148
9 .1025154 .0984339 .0944930 .0906901 .0870222 .0834865 .0800797
10 .0913265 .0872305 .0832909 .0795046 .0758680 .0723775 .0690295
11 .0821779 .0780774 .0741490 .0703889 .0667929 .0633569 .0600763
12 .0745596 .0704621 .0665522 .0628254 .0592770 .0559020 .0526950
13 .0681184 .0640295 .0601437 .0564558 .0529601 .0496508 .0465218
14 .0622020 .0585263 .0546690 .0510240 .0475849 .0443449 .0412969
15 .0578255 .0537666 .0499411 .0463423 .0429628 .0397946 .0368295
16 .0536501 .0496108 .0458200 .0422699 .0389521 .0358576 .0329769
17 .0499698 .0459525 .0421985 .0386991 .0354448 .0324252 .0296294
18 .0467021 .0427087 .0389933 .0355462 .0323565 .0294126 .0267021
19 .0437818 .0398139 .0361386 .0327450 .0296209 .0267530 .0241276
20 .0411567 .0372157 .0335818 .0302426 .0271846 .0243929 .0218522
21 .0387848 .0348718 .0312801 .0279961 .0250045 .0222890 .0198323
22 .0366314 .0327474 .0291988 .0259705 .0230456 .0204058 .0180321
23 .0346681 .0308139 .0273091 .0241368 .0212785 .0187139 .0164222
24 .0328711 .0290474 .0255868 .0224709 .0196790 .0171890 .0149780
25 .0312204 .0274279 .0240120 .0209525 .0182267 .0158105 .0136788
26 .0296992 .0259383 .0225674 .0195643 .0169043 .0145610 .0125071
27 .0282931 .0245642 .0212385 .0182919 .0156972 .0134257 .0114481
28 .0269897 .0232932 .0200130 .0171225 .0145926 .0123919 .0104889
29 .0257784 .0221147 .0188799 .0160455 .0135796 .0114487 .0096185
30 .0246499 .0210193 .0178301 .0150514 .0126489 .0105864 .0088274
31 .0235963 .0199989 .0168554 .0141321 .0117922 .0097969 .0081073
32 .0226106 .0190466 .0159486 .0132804 .0110023 .0090729 .0074508
33 .0216865 .0181561 .0151036 .0124900 .0102729 .0084081 .0068516
34 .0208187 .0173220 .0143148 .0117554 .0095984 .0077967 .0063041
35 .0200022 .0165393 .0135773 .0110717 .0089739 .0072340 .0058033
36 .0192329 .0158038 .0128869 .0104345 .0083948 .0067153 .0053447
37 .0185068 .0151116 .0122396 .0098398 .0078574 .0062368 .0049244
38 .0178206 .0144593 .0116319 .0092842 .0073581 .0057951 .0045389
39 .0171711 .0138439 .0110608 .0087646 .0068938 .0053868 .0041851
40 .0165557 .0132824 .0105235 .0082782 .0064615 .0050091 .0038602
41 .0159719 .0127124 .0100174 .0078223 .0060589 .0046596 .0035615
42 .0154173 .0121917 .0095402 .0073947 .0056834 .0043359 .0032868
43 .0148899 .0116981 .0090899 .0069933 .0053331 .0040359 .0030341
44 .0143879 .0112298 .0086645 .0066163 .0050061 .0037577 .0028015
45 .0139096 .0107852 .0082625 .0062617 .0047005 .0034996 .0025873
46 .0134534 .0103625 .0078820 .0059282 .0044149 .0032600 .0023899
47 .0130179 .0099605 .0075219 .0056142 .0041477 .0030374 .0022080
48 .0126018 .0095778 .0071806 .0053184 .0038977 .0028307 .0020403
49 .0122040 .0092131 .0068571 .0050396 .0036636 .0026385 .0018856
50 .0118232 .0088655 .0065502 .0047767 .0034443 .0024598 .0017429
60 .0087680 .0061330 .0042018 .0028282
Extracts from Parry’s Valuation and Investment Tables, A W Davidson (1989), (11th Edition) (Estates
Gazette) reproduced by permission of the College of Estate Management which owns the copyright.
I Appendix A: Residual Values

A1 At the end of the life of a building, the component/building and the land will
have a residual value.
A2 There will be one of two situations. Either the building will have reached the
end of its life, with no alternative use, or the building will have reached the
end of the life for its planned purpose, but does have an alternative use.
A3 In either situation the residual value of the building and/or the land may be
significant and will need to be carefully assessed as it may have a substantial
effect on life cycle costing calculations. Residual values will be of particular
significance if the time horizon used for life cycle costing calculations is
relatively short.
A4 In considering residual values, an allowance should be made for the cost of

disposing of plant and equipment and for the demolition of buildings, if
appropriate. In assessing demolition costs, allowance should be made for the
value of any re-usable materials.
A5 Owners also need to be cognisant of taxation issues and whether these affect
their property/building decisions.
A6 There are strict guidelines for taxation adjustments that arise at disposal. If the
plant and machinery is ‘scrapped’ the remaining value is written off and a
balancing allowance brought into account. Alternatively if the building (and
the plant and machinery contained therein) is sold, the vendor should declare
whether allowances have been claimed. An adjustment to their after tax cost
will arise depending upon whether the disposal value is greater or less than the
written down value remaining on the vendor’s accounts.
A7 This area of tax advice is experiencing increased scrutiny from the Inland
Revenue and the District Valuer’s Department, as parties to property
transactions sometimes select/contract disposal values of tax relievable
components with specific tax planning objectives.
Appendix A (4/99)
I Appendix B: Obsolescence
B1 Building life is influenced by obsolescence. Almost all its forms relate to
economic considerations. However, six different forms of obsolescence can
be categorised as:
• physical
• economic
• functional
• technological
• social
• legal.
B2 Buildings usually end their ‘life’ before the end of their physical life. The most
common reasons for buildings becoming obsolete are probably economic and
functional considerations. Buildings designed for a specific specialised use,
with little or no flexibility for changing their use, are therefore likely to have
shorter lives than buildings offering flexibility for the change of function of
the building.
B3 The table below gives definitions and examples of each form of obsolescence:
Types of Definition of type Basis for Examples of factors

obsolescence of obsolescence assessment of leading to
building life obsolescence
Physical Life of the building How long will the Deterioration of

to when physical building stand up? external brick walls
collapse is affecting their structural
possible. stability.
Deterioration of
suspended concrete
floors, containing high
alumina cement, in
multi-storey buildings,
affecting structural
stability.
Economic Life of the building How long will the The value of the land on
to when occupation building be which the building
is not considered to economic for the stands is more than the
be the least cost client to own or capitalised full rental
alternative of operate? value that could be
meeting a derived from letting the
particular objective. building.
The asset would

achieve a better rate of
return in the possession
of another, or in the
redevelopment or
refurbishment scheme.
Appendix B (4/99)
Types of Definition of type Basis for Examples of

obsolescence of obsolescence assessment of factors leading to
building life obsolescence
Functional Life of the building How long will the Cinemas converted into
to when the building be used bingo halls, village
building ceases to for the purpose for railway stations
function for the which it was built? converted into private
same purpose as houses.
that for which it
was built.
Technological Life of the building How long will the Prestige office unable
until the building is building be to accommodate
no longer technologically introduction of high
technologically superior to level of computing
superior to alternatives? facilities.
alternatives.
Storage warehouse
unable to
accommodate the
introduction of robotics
for goods handling.
Social and The life of a How long will the Timber football stand
Legal building until the building meet replaced (following
time when human human desires, Bradford Football Club
desire or legal (with the exclusion fire disaster).
requirement of economic
dictates considerations). Multi-storey flats in
replacement for inner city demolished
reasons other than (following social and
economic community problems).
considerations.
B4 Notwithstanding the difficulty of the task, the surveyor, in consultation with

the client, should make an informed assessment of the building life to be used
in any particular study. In making that assessment the surveyor will need to
take account of a number of factors which may influence the final assessment
of building life in any particular case.
B5 While the above examples relate to the whole building, obsolescence of

elements or components is also relevant, for example major refurbishment of
retail buildings at say 15-year intervals to remain attractive.
Appendix B (4/99)
I Appendix C: Costs And Values

The following checklist provides suggestions for cost and value categories to be
considered. This list is not exhaustive and items may need to be added or others
disregarded as applicable to any particular project.
C1 CAPITAL COSTS
C1.1 Land
C1.2 Fees on acquisition
C1.3 Design team professional fees
C1.4 Demolition and site clearance
C1.5 Construction price for building work
C1.6 Cost of statutory consents
C1.7 Development Land Tax
C1.8 Capital Gains Tax
C1.9 Value Added Tax
C1.10 Furnishings
C1.11 Other capital costs
C1.12 Commissioning expenses
C1.13 Decanting charges
C2 FINANCING COSTS
C2.1 Finance for land purchase and during construction
C2.2 Finance during period of intended occupation
C2.3 Loan charges (public sector)
C3 OPERATION COSTS
C3.1 Energy
C3.2 Cleaning
C3.3 Rates
C3.4 Insurances
C3.5 Security and Health
C3.6 Staff (related to the building)
C3.7 Management and administration of the building
C3.8 Land charges
C3.9 Energy conservation measures
C3.10 Internal planting
C3.11 Equipment associated with occupier’s occupation
C4 ANNUAL MAINTENANCE COSTS, INTERMITTENT MAINTENANCE, REPLACEMENT AND

ALTERATION COSTS
C4.1 Main structure
C4.2 External decorations
C4.3 Internal decorations
C4.4 Finishes, fixtures and fittings
C4.5 Plumbing and sanitary services
C4.6 Heat source
Appendix C (4/99)
C4.7 Space heating and air treatment

C4.8 Ventilating systems
C4.9 Electrical installations
C4.10 Gas installations
C4.11 Life and conveyor installation
C4.12 Communications installation
C4.13 Special and protective installations
C4.14 External works
C4.15 Gardening
C5 OCCUPANCY COSTS
C5.1 Client’s occupancy costs
C6 RESIDUAL VALUES
C6.1 Resale value – building, land and plant and equipment
C6.2 Related costs – demolition and site clearance and disposal of fees and charges
C6.3 Capital Gains Tax and balancing charges
Appendix C (4/99)
I Appendix D: Glossary of Terms for Taxation

D1 CAPITAL EXPENDITURE
Money expended in acquiring long life assets which includes land, buildings,
permanent improvements or additions/extensions to existing assets including
associated professional fees, furniture and equipment thereto, which are
intended for use in the carrying out of business operations. These assets
should have a useful life of more than one year.
D2 REVENUE EXPENDITURE
Expenditure incurred as a trading expense e.g. salaries, consumables,
occupancy and regular maintenance costs.
D3 TAXATION ‘DEPRECIATION’ ALLOWANCES (FOR TAXATION PURPOSES)

This is a collective term for taxation relief afforded to commercial (tax
paying) organisations to offset the cost of capital expenditure incurred upon
assets used for the purposes of their trade.
As explained in 2.2.3 there are various types of taxation allowances and the
proportion of initial expenditure which attracts tax relief is often varied by
successive Finance Acts.
This should be differentiated from the rate of depreciation adopted by

accountants/auditors when preparing company management accounts to allow
provision for replacement of assets. This is because the depreciation
allowance for taxation purposes is fixed by legislation.
When an asset is disposed of a review of the allowances received is required

and an adjustment may be necessary.
D4 INDUSTRIAL BUILDING
Industrial buildings or structures which qualify for capital allowances are
defined in the statutes CAA 1968 S7 and CAA 1990 S18. These include
factories, manufacturing, storage, docks, tunnels and mines. There are specific
rules which apply where part of the building is used for a non-qualifying
purpose.
D5 PLANT AND MACHINERY

This type of tax relief was introduced after the second world war to provide an
incentive to industry to replace equipment used in industry and commerce.
The precise definition of plant and machinery is frequently contested in the

courts. To assist clarification examples of items likely to attract taxation relief
are illustrated in Appendix E.
D6 INITIAL ALLOWANCES/FIRST YEAR ALLOWANCES

These were introduced to provide an acceleration to the standard rate of
annual tax relief (depreciation allowance) being a proportion of the original
capital expenditure.
Appendix D (4/99)
Governments use successive Finance Acts to vary the proportion awarded to

increase or reduce this incentive as a method of influencing or stimulating
capital investment within the commercial sector of the economy.
D7 ANNUAL ‘WRITING DOWN’ ALLOWANCE

This is the annual depreciation allowance awarded in respect to ‘qualifying
expenditure’ as a proportion of the residual balance of the initial expenditure
i.e. original cost less the amounts already calculated and benefiting from tax
relief.
D8 BALANCING ALLOWANCE
Upon disposal of an asset a comparison between its value and the written
down amount remaining on the owner’s accounts is required.
If the asset is sold for a sum in excess of the vendor’s after tax relief cost, then
a ‘profit’ has arisen which is subject to an adjustment to the depreciation
allowance (i.e. reduction of tax relief), termed a ‘balancing charge’.
Alternatively, if the asset is ‘scrapped’ or disposed of at low value (compared
with the residual amount) then an additional tax relief is awarded, termed a
‘balancing allowance’.
Appendix D (4/99)
PART 2, SECTION 2, APPENDIX E
I Appendix E: Examples of items of Expenditure Likely to Attract

Taxation Allowances
Item Plant and equipment
Finishes/fixtures/ 1. Wall finishes where they can be removed from the building, e.g.
fittings curtains, curtain track, battens for fixing
2. Floor finishes such as carpets and any floor finishing that can be
removed from the building
3. Door mats and matwell frames
4. Suspended ceilings which are airtight and can be used as an
extract system or any ceiling which is an integral part of the
heating, ventilating or air conditioning system
5. Any movable fixtures and fittings
6. Demountable partitions
7. Curtains, blinds and furnishing
8. Cupboards, lockers, shelves, display counters, chalkboards,
dustbins, cloakroom fittings, telephone booths
Plumbing and 1. Sanitary fittings (not the pipework)
sanitary services 2. Vanity units
3. Soap dispensers
4. Mirrors
5. Demountable toilet partitions
6. Coat hooks and racks
7. Towel rails and cabinets
8. Toilet roll holders
9. Tanks
Heat source 1. Boilers and equipment, fuel pumps, water pumps, flue, etc. (not
the pipework from the boiler)
2. Boiler bases and foundations
3. Oil storage tanks and foundations
4. Fuel hoppers, ash removal plant
5. Control equipment to the heating system
6. Builder’s work in connection with the heat source
7. Part cost of boiler room
Space heating and air 1. Equipment in connection with heating, air conditioning and hot
treatment water installation (not the pipework or ducting)
2. Builder’s work in connection with the equipment
3. Plant room
4. Electrical and mechanical control system
5. Solar heating systems
6. Insulation to pipework
Ventilation systems 1. Dust and fume extraction equipment including ductwork and
builder’s work in connection
2. Extract fans and builder’s work
3. Ventilators
4. Instrumentation controls
Electrical installations 1. Electrical installation to all plant and equipment (excludes conduit
and wiring to power and lighting for the building generally)
2. Light fittings
3. Emergency lighting
4. Switchgear and transformers
5. Control gear and distribution boards
6. Plant rooms
7. Builder’s work in connection with the electrical installation
Gas installations 1. Gas fires, cookers and equipment including flues and builder’s
work in connection
Appendix E (4/99)
Item Plant and equipment

Lift and conveyor 1. Lift installation complete including builder’s work in connection
installations with lift motors, lift guides and plant room
2. Escalators and hoists are as for lifts
Communications 1. Clocks
installations 2. Sound distribution, bells, signals and the like
3. Fire alarms
4. Burglar alarms
5. Telephone installation
6. Builder’s work in connection with communication installations
Special installations/ 1. Sprinkler system
protective installations 2. Dry riser system
3. Hosereel system
4. CO2 system
5. Fire extinguishers
6. Refrigeration equipment
7. Kitchen equipment
8. Laundry equipment
9. Health equipment
10. Laboratory equipment
11. Manufacturing equipment
12. Incinerators and flues
13. Water heaters
14. Hand dryers
15. Window cleaning hoists and equipment including track, motors
and ancillary builder’s work
16. Refuse disposal equipment including ancillary builder’s work
17. Lighting conductors and earthing systems
18. Occupational equipment associated with the building user
19. Computer equipment and all ancillary work
20. Crane gantries
21. All builder’s work in connection with items 1 to 20 above
Special items within a 1. Removable fire escapes
building (the items 2. Shelving
shown are only given 3. Safes and strong rooms
as indicative of the 4. Roller shutters
types of item) 5. Ladders
6. Dock levellers
7. Signs/notice boards
8. Interior planting
External works 1. External signs
2. Traffic signs, crash barriers
3. Drainage where it is specifically required for plant and equipment
4. Cycle racks
Appendix E (4/99)
PART 2, SECTION 2, APPENDIX F
I Appendix F: Further Reading
Ferry, D.J.O., Flanagan, R., Life Cycle Costing: A Radical Approach, Construction
Industry Research and Information Association (CIRIA Report 122), London, 1991
Flanagan, Roger, Norman, George, Furbur, J. David & Townsend, Geoffrey M., Life
Cycle Costing For Construction, Surveyors Publications, London, 1983
Flanagan, Roger, Norman, George Meadows, Justin Robinson, Graham, Life Cycle
Costing: Theory and Practice, BSP Professional Books, Oxford, 1989
HM Treasury. Guidance Note No. 35: Life Cycle Costing, Central Unit on Procurement,
HM Treasury, London, 1992
Data Sources
Bernard Williams Associates, Facilities Economics. Bernard Williams Associates,

Building Economics Bureau Ltd, Kent. Tel: 0181 460 1111, 1995. A comprehensive
study including hard costs.
BMI. Energy Consumption Study, Building Maintenance Information, 12 Great George

Street, London, SW1P 3AD, Tel: 0171 222 7000, 1996. Covers typical energy costs for
different building types.
BMI. Occupancy Cost Planning, Building Maintenance Information, contact details as

above, 1992. Includes addresses of numerous trade and professional organisations as
possible data sources.
BMI. Review of Maintenance and Occupancy Costs, Building Maintenance

Information, contact details as above, 1994
British Standard 7543: 1992 Guide to Durability of Buildings and Building Elements,
Products and Components, British Standards Institution, London, 1992
Building Research Energy Conservation Support Unit. Energy Efficiency Best Practice
Programme. Building Research Energy Conservation Support Unit, Watford, WD2
7JR. Tel: 01923 664 258. Includes numerous good practice case studies, good practice
guides and energy consumption guides for different building types including costings.
CIB. CIB W80 report 96: Prediction of Service Life of Building Materials and
Components
CIBSE. CIBSE Guide, Section B18, Owning and Operating Costs. Chartered Institute of
Building Services Engineers, London. Gives indicative details of energy consumption,
maintenance costs and rough life spans for plant (currently being updated in more
detail).
Appendix F (4/99)
HAPM Component Life Manual. E & FN Spon. Tel: 0171 204 2481, 1985.
Comprehensive life-span assessment for over 500 housing components based on
insured life assessments.
ISO Guide to Service Life Planning of Buildings (under preparation at the time of
writing but it will include a method of estimating the durability of individual building
components).
Jones Lang Wootton. Office Service Charges Analysis 1995, Jones Lang Wootton,
London, 1995. A review of 300 buildings including unit costs.
Kirk, Stephen J., Dell’isola, Alphonse J., Life Cycle Costing For Design Professionals,
(2nd Edition), McGraw-Hill Inc, New York, 1995. Includes 45 pages of maintenance
and replacement data (in dollars) covering all elements.
NBA Construction Consultants. Maintenance Cycles and Life Expectancies of Building

Components and Elements: a guide to data and sources. NBA Construction Consultants
PSA Cost in Use Tables, 3rd Edition, London HMSO 1991. Includes elemental analysis
of cleaning, maintenance and repair costs.
RICS. Life Expectancies of Building Components. RICS Research Paper Series No 11,
1992. Preliminary results from a survey of Building Surveyors’ views.
Appendix F (4/99)
PART 2, SECTION 3
SECTION 3: ELEMENTS FOR BUILDINGS
Introduction
The Building Cost Information Service (BCIS) elements were originally
produced for use in cost planning, i.e., the development of a design with a pre-
set budget and were published in the BCIS document, Standard Form of Cost
Analysis: Principles, Instructions and Definitions. However, since their
introduction elements have become widely used for structuring building
information in value engineering, specifications, contract drafting and tender
evaluation as well as for cost planning/cost analysis.
This section discusses some of the uses for elemental information and gives a
complete definition for each element. The elements are also referred to in
other sections of the handbook.
I 2.3.1 Elements
2.3.1.1 An element is a part of a building which fulfils a specific function or
functions irrespective of its design, specification or construction, for
example, the element ‘external walls’ provides the external vertical envelope
to a building, separating the internal and external environment, irrespective of
how it may be constructed.
2.3.1.2 Elements relate to the design process. Therefore, budget estimates are
normally prepared in elemental form and developing the designs are normally
described and costed in this manner.
I 2.3.2 Elemental Cost Analysis

2.3.2.1 An elemental cost analysis is prepared following the receipt and acceptance
of a tender for building work.
2.3.2.2 The tender cost is broken down into the standard BCIS elements (see
Appendix A) using the definitions to determine which items should be
included in any particular element.
2.3.2.3 The elemental cost analysis can then be used to estimate future projects of a
similar type.
2.3.2.4 For further information on the preparation of an elemental cost analysis using
the BCIS elements, please refer to the BCIS publication, Standard Form of
Cost Analysis: Principles, Instructions and Definitions.
PART 2, S ECTION 3
I 2.3.3 Other Uses

The standard elements can be used successfully for other purposes, as detailed
in the following subsections.
2.3.3.1 DESIGN AND BUILD
In the procurement of design and build projects there has been an increase in
the use of elements to structure both employer’s requirements and the contract
sum analysis. However, the use of non-standard elements and definitions can
be confusing. Standard elements, on the other hand, encourage a structured
thought process and produce more coherent employer’s requirements. This
helps to avoid some conflicting statements that may arise in contract
documents if standard elements are not used.
(a) Employer’s Requirements

The Joint Contracts Tribunal (JCT) practice note on the Standard Form of
Building Contract With Contractor’s Design, CD/1A states that the employer’s
requirements may be little more than a description of accommodation
required, or may be anything up to full ‘scheme design’ or further, prepared
for the employer by his own consultants or other professional advisers:
• Any design input from the employer must be embodied in the
employer’s requirements as there is no provision for design input
from the employer during the course of the contract.
• There is no set format for the employer’s requirements, but if
anything beyond basic accommodation requirements is being given,
particularly where an outline specification is being prepared, setting
it out in design elements will be helpful to both the employer and the
contractor.
• Using the element headings to structure the requirements will act as a
checklist for the employer and his representatives in producing any
design requirements they may have. It also means that the
requirements are presented to the contractor in a form that will assist
him in developing his design proposal.
• Elements are the most helpful form for structuring specifications to
be included in the employer’s requirements. Performance
specifications and outline specifications naturally fit into an
elemental format. Where a more detailed specification is required it
may be more helpful to give performance requirements in elemental
form, with the more detailed specification in trade (work sections)
form, where necessary.
PART 2, S ECTION 3
(b) Contractor’s Proposals

The contractor’s proposals should follow the format of the employer’s
requirements. The preparation of the specification for materials and
workmanship in elemental form facilitates the development of the
specification alongside the design and tendering process. It also highlights
any amendments to the employer’s requirements either proposed by the
contractor or requested by the client.
(c) Contract Sum Analysis

Design and build contracts are for a lump sum price, but the standard forms
of contract provide for a contract sum analysis for assisting the employer in
assessing tenders, for checking interim payments and for valuation of
changes in the employer’s requirements. The use of standard elements to
format the contract sum analysis makes the foregoing procedures simpler
(see Section 2.3.3.1 (e)).
(d) Evaluation of Tender Proposals

On client-led design projects where tenders are based on a detailed set of
employer’s requirements and a highly developed design, the employer should
in theory be able to accept the lowest tender. Comparison of the tender with
the cost plan element by element helps in assessing the contractor’s
compliance with the employer’s design. Where alternative solutions have been
put forward for particular elements, the existence of an elemental cost plan
and an elemental contract sum analysis prove invaluable in assessing the
tender value.
Contractor’s proposals on contractor-led design projects should be

systematically checked to ensure that they meet the employer’s requirements.
The structuring of the requirements, the proposal and the contract sum
analysis in consistent elemental form greatly assists in this process. Indeed, it
is difficult to imagine any successful detailed technical check of a tender that
did not follow a design elemental form. If the contractor’s proposals were not
structured in this way, the process would be much more difficult.
Contract sum analyses presented in consistent elemental form allow

comparison both with the client’s quantity surveyor’s original cost plan and
between the competing tenders. This identifies where individual tenders have
proposed any elemental solutions with a significantly different cost.
(e) Interim Payments

The JCT Standard Form of Building Contract With Contractor’s Design 1998
(CD98) provides for the use of one of two methods for interim payments.
Alternative A is by stage payments and Alternative B is by periodic payments.
If the contract sum analysis has been set out elementally it lends itself to
Alternative A, as elements and sub-elements provide easily definable stages.
PART 2, S ECTION 3
With Alternative B - periodic payments - an elemental breakdown of the

contract sum analysis makes valuations relatively easy, particularly if different
design solutions within a single element are identified separately. For
example, a periodic payment for the external walls would be a simple task of
proportioning the amount of external wall completed to the total. This
overcomes some of the problems that arise in checking interim valuations
where the contract sum analysis has been prepared in trade format but no bill
of quantities or quantified schedule of rates has been provided.
2.3.3.2 ACTIVITY SCHEDULES
The JCT Standard Form of Building Contract 1998 (JCT98) contains an

option for the contractor to include an activity schedule for use in interim
payments. The activity schedule is defined as ‘the schedule of activities as
attached to the Appendix with each activity priced and with the sum of those
prices being the contract sum excluding provisional sums, prime cost sums
and any contractor’s profit thereon’. If the contractor does include an activity
schedule, it must be by agreement with the employer.
There is no standard format stipulated for the activity schedule. However,

using a BCIS standard list of elements (Appendix A) to provide an activity
schedule eliminates any problems with definitions. Furthermore, an elemental
breakdown makes valuation for interim payments simple (see Section 2.3.3.1
(e)) and overcomes some of the problems that may arise if activity schedules
have been broken down into trades.
The use of an activity schedule broken down into BCIS standard elements
would also allow an elemental cost analysis to be completed relatively easily
and would be particularly useful if projects have been procured without bills
of quantities.
PART 2, S ECTION 3, A PPENDIX A
Appendix A: BCIS Standard Elements

(Please also refer to the notes which follow the definitions)
1 SUBSTRUCTURE
All work below underside of screed or where no screed exists to underside of

lowest floor finish including damp-proof membrane, together with relevant
excavations and foundations.
2 SUPERSTRUCTURE
2A Frame
Loadbearing framework of concrete, steel or timber. Main floor and roof

beams, ties and roof trusses of framed buildings. Casing to stanchions and
beams for structural or protective purposes.
2B Upper floors
Upper floors, balconies and structural screeds, suspended floors over or in

basements.
2C Roof
2C1 Roof structure

Construction, including eaves and verges, plates and ceiling joists,
trusses, gable ends, internal walls and chimneys above plate level,
parapet walls and balustrades.
2C2 Roof coverings

Roof screeds and finishings. Battening, felt, slating, tiling and the like.
Flashings and trims. Insulation. Eaves and verge treatment.
2C3 Roof drainage

Gutters where not integral with roof structure, rainwater heads and roof
outlets. (Rainwater downpipes to be included in ‘Internal drainage’
(5C1).)
2C4 Roof lights

Roof lights, opening gear, frame, kerb and glazing. Pavement lights.
Appendix A (10/99)
2D Stairs
2D1 Stair structure

Construction of ramps, stairs and landings other than at floor levels.
Ladders. Escape staircases.
2D2 Stair finishes

Finishes to treads, risers, landings (other than at floor levels), ramp
surfaces, strings and soffits.
2D3 Stair balustrades and handrails

Balustrades and handrails to stairs, landings and stairwells.
2E External walls
External enclosing walls including that to basements but excluding items

included with ‘Roof structure’ (2C1). Chimneys forming part of external
walls up to plate level. Curtain walling, sheeting rails and cladding. Vertical
tanking. Insulation. Applied external finishes.
2F1 Windows
Sashes, frames, linings and trims. Ironmongery and glazing. Shop
fronts. Lintels, sills, cavity damp-proof courses and work to reveals of
openings.
2F2 External doors

Doors, fanlights and sidelights. Frames, linings and trims.
Ironmongery and glazing. Lintels, thresholds, cavity damp-proof
courses and work to reveals of openings.
Internal walls, partitions and insulation. Chimneys forming part of internal

walls up to plate level. Screens, borrowed lights and glazing. Moveable space-
dividing partitions. Internal balustrades excluding items included with ‘Stair
balustrades and handrails’ (2D3).
2H Internal doors
Doors, fanlights and sidelights. Sliding and folding doors. Hatches. Frames,
linings and trims. Ironmongery and glazing. Lintels, thresholds and work to
reveals of openings.
Appendix A (10/99)
3 INTERNAL FINISHES
3A Wall finishes
Preparatory work and finishes to surfaces of walls internally. Picture, dado

and similar rails.
3B Floor finishes
Preparatory work, screeds, skirtings and finishes to floor surfaces excluding

items included with ‘Stair finishes’ (2D2) and structural screeds included
with ‘Upper floors’ (2B)
3C Ceiling finishes
3C1 Finishes to ceilings

Preparatory work and finishes to surfaces of soffits excluding items
included with ‘Stair finishes’ (2D2) but including sides and soffits of
beams not forming part of a wall surface. Cornices, coves.
3C2 Suspended ceilings

Construction and finishes of suspended ceilings.
4 FITTINGS AND FURNISHINGS
4A Fittings and furnishings
4A1 Fittings, fixtures and furniture

Fixed and loose fittings and furniture including shelving, cupboards,
wardrobes, benches, seating, counters and the like. Blinds, blind
boxes, curtain tracks and pelmets. Blackboards, pin-up boards, notice
boards, signs, lettering, mirrors and the like. Ironmongery, other than
to doors and windows.
4A2 Soft furnishings

Curtains, loose carpets or similar soft furnishing materials.
4A3 Works of art

Works of art if not included in a finishes element or elsewhere.
4A4 Equipment
Non-mechanical and non-electrical equipment related to the function
or need of the building (e.g. gymnasia equipment).
Appendix A (10/99)
5 SERVICES
Baths, basins, sinks, etc. WC’s, slop sinks, urinals and the like. Toilet-roll
holders, towel rails, etc. Traps, waste fittings, overflows and taps as appropriate.
Kitchen, laundry, hospital and dental equipment and other specialist

mechanical and electrical equipment related to the function of the building.
5C1 Internal drainage

Waste pipes to ‘Sanitary appliances’ (5A) and ‘Services equipment’ (5B).
Soil, anti-syphonage and ventilation pipes. Rainwater downpipes. Floor
channels and gratings and drains in ground within buildings up to external
face of external walls.
5C2 Refuse disposal

Refuse ducts, waste disposal (grinding) units, chutes and bins. Local
incinerators and flues thereto. Paper shredders and incinerators.
5D1 Water – mains supply

Incoming water main from external face of external wall at point of
entry into building including valves, water meters, rising main to (but
excluding) storage tanks and main taps. Insulation.
5D2 Cold water services

Storage tanks, pumps, pressure boosters, distribution pipework to
sanitary appliances and to services equipment. Valves and taps not
included with ‘Sanitary appliances’ (5A) and/or ‘Services equipment’
(5B). Insulation.
5D3 Hot water services

Hot water and/or mixed water services. Storage cylinders, pumps,
calorifiers, instantaneous water heaters, distribution pipework to
sanitary appliances and services equipment. Valves and taps not
included with ‘Sanitary appliances’ (5A) and/or ‘Services equipment’
(5B). Insulation.
5D4 Steam and condensate

Steam distribution and condensate return pipework to and from services
equipment within the building including all valves, fittings, etc.
Insulation.
Appendix A (10/99)
5E Heat source
Boilers, mounting, firing equipment, pressurising equipment, instrumentation

and control, ID and FD fans, gantries, flues and chimneys, fuel conveyors and
calorifiers. Cold and treated water supplies and tanks, fuel oil and/or gas
supplies, storage tanks, etc., pipework, (water or steam mains) pumps, valves and
other equipment. Insulation.
5F1 Water and/or steam (heating only)

Heat emission units (radiators, pipe coils, etc.) valves and fittings,
instrumentation and control and distribution pipework from ‘Heat
source’ (5E).
5F2 Ducted warm air (heating only)

Ductwork, grilles, fans, filters, etc., instrumentation and control.
5F3 Electricity (heating only)

Cable heating systems, off-peak heating system, including storage
radiators.
5F4 Local heating (heating only)

Fireplaces (except flues), radiant heaters, small electrical or gas
appliances, etc.
5F5 Other heating systems (heating only)
5F6 Heating with ventilation (air treated locally)

Distribution pipework ducting, grilles, heat emission units including
heating calorifiers, except those which are part of ‘Heat source’ (5E)
instrumentation and control.
5F7 Heating with ventilation (air treated centrally)

All works as detailed under 5F6 for system where air treated centrally.
5F8 Heating with cooling (air treated locally)

All work as detailed under 5F6 including chilled water systems and/or
cold or treated water feeds. The whole of the costs of the cooling plant
and distribution pipework to local cooling units shall be shown
separately.
5F9 Heating with cooling (air treated centrally)

All work detailed under 5F8 for system where air treated centrally.
Appendix A (10/99)
Mechanical ventilating system not incorporating heating or cooling

installations including dust and fume extraction and fresh air injection, unit
extract fans, rotating ventilators and instrumentation and controls.
5H1 Electric source and mains

All work from external face of building up to and including local
distribution boards including main switchgear, main and sub-main
cables, control gear, power factor correction equipment, stand-by
equipment, earthing, etc.
5H2 Electric power supplies

All wiring, cables, conduits, switches from local distribution boards,
etc., to and including outlet points for individual installations.
5H3 Electric lighting

All wiring, cables, conduits, switches, etc. from local distribution
boards and fittings to and including outlet points.
5H4 Electric lighting fittings

Lighting fittings including fixing.
Town and natural gas services from meter or from point of entry where there
is no individual meter: distribution pipework to appliances and equipment.
5J1 Lifts and hoists

The complete installation including gantries, trolleys, blocks, hooks and
ropes, downshop leads, pendant controls and electrical work from and
including isolator.
5J2 Escalators
As detailed under 5J1.
5J3 Conveyors
As detailed under 5J1.
5K1 Sprinkler installations

The complete sprinkler, installation and CO 2 extinguishing system.
Including tanks, control mechanism, etc.
Appendix A (10/99)
5K2 Fire-fighting installations

Hose reels, hand extinguishers, asbestos blankets, water and sand
buckets, foam inlets, dry risers (and wet risers where only serving fire-
fighting equipment).
5K3 Lightning protection

The complete lightning protection installation from finials conductor
tapes, to and including earthing.
5L Communication installation
Warning installations (fire and theft)
Burglar and security alarms

Fire alarms
Visual and audio installations
Door signals
Timed signals
Call signals
Clocks
Telephones
Public address
Radio
Television
Pneumatic message systems
All other mechanical and/or electrical installations (separately identifiable) which

have not been included elsewhere, e.g. chemical gases; medical gases; vacuum
cleaning; window cleaning equipment and cradles; compressed air; treated water;
refrigerated stores.
5N Builder’s work in connection with services
Builder’s work in connection with mechanical and electrical services.
5O Builder’s profit and attendance on services
Builder’s profit and attendance in connection with mechanical and electrical

services.
Appendix A (10/99)
6 EXTERNAL WORKS
6A Site works
6A1 Site preparations

Clearance and demolitions. Preparatory earth works to form new
contours.
6A2 Surface treatments

Roads and associated footways
Vehicle parks
Paths and paved areas
Playing fields
Playgrounds
Games courts
Retaining walls
Land drainage
Landscape work
6A3 Site enclosure and division

Gates and entrances. Fencing, walling and hedges.
6A4 Fittings and furniture

Notice boards, flag poles, seats, signs.
6B Drainage
Surface water drainage. Foul drainage. Sewage treatment.
6C1 Water mains

Main from existing supply up to external face of building.
6C2 Fire mains

Main from existing supply up to external face of building; fire
hydrants.
6C3 Heating mains

Main from existing supply or heat source up to external face of
building.
6C4 Gas mains

6C5 Electric mains

6C6 Site lighting

Distribution, fittings and equipment.
Appendix A (10/99)
6C7 Other mains and services

Mains relating to other service installations (each shown separately).
6C8 Builder’s work in connection with external services

Builder’s work in connection with external mechanical and electrical
services: e.g. pits, trenches, ducts, etc.
6C9 Builder’s profit and attendance on external mechanical and electrical

services.
6D Minor building work
6D1 Ancillary buildings

Separate minor buildings such as sub-stations, bicycle stores,
horticultural buildings and the like, inclusive of local engineering
services.
6D2 Alterations to existing buildings

Alterations and minor additions, shoring, repair and maintenance to
existing buildings.
7 PRELIMINARIES
Priced items in preliminaries bill and summary but excluding contractors’

price adjustments. This is not classed as an element but is included for
allocation of costs.
8 EMPLOYERS CONTINGENCIES
This is not classed as an element but is included for allocation of costs.
Notes
1 Substructure
(a) Where lowest floor construction does not otherwise provide a platform, the
flooring surface shall be included with this element (e.g. if joisted floor, floor
boarding would be included here).
(b) Stanchions and columns (with relevant castings) shall be included with
‘Frame’ (2A).
(c) External enclosing walls to basements shall be included with ‘External
walls’ (2E).
2A Frame
(a) Structural walls which form an integral part of the loadbearing framework
shall be included either with ‘External walls’ (2E) or ‘Internal walls and
partitions’ (2G) as appropriate.
(b) Beams which form an integral part of a floor or roof which cannot be
segregated therefrom shall be included in the appropriate element.
Appendix A (10/99)
(c) In unframed buildings roof beams and trusses and floor beams shall be
included with ‘Upper floors’ (2B) or ‘Roof structure’ (2C1) as appropriate.
(d) If the ‘Stair structure’ (2D1) has had to be included in this element it
should be noted.
2B Upper floors
(a) Where floor construction does not otherwise provide a platform the
flooring surface shall be included with this element (e.g. if joisted floor, floor
boardings would be included here).
(b) Beams which form an integral part of a floor slab shall be included with
this element.
(c) If the ‘Stair structure’ (2D1) has had to be included in this element it
should be noted.
2C1 Roof structure

(a) Trusses which form part of a whole building framework shall be included
in ‘Frame’ (2A).
(b) Beams which form an integral part of a roof shall be included with this
element.
(c) Roof housings (e.g. lift motor and plant rooms) shall be broken down into
the appropriate constituent elements.
2D1 Stair structure

(a) The cost of external escape staircases shall be shown separately.
(b) If the stair structure has had to be included in the elements ‘Frame’ (2A)
or ‘Upper floors’ (2B) this should be stated.
2E External walls
(a) If walls are self-finished on internal face, this shall be stated.
3A Wall finishes
(a) Surfaces which are self-finished (e.g. self-finished partitions, fair-faced
work) shall be included in the appropriate element.
(b) Insulation which is a wall finishing shall be included here.
3B Floor finishes
(a) Where the floor construction does not otherwise provide a platform the
flooring surface will be included either in ‘Substructure’ (1A) or ‘Upper
floors’ (2B) as appropriate. Access floors.
3C Ceiling finishes
(a) Where ceilings principally provide a source of heat, artificial lighting or
ventilation, they shall be included with the appropriate ‘Services’ element.

(a) Ironmongery to ‘Windows and external doors’ and ‘Internal doors’ should
be included in (2F) and (2H) respectively.
Appendix A (10/99)
4A3 Works of art

(a) Where items in this element have a significant effect on other elements a
note should be included in the appropriate element.
(a) Local incinerators shall be included with ‘Refuse disposal’ (5C2).

(a) Rainwater gutters are included in ‘Roof drainage’ (2C3).
5D2 Cold water services

(a) Header tanks, cold water supplies, etc. for heating systems should be
included in ‘Heat source’ (5E).

(a) Steam and condensate pipework installed in connection with space
heating, or the like, shall be included as appropriate with ‘Heat source’ (5E)
or ‘Space heating and air treatment’ (5F).
5E Heat source
(a) Chimneys and flues which are an integral part of the structure shall be
included with the appropriate structural element.
(b) Local heat source shall be included with ‘Local heating’ (5F4).

System described as having:
(a) ‘Air treated locally’ shall be deemed to include all systems where air
treatment (heating or cooling) is performed either in or adjacent to the space
to be treated.
(b) ‘Air treated centrally’ shall be deemed to include all systems where air
treatment (heating or cooling) is performed at a central point and ducted to the
space being treated.
5F3 Space heating and air treatment - Electricity (heating only)

(a) Electrically-operated heat emission units other than storage radiators
should be included under ‘Local heating’ (5F4).

(a) Installation for electric heating (‘built-in’ systems) shall be included with
‘Space heating and air treatment’ (5F3).

(a) Special structural work, e.g. lift walls, lift motor rooms, etc., shall be
included in the appropriate structural elements.
(b) Remaining electrical work shall be included with ‘Electrical power supplies’
(5H2).
(c) Each type of lift or hoist shall be stated separately where appropriate.
Appendix A (10/99)
5K1 Sprinkler installations

(a) Electrical work shall be included with ‘Electrical power supplies’ (5H2).
(a) Each installation shall be stated separately where appropriate.
(b) The cost of the work in connection with electrical supply shall be included
with ‘Electrical power supplies’ (5H2).
(a) The cost of each installation shall, where appropriate, be shown separately.
(b) Items deemed to be included under ‘Refrigerated stores’ comprises all
plant required to provide refrigerated conditions (i.e. cooling towers,
compressors, instrumentation and controls, cold room thermal insulation and
vapour sealing, cold room doors, etc.) for cold rooms, refrigerated stores and
the like other than that required for ‘Space heating and air treatment’ (5F8 and
5F9).

(a) Builder’s work in connection with each of the services elements shall,
where possible, be shown separately.
(b) Where tank rooms, housings and the like are included in the gross floor
area, their component parts shall be included under the appropriate elements.
Where this is not the case the items shall be included here.

(a) The profit and attendance in connection with each of the services elements
shall, where possible, be shown separately.
6B Drainage
(a) To include all drainage works (other than land drainage included with
‘Surface treatment’ (6A2)) outside the building, to and including disposal
point, connection to sewer or to treatment plants.
6C8 Builder’s work in connection with external services

(a) Builder’s work shall be stated separately for each installation where
appropriate.
6C9 Builder’s profit and attendance on external mechanical and electrical services
(a) Profit and attendances shall be stated separately for each installation
where appropriate.
Appendix A (10/99)
PART 2, SECTION 4
SECTION 4: DESIGN AND BUILD – GUIDANCE FOR

EMPLOYERS’ AGENTS
Introduction
This section describes some of the tasks and responsibilities that a surveyor
may be asked to undertake when appointed as an employer’s agent on a design
and build contract.
(Note: The organisation or person commissioning a building is referred to in

this section as both the client and the employer. Generally, the term ‘client’ is
used in relationship to the employer’s agent and ‘employer’ to denote the
relationship to the contractor.)
At its most basic, the role of the employer’s agent is to act on behalf of the
client in the matters specified in the contract. However, in practice there are a
wide range of tasks that a client may ask an employer’s agent to undertake.
This section is not about procurement options; it assumes that all optional
procurement strategies have been carefully considered by clients and their
advisors and that the decision has been made to adopt design and build. With
regard to procurement strategies, reference should be made to part 3, section 1
of this handbook (‘Developing an Appropriate Building Procurement
Strategy’) which provides extensive guidance on selection of the most
appropriate option for the procurement of buildings.
‘Design and build’ describes contracts whereby the contractor assumes

responsibility both for completing the design for the works and for carrying
out the construction in return for a fixed lump sum.
There are a number of ‘standard’ forms of design and build contracts, but
where specific reference is made in this section, it is to the current edition of
the Joint Contracts Tribunal (JCT) Standard Form of Building Contract With
Contractor’s Design 1998 (CD 98). This form of contract makes no provision
for a contract administrator (CA) and all matters which would have been
certified by the CA are ascribed to either the client or the contractor.
It should be noted that the prescribed duties of the employer’s agent are
restricted to ‘access to documents on site’ and ‘access to works, workshops,
etc.’. Importantly however, the contract also allows the client to delegate his
or her responsibilities under the contract and in practice this is usually what
happens.
PART 2, SECTION 4
The services of an employer’s agent can be provided by any one of the

construction professionals (determined by the nature of the project) but often
it is a chartered surveyor. On more complex projects the role of employer’s
agent may sometimes be provided by a team comprising the ‘lead’ consultant,
with other consultants advising on matters relative to their respective
disciplines. In such circumstances, the function of the lead consultant may not
be dissimilar to that of a project manager.
In appendix A the services which may be requested from an employer’s agent

are set out. However, the scope of the role can vary considerably depending
upon the particular circumstances of the commission. It would be unusual for
any client to require all the services listed in appendix A but they serve to
indicate the extent to which this role can be developed.
G 2.4.1 Background
2.4.1.1 Design and build is not a new concept. Many historic buildings have been
procured in this way and the technique has been used for simple industrial
shell buildings. However, in recent years the use of design and build has
extended to cover a significant number of building projects of all types.
2.4.1.2 It is thought that design and build has become more popular because clients
believed that in some circumstances the traditional route failed to deliver their
projects on time and to budget.
2.4.1.3 Proponents of design and build claim that it can deliver coordinated planning,
reduced professional fees, improved lead-in times, shorter construction
programmes and cost savings, as well as providing greater cost certainty for
clients through a single point of contact.
2.4.1.4 Responsibility for the development of the design, as well as the construction
of a project, is firmly placed with the contractor. This is perceived to clarify
any litigation or dispute between the parties to the contract.
2.4.1.5 Proponents of design and build also claim that it can allow tenderers to bring
their skills to the design which, through the competitive process, can deliver
benefits to the client in terms of buildability. Furthermore, tenderers can take
account of current availability of labour, materials and plant in their design
and pricing considerations.
I 2.4.2 Contract documentation

2.4.2.1 The JCT Standard Form of Building Contract With Contractor’s Design was
first introduced in response to demand for a form of contract which allowed
the contractor to carry out a complete contract (including design development)
for a lump sum.
PART 2, SECTION 4
2.4.2.2 Throughout its life the JCT Standard Form of Building Contract With
Contractor’s Design has been subject to many amendments to account for
changes in the law, regulations affecting building development and increasing
expectations and involvement of clients.
2.4.2.3 In England and Wales the contract documents under this form are:
• the employer’s requirements;
• the contractor’s proposals;
• the contract sum analysis; and
• the articles and conditions set out in the form including optional
supplementary provisions and appendices.
G 2.4.3 Additional services
2.4.3.1 The list in appendix A is intentionally comprehensive and involves some

duties which may be beyond a surveyor’s normal skills. Great care should be
exercised by the employer’s agent in advising on which duties to incorporate
within the commissioning contract. An inability to deliver a service could
expose the employer’s agent to claims for negligence from both the client and
the contractor.
2.4.3.2 The employer’s agent will normally be involved from the outset and will be
instrumental in producing the contract documentation, including the
employer’s requirements based on the brief developed with the client.
Thereafter, the agent can arrange or assist with the selection of tenderers and
arrange the formal tendering process. Subsequently he or she can review the
contractor’s proposals (including the developed design and the contract sum
analysis) to ensure that all aspects of the employer’s requirements have been
met with particular reference to quality, time and cost issues.
2.4.3.3 Where the employer’s agent has been delegated the authority by the client, he
or she is responsible for ensuring that the project is carried out in accordance
with the conditions of contract, employer’s requirements, contractor’s
proposals and contract sum analysis. The role will usually include monitoring
the construction process to ensure best practice, controlling expenditure and
overseeing contractor compliance with all current regulations. Typically, it
will also involve the administration of the project in terms of design and cost
by sanctioning all design issues and by instructing any changes. The
employer’s agent will be responsible for checking the contractor’s valuations
and confirming interim and final payment amounts to the client in accordance
with the contract conditions.
2.4.3.4 If a day-to-day inspection is required this should be carried out by a clerk of

works, resident engineer or quality control inspector and should be the subject
of a separate agreement outside the employer’s agent commission.
PART 2, SECTION 4
2.4.3.5 The role of employer’s agent is not just one of monitoring the contractor’s
performance; good practice requires an active approach to ensure that the
contractor undertakes all of his or her responsibilities under the contract.
However, the employer’s agent should not hinder or prevent the contractor
from fulfilling his or her duties.
2.4.3.6 The employer’s agent should advise the employer on those roles that are
within his or her competency, which attract a duty of care similar to that under
traditional procurement methods and advise the employer on the appointment
of any other consultants required to fulfil any additional roles.
2.4.3.7 It has been held that an employer’s agent was responsible for failure to
comment on high risk design elements of the contractor’s proposals and an
ongoing failure to approve the contractor’s design development proposals. It
would be an unusual project arrangement if these essential tasks were not
delegated by the client to the employer’s agent. On the other hand, the duty to
approve the contractor’s design development and drawing should be included
expressly or by implication in the contract between the client and the
employer’s agent.
2.4.3.8 Design and build is fundamentally about the allocation of risk and
responsibility. Therefore, it is strongly recommended that the agent’s
contractual responsibilities as delegated by the client, together with any
additional duties the agent has agreed to undertake on behalf of the client, are
clearly defined and recorded, and that the client understands the position.
G 2.4.4 Employer’s requirements and contractor’s proposals (including

contract sum analysis)
2.4.4.1 The contractor’s proposals and the employer’s requirements taken together set
out the scope of the works, so it is important that the proposals are examined
in detail and that they match the requirements. Any areas of conflict should be
resolved since the contract assumes they are compatible when it is signed. If
the employer’s requirements and the contractor’s proposals are long and/or
complicated, concern about the possibility of a conflict between the two
documents may well remain, even after thorough checks have been carried
out. In this case it may be worth consdering inserting an additional clause as
to how conflicts between the two are to be resolved.
2.4.4.2 The appointed employer’s agent has an obligation to guide the client, provide
technical and professional advice and draft the employer’s requirements in
order to protect the client and to ensure the project is completed.
2.4.4.3 The employer’s requirements can be by way of performance specification, or

on a prescriptive basis where a great deal of design may have been produced
initially.
PART 2, SECTION 4
2.4.4.4 The employer’s agent and the employer should agree between them the
standard of performance and the requirements of the building. The employer’s
agent should offer guidance on the effect that this might have on the
contractor’s flexibility in design and construction. Some clients may require a
detailed level of specification. However, if the employer’s requirements
become unnecessarily prescriptive as to the contractor’s basic construction
methods, the contractor may lose sight of the client’s real requirements. The
requirements should always be sufficiently detailed to ensure the client
obtains the building he or she needs. Therefore, great care should be exercised
by the employer’s agent in advising the client on the appropriate level of detail
to be provided in the employer’s requirements and that requested in the
contractor’s proposal.
2.4.4.5 The employer’s agent should try to encourage the client to concentrate on the
purpose, performance and desired end requirements of the project and to avoid
involvement in the construction method.
2.4.4.6 It is, however, most important that the client’s input is sufficiently detailed to
enable the production of clear and concise ‘employer’s requirements’ to
achieve the client’s objectives. The requirements should also be
comprehensive enough to avoid amendments during the construction process
as these can be very costly.
2.4.4.7 All relevant parts of the client’s brief should be given in the employer’s
requirements. Additional requirements arising from meetings during the
tender process should be incorporated into the requirements by amendment.
There should be no misunderstanding as to what comprises the employer’s
requirements. Similarly, any amendments to the contractor’s proposals after
they have been submitted should be incorporated. Any ambiguity between
these two documents could give rise to conflict at a later date.
2.4.4.8 Contractors are only responsible for that which they design or specify; in turn
employers or their consultants are responsible for all that they design and/or
specify, unless there has been a pre-agreed limitation to the contract. Thus, in
order for the employer to maximise the benefit from design and build, the
extent of any designing and specifying by prescription in the employer’s
requirements should be limited to those elements in which the employer
requires such control.
2.4.4.9 The Building Cost Information Service (BCIS) publication, Elements for
Design and Build offers guidance to employer’s agents on the use of building
elements for structuring the employer’s requirements and the contractor’s
proposals/contract sum analysis. Elements for Design and Build is considered
to be important supplementary reading. The list of elements, and their
definition, is also given in section 2.3 of this handbook.
PART 2, SECTION 4
Note should also be made of the Code of Procedure for Selective Tendering
for Design and Build published by the National Joint Consultative Committee
for Building (NJCC) in 1995 and as amended from time to time.
Appendix B is a checklist of matters which surveyors are advised to consider

when compiling employer’s requirements and checking contractor’s
proposals. The list covers the major matters and the elements that relate to
buildings in general. It cannot be exhaustive when applied to any particular
buildings. Any chartered surveyors acting as employer’s agents are advised to
make themselves aware of all matters which are relevant to the client and the
client’s business so as to ensure that the employer’s requirements/contractor’s
proposal reflects the client’s needs.
I 2.4.5 Design and build variants

2.4.5.1 The forms of design and build contract allow for the production of variation to
the conventional design and build contract, for example:
• package deal;
• turnkey;
• develop and construct;
• two-stage tender;
• joint venture/negotiated; and
• design build fund and operate.
2.4.5.2 PACKAGE DEAL AND TURNKEY
Package deal and turnkey are both expressions used to describe traditional
design and build, but with the absolute minimum of client involvement in the
design development (or the building operations). A turnkey contract
additionally requires that the building is fully fitted out to enable immediate
operation by the end user.
2.4.5.3 DEVELOP AND CONSTRUCT
Develop and construct is the name given to the ‘variant’ where the client, as
part of the employer’s requirements, imposes a design and/or specification
developed to a greater degree than most (for example, listing specific
manufacturers’ products). The contractor is obliged to adopt this data and
should reflect this developed design information in the contractor’s proposals.
A fully developed preliminary design may negate many of the advantages

associated with conventional design and build. However, the client may be
happy to forego these advantages and to impose his or her own particular
design or specification in return for other benefits perceived to derive from a
design and build procurement strategy.
PART 2, SECTION 4
2.4.5.4 TWO-STAGE TENDER
Two-stage tender requests seek to obtain proposals from a number of

tenderers from which one is selected. That tenderer then works up the
preferred submission in greater detail.
2.4.5.5 JOINT VENTURE/NEGOTIATED
Joint venture/negotiated projects arise when a client is approached by a

contractor or developer with a proposal which broadly aligns with the client’s
needs. Many successful projects have been carried out using this route with
considerable benefit to the client. Clearly, the earlier the employer’s agent can
be introduced the better, since his or her involvement should help limit any
abortive design.
2.4.5.6 DESIGN BUILD FUND AND OPERATE
Design build fund and operate (DBFO) contracts have been created as a result
of the private finance initiative. Although this form of procurement has been
listed as a design and build variant it should be remembered that the end user
never actually owns the building (unless otherwise provided). CD 98 is not
therefore appropriate as part of the primary agreement, although it could
feature in a subcontract. In most instances, the client will appoint a shadow
design team to ensure that user’s requirements are properly established and
communicated to the bidders. The shadow team checks the offers received to
ensure that the user’s requirements have been addressed and continues to
monitor design and development with the preferred bidder. Thereafter the
shadow team ensures that the building incorporates the specified user
requirements.
Irrespective of the design and build variant employed, the service of the
employer’s agent does not alter radically and can still be developed from the
items of service listed in appendix A.
I 2.4.6 Novation
2.4.6.1 Novation can be employed on any of the design and build variants and
involves the transfer of the client’s contract with his or her designer (or
designers) to the successful contractor, this arrangement having been included
in the tender documents. The contractor assumes the responsibility for the
payment of fees and associated value added tax (VAT), and receives the
benefit of continuity of design. Often when novation is implemented, it is not
applied to the quantity surveyor who remains with the client acting as the
employer’s agent during the design development and construction phase.
Novation is not defined in CD 98, although it is widely practised.
PART 2, SECTION 4
2.4.6.2 Where designers are novated it is important for clients to understand that their
designers’ allegiance transfers from the client to the contractor. This transfer
of allegiance should be properly explained to the client prior to a decision to
implement novation. It is also important that the employer’s agent advises on
selecting appropriate designers and contractors and that the transfer of roles
occurs and is maintained.
Appendix A: Potential services associated with the role of

employer’s agent
The services to be provided should follow the NJCC’s Code of Procedure for Selective
Tendering for Design and Build (1995).
Reference should also be made to the BCIS publication Elements for Design and Build
which provides guidance on how to structure documents for design and build contracts.
The scope of services should be fully agreed between the employer’s agent and the
client at the outset of the commission and all interested parties should be informed as to
the extent of delegated authority.
A1 INITIAL DESIGN INPUT
• Advising on the need for specialist appointments where necessary

including appointments under CDM (Regulations) 1994 (also
competency and resource check).
• Agreeing with the client the scope of the employer’s requirements
(including the need for preliminary design, if any) and ensuring that
these are ‘signed off’.
• Examining land transfer documents to clarify boundary positions
including an assessment of the likely impact of existing easements
(including rights of light, rights of way, restrictive covenants, etc.).
• Initiating measured survey with levels.
• Preparing or procuring preliminary design for the development.
• Establishing with the client the programme to suit funding availability.
• Assessing suitability and cost effectiveness of general and structural
design.
• Reviewing scheme under Town and Country Planning Acts including
consultations with local planning authority leading to initial outline
town planning application. (Note: submission of formal full town and
country planning application is normally at a later stage (see A2) and
sometimes this application is by the contractor.)
• On projects involving the refurbishment of existing buildings the
provision of design, cost assessment and submission of formal town and
country planning applications.
• Investigating/establishing location of existing services to site with local
and statutory authorities.
• Initiating and reviewing subsoil reports.
• Consulting as appropriate with relevant agencies, for example, English
Nature and English Heritage.
• Advising on the implementation of the Construction Act and any other
relevant legislation.
Appendix A (09/03)
A2 PRE-CONTRACT
• Advising on the need for further specialist appointments where

necessary.
• Preparing cost estimate/structured cost plan.
• Advising on need for risk analysis to include market research to
underpin financial viability.
• Advising on any possible archaeological implications for the site.
• Reviewing subsoil reports and commenting on foundation design and
contamination considerations.
• Assessing environmental impact and advising generally on
environmental issues.
• Conducting local public investigations as related to town planning,
including consultation with building occupiers prior to submitting a full
town and country planning application.
• Arranging drawings and performance specification for mechanical and
electrical services.
• Arranging design/cost audit at appropriate work stages if appropriate.
• Advising on the need for provision of Party Wall Act or Access to
Neighbouring Land Act Agreements.
• Developing project brief with client and reflecting same in the
employer’s requirements.
• Establishing with client the format of the contract sum analysis.
• Assisting with completion of formal applications in connection with
approvals relating to funding, necessary consents and other
requirements.
• Advising level of contingencies and preparing appropriate daywork
clause.
• Advising on tendering options including single- or two-stage tendering,
develop and construct or joint venture.
• Advising on optional clauses in standard forms of contract, in particular
CD 98 supplementary provisions which provide both parties with time
and cost certainty.
• Advising on dispute resolution.
• In consultation with client finalising the employer’s requirements
document and arranging for this to be formally ‘signed off’ by the client.
• Where applicable, advising (after interview if required) on the selection
of suitable tenderers including their capacity, resources, financial and
tax exemption status.
• Reviewing and reporting on tenders received for the project including
comparison with cost plan and comment on programme proposed by
each.
• Advising on all aspects of future maintenance of the completed
development.
• Advising on services installation and future maintenance to these
services including checking and commenting upon working drawings
produced by tenderers.
Appendix A (09/03)
• Advising on energy ratings, for example, National Housing Energy

Rating and Standard Assessment Procedure.
• Ensuring access audit is executed (to meet the requirements of the
Disability Discrimination Act).
• Auditing contractor’s proposals (including design and detailed
drawings) to ensure compliance with employer’s requirements, town
and country planning, building regulations and any further criteria
imposed upon the project by external organisations.
• Preparing cash flow forecasts.
• Advising on necessity for and wording of performance bonds and,
where applicable, parent company guarantees.
• In conjunction with the client’s broker reviewing contractor’s and
client’s insurances (including professional indemnity insurance of
designers).
• Preparing and agreeing a schedule of rates for valuation or negotiation
purposes.
• Advising both client and tenderer on any agreed amendments to the
employer’s requirements following receipt of contractor’s proposals and
other relevant inputs.
• Providing information to client in connection with post-tender
documentation for lender/funder.
• Agreeing with contractor cash flow based on stage or periodic
payments.
• Arranging for all necessary collateral warranties to be prepared and
completed by contractor, subcontractors and consultants.
• Arranging for the appointment of a clerk of works.
• Advising on assignment and subcontracting (including design).
• Advising on novation of designers’ contracts, if appropriate.
• Preparing contract documentation, agreeing documentation with both
parties and arranging execution.
• Visiting the site with the contractor and agreeing by schedule and
photographic records the existing condition of any buildings to be
retained, also, roads, footpaths, trees, shrubs and other similar items
liable to be damaged.
• Attending site with contractor and assisting in arranging closure of roads
and footpaths.
A3 CONTRACT DURATION
• Issuing letters of intent where appropriate.

• Distributing contract documents in accordance with the contract.
• Approving/monitoring/commenting, as appropriate, on contractor’s
design development.
• Visiting the construction site. (The number of site visits depends on the
stage of construction (or as agreed with client) and may be weekly
during initial stages until all superstructure is erected and complete.)
• Ensuring that there are regular properly conducted site meetings with a
chairman operating to a prescribed agenda and formal minutes.
Appendix A (09/03)
• Attending all site meetings.

• Generally monitoring the works in terms of quality and progress.
• Assessing compliance with contract conditions by contractor.
• Assessing compliance of service installations.
• Regularly reporting to client, in a format agreed with the client, matters
of interest, for example, quality, progress against programme, site
organisation and labour employed. Also, defects and weather stoppages,
etc.
• Monitoring spend rate against cash flow forecasts including earned
value analysis.
• Ensuring that there is no adjustment to the contract sum other than as
provided in the contract.
• Issuing instructions on behalf of the client to instigate changes to the
design quality or quantity of the works or on any other matter as
required by the contract.
• Measuring for and agreeing with contractor any variations resulting
from changes to the employer’s requirements during construction as
well as the expenditure of any provisional sums.
• Agreeing valuation of fluctuations in the cost of labour, plant and
materials.
• Addressing requests from contractors for payment for off-site material.
• Receiving requests, assessing, preparing, granting and issuing any
notice of extension of time.
• Negotiating and agreeing any loss and expense claims submitted in
writing by the contractor.
• Checking contractor’s valuations for stage or periodic payments and
notifying the client.
• Preparing and issuing financial statements as may be required by the
client.
• Ensuring that appropriate VAT is levied in accordance with current
legislation.
• Ensuring compliance with all reserved matters contained within Town
and Country Planning Certificate.
• Ensuring that adoption procedure is put in hand at appropriate stage and
following through to achieve adoption prior to handover and to include
for drainage installation.
• Issuing, where applicable, non-completion certificate and advising on
the implications of imposition as well as the amount of liquidated and
ascertained damages which may be deducted by the client from any
payment certified.
• Ensuring that all required tests are carried out by the contractor and
documented proof provided prior to practical completion.
• Issuing certificate of practical completion.
• Checking contractor’s final account and issuing final statements.
• Issuing all other final statements relating to the final accounts that may
be required by the client.
• Preparing snagging lists.
• Arranging and attending pre-handover inspections.
Appendix A (09/03)
• Ensuring that all snagging items are rectified before inviting client to
receive handover.
• Ensuring the provision of ‘as built’ information compiled in manual
form and supplied to the client at completion of construction process –
user’s manual and/or computer disk.
• Ensuring that all service installations are completed in accordance with
original approved design, attending final commissioning and procuring
test certificates.
• Arranging and attending handover sessions.
A4 POST-CONTRACT
• Receiving health and safety file from planning supervisor and delivering
to client.
• On partial possession and/or sectional completion, agreeing value
thereof.
• Ensuring compliance with any insurance requirements.
• Advising on values for building insurance purposes.
• Reviewing means of escape as built and ensuring procurement of fire
certificate by the contractor.
• Issuing notices of practical completion on client satisfaction or
beneficial occupation, if appropriate.
• Obtaining final clearance certificates from local authority in connection
with compliance with building regulations.
• Preparing post-contract schedules of defects after occupation and
arranging for rectification by contractor and on completion notifying
client.
• Issuing notices on making good defects at end of defects liability period,
examining the rectified works and certifying completion of making
good defects, where applicable.
A5 GENERAL ADDITIONAL SERVICES
• Dealing with essential items of defect that arise during maintenance

periods.
• Resolving any issues concerning latent defects.
• Advising on alternative means of remedying defects.
• Advising on insolvency of any party involved with the contract.
• Advising on obtaining statutory approvals such as registration for food
preparation.
• Advising on provision of post-handover service relating to ongoing
maintenance.
• Preparing capital allowances and revenue schedules.
• Advising on special design requirements, for example, Feng Shui, if
applicable.
• Advising on contingency planning and business recovery for select
buildings, for example, terrorist insurance, bomb threats and
construction of communication rooms.
Appendix A (09/03)
Appendix B: Employer’s Requirement/Contractor’s Proposal Checklist

B1 CONTRACT DOCUMENTATION
The contract documentation will include:

• the employer’s requirements
• the contractor’s proposal
• the contract sum analysis
• the article conditions, optional supplementary provisions and
appendices set out in the form of contract.
The employer’s requirements can be a brief statement of the client’s

accommodation requirements, an outline design or a fully worked up
design. The contractor’s proposals should be in sufficient detail to allow
the client to judge between the tenders on design as well as price.
The required level of detail will vary from client to client and contract to
contract but it is suggested that information on this checklist would be the
minimum requirement.
Where little design work has been carried out before tenders and proposals
are invited, a performance specification would be normally required.
However, where a great deal of design work has taken place a prescriptive
specification would be needed.
B2 CHECKLIST
(Note that this list is not intended to be exhaustive in total or in any section)
B2.1 General Information

• Project title
• Employer
• Employer’s agent
• List of drawings and other information accompanying documents
• Location, including a narrative on the proposed use/user of the building.
An indication of the employer’s business and overall objectives (to
provide a feel for the eventual product)
• Access to site
• Site boundary defined
• Form of contract
• Permissible modification to standard form of contract
• Details of appendices to the conditions of contract
• Form of contract sum analysis
B2.2 Building and Accommodation Outline

Outline description of the building
Accommodation schedule
• schedule of net usable areas (including definition of occupancy)
• schedule of occupancy numbers and duration of occupancy
• circulation requirements
Appendix B (10/99)
Basis of design
Conceptual design statement and drawings

• site layout
• plans
• elevations
• sections
• relevant working details
• site works and landscaping layouts
• sketch perspectives
• structural design
• services design
Design standards
• legislation or standards
• details of standards which apply (for example codes of practice)
• statement of workmanship
• tolerances
• CDM regulations
Aesthetics
• specific aesthetic needs (other than planning requirements)
Integration of components
• relationship with each other
• methods of dealing with interfaces
• method of dealing with services installations. For example, level of
concealment of services and architectural treatments to exposed
surfaces
B2.3 Form of Detailed Specification

(Note: The detailed employer’s requirements can be drafted in performance
specification terms, or in prescriptive terms (contractor delivery) by including
detailed specification and drawings, or a combination of performance and
prescriptive specification.)
The scope of work (see Section B2.4) assumes an employer’s requirement

drafted in performance specification terms and the contractor’s proposals should
convert these performance specifications into clearly defined design proposals.
The specifications and design checklist (see Section B2.5) can be used in
preparing employer’s requirements or a specification for a contractor’s
proposal.
A performance specification should be checked to ascertain that it is

feasible to design a structure with the requirements given and that there is
no conflict between performance and other prescriptive requirements given.
Appendix B (10/99)
B2.4 Scope of Work (Performance Requirements)

Performance specification may relate to the whole building or include
elements or both. The following are some matter which may be addressed.
Image/description of key areas

• drawings
• sketches
• statements
Flexibility
• flexibility of accommodation
• flexibility of design
Energy
• energy conservation and heat measures
• insulation values
• Building research establishment environmental assessment method
(BREEAM) certification rating
• plant room layouts
Loading requirements
Details of dead and imposed loadings
Facilities for disabled

• provision statement to comply with building regulations and current
disability legislation
• specific needs of disabled
Building configuration
• written statement and/or drawing
• relationship of accommodation
• size of accommodation
• purpose
• layout
• dimensional constraints including clear heights under slabs and beams
• natural lighting - lux levels and method of measurement
• natural ventilation
• column grid arrangement including projections from walls, etc.
• clear ceilings/soffit heights
• tolerances
• vehicle access door heights and widths
• toilet/bathroom/locker room requirements
• kitchen/catering requirements
• restaurant/vending requirements
• plant room configuration
• noise breakout between rooms
Appendix B (10/99)
• storage space, cleaners, cupboards, maintenance facilities

• access for cleaning and maintenance
• security
Means of escape
Plantrooms
External works
• car parking
• leisure facilities
• environmental considerations
• visual effects
• waste disposal
• emergency vehicle access
• water features
• loading bays
• existing site features and treatments
• function buildings within externals
• site survey
B2.5 Specifications and Design

Specification of performance, or the form of construction, kind and quality
may be given in elemental or other format. The standard elements are listed
below. (Please see Section 2.3 of this handbook or the BCIS publication,
Standard Form of Cost Analysis for definition of elements.)
1 Substructure
2 Superstructure
2A Frame
2B Upper floors
2C Roof
2C1 Roof structure
2C2 Roof coverings
2C3 Roof drainage
2C4 Roof lights
2D Stairs
2D1 Stair structure
2D2 Stair finishes
2D3 Stair balustrades and handrails
2E External walls
2F1 Windows
2F2 External Doors
2G1 WC cubicles
2H Internal doors
3 Internal finishes
Appendix B (10/99)
3A Wall finishes
3B Floor finishes
3C Ceiling finishes
3C1 Finishes to ceilings
3C2 Suspended ceilings
4 Fittings and furnishings
4A Fittings and furnishings
4A2 Soft furnishings
4A3 Works of art
4A4 Equipment
5 Services
5C2 Refuse disposal
5D1 Water mains supply
5D2 Cold water service
5D3 Hot water service
5E Heat source
5F1 Water and/or steam (heating only)
5F2 Ducted warm air (heating only)
5F3 Electricity (heating only)
5F4 Local heating (heating only)
5F5 Other heating systems (heating only)
5F6 Heating with ventilation (air heated locally)
5F7 Heating with ventilation (air heated centrally)
5F8 Heating with cooling (air heated locally)
5F9 Heating with cooling (air heated centrally)
5H2 Electric power supplies
5H3 Electric lighting
5H4 Electric lighting fittings
5I Gas installation
5J2 Escalators
5J3 Conveyors
5K1 Sprinkler installation
5K2 Fire-fighting installations
Appendix B (10/99)
5K3 Lightning protection

Details of each installation
6 External works
6A Site works
6A1 Site preparation
6A2 Surface treatment
6A3 Site enclosure and division
6A4 Fittings and furniture
6B Drainage
6C External Services
6C1 Water mains
6C2 Fire mains
6C3 Heating mains
6C4 Gas mains
6C5 Electric mains
6C6 Site lighting
6C7 Other mains and services
6C8 Builder’s work in conjunction with external services
6C9 Builder’s profit and attendance on external mechanical and
electrical services
6D Minor building work
6D1 Ancillary buildings
6D2 Alterations to existing buildings
B2.6 Particular Requirements

Additional Responsibilities
The employer’s requirements should state who is responsible for all matters
that affect the construction of the building including such matters as:
Site investigations
• soil survey
• ground conditions
• topographical surveys
• existing services
• hazardous waste
• archaeological features
Development controls or other controls

• planning permission (including reserved matters)
• building regulations
• Water Authority
• Licensing Authority (liqour)
• Licensing Authority (entertainments)
• fire officer requirements
Appendix B (10/99)
• factory inspector
• environmental health officer
• employer’s building insurers (if appropriate)
• Traffic Planning Authority
• utilities
• National Rivers Authority
• Any other authority or statutory undertaker which has jurisdiction
with regard to the works
Establish responsibility for fees payable in connection with above
Other legislation or provisions
Adjoining premises
• rights of access to adjoining premises
Trespass, nuisance
• contractor to acquire rights as required and absolve the employer of
responsibility
Use and maintenance of existing:

• roads
• sewers
• services
If the responsibility for any of these matters is to be with the contractor the
client should include disclaimers in any information which is provided to
the contractor.
Information requirements
The employer’s requirements should give details of all records, drawings,
etc., required to be handed over on completion including:
• record drawings
• maintenance manuals
• CAD data disks
• design calculations
• staff training requirements
• warranties and guarantees
Exclusions
Give details of items not to be designed and/or constructed by the
contractor and the requirements and responsibilities for integrating these
into the works
Future developments
Provide details of any provisions required for future developments
Appendix B (10/99)
PART 2, SECTION 5
PART TWO: CONSTRUCTION DESIGN AND ECONOMICS
SECTION 5: THE CHARTERED SURVEYOR AS LEAD

CONSULTANT
Introduction
Over recent years many property and construction professionals have
diversified into areas outside their core discipline. Some have become
barristers; many have become planning supervisors; but the most common
and obvious diversification has been to take on the role of lead consultant or
project manager.
In the past, this role has largely been the domain of the architect. However, in
recent years many clients have increasingly used the services of the chartered
surveyor to carry out these duties.
For those embarking on this route care must be taken to ensure that the
additional duties required by the role of lead consultant are fully understood
and considered when undertaking the project, together with the associated
professional liabilities.
This section highlights some of the issues which the chartered surveyor
should consider before undertaking this role. It also identifies some of the
benefits for both clients and projects when appointing a chartered surveyor as
lead consultant. A schedule of the additional duties that are likely to be
required in excess of the main professional duties defined in appointment
documents (such as those for building and quantity surveying) is included at
the end of the section.
I 2.5.1 Definitions: The Difference between a Project Manager and Lead

Consultant
2.5.1.1 The role of project manager is to directly manage and coordinate all other
consultants involved with a project on behalf of the client. Ultimately the
delivery of the project is the direct responsibility of the project manager. On
some projects consultants are appointed by the project manager as
subconsultants, or are managed and paid by the project manager (although the
client directly appoints them). This arrangement is most beneficial to clients
who, through desire or inexperience, do not wish to have a pro-active
involvement with the project.
PART 2, S ECTION 5
Figure 1: Project Structure using a Project Manager
Client
Project Manager Managing &

coordination
Arch. Eng. QS Plann. Sup. etc..
2.5.1.2 The position of lead consultant is more of a coordinating role, ensuring that
other parties in the design, procurement and construction process of a project
provide the right input at the right time, and to take an overall view to ensure
coordination of all aspects of the project. However, the management of the
other consultants is ultimately down to the client and, therefore, is better
suited to more informed clients who may have their own in-house project
managers undertaking an overall management role.
Figure 2: Project Structure using a Lead Consultant
Client
Client’s Representative Advising &

coordination
Lead Consultant
Arch. Eng. QS Plann. Sup. etc..
I 2.5.2 Benefits of Appointing a Chartered Surveyor as Lead Consultant

2.5.2.1 In many circumstances a chartered surveyor can provide a greater breadth of
knowledge and understanding of the complete process of a construction
project. By utilising this awareness, the chartered surveyor can provide added
value to the management of a construction project. Chartered building
surveyors are not only involved in design, but also in the peripheral activities
such as wayleaves, right to light, party wall and boundary disputes. Chartered
quantity surveyors have an inherent knowledge of the complete design
package through their cost control role, and often clients will appreciate this
financial control being extended to a project liaison function.
PART 2, SECTION 5
2.5.2.2 As well as simply the design of the buildings, many other skills are required
to provide a functional space for a client and the chartered surveyor is often
more conversant with these additional activities.
2.5.2.3 The chartered surveyor is frequently called upon in matters associated with
land purchase, valuation, condition survey, development potential and
building cost. This front-end advice provides the opportunity to advise clients
and add value before the appointment of the architect, or in parallel with the
concept designs. This early involvement opens the door of opportunity for the
chartered surveyor to take up the reins as lead consultant.
2.5.2.4 Other benefits to a client can be derived where the ‘project’ requires a distinct
specialism and the design process is only part of a more specialised activity,
for example farms management.
I 2.5.3 Issues to Consider before Undertaking the Role

2.5.3.1 Before taking on the role of lead consultant, careful consideration must be
taken to ensure that there is sufficient competency to undertake the additional
duties involved in the role. This level of competency will impact directly on
professional liability insurance policies and ‘competency’ under the
Construction (Design and Management) (CDM) Regulations.
2.5.3.2 Fees for these additional activities must be at the discretion of the provider.
They should take into account the level of additional time and resources
required in excess of the core professional services provided. It may be that
some of the lead consultant duties overlap with existing duties and that
economies may be obtained. However, the converse may equally apply and it
is essential that the chartered surveyor thoroughly reviews the actual
additional duties required before providing fee quotations.
2.5.3.3 With the constant changes in the way that buildings are procured and
designed, the chartered surveyor is in a prime position for providing real
added value to the process. For those individuals or practices who do not wish
to undertake the more encompassing role of project manager, but feel that
they can make a positive contribution by directing a particular project, then
the role of lead consultant fits the bill. However, care must be taken to ensure
that the necessary additional skills exist to be certain that the increased
responsibility can be taken on comfortably and to the ultimate benefit to the
client.
I 2.5.4 Schedule of Lead Consultant Duties

2.5.4.1 The schedule of duties of a lead consultant is not exhaustive. The Royal
Institution of Chartered Surveyors provides a range of publications which
describe in more detail individual professional services such as quantity and
PART 2, S ECTION 5
building surveying and it is recommended that, wherever possible, the

surveyor refers to these when confirming the scope of service to be provided
as lead consultant.
2.5.4.2 PURPOSE
During a construction project many issues can arise on which the client may
require professional advice from his or her consultants. The lead consultant’s
role is to provide the client with comprehensive professional support to ensure
that the client’s requirements are met with regard to legislation, standards,
cost and programme.
The client nominates a lead consultant for each capital project undertaken.
The lead consultant, who may or may not be an active design member of the
project team, will liaise with the client representative and will be responsible
for the following activities.
2.5.4.3 GENERALLY
(a) Establish the client’s brief and ensure that it is agreed with the client
and communicated to all designers.
(b) Monitor the service provided by all consultants to ensure that they are
carrying out their duties to the standard required at each work stage.
Submit all reports, plans and proposals to the client with the request for
approval to proceed to the next work stage.
(c) Deal with all queries and solve problems as they arise. Seek advice
from the client where necessary, but be aware that professional
responsibility for the proper management of all aspects of the project
lies solely with the lead consultant and project team members.
(d) Ensure that all drawn and specification material is forwarded to all
other consultants in accordance with the previously agreed project team
programme. Review, coordinate and confirm design drawings of all
project team members.
(e) Regularly review the design with the client and designers and formally
minute any agreed amendments. Inform the client of the impact of
these amendments on time, cost and design.
2.5.4.4 STAGES A AND B: INCEPTION, FEASABILITY AND BRIEFING
AB/1 Establish the scope of the project and ensure that all other members of
the project team have the same understanding.
AB/2 Advise on the need for site investigations.
AB/3 Investigate planning constraints.
PART 2, S ECTION 5
AB/4 Direct the activities of any supporting consultants such that the option
appraisal/feasibility study is fully investigated. Collate and prepare a
report for submission to the client. Attend presentation meetings as
required.
AB/5 Assist the client with the preparation of detailed briefing documents
with special input on technical, legal, statutory, financial and
programming requirements.
AB/6 Advise on procurement methods.
AB/7 Advise the client with regard to the general application of the CDM
Regulations and comply with Regulation 13(1).
AB/8 Agree fee with the client.
AB/9 Obtain further instructions from the client.
2.5.4.5 STAGE C: OUTLINE PROPOSALS
C1 Arrange dates and venues. Chair and minute all regular design team
meetings (at least monthly up to tender stage).
C2 Arrange to circulate a list of specific duties of each consultant to

establish roles and responsibilities. Discuss and agree a detailed design
and general construction programme with all members of the design
team.
C3 Arrange dates and venues with the architect and client representative
for brief development and presentation meetings.
C4 Arrange for surveys, investigations and consultations with statutory

bodies.
C5 Ensure compliance with Regulation 13(2) of the CDM Regulations and

liaise with the planning supervisor.
C6 Compile and submit Stage C report to the client.
C7 Request approval to proceed to Stage D.
2.5.4.6 STAGE D: SCHEME DESIGN
D1 Arrange for any site investigations and consultations which are still
necessary.
D2 Review progress, brief and the client’s decisions. With the project
team’s assistance prepare and agree a detailed design programme of
work and flow of information.
PART 2, S ECTION 5
D3 Prepare the initial health and safety plan (if acting as the planning
supervisor).
D4 Ensure compliance with Regulation 13(2) of the CDM Regulations and

D5 Clarify items of fixed furniture and equipment required by the client.
D6 Compile the Stage D report from work undertaken and coordinated by

all project team members.
D7 With the architect, undertake a formal presentation (or presentations) to

the client.
D8 Request approval to proceed to Stage E.
2.5.4.7 STAGE E: DETAILED DESIGN
E1 Review the outcome of planning submission.
E2 Consider the need for pre-ordering of materials or equipment.
E3 Compile and submit the Stage E report to the client which, in addition
to the usual reports and cost plans, should comprise:
• furniture and layout drawings;
• sample boards and recommendations for selection of materials and
finishes;
• reports from advising authorities;
• phasing and site management drawing showing the effects of
disruption on the operation of the establishment; and
• schedule of areas showing the direct relation to the areas in the
brief.
E4 Ensure compliance with Regulation 13(2) of the CDM Regulations and

E5 Advise on the form of contract.
E6 Request approval to proceed to Stage F.
2.5.4.8 STAGE F: PRODUCTION OF INFORMATION
F1 Ensure appropriate applications for approval under other applicable

statutory requirements (including negotiating waivers or relaxations).
F2 Ensure appropriate applications for approval under the building

regulations or other applicable statutory requirements (including
negotiating waivers or relaxations).
PART 2, S ECTION 5
F3 Discuss any aspects of the design, construction methods or site

management that could be of concern under health and safety
legislation. Update the health and safety plan.
F4 Ensure that a list of tenderers from approved register of contractors is

obtained. Contact each contractor giving outline details of the scheme
and request that they confirm their interest in submitting a bona fide
tender.
F5 Confirm all requirements from the planning authority, fire officer,

crime prevention officer and highway authority will be incorporated in
the contract documents.
F6 Report to the client at monthly intervals on progress and cost plan

checks.
2.5.4.9 STAGE G: BILLS OF QUANTITIES
G1 Discuss with the client and project team suitable amendments to

standard contract preliminary clauses, the completion of the appendix
to the contract, performance bonds, changes to standard contract
conditions, methods of appointing subcontractors and suppliers and
insurance liabilities.
G2 Ensure that planning and building regulation approval has been achieved.
G3 Obtain pre-tender estimate from quantity surveyors. Inform the client

of readiness.
G4 On instructions to proceed to tender, instruct the quantity surveyor (if

appointed) to issue tender documents. Follow all the client’s standard
procedures for this activity.
2.5.4.10 STAGE H: TENDER ACTION
H1 Ensure that all arrangements for temporary works and client site
preparation have been undertaken. Liaise with the property
manager/client for all temporary site management and services issues.
H2 Be available to assist tenderers in the clarification or correction of data

within the tender documents.
H3 Carry out tender appraisal in conjunction with other consultants and

submit a formal tender report to the client recommending (or
otherwise) the acceptance of a single tender.
H4 If necessary, undertake redesign, and/or negotiation with tenderer(s)

and client, on reductions in tendered contract sum to meet the client’s
budget.
PART 2, S ECTION 5
2.5.4.11 STAGE J: PROJECT PLANNING
J1 Prepare the building contract and arrange for it to be forwarded to the

client or his or her solicitor, and signed by the contractor.
J2 Notify the client’s insurers.
J3 Arrange a pre-contract meeting with the contractor, subcontractors,

consultants, clerk of works, client and head of establishment. Advise on
arrangements for access to the site and deal with queries and concerns
on works.
J4 Ensure that all temporary and enabling works are complete.
2.5.4.12 STAGE K: OPERATIONS ON SITE
K1 Ensure that the contract is administered in accordance with its terms.

Ensure that cost control of the project is maintained.
K2 Visit the site as appropriate to inspect the progress and quality of work.
K3 Liaise and coordinate the work of all design consultants during the post-
contract period ensuring solutions are found to issues that may arise and
that the schedules for issue of later design information are met.
K4 Hold regular meetings on site with the head of establishment, client and
clerk of works to appraise them of progress and to establish and resolve
any concerns that may be arising.
K5 Attend regular site meetings with the contractor, other consultants and
clerk of works.
K6 Give a short general report at appropriate intervals during the course of

the contract on progress, site relationships, quality of workmanship and
any other pertinent matter. Monitor contractor’s health and safety plan
and records.
K7 Ensure that certificates are issued for interim payments on the RIBA
standard form to the client. Produce short financial reports on a
cumulative basis (cash flow predictions are required to be attached to
each valuation certificate). Produce a detailed financial report showing
the value of all actual and expected variations to be issued at three
monthly intervals throughout the construction process.
K8 Ensure that all the client’s handover procedures have been followed
before accepting the building from the contractor.
K9 Notify the client’s insurers that work is complete and arrange for
release of bonds.
PART 2, S ECTION 5
2.5.4.13 STAGE L: COMPLETION
L1 Check making good of all outstanding patent defects. Resolve any

issues relating to emergency latent defects over the defects period. On
completion of all making good, agreed with the head of establishment
in writing, issue certificate of making good defects.
L2 Ensure that the terms of the contract, in relation to completion of the

works, are administered.
L3 Continue to produce a financial report at three monthly intervals.
L4 Ensure that the quantity surveyor completes the final account to an

auditable standard. Send to the client with the request for approval to
issue final certificate.
L5 Ensure that the issue of final certificate is made and that all consultants
complete construction certificate.
L6 Complete quality assurance questionnaire on performance of the client,

contractor and other consultants.
L7 Resolve any issues relating to emergency latent defects after the patent
defects period.
L8 Resolve contractual claims and provide any necessary reports to the

client.
L9 Ensure that the health and safety file is completed and handed to the
client.
L10 Ensure that all fire safety certificates, building control certificates,
licenses, etc. are obtained and handed to the client.
L11 Review the project from start to finish and report findings to the client,
complete with observations on successes and failures. Ensure that all
parties involved are sent a copy of the report.
PART 2, SECTION 6

SECTION 6: DEFINING SUSTAINABLE CONSTRUCTION
Introduction
The term ‘sustainable’ was first used in the construction industry when it was
applied to sources of timber. At that time timber was declared to come from
‘sustainable sources’. Today, timber from ‘sustainable sources’ has been
replaced with the expression ‘well managed’ or even ‘managed’ sources
implying that there is a difference between being sustainable and being well
managed.
But what is this difference?
The definition of sustainability that seems to have achieved almost universal

acceptance is that put forward by the World Commission on Environment and
Development in 1987, often referred to as the Brundtland definition:
‘Humanity has the ability to make development sustainable – to ensure that it

meets the needs of the present without compromising the ability of future
generations to meet their own needs.’
This definition appears quite clear in its meaning: we are charged with the
responsibility of ensuring that our activities do not damage the legacy which
we are passing on to our successors. Development can be taken in any context,
from the economic development of a nation to the construction of a simple
building. It confers upon us the responsibility to consider the impact of our
activity now and the legacy that we are leaving behind us. This can be
regarded as the principal of ‘common inheritance’ or, alternatively, ‘inter-
generational equity’.
The time frame element is therefore the difference between something which
is well managed and something which is sustainable. A source of supply for
timber may be well managed, but may only be so for 20, 30, 40 or 50 years.
Something which is sustainable has, theoretically, an infinite timescale and
therefore has inter-generational equity (where the term equity can mean a
resource stock, capital stock or a stock of technologies).
In the construction industry a resource stock can either be land, the

availability of raw materials or the buildings from which the raw materials
have been constructed. Unless purely organic materials, which are capable of
self-regeneration, are used, then in-organic materials are used such as stone,
clay and minerals which are deposits available in finite quantities and cannot
be regenerated.
PART 2, S ECTION 6
The mineral resources that are used are therefore not sustainable in
themselves, and in order to demonstrate a sustainable, or at least a ‘more’
sustainable construction industry it is the industry’s responsibility, under the
definition, to ensure that the buildings being constructed from the finite raw
material resources are capable of inter-generation usage.
To summarize, the construction industry cannot be considered to be

sustainable in terms of resource usage because raw materials, which are only
available in finite quantities, are being extracted and processed into building
products for incorporation into a building where the building itself is only
designed for a finite life. For the industry to be seen to act in a sustainable
manner it needs to provide a building stock that demonstrates appropriate
investment of these raw materials such that the swap is an equitable one. To
ensure that this takes place, the industry has a responsibility to consider the
design, detailing and construction methods as well as the cost in use to show
that a valuable legacy has been left to future generations.
I 2.6.1 Technology Swaps

Sustainability can be demonstrated, and the consumption of finite raw
materials justified, if a technology is produced that is a substitute for the
original raw material resource once this is exhausted. The best demonstration
of this, and probably the first major challenge that will face humankind, is the
exhaustion of fossil fuels.
Today, development, economic and political stability depend entirely upon the
availability of oil as a fuel and a raw materials source. Although estimates of
available economic oil reserves continually extend, and we are likely to enjoy
the benefits of it for at least another 100 years or so, it is universally agreed
that human activity will have to change and the reliance upon oil will have to
decline as the availability diminishes and it becomes more costly to extract.
The development of an alternative renewable, sustainable, pollution-free
energy source is therefore vital to the sustainability of human development.
Oil provides a very good example of non-sustainability in practice. However,

if the revenues generated from the use of oil were diverted to the research and
development of alternative, sustainable energy sources, this would be an
example of sustainability in practice in the form of a technology swap. In this
instance, the result of using one resource has been the production of an
alternative technology which is a direct substitute for the resource that has
been exhausted. The definition of sustainability has therefore been satisfied
in that the activities of one generation in achieving their goals has not
prevented future generations from achieving their goals.
The inter-generational equity principal is therefore a mechanism by which the

total available resource to future generations is maintained at a constant level.
PART 2, SECTION 6
This resource, which is available for their use, can either be in the form of raw
materials, capital wealth or alternative technologies. The important factor is
that the overall equity stock must not be diminished.
I 2.6.2 How Can the Environment and Sustainability be Valued?

At present the only method that has been developed for assessing the impact
of human activities has been to put a financial value on everything. In the
fullness of time it is to be hoped that we will devise different methods of
quantifying value.
An example of a technology advance resulting in huge potential

environmental damage is the CFC gases that have been identified as being
largely responsible for the depletion of the ozone layer. But how do we value
the environmental damage and possibly attempt to justify it in terms that are
economically acceptable? It has been suggested that the only way that ozone
layer depletion could be argued and justified as economically acceptable is if
there was a way of reinstating it at an acceptable cost. In other words, a
technology advance has been made for economic gain but at an environmental
cost. This environmental cost cannot be quantified in economic terms because
no cost yardstick has been devised for attributing economic value to our
environmental stock. This could, however, be quantified if there was a
technology to replace the ozone layer which would itself carry the missing
cost element within the equation.
This leads to the conclusion that acts which damage the environment do carry
a penalty for future generations and therefore to ignore them is a risk. This risk
may not necessarily be a risk for the present generation, but one that is being
imposed on future generations. Under a philosophy of sustainability it is the
responsibility of the present generation to hand on to the next generation the
same total stock as it itself inherited so as to ensure the same overall balance
of advantages for future development as originally inherited. Providing that
each generation adheres to these principals, the element of timescale
judgement is removed as each successive generation looks after the next.
Under these criteria, knowledge and technical advances will still be made and
future generations will still be at least as well off as the present generations;
but the likely loser will be the industrialized economy which will have to alter
the way in which the indicators of economic development are measured. At
present, industrialized nations generally consider economic development to
mean an increase in Gross National Product (GNP) per capita. However, GNP
assumes all matters relating to the environment have zero value. If economic
values are attributed to environmental functions in relation to economic
development, the national economic balance sheets would take on a
considerably different complexion.
PART 2, SECTION 6
I 2.6.3 How Does This Affect the Construction Industry?

2.6.3.1 MATERIALS
Most construction materials are a finite resource and will eventually be

exhausted. Many already are. Local British sources of Portland stone, which
has been used as a cladding material for many years, have been exhausted or
the quarries closed and it now has to be obtained from the Continent. Certain
colours of terrazzo marble, once popular in the 1960s, are no longer available
as entire mountains in Italy have been levelled. The use of terrazzo has now
been superseded by the increased use in solid marble and granite although it
will only be a matter of time before these sources are similarly exhausted.
Even organic materials are not immune. Brazilian Rio Rosewood, which was
very popular for making high-quality furniture in the 1960s, is now so
endangered that it appears on the Control in Trade of Endangered Species
(CITES) list as being illegal for fear of extinction. Mahogany is also on the
fringes of being listed and it is widely reported that there are no longer any
legal sources for the supply of the true Swietenia mahogany.
An example closer to home is the UK’s reliance upon imported timber having
used up its own supply. The history of timber production in the UK is an
interesting one which has seen the rapid depletion of forests from
approximately 90 per cent forest coverage at the time the Romans arrived to a
low point of less than 5 per cent of land coverage at the early part of this
century. Timber was first imported after the Great Fire of London and in 1668
it became necessary for Acts of Parliament to be passed to create forest
reserves like the New Forest in Hampshire to try to arrest the situation. World
War I saw timber in short supply again and resulted in the birth of the Forestry
Commission as a Government Agency in 1919. World War II resulted in
timber shortages again and the emergency created the major post-war
plantation of quick-growing conifers.
Humankind has a history of failing to adequately consider the impact that its
activities are having on the resource base and examples are easy to find.
2.6.3.2 BENCH MARKING ENVIRONMENTAL IMPACTS
In order to be able to assess the effect that we are having upon the environment
as a result of our activities a scientifically rigorous and consistent method of
analysis and bench marking is required. Such a method would have to
attribute units of measurement to each environmental impact and in turn to
relate these back to a datum to render the results meaningful on a human scale.
The Building Research Establishment (BRE) has undertaken more work than
most in this area. It has developed Envest, an environmental estimating
software tool which attributes Ecopoints to environmental impacts, with 100
Ecopoints being equivalent to the environmental impact of the average UK
citizen. Using a variety of comparison models and mathematical techniques
Ecopoint values have been attributed to building materials and systems, and it
PART 2, SECTION 6
is now possible, via the software package, to calculate the total Ecopoints
score for building types, building operations, refurbishment and custom use.
From this data one form of construction can be analysed against another. It is
also possible to quantify the decision-making process using environmental
criteria, not only by building type and the method of construction that should
be used but also the decision whether to build new or to refurbish.
Environmental Impacts
In undertaking the assessment of environmental impacts and attributing
Ecopoints values to various activities and products, the following must be
considered carefully:
• climate change;
• fossil fuel depletion;
• ozone depletion;
• human toxicity to air and water;
• waste disposal;
• water extraction;
• acid deposition;
• eutrophication (or over enrichment of water courses);
• ecotoxicity;
• low-level ozone creation (summer smog); and
• mineral extraction.
All these factors have been considered, quantified, compared and weighted in
relation to the impact associated with a typical UK citizen and are shown in
table 1.
Table 1: Environmental Impact of UK Citizens
Issue % weighting Characterized impact

associated with a typical
UK citizen
Climate change 37.8 12300 kg CO2 eq. (100yr)
Fossil fuel depletion 12.0 4.09 tonnes oil eq.
Ozone depletion 8.2 0.286 kg CFC11 eq.
Human toxicity to air 7.0 90.7 kg toxicity
Waste disposal 6.1 7.19 tonnes
Water extraction 5.4 418000 litres
Acid deposition 5.1 58.9 kg SO2 eq.
Eutrophication 4.3 8.01 kg PO4 eq
Ecotoxicity 4.3 178000 m3 toxicity
Photochemical ozone creation 3.8 32.2 kg ethene eq.
Mineral extraction 3.5 5.04 tonnes
Human toxicity to water 2.6 0.0275 kg toxicity
% may not add up to 100% due to rounding
PART 2, SECTION 6
So for example, to calculate the Ecopoints for 1 tonne of mineral extraction:
Characterized impact = 1 tonne mineral extraction

Characterized impact for 1 typical UK citizen = 5.04 tonnes mineral extraction
Normalized impact = 1 divided by 5.04 = 0.198
Weighting = 3.5%
Ecopoints = 0.198 multipled by 3.5 = 0.693 Ecopoints
2.6.3.3 EMBODIED ENERGY
As materials can be extracted in any part of the world and either processed into
building components locally or transported as raw materials, it is virtually
impossible to examine all of the possible environmental impacts that the
various activities are likely to have because the variables are just so great.
Perhaps the only constant method there may be in the winning and working of
materials, their transportation and processing into building components up to
the point when they are assembled into completed buildings is the energy
requirements of the various processes. The actual monetary value of energy
can also be different from country to country, therefore it is not possible to use
monetary value of energy as a unit of measure. However, the unit of energy
input itself can be used.
As energy is required to be consumed at every stage of the production process,

from extraction of the raw material to its incorporation into a construction, and
eventually to demolition and possible reprocessing, the sum total of these
energy inputs can be termed as the embodied energy of that product. It should
therefore be scientifically possible to establish a method of calculating the
quantity of embodied energy that is required to make a building component,
be it a cubic metre of concrete, a single brick, a square metre of glass or a sheet
of plasterboard.
Appendix A shows a comparison of embodied energy values for some

common materials. From this it can be appreciated just how energy intensive
some processes are and therefore how relatively good and bad some
components are. If materials have to be imported or are chosen to be imported
on the grounds of economic cost these will, by definition, carry a larger
embodied energy by virtue of the cost of global transportation. Conversely,
economies may be derived by local energy consumption and waste disposal
which can also be incorporated into the equation.
Embodied energy impacts associated with materials have also been assessed
quantitively by the BRE using Envest (see 2.6.3.2) which can also take
account of the building form and fabric typical replacement intervals and
other data held by the Centre for Sustainable Construction. The results
generated are quoted in Ecopoints per m² of element and factors such as
replacement intervals can also be factored in as part of a full cost and use
study.
A fundamental difference in environmental terms between refurbishment and

redevelopment is the saving of embodied environmental impact and energy if
refurbishment is undertaken in preference to demolition and redevelopment.
PART 2, SECTION 6
2.6.3.4 LEGISLATIVE CHANGES
Armed with bench-marking data it would be possible for systems of

regulation to be built into the existing regulations. With the increasing
emphasis on energy conservation within the building regulations (which
currently concentrate on energy consumed in use) it would be a simple
extension of these regulations to lay down embodied energy maxima per
square metre for various building types.
A major criticism that could be levelled at such a system is that it would starve
the construction industry of design flexibility. However, this could be
overcome by introducing a scale of energy taxation. This would enable those
that wish to exceed the design criteria of the regulations to do so, but they
would have to pay for the privilege. Conversely, those who produce buildings
and achieve significant savings beneath the bench mark could receive aid in
the form of grants as recognition for their efforts and ingenuity.
I 2.6.4 Green Building Materials

Timber is undoubtedly the material most favoured by green designers. As well
as having a relatively low embodied energy content, it absorbs and stores
carbon from CO2 when growing, and is strong, insulating and easy to work.
Ideally, timber should be sourced in the UK but the supply is severely limited.
When sourcing imported timbers designers should ensure that the material
originates from a suitable source. The Forest Stewardship Council and the
Timber Trades Federation both supply lists of suppliers of timber from good
UK sources (see Appendix B).
Some species of timber are better than others at resisting rot and decay. In
particular, Western Red Cedar and Douglas Fir, which are again being
considered as a viable alternative to PVC-u or aluminium.
Note: specifiers should exercise care with regards to the source of timber as all
is not always as it seems.
Masonry construction can be considered green, especially if lime mortars are

specified, because this enables the bricks to be used again in the future. Brick
manufacturers are now keen to promote their products which use low energy
kilns.
Another form of construction finding favour is a solid block or concrete wall

with insulation and render externally. Dense concrete blocks are preferred to
lightweight aerated blocks which use more energy in production. Pulverized
fuel ash blocks contain over 50 per cent fuel ash which is a waste product from
power stations.
It is also now possible to obtain plaster and plasterboard made from waste
gypsum which is a by-product from fuel gas de-sulphurization.
PART 2, SECTION 6
Insulation boards made from polyurethane, extruded polystyrene and phenolic

foams have given way to mineral wool, glass fibre, expanded polystyrene, and
in some cases foam glass or cork. Recycled cellulose fibre (newspaper print)
is now being specified more for loft insulation and wall insulation in timber
frame construction. One such product is known as ‘warm cell’ and is available
from Excel Industries (see Appendix B).
These are just a few examples of alternative material resources now available.
It is of course interesting to consider that as these materials gain popularity
and become specified as a matter of course, this will cause problems in
sourcing adequate quantities to satisfy demands.
There is a logic to the use of recycled materials (where the embodied energy
can be utilized again) as being perhaps the greenest contribution to be made.
Second-hand bricks, timber, roofing materials and assorted ironwork are
already available, unfortunately at premium prices.
I 2.6.5 Whole Building Sustainability

The matters discussed above help us to use resources and raw materials wisely
and to produce better buildings in terms of energy consumed in construction
and use. However, this in itself is not sustainable construction, although it is
certainly a vital component in the process. Sustainable construction would
only be achieved when the finished product can demonstrate usefulness and
serviceability on an inter-generation basis, rather than being constructed for a
single use and then rendered redundant when there is no longer a requirement
for the original purpose.
An example of such practice is the current trend for the conversion of

redundant 1960s office buildings into residential accommodation, as well as
warehouses and barns, which have for many years been seen as suitable
residential conversion opportunities. The uses to which these buildings are
now being put were never originally envisaged at the time of their planning,
design and construction, but suitable alternative uses have been found.
One of the key issues in building sustainability is to ensure that what is

originally constructed from the resources becomes a similar resource for the
future generations. In order to achieve this, attention must be turned to wise
material usage and reduction of waste as well as to producing a building of the
highest possible quality and with maximum adaptability. The building created
must continue to serve future generations well for whatever purpose they wish
to put it to, with the minimum of additional cost in terms of energy and raw
material resource input in order to convert and use it for their own purposes.
There are many buildings of over 200 years of age that have found suitable
alternative purposes beyond that for which they were originally designed. It is
therefore possible to establish with a reasonable degree of certainty what the
vital component parts are in ensuring the success of a building for say a 200,
or even a 300 year design life.
PART 2, SECTION 6
The methods of funding and, in particular, the timescale over which a building
is considered a viable proposition would need to be reviewed and an
alternative method of valuing the asset would need to be established. This
would reflect not just the economic value, but also the environmental resource
value invested in the construction, and the social impact and benefits that the
construction is likely to have for future generations.
The planning process could be slightly extended such that alternative uses are
identified and documented and form an integral part of the planning process.
This would require the procurers and designers of the building to demonstrate
how it could be used for identified alternative purposes and to ensure that the
design, as proposed, is sufficiently flexible for the alternative uses to be
achieved with minimal additional input.
The other components to ensure that a building is suitable for inter-generation

use is to get the detailing, product selection and construction quality right such
that the building does not wear out before the inter-generation uses can be
realised.
Whilst some technologies have changed very significantly the base skills have
not and nor have the materials. It may be necessary for us to re-learn some old
skills in order to produce buildings of a long life expectancy but it is now
necessary for us to change from being a disposal society to a considerate and
conserving one.
I 2.6.6 The Government Line
In May 1999 the Department of Environment, Transport and the Regions

(DETR) published A Better Quality of Life – A Strategy for Sustainable
Development for the United Kingdom. This document endeavoured to set out
a framework and priorities for achieving sustainable development which
included:
• more investment in people and equipment for a competitive economy;
• achieving higher growth whilst reducing pollution and reuse of

resources;
• sharing the benefits of growth more widely and more fairly;
• improving towns and cities and protecting the quality of the countryside;
and
• contributing to sustainable development internationally.
The Government also felt that the construction industry can contribute to
achieving the sustainable development aims by:
PART 2, SECTION 6
• being more profitable and more competitive;
• delivering buildings and structures that provide greater satisfaction,

well-being and value to customers and users;
• respecting and treating its stakeholders more fairly;
• enhancing and better protecting the natural environment; and
• minimizing its impact on the consumption of energy (especially

carbon-based energy) and natural resources.
In April 2000 the DETR published Building a Better Quality of Life – A

Strategy for More Sustainable Construction. (It should be noted that the
inclusion of the word ‘more’ is now associated with a sustainable
development strategy which perhaps indicates a slight rethink of absolutes.)
This document shows that the Government now feels that the main themes for
action in achieving ‘more’ sustainable construction can best be served by
adopting the following action points:
• reuse existing built assets – meeting functional requirements may not

require new buildings and refurbishment and renovation may work
better;
• design for minimum waste – specify materials with care, think about
using recycled materials, design out waste at all phases in the
construction and occupation process and involve the supply chain;
• aim for lean construction – aim for continuous improvement, waste

elimination, customer focus, value for money, high quality management
of the projects and supply chain and good communication;
• minimize energy in construction – be aware of embodied energies and

transportation of construction projects. Adopt ‘green’ travel policies;
• minimize energy in use – consider more energy efficient solutions and

energy production from renewable sources;
• do not pollute – understand environmental impacts;
• preserve and enhance bio-diversity – look for opportunities throughout

the construction process to provide and protect habitats;
• conserve water resources – design for increased water efficiency in

building services and within the built environment;
• respect people and their local environment – be responsive to the

community and consider your workforce; and
• set targets – measure and compare your performance with others and set
targets for continuous improvement.
PART 2, SECTION 6
I 2.6.7 What Might the Future Hold

If sustainability is going to be the way forward in the next millennium many
existing conceptions of development have to be reviewed and overhauled. The
way the environment and resources are valued, and how they are used, have to
be re-examined and justified against a policy of sustainability. The materials
and resources that are used in construction activities and the buildings that are
created will require fresh justification against sustainability objectives.
This will require an overhaul of the planning process and regulatory

frameworks within which the construction industry operates, requiring
funders, building users, material technologists, material manufacturers and
suppliers to re-examine and justify their methods.
The sourcing of the materials and the methods employed in conversion and
production of building products must be the first priority in making progress
towards sustainable constructions. The way in which raw materials are
extracted and processed at source can have the most direct impact upon the
environment and must be closely examined as well as the actual material
manufacturers themselves.
The second area for examination would have to be the philosophy behind
procuring buildings and meeting user requirements, the method by which
buildings are funded, the method of valuation and justification, together with
the demands for greater longevity and flexibility.
Thirdly, the professions responsible for the design and construction of

buildings to meet the requirements of funders and users must respond to the
challenge of sustainability in order to deliver the required product. This would
require new demands and disciplines in relation to the construction form and
the standard of construction itself. New materials and techniques would need
to be developed and adapted into sustainable construction. The professionals
would have to put new demands upon the material producers in the production
of more sustainable materials, but above all they must build for longevity and
flexibility with minimum re-investment by way of adaptation and
maintenance if the goals and targets are to be met.
Finally, the contribution that those actually constructing the building have to
make would need to be considered. The sustainable building should be a piece
of procession engineering, simply constructed but to the very highest of quality
standards with good detailing and nothing left to chance. The finished product
would have to be a monument to sustainable construction and inter-generational
equity making the optimum use of the energy and materials invested.
In other words the principles of sustainability must be fully embraced by every

participant from the supplier of the raw material, through the material
manufacturing process, the procurement and design functions right up to the
occupation of the completed building where the responsibility passes to the
occupiers, the facilities managers and the future owners, occupiers and
managers of the building to each play their part in making the most of what we
have.
Appendix A: Embodied Energy Content of Building Material
Lightweight 417
blocks
Concrete 625

Timber 694
Lightweight 833
concrete
Bricks 1222
Material
Plaster 1806
Part 2, Section 6
Appendix A (10/00)
Plastic 9300
Glass 15000
Steel 63000
Aluminium 195000

0 5000 10000 15000
kWh/m3
Page 1
Source: The Architects Handbook 8 June 1995

Appendix B: Useful Addresses

Timber Trade Federation
Clareville House
22/27 Oxenden Street
London SW1Y 4EL
Centre for Sustainable Construction

Building Research Establishment
Garston
Watford WD2 7JR
Department of Transport, Local Government and Regions

(formerly Department of Environment, Transport and Regions)
Sustainable Construction Team
Eland House
Bressenden Place
London SW1E 5DU
The Forest Stewardship Council

Unit D
Station Building
Llanidloes
Powys SY18 6EB
Excel Industries
13 Rassau Industrial Estate
Ebbw Vale
Monmouthshire NP3 5SD
Construction Resources
16 Great Guildford Street
London SE1 0HS
The Building Centre

26 Store Street
London WC1
The Environment Information Service

PO Box 197
Cawston
Norwich NR10 4BH
Appendix B (revised 10/01)
PART 3, SECTION 1
PART THREE: CONSTRUCTION PLANNING AND

PROCUREMENT
SECTION 1: DEVELOPING AN APPROPRIATE

BUILDING PROCUREMENT STRATEGY
Introduction
This section is intended to provide both clients and their advisers with
procedures which will assist them in the selection of an appropriate
procurement strategy for a building project.
The strategy developed for the purpose of project procurement should result
from an objective assessment of client needs and project characteristics, since
it is considered that there will be no single procurement strategy suitable for
all projects and all clients. Choice of an inappropriate strategy can, however,
result in a failure to meet client objectives, disappointment and potential
litigation.
The selection process should, therefore, provide a best-fit solution based on

good judgement and which is acceptable in terms of the identified criteria and
the acceptable distribution of risk.
The selection of an appropriate procurement strategy is identified as a key

decision in terms of achieving client objectives. Conversely, an inappropriate
choice can be a key factor in performance failure, resulting in cost and time
overruns and poor building performance. This section looks at the client’s
role (3.1.1), the development of procurement strategies (3.1.2), the selection
of the most appropriate procurement route (3.1.3), and the implementation
process (3.1.4).
3.1.1 informs clients as to their involvement as it relates to key stages in the

process. It also stresses the importance of appropriate professional advice.
In 3.1.2–3, the key issues are addressed together with the characteristics of a
variety of procurement strategies: the aim is to match client needs, the
particular project’s criteria and the chosen strategy.
The implementation of strategies is considered in 3.1.4 where reference is also

made to standard contracts for the designer, consultant or constructor
appointment.
Appendix A outlines procurement options.
PART 3, SECTION 1
EFFECT OF CLIENT TYPE ON SATISFACTION CRITERIA
The type of client will affect the criteria which must be met if the client is to
be satisfied with the project.
Owner-occupiers are usually primarily concerned with building performance

in terms of functionality and costs in use. They may also be concerned with
image and building style. In this sense, value for money is a key criterion.
Developers, on the other hand, may be driven by market conditions which

enable the project to be let or sold at maximum advantage. They may be
predominantly concerned with speed rather than performance.
This is not to say that owner-occupiers are unconcerned about time. Indeed,
certainty of completion date may be a key issue. Nor is it fair to suggest that
developers are unconcerned about building performance or cost. There are
market conditions where both of these issues may become important.
Attempts to categorise clients in various ways may be helpful in the early

stages of developing procurement strategy. However, each client is unique
and will be more or less experienced in the process of building procurement
depending on company size and stage of development.
It is important to consider those factors which will affect client satisfaction as

well as the level of knowledge and experience of the client in the process of
building procurement. These factors should have a major influence on
procurement strategy and whether the client should take an active role in the
procurement process.
This Section addresses these issues and provides, through the form of a
checklist, a process to aid selection.
SCOPE
The section and the processes included should be used as a prompt and a focus
for the issues to be addressed during the development of procurement strategy.
It is not intended that the section will be used as a substitute for judgement.
3.1.1 The Client’s Role

(It is recommended that this be read in conjunction with Part 1, Section 1)
G 3.1.1.1 INTRODUCTION
G 3.1.1.1 This subsection explains the client’s responsibilities through the life of a
project. Although it is written for building projects, much of the advice is
applicable to other types of project. In carrying out their role, clients,
depending on their knowledge and expertise, will need help from their
PART 3, SECTION 1
consultants, project managers and other advisers, whose roles are also
explained in this section. It is advisable, wherever possible, that clients obtain
advice from an objective and independent adviser who will then not be
involved as a consultant on the project.
This subsection aims to assist both current and future clients in setting policy
and formulating strategy. It outlines their task and explains how it should be
carried out. It has been written with the lay client in mind, but will also assist
experienced clients and their advisers.
The success of any project will depend on the motivation given by the client.
Experienced clients may take a leading role in the procurement process; less
experienced clients will need to seek advice or to appoint an adviser to assist
them. Where projects are of a large or complex nature it may be advisable to
consider the appointment of a project manager, who will manage the whole
project on behalf of the client.
G 3.1.1.2 A building project represents a discrete piece of work with clear start and
finish dates, providing specified benefits at accepted cost. It is unlike any
other manufactured product because it has:
• a unique demand – the client’s specific need for accommodation (but

future adaptability and possible disposal must not be ignored);
• a unique location – the site available for the building;
• unique constraints – the cost and time parameters for the project; and
• a unique end product – the finished building.
G 3.1.1.3 It has three other particular characteristics:
• the final product, although itself unique, is built up of many standard parts
assembled in accordance with a series of standard rules and practices;
• its construction involves major expenditure over a comparatively short
period of time; and
• the construction of a new building requires a large team of individuals and
firms with particular expertise to work together to complete the project
satisfactorily. This team will normally only be formed for this unique
project and then be disassembled. It is unlikely that the same team will
work together again, and if it does, the project is likely to be different.
Each project is, therefore, a prototype and involves a learning curve.
Project testing is rare.
G 3.1.1.4 (a) Effective management is vital in any construction project. The client’s
prime role is to define the project and to establish a structure for the
management of the project to make sure that it works.
(b) A crucial part of any effective management structure is effective

communication. To perform effectively all parties should have timely access
to all information relevant to their tasks and the project’s objectives and status.
PART 3, SECTION 1
(c) The client can have substantial influence on the design of the project in
respect of both functional efficiency and of overall appearance, and, therefore,
has to take particular care to:
• develop a business case for the project identifying primary needs and
analysing costs and benefits
• understand fully the purpose of the building; ensure that the
requirements of the users are accommodated; and communicate those
requirements to the designers;
• appoint architects and engineers with the proven ability of designing
buildings which satisfy users’ requirements and harmonise with and
contribute to the quality of the built environment. The selection of the
right people is emphasised as a key to success.
(d) This subsection sets out the role and responsibilities of the client through
all stages of the project.
(e) The diagram on the next page indicates the primary activities in the
procurement process and when activities are performed. As can be seen the
client’s role is significant with a wide range of activities to perform and
implement before both the design and the construction processes. In the
performance of these activities clients can expect to be supported and advised
by their advisers or (if appointed) the project manager.
G 3.1.1.5 PRIMARY ACTIVITIES IN THE PROCUREMENT PROCESS
Pre-design phase Pre-construction phase Construction Post-construction
Client’s role Appoint adviser (3.1.1.6) Procurement strategy (3.1.1.13) Design overview (3.1.4.12) Commissioning (3.1.1.17)
Develop the business case for the Design overview* (3.1.4.12) Cost control overview (3.1.4.13) Occupation and takeover
project* (3.1.1.9) Cost control overview* (3.1.4.13) Time control overview (3.1.4.14) (3.1.1.18)
Define client’s responsibilities Whole-life costs (3.1.4.15) Quality control overview (3.1.4.18)
(3.1.1.7) Value engineering (3.1.4.17) Change control overview
Project definition (3.1.1.10) Time control overview* (3.1.4.14) (3.1.4.19)

Project briefing (3.1.1.12) Quality control overview*
Appointment of PM (if appropriate) (3.1.4.18)
(3.1.4.7) Appointment of constructors
Appointment of design and cost (3.1.4.9)
consultants (3.1.4.8) Confirming the business case
Procurement strategy* (3.1.1.13) (3.1.1.9)
Value management (3.1.4.16)
Procurement Procurement strategy

strategy development (3.1.2)

Implementation Resources (3.1.4.3–5) (Client) Contractual arrangements Systems and controls (3.1.4.11)
Organisational structure (3.1.4.6) (3.1.4.10)
Contractual arrangements* Systems and controls (3.1.4.11)
(3.1.4.10)
Systems and controls* (3.1.4.11)
Implementation policy (3.1.4.2)
Diagram to indicate the activities in the Procurement Process

* Indicates the activity will continue into the next phase
( ) Indicates the subsection of this document referring to the activity
PART 3, SECTION 1
Page 5
PART 3, SECTION 1
G 3.1.1.6 INDEPENDENT CLIENT ADVICE
(a) With the potential for the involvement of many consultants and/or
constructors in a project, and the range of contracts associated with their
employment, all but the most experienced client may need advice. The advice
offered should be informed and unbiased and it should be based upon a logical
analysis of the needs of the client, the type and character of the project and the
range of appropriate strategies available.
(b) This advice can be offered by a member of the client’s design team or can
be a separate function. It may be more difficult for a design team member to
remain impartial in carrying out this process and it is recommended that any
expertise retained should be retained solely for this purpose. This function
may encompass:
• Assistance in preparing the business case (the business case)

underpinning the project
• Identifying the needs and requirements of the (briefing)
client
• Defining the project (project definition)
• Matching needs and project characteristics (procurement strategy)
with appropriate procurement strategy
• Facilitating the associated selection and (implementation)
contractual processes and policies
(c) The decision as to which procurement strategy to select should be based

upon information from the client and information about the project.
(d) A best practice guide is available to assist in this process1.
(e) Possible sources for independent client advice include a suitably

qualified and experienced construction professional such as a chartered
surveyor.
G 3.1.1.7 CLIENT’S RESPONSIBILITIES
(a) The client should set policy and outline strategy including:
• setting and prioritising the project objectives;
• clarifying client attitude to project risk;
• establishing procurement strategy;
• arbitrating between conflicting demands; and
• evaluating the completed project against the objectives.
1
PART 3, SECTION 1
(b) The client also has a threefold management function:

• to provide financial resources and land for the project;
• to manage the client input; to co-ordinate functional and administrative
needs; to make decisions when needed; to resolve conflicts; to act as the
formal point of contract for the project; and
• to supply the technical expertise, to assess, procure, monitor and
control the external resources need to implement the project
(throughout the procurement process).
(c) In particular the client should be satisfied, as far as possible, that:

• the project brief is clearly defined as far as possible and linked back to
the client’s business case for the project;
• the project brief is comprehensive and clear and has the full support of
the users;
• any constraints demanded by the project funder(s) are known and their
impact understood;
• the critical assumptions made in preparing the initial estimates and
programmes are valid, realistic and achievable;
• advisers have developed cost estimates which are comprehensive and
include all capital and resources costs;
• allowances made in the feasibility and viability assessments to cover
possible risks are sufficient (contingency allowance);
• an adequate risk analysis has been completed;
• substantial sensitivity analysis and ‘what if’ studies have been carried
out to assess the effect of possible changed criteria on the viability of
the project;
• plans are in place for adequate project management including systems
for cost, time and change control, and that health and safety has been
adequately addressed;
• land will be purchased and available for the commencement of the
work.
(d) The client should also co-ordinate and resolve conflicts between all
interested sections of the client organisation including:
• user groups – who will work in the building;
• specialist groups – responsible for technical systems within the
building, e.g. communications, computers;
• facilities management – who will manage the completed building
including maintenance and security;
• finance and accounts – who will plan and control expenditure and pay
bills as they arise;
• legal advisers – who will advise on and monitor the client’s formal
relationships with outside parties.
PART 3, SECTION 1
(e) The client is responsible for ensuring that all necessary decisions are made
on time. Timely decisions are necessary to avoid delays and increased costs;
the decision-making process requires as much planning and management as
any other activity. This will include:
• scheduling the key decisions to be made;
• identifying the decision makers and their required procedures;
• ascertaining the time required for making decisions;
• establishing a formal programme for decisions;
• pre-warning decision makers of forthcoming submissions – making
sure ‘items are on the agenda’;
• preparing on time fully detailed submissions and/or presentations in
full compliance with procedural requirements;
• following up submissions throughout the decision making process; and
• promptly communicating decisions made to the parties affected by
them.
G 3.1.1.8 KEY CLIENT ACTIVITIES
Notwithstanding overall responsibility for the whole of the project, the client
will have an active personal involvement in the key activities explained in the
following subsections.
G 3.1.1.9 DEVELOPING THE BUSINESS CASE FOR THE PROJECT
(a) The client’s purpose in initiating a building project may be driven by the
need for the project as a functional unit or long-term investment.
(b) The client will need to review project feasibility in terms of time and cost
against benefits which will stem from the proposed project. In doing so he/she
will have to consider the returns expected, the value (in use) of the projected
asset against projected land costs, construction costs, cost of fees, fitting out
and commissioning costs, operating and maintenance costs and the
opportunity cost of money.
(c) The importance of each of these issues will be relative to the objectives of
the client and to the extent to which the client is able to cope with risk.
(d) Further influences in the case of a development project may include likely
annual rental, period between rent reviews, and growth of rental value. In
terms of the project development, total development time and taxation issues
may also be influential on the decision process.
(e) It is important that the client seeks advice in terms of investment appraisal
of the planned project and that any appraisal considers ‘what if’ questions to
ensure that the impact of changes of key components in the appraisal are
clearly understood. A chartered surveyor will be able to assist the client in
these matters.
PART 3, SECTION 1
G 3.1.1.10 PROJECT DEFINITION
The importance of a clear project definition to the successful completion of the

project and in ensuring appropriate performance of the project cannot be over
emphasised. The inexperienced client will need professional help from the
advisers or design team in the preparation of the definition. The project definition
is a comprehensive statement of the client’s objectives and parameters for the
project based on close consultation between the client and users covering:
• project description;
• function of building;
• equipment and special services/requirements;
• target programme; and
• site.
G 3.1.1.11 ESTABLISHING PRIMARY OBJECTIVES
(a) In establishing the primary objectives for the project it is necessary to

prioritise these objectives to ensure that when developing a procurement
strategy appropriate emphasis is given to the most important objectives.
(b) Since there can be a tension between the long-term objectives set for the
project in the business plan and the short-term objectives set for the project by
the project team, the identification of priorities is very important.
(c) One way to achieve this is to consider ‘what if’ scenarios to establish the
importance of key factors:
• what if the project does not meet its functional requirements?
• what if the project is delivered late?
• what if the cost of the project exceeds the budget?
(d) By carrying out an analysis in this way relative importance can be given to
each aspect by weighting that aspect against a total.
For example:
%
Function 50 Each of these can be subdivided to produce clarity, e.g.
Completion 20 cost can be divided into capital and running costs, time
Cost 30 into speed or reliability of delivery date and function into
100 layout, environmental quality and specification.
(e) This is the initial control document for the early planning of the project;
without it little constructive work can be done. If all the information required
for the project definition is not readily available, it is better to issue it in an
incomplete form and progressively update it.
G 3.1.1.12 BRIEFING
(a) Once the project definition has been completed the briefing process will be
carried out. This is when the design team and cost consultants are able to flesh out
PART 3, SECTION 1
the project prior to extensive design work. The process commences with concept
design building upon project definition and progresses through to a project brief
which should encompass the client’s aesthetic, spatial and service requirements.
(b) While it may be difficult for inexperienced construction clients to

visualise the descriptions outlined during the briefing process it is worth
spending time seeking consensus on its content to avoid waste in the later
design process.
(c) The Construction Industry Board (1997) have produced an excellent guide
called Briefing the Team which summarises the processes involved.1
(d) Following the development of the brief for the project the design process
will commence (see 3.1.4 – Implementation).
G 3.1.1.13 DEVELOPMENT OF PROCUREMENT STRATEGY
The client is responsible for selecting the procurement strategy most suited to
the project and deciding how it is to be administered. The client may need to
take consultant advice on which strategy is most appropriate considering the
prioritised objectives and attitude to risk. This is a three-stage process which
may be key to project success:
• selecting the strategy;

• implementing the strategy; and
• planning the administration of the contracts underpinning the
implementation of the strategy.
The processes of procurement strategy selection and implementation are dealt

with in 3.1.3 and 3.1.4.
G 3.1.1.14 (a) Strategies may include:

• traditional – design by consultants completed before lump sum tenders
are obtained;
• design and build – detailed design and construction by the contractor
for lump sum; design and construction may overlap. Where a concept
design is produced by the consultants before the contractor is
appointed, the strategy is called develop and construct;
• management contract – design by consultants; management
contractor appointed early and work package contracts let
progressively in the contractor’s name; design and construction
overlap;
• design and manage – outline design by the consultants; as
‘management contract’ but detailed design by the management
contractor; design and construction overlap; and
• construction management – design by consultants; construction
manager appointed early to produce and manage trade package contracts
made directly with the client; design and construction overlap.
PART 3, SECTION 1
G 3.1.1.15 (a) The extent of collaboration possible between those who design the project
and those responsible for delivery will vary with the strategy adopted.
(b) Selection strategies may include selection by competition for price; on the
basis of the quality of the bid as well as price alone; or by negotiation. In some
cases a high level of collaboration is possible enabling those responsible for
delivery to adopt a ‘Partnering’ approach to project delivery.
(c) Partnering is not so much a contract strategy as a way by which the project
team can be drawn together for their mutual benefit. Partnering is usually most
advantageous where the client has a range of projects to procure but can be
adopted for single projects.
(d) The principles associated with Partnering are based on inclusiveness and
depend upon a trust being established within the team. There is also a focus on
achieving the best outcome for the client as well as a satisfactory outcome for
each participant. The primary principles include developing mutual
objectives, simple approaches to dealing with disputes and a focus on
continuous improvement which can be measured.
(e) This approach represents a change in the culture traditionally adopted by

the UK construction industry which has previously been based on price-bid
approaches and will need to be carefully managed. However, evidence is
beginning to emerge of real all-round benefits being achieved particularly by
regular and experienced construction clients.
(f) The Construction Industry Board have published a most useful guide to
partnering1.
(g) The number and style of contract documents will depend on the contract
strategy selected.
G 3.1.1.16 (a) Where direct consultant appointments are made each will be subject to a
separate form of contract, but where a design and build strategy is selected,
designers may be appointed by the contractor. In the case of construction
management, the client will be required to enter into many individual trade
contracts.
(b) Contract implementation can be complex and may encompass the

additional appointment of consultant advisers or the novation of designers
from the client to the contractor. In addition, forms of warranty and collateral
contracts may be involved. The consultant advisers can assist the client in the
selection of appropriate contracts and the documentation associated with
them.
1
Construction Industry Board, Partnering in the Team, Thomas Telford Publishing, London, 1997.
PART 3, SECTION 1
(c) The responsibility for contract administration will depend upon the
procurement strategy selected, and may fall upon the design team, the project
manager, a contract administrator, or the client him/herself. The client should
seek advice to ensure that the administration process is appropriately planned
and delegated.
(d) Guidance on the appointment of consultants and contractors is included in

3.1.4 (Implementation).
G 3.1.1.17 COMMISSIONING
(a) Once the building work is complete the systems which will support comfort
must be commissioned to ensure they are working effectively and reliably.
(b) In relatively simple buildings the client can insist that this is a function
which the contractor must perform. Where buildings have sophisticated
systems controlling the internal environment or facilitating staff movement or
safety, commissioning can be established as an independent activity carried
out by specialists.
(c) However commissioning is facilitated, it must be achieved before any

building can function effectively.
G 3.1.1.18 OCCUPATION AND TAKE-OVER
(a) The client is responsible for addressing the issues of occupation, staffing
and subsequent operation and maintenance of the building. This activity is
separate from the design and construction process, although it will affect it,
and will have its own time, resource and cost implications which should be
incorporated into the overall project plan.
(b) For large projects, the client may wish to arrange for the nomination of a
member of the department to act as occupation manager to manage this
activity or may appoint a facilities manager. Occupation plans should be
established during the design stages of the project and should cover:
• the operation of the building on a regular on-going basis;
• the hand-over and acceptance of the building from the contractor(s);
• the progressive final fitting-out (if any) and physical occupation of the
building with minimum disruption to the client’s operations.
3.1.2 Procurement Strategy

G 3.1.2.1 Designing and constructing a new building is rarely straightforward. It is
subject to a series of risks and uncertainties and involves a number of
organisations especially assembled for the project. The way in which the
client and the various designers, contractors and suppliers work together as a
team is determined by the procurement strategy and forms of contract entered
PART 3, SECTION 1
into between the project participants and the client. The procurement strategy
should be consistent with the objectives of the project and should enable the
risks to be controlled to achieve a successful outcome.
G 3.1.2.2 Procurement strategy is the outcome of a series of decisions which are made
during the early stages of a project. It is one of the most important decisions
facing the client. The chosen strategy influences the allocation of risk, the
design strategy and the method of employment of consultants and
contractors. Risks are also allocated by means of the associated contracts.
Procurement strategy has a major impact on the timescale and ultimate cost
of the project.
G 3.1.2.3 Generally, clients can choose from several different strategies. A successful
strategy is one which leads to a completed building which meets the client’s
objectives. The preferred aim is for contributing parties to work together for a
quality result rather than competing against each other.
G 3.1.2.4 Where the development of design does not maintain the pace anticipated, or
the programme is otherwise affected by unexpected occurrences, the selected
strategy must be reviewed. It is most important that the strategy is
reconsidered at key times in the progress of the project such as when planning
approval is given, before contract strategy is decided and before construction
contracts are let.
G 3.1.2.5 DEFINITION OF TERMS
Different procurement strategies provide different ways of allocating risk and

responsibility to the organisation contributing to the project. They can either
integrate the design and construction processes or segregate them.
Approaches to the selection of processes enabling collaboration are referred to
in 3.1.4 (Implementation).
The main types of procurement strategy are summarised below (they are
covered in more detail in Appendix A).
• traditional: design by consultants is completed before contractors tender

for, then carry out, construction;
• construction management: design by the client’s consultants and
construction overlap. A fee-earning construction manager defines and
manages the work packages. All contracts are between the client and the
trade contractors. The final cost of the project may only be accurately
forecast when all packages have been let;
• management contracting: design by the client’s consultant and
construction overlap. A management contractor is appointed early to let
elements of work progressively by trade or package contracts (called
‘works packages’). The contracts are between the management contractor
and the works contractors. As with construction management, the final
cost can only be accurately forecast when the last package has been let;
PART 3, SECTION 1
• design and manage: similar to the management contract, with the

contractor also being responsible either for detailed design or for
managing the detailed design process; and
• design and build: detailed design and construction are both undertaken by
a single contractor is return for a lump sum price. Where a concept design
is prepared before the contractor is appointed, the strategy is called
develop and construct.
G 3.1.2.6 On some projects it may be necessary to use more than one strategy to meet
the project’s objectives. For example, a traditional approach may be used for
completing the building structurally with main services installed. This is
known as a shell and core contract. A separate strategy, for example,
construction management, may be used to fit out the building with ceilings,
raised floors, carpets, partitions and electrical fittings. The use of two
strategies allows the client more time to finalise the user’s detailed
requirements, without delaying the start of construction.
G 3.1.2.7 When the choice of procurement strategy has been made, the resultant
contract strategy and forms of contract should be chosen (i.e. the terms and
conditions of the contract). To avoid the need for fresh legal drafting each
time, various standard forms of contract are available, both for the
appointment of consultants and contractors. Construction professionals re
usually experienced in understanding these contracts and can advise on the
implications of their adoption. The range of contracts available is referred to
in 3.1.4 (Implementation).
G 3.1.2.8 PROJECT OBJECTIVES
(a) Construction (and refurbishment) projects are often complex with potential
for cost and time overruns or the finished building performing less well than
planned. To minimise such risks the client should select the procurement
strategy which matches the objectives of the project. These must be clearly
established and prioritised before any design or other work begins (see
3.1.1.10–11 – Project Definition, Establishing Primary Objectives).
(b) The client must decide the relative importance of the three main types of
criteria – time, cost and performance:
• time: earlier completion can be achieved if construction is started
before design is finished. The greater the overlap between the two, the
less time will be required to complete the project;
• cost: with the exception of simple ‘standard’ buildings and certain
‘design and build’ strategies, a final construction contract sum cannot
be established until the design is complete. Any overlap between design
and construction means that construction starts before the cost is fixed.
This increases the importance of accurate cost forecasting and the risk
to the client; and
PART 3, SECTION 1
• performance (design): the quality and performance characteristics

required from the completed building determine both the project time
and cost. Some strategies reduce the client’s ability to control and make
changes to the detailed building specification after the contracts have
been let.
(c) Performance includes the function of the building, its quality and
appearance and other factors such as durability, cost in use and flexibility. The
relative importance of each objective must be given careful consideration
because decisions throughout the project will be based on balances between
the other objectives (see Figure 1).
In any project these three criteria will be interdependent and decisions

affecting one will affect one or both of the other criteria. The appropriate
procurement strategy will recognise this interrelationship and reflect the
client’s objectives and the characteristics of the project. It is uncommon for a
project simply to emphasise one criterion alone and most projects would
emphasise time and cost, time and performance or cost and performance. The
project strategies most commonly adopted reflect this characteristic.
The strategy should also reflect the client’s technical ability and resources and
the amount of control over the process which he/she wishes to exert directly
or through the project manager (if appointed).
FIGURE 1
THE RELATIONSHIP BE TWEEN P RIMARY CRITERIA
Time aspects (speed to completion,

programme certainty)
As the emphasis on one

or two of these criteria increases
the other(s) will be affected
Cost Issues Performance Issues

(level of price, certainty of price) (quality, functionality, design)
PART 3, SECTION 1
G 3.1.2.9 RISK AND RESPONSIBILITY
(a) There is a finite amount of risk and responsibility associated with any
project and this should be an influencing factor on the selection of the
procurement strategy. The uncertainties of time, cost and performance are the
three main risks that are present in every project. Risks are usually considered
as uncertain future events, which may have significant effects, e.g. extra cost,
delay or damage to the performance of the finished project. Having set the
priorities for the project’s objectives, the client should consider the effect of
those objectives not being met and the resulting risks to which he/she could be
exposed.
Although the project is subject to a wide variety of risks, it is important to note

that only a few have a major effect. This is a powerful argument for
concentrating attention during cost estimating and management
decision-making on the few largest sources of uncertainty and risk and for
developing strategies for managing out risk and for setting up contracts in
such a way that the allocation of the major risks is clear.
(b) The risks which are considered to have potentially the greatest impact on
construction projects include:
• a project which will not function in accordance with the client’s
needs;
• a project which is of inadequate quality;
• a project which is completed later than required deadlines; and
• a project which costs more than the client’s budget or ability to pay.
In each case, the strategy can be to transfer the whole risk to another through
the medium of contract. This is possible but will attract high price premiums
or will expose the transferee to risks which they may not be able to ‘own’ or
insure and therefore the party transferring the risk will remain exposed.
Risk may alternatively be retained in part by the client, or reduced by adequate

pre-design or pre-price investigation.
(c) As has been already suggested, an adequate brief will reduce risk and
ensure functionality and quality standards. Equally, adequacy of programme
will reduce the risk of overrun and adequacy of cost estimates should ensure a
resultant cost which is within budget. Both construction time and construction
cost estimates depend upon sufficient design development, which itself will
depend upon an adequate brief and parallel investigation of ground conditions
and the particular requirements of statutory controls. In ensuring that the brief
is adequate, and that design is appropriately developed, the client can
successfully reduce some risk in a way that will not result in high price
premiums.
(d) Ideally, risk and responsibility should go together, so that the party
responsible for performing a task is accountable. Each risk should be allocated
PART 3, SECTION 1
to the party with the greatest ability to own the risk and to manage its effects.
If, for example, the client considers it critical that the price for the building is
fixed before construction commences, the risk of meeting that objective could
be passed to contractors, making them contractually responsible for
completion to an agreed design and specification for a lump sum price.
G 3.1.2.10 PASSING ON RISK
(a) Responsibility for risk and the ability to control a project interact. The
more the client chooses to allocate risk to other parties, the less control the
client has over the way in which the project is executed. In the example above,
if the contractor has to meet the agreed specification within the budget and
time, the client has little influence over the way in which these objectives are
met. In practice, risk allocation is determined by the chosen strategy and
allocated by means of contracts between the client and those responsible for
managing, designing or constructing the project. The way in which risk and
responsibility are allocated by different contract strategies is indicated below
and shown in Appendix A.
(b) In all cases where risks are transferred in contractual terms, it is necessary
to ensure the ability of the transferee to own the risk. In the case of design
failure, for example, this is usually passed to the design team including the
architect and engineering consultants. Because of the nature of their
professions they should have insurances of sufficient capacity to meet the
maximum possible cost of correcting the design failure. The client should
ensure that such insurances are in place, adequate and paid for; where a project
manager or consultant adviser has been appointed, this is a role that may be
performed by him/her.
(c) Some design work may be carried out by subcontractors who may or may
not continue to pay design liability insurance premiums and usually will have
limited liability status. Liability for their design work is commonly passed by
warranties but these are less secure.
Equally, where time risks are passed to contractors their attempts to transfer
them to small subcontractors may fail where the capacity to own or accept the
risk is limited.
In situations such as these it may be possible to pass risks contractually but the
lack of security associated with the transfer may result in the risk being borne
by the party attempting to pass it. It is difficult to allocate blame in team
situations. The client should be aware of this weakness in terms of risk
allocation.
(d) While the transfer of risk provides an incentive for the receiving party to
minimise its impact, the client should avoid transferring risks when the
receiving party has no control over them or no capacity to absorb them.
Generally, the more the risk of cost and time slippage is allocated to other
PART 3, SECTION 1
parties, the higher the tendered cost. In pricing the project, tenderers may
over-estimate the size of the risk or add a high safety margin to an accurate
estimate and thereby increase the project’s costs unnecessarily.
G 3.1.2.11 RISK AND PROCUREMENT STRATEGY
(a) Risks are inherent in the data used by the client in the preparation of the
brief, they are inherent in the characteristics of the project, and they are
inherent in the procurement strategy which is selected.
The identification of primary risks and an analysis of the client’s ability to be

a risk taker, or need to be risk averse, should affect procurement strategy.
With this information in mind steps should be taken:
• to inform the client of the extent of the risks involved; and

• to prepare a strategy for managing risk.
Since the latter will have a cost the client should also be advised of the
expense of managing risk.
(b) Appendix A refers to the characteristics of each procurement strategy and

indicates the levels of risk associated with time, cost and performance in each
case on the assumption that the procurement strategy is properly utilised and
in no way abused. (Thus, for example, in relation to the traditional system it
has been assumed that design completion is achieved before measurement and
documentation is carried out.)
These primary risks are summarised (by simple examples in Figure 2) by

procurement method in the categories time, cost and performance.
Where design is by the client’s consultant, design risk is placed by the

appointment agreement. Where design is by the contractor, design risk is
placed by the building contract agreement.
Where lump sum price is fixed by the contract the responsibility rests with the
contractor. Where a contract sets standards of specification, meeting these
standards is the contractor’s responsibility (risk).
Thus by contractual agreement primary risks can be distributed between

client, designer and constructor. It is impossible to dispose of all risk inherent
in construction projects and some will inevitably remain with the client. For
example, the risks listed here tend to be client risks and although they may be
of varying likelihood they should be understood.
PART 3, SECTION 1
FIGURE 2
S U M M A R I S I N G T H E P R I M A RY R I S K S , B Y E X A M P L E
Time Cost Performance
Traditional Fixed but extension Fixed but subject to Designed by client’s

of time possible due change where consultant. Quality
to client and design changes are set by contract
designer initiated made, where inflation documents
changes occurs or where
contractor is alleged
to have grounds for
contractual claims
Design and Build As traditional As traditional Design by contractor

Contractor but with varying
levels of input by
client – quality set in
same way
Separate Time not fixed by Cost not fixed before As traditional

management contract commencement
function
(c) This short list segregates residual risk by procurement method. The extent
to which risk remains with the client can be established by a detailed analysis
of contractual agreements.
• Traditional
– building suitability
– risk of contractor insolvency
– risk of delay by consultant or the causes allowed by contract
• Design and Build
– building suitability
– design functionality and usability
– design insurance if contractor moves away from this type of business,
goes out of business or fails to pay premium
• Management Contracting/Construction Management
– as traditional procurement plus:
risk of cost overrun
risk of time overrun
G 3.1.2.12 SUMMARY (RISK)
Risk can be reduced, retained, transferred or distributed. To transfer risk

successfully the risk taker should have the capacity to take the full extent of the
risk or the risk placer will have failed. Where there are so many relatively small
firms, as in the UK construction industry, this can be problematic because many
contracts place risks with risk takers without sufficient capacity. They may be
limited liability companies or may be unable or unwilling to insure.
PART 3, SECTION 1
Thus, for example, attempting to enforce large scale liquidated damages for
late completion on a small-sized domestic subcontractor may fail for lack of
financial capacity within the small company.
Procurement strategy should therefore reflect the ability to place risk, and
where possible risk should be managed out.
G 3.1.2.13 PROCUREMENT STRATEGY AND THE PROJECT CYCLE
The development of procurement strategy follows the stages in the life of a

project. Initially, a preliminary strategy is determined. It is based on a broad
definition of objectives and is an essential step in establishing the way forward
for the project. It encourages the client to consider strategy early. The
preliminary procurement strategy is usually developed with help from the
client’s adviser and possibly other consultants.
Procurement strategy development has three components:
• analysis – assessing and setting the priorities of the project objectives and
requirements;
• choice – considering possible options, evaluating them and selecting the
most appropriate; and
• implementation – putting the chosen strategy into effect.
During strategy preparation, it may be necessary to seek specialist advice from

other consultants, for example, in relation to expected costs for the project.
The adviser should advise the client on this. Specialist advice should be
sought when developing the strategy for novel or especially difficult projects.
Until construction contracts are let, the client, with help from his adviser, must
systematically ensure that the strategy is on course to meet the project’s
established objectives. This is important because objectives sometimes
change.
G 3.1.2.14 IMPORTANT CONSIDERATIONS
The factors listed below should be considered in analysing project objectives,

requirements and their relative priorities (each is then considered in detail)
and may have an effect on the choice of procurement strategy:
• factors outside the control of the project team;

• client resources;
• project characteristics;
• ability to make changes;
• risk management;
• cost issues;
• timing; and
• quality and performance.
PART 3, SECTION 1
Inevitably, some of these requirements will be in conflict and priorities need

to be decided. The choice of strategy should ensure that control is maintained
over those factors which are of most importance to the client. The way in
which this choice can be made is covered below and in 3.1.4.
(a) Factors outside the control of the project team
Consideration should be given to economic, technological, social, political and

legal factors which influence the client and the project team or are likely to do
so during the lifetime of the project. These may include forecast and actual:
• interest rates;
• inflation;
• changes in output of construction industry affecting tender price levels and
the availability of skilled labour; and
• legislation, particularly legislation affecting the design and construction of
projects. In many cases the client will have responsibility for legal
compliance, particularly in relation to health and safety matters and should
seek the advice of his/her advisers (including the design team) on such
issues as a matter of importance.
(b) Client resources
The client’s knowledge and experience of the company’s organisation and the
environment in which it operates are vital in assessing the appropriate
procurement strategy. Project objectives are influenced by the nature and
culture of the company, external influences and the expectations of
individuals affected by the project. The extent to which the client is prepared
to take a full and active role is a major consideration.
(c) Project characteristics
The size, complexity and location of the project should be carefully

considered and particular attention given to projects with novel elements. For
example, if the building is especially large or complex there may be a bigger
risk of cost or time overrun. Novel projects present special risks. The novelty
potential factor means that estimates of time, cost and performance are all
subject to greater error with an increased probability of one or more of the
project’s objectives failing.
(d) Ability to make changes
It is preferable to identify the total needs of the project during the early stages
but this is not always possible. Rapidly changing technology often means late
changes. Changes in the scope of the project very often result in increased
costs, especially if they arise during construction. Changes introduced after the
design is well advanced or construction has commenced often have a
disproportionate effect on the project, in terms of cost, delay and disruption,
compared with the change itself. The design process goes through a progressive
PART 3, SECTION 1
series of ‘freezes’ as it develops but the client should set a final design freeze
date after which no significant changes to requirements or design are allowed.
Some procurement strategies such as construction management are better than

others at handling the introduction of changes later in the project without
having to pay some form of specific premium.
(e) Cost issues
Price certainty – influences the project timing and the procurement strategy
which should be used. Generally, design should be complete if price certainty
is required before construction commences.
Cost of changes – if cost certainty is to be maintained during the course of

construction changes should be avoided. Changes often have cost and time
implications on the project well in excess of the change itself. It is therefore
important for the client to fix a date after which no significant changes should
be introduced.
(f) Timing
The programme of the project is influenced by many of the above factors. A

particularly large and/or complex project is likely to require more time for
design, specification and construction than would be required for a simple
small building.
It is of vital importance to allow for adequate design time in terms of the total
project. If design is required to be complete before construction commences
(where perhaps cost certainty is required) this is particularly the case.
In the process of the appointment of the design team assurances should be

obtained about resource levels and the ability to meet key dates or
programmes. It is not usual to impose contractual dates upon designers,
although their progress is probably the key to the overall completion date.
Decisions to progress with a project may be influenced by the gaining of

planning approval, by the successful operation of compulsory purchase order,
by land purchase or by some other non-specific but critical factor (such as
obtaining funding approval). Depending on whether these factors occur earlier
or later, they may be an influence upon the planned or desired time available
for design.
Procurement strategies such as management contracting, construction

management, and design and build provide an overlap between the design and
construction stages, so construction can start earlier than sequential strategies
and offer the potential for earlier completion.
It may be necessary to review planned procurement strategy in the light of

design progress at the point where restraints to constructions are removed,
bearing in mind the stage of design and the consequence in terms of risk.
PART 3, SECTION 1
F IGURE 3
CON STRUCT ION T IME S
The following times are based upon historical data and are only a guide. Projects of
relatively simple design may be constructed more quickly and more complex
designs may take longer.
New purpose built Retail facilities New speculative Retail facilities

cost (£millions) weeks cost (£millions) weeks
30 90 30 100
25 80 25 95
20 75 20 90
15 70 15 85
10 65 10 80
5 55 5 70
New purpose built Office facilities New speculative Office facilities

cost (£millions) weeks cost (£millions) weeks
30 120 30 135
25 110 25 130
20 100 20 120
15 90 15 110
10 85 10 100
5 70 5 85
(g) Construction times
Total construction time is a consequence of design. Insufficient time

allowance can result in apparent delay when in fact the targets were
unachievable. Design is a time-consuming process and often will take as long
as construction itself (sometimes longer). More complex structures will take
longer given the same cost or size, and may require more resources. Although
it is possible to work on site for extensive hours or to increase resources, it is
not always possible to achieve directly resulting productivity. The law of
diminishing returns will have an influence because of the limited space and
the nature of traditional construction methods (such as concreting and
bricklaying).
Indications of construction times are shown in Figure 3. These are only a

general guide and should not be relied on without careful review. The data on
which these are based was available only for commercial and industrial
projects. This data was used to confirm, enhance and update that published by
NEDO (1988), Faster Building for Commerce and the construction costs have
been updated by index to the year 2002. If possible (as in the case of
PART 3, SECTION 1
management contracting and construction management) those who will be

involved in the construction process should also be involved in the planning
process, as they are more likely to be aware of the logistical consequences of
particular designs. Other projects are likely, in most cases, to be more
complex and may therefore take longer.
(h) Design times
There is no reliable data available to indicate the time to be allowed for design.
As a general rule it will take between two thirds of construction time to one
and a half times construction time to design a building. The impact that this
will have on the overall programme will depend upon the choice of
procurement strategy and whether any overlap of design and construction is
allowed.
(i) Performance
The required performance of the project measured both in terms of its

response to the needs of the client and the quality of individual elements must
be clearly identified. If performance is over-specified, a premium will be paid
for exceeding actual requirements, thereby affecting the cost objective.
Over-specification will also lead to time overruns. Conversely, failure to
recognise the true performance objective leads to an unsatisfactory product.
If quality and performance are particularly important the client will probably
want to keep direct control over the development of the design. This can be
achieved by employing the design team directly.
G 3.1.2.15 PROCUREMENT OPTIONS
When all the factors influencing the project have been identified and the
project requirements analysed, the final strategy for the project must be
developed.
It is likely that there will be more than one way to achieve the requirements of
the project. It is important to consider carefully each option, as each will
address the various influencing factors to a different extent. In developing
strategies, a potential danger is that only the most obvious course of action
may be considered – this is not necessarily the best in the longer term.
G 3.1.2.16 Common strategies differ from each other in relation to:
• the financial risk that the client is exposed to;

• the degree of control that the client has over the design and construction
processes;
• the information required at the time construction contracts are let;
• the extent of involvement of the contractor in the design stage when the
contractor may be able to influence the ‘buildability’ of the project;
PART 3, SECTION 1
• the organisational arrangements which distribute responsibility and

accountability; and
• the sequential nature of the process.
G 3.1.2.17 In Appendix A each of the most commonly used procurement strategies is

described and is also illustrated by diagram. Each diagram has a consistent
format to indicate:
• the contractual relationships (showing administrative responsibility in

most cases);
• the advantages and disadvantages;
• the sequential nature of the process; and
• the dominant risks categorised broadly (as high, medium or low).
3.1.3 Selection of Most Appropriate Procurement Strategy

G 3.1.3.1 The ultimate responsibility for selection of appropriate procurement strategy
will rest with the client, based upon advice from the project team and principal
adviser.
The selected strategy should be:
• suitable in the light of the client’s needs, the project type and the client’s
exposure to risk; and
• feasible in the light of the client’s expertise, internal management
structure, resource and funding facility.
Professional judgement is a reliable way of selecting an appropriate

procurement strategy although some procurement strategies can be
inappropriately adopted because of individual preference.
A procurement selection checklist is provided here to assist the client and

advisers in the identification of an appropriate strategy.
G 3.1.3.2 PROCUREMENT SELECTION CHECKLIST
This process has been designed to establish a range of information about client
needs and about the particular project being considered, and to develop this
information in parallel with the characteristics of procurement strategies and
associated risk.
It is intended to inform judgement, not to replace judgement.
The relative importance of time, cost and performance (design) forms a key
criterion in the selection mechanism as does inherent risk and its
apportionment.
PART 3, SECTION 1
G 3.1.3.3 METHOD
Checklists 1, 2 and 3 should be carefully completed in consultation with the

client.
The resultant information should then be transferred to Checklist 4 which will

enable the information to be analysed and evaluated. The analysis can then be
compared with the characteristics of each procurement method, and the
associated risk so that an informed decision can finally be made.
CHECKLIST 1: TIME
The following should be considered:
1.1 Is completion needed by a specific date?

1.2 Is completion needed in the shortest possible time?
1.3 Is the client prepared to pay more for earlier completion?
2. Does the answer to question 1.1 suggest a faster than ‘normal’ total project
time in the judgement of the adviser?
3. How long is it in months from the date of completion of this protocol until
the desired ‘move in’ date?
4. Define the reason for the identified completion or ‘move in’ date:
4.1 end of lease
4.2 sale of premises
4.3 new business opportunities
4.4 unsuitability of present premises
4.5 company restructuring
4.6 other.
5.1 Is the need for completion by a specific date or within a specific time more
important than certainty of construction cost before work starts?
5.2 Is the need for completion by a specific date or within a specific time more
important than spending an extended time on design?
6. What is the approximate value, in sterling, to the client of the building or

facility in terms of contribution, rental or cost savings per month?
7. If the building is completed later than the specified or desired time will the
client:
7.1 stay in existing premises?
7.2 find temporary accommodation?
7.3 close down?
7.4 don’t know.
PART 3, SECTION 1
Upon the completion of this part, the following information should have been
established and should be transferred to Checklist 4:
1(a) specified completion time;

1(b) reason for completion time;
1(c) whether required completion time is relatively fast;
1(d) whether time is seen as the predominant client need;
1(e) the potential financial implication of earlier or later completion; and
1(f) what action the client may take if the dates are not achieved.
CHECKLIST 2: DESIGN/PERFORMANCE
1. Has the client clear ideas about building functionality and its desired
design?
2. Does the site (if selected) pose any particular problems for the designer in
respect of:
2.1 shape or topography?
2.2 access?
2.3 storage space?
3. Does the building type suggest relative design complexity?
4. Does the building type suggest emphasis upon functionality?
5. Does the building type suggest highly complex mechanical, electrical or

engineering installations?
6. Is it anticipated that extensive changes to design may be required during the

construction phase?
7. Does the client wish to particularly emphasise low running costs?
8. Does the client wish to particularly emphasise low maintenance costs?
9. Does the client wish to particularly emphasise product quality at a higher

potential cost?
Upon the completion of this part of the process, the following information
should have been established and should be transferred to Checklist 4:
2(a) whether the client has clear ideas about his/her needs;
2(b) whether the site poses complex design problems;
2(c) whether the building design is complex;
2(d) whether functionality is particularly important; and
2(e) whether the client has a long-term view about the cost of the building.
PART 3, SECTION 1
CHECKLIST 3: COST
1. What is the client’s maximum budget?
2. Can the budget be allocated as below?

2.1 land purchase and fees
2.2 construction, including fees
2.3 fittings and plant
2.4 contingencies
2.5 other (define).
3. Will the client need to have a fixed contract price for the construction
element of his budget or will a reasonably accurate budget be adequate?
Upon the completion of this part of the process, the following information
should have been established and should be transferred to Checklist 4:
3(a) total maximum spending capacity;

3(b) total construction spending capacity; and
3(c) need for pre-construction cost certainty.
CHECKLIST 4: ANALYSIS
• As an overview, is the project feasible in terms of time and viable in terms

of cost on the basis of the information in 1a, 2a, 2b, 2c, 3a, 3b, 3c?
If yes, proceed.
If no, advise client and seek other solutions.
• Is the reason given as to why it should be completed by the specified date
vital to the project’s success in terms of client needs, or can slippage be
coped with if cost is considered?
See 1b, 1d, 2a, 2b, 2c, 3c.
If vital, the project has to be carefully planned from a reasonably
advanced design. Design and construction should be planned. Where
design is completed, the completion date can be contractually fixed.
Where design cannot be completed, fast-track systems can achieve
relative speed by overlapping design and construction.
If relative speed is required can the client accept less cost certainty?
See 1c, 3c.
If yes, this may mean that fast-track approaches may be suitable.
If no, a method of achieving cost certainty relatively quickly may be
through negotiation.
• Does the information provided indicate that the project is complex in
terms of design or in terms of site-related problems?
See 2b, 2c, 2d.
If so, adequate time should be allowed for a design process to occur
which will provide the client with an acceptable design solution.
PART 3, SECTION 1
Some fast-track solutions will enable the design process to be extended

into the construction phase where pre-construction time is not
available. This will reduce cost certainty.
• Is the need to ensure that the project can be built within a budget a priority?
See 3c.
In this event, design should be complete before construction is
commenced or a sufficiently large contingency should be allowed.
The latter will not give cost certainty and may result in a less balanced
project in financial terms.
G 3.1.3.4 CHECKLIST SUMMARY
Having established whether the project is both feasible and viable, the
importance of time, cost and design has now been reviewed.
There is always an interrelationship between these three primary criteria and

procurement systems selected should reflect this.
Projects can probably be broadly categorised into those which will be

design-led and those which will be production-led. Design-led projects
usually reflect the characteristics of procurement systems where the client
appoints his/her own design team; whereas production-led projects enable the
constructor to take on some or all of the design function.
Design-led projects have the greater capacity for cost and time overrun,
whereas the potential capacity for design shortcomings may rest with
production-led systems.
System selection should consider whether the project is design or

production-led but should also consider the client’s need to manage and/or
distribute risk.
3.1.4 Implementation
G 3.1.4.1 Having selected a procurement strategy for a project, the strategy should be
successfully implemented. The client should implement the strategy but may
do this with the advice of consultants or a project manager. In many cases they
will carry out most or all of the necessary functions in achieving
implementation and the client’s role will be to formally approve their actions.
Notwithstanding the role of consultants or a project manager, the client should

ensure that he/she puts in place the necessary resources, organisational
structure, contractual arrangements, systems and controls necessary for a
successful project outcome.
PART 3, SECTION 1
G 3.1.4.2 IMPLEMENTATION POLICY
Implementation of procurement strategy is a key role for the team and

warrants sufficient thought and review. The policy developed to ensure
appropriate implementation should be clearly communicated to all the key
players. By ensuring that implementation policy is maintained, the client has
a greater chance of obtaining the right project at the right time at the right cost
with the minimum of conflict.
G 3.1.4.3 FINANCIAL RESOURCES
(a) In this section, the funding function has been assumed to be a matter for the
client. It is a vital function and by the time the procurement strategy is set,
sufficient funding should be available at appropriate times in the
pre-construction and construction process.
(b) Funding requirements are usually a consequence of contractual

agreements, whether they be agreements to purchase land, to design or to
construct. It is possible to take account of each contractual agreement and to
plan expenditure in the form of a cash flow. Useful advice in this context can
be provided by the project manager or the project cost consultant. Both of
these team members should be in place at an appropriate time to ensure that
funding arrangements are appropriate.
G 3.1.4.4 HUMAN RESOURCES
In terms of client organisation, the client should be prepared to allocate

appropriate in-house personnel to the project or should be prepared to appoint
consultants for this purpose. In most cases, consultants are appointed to design
and cost a project, but a client will have his/her own staff member who will
provide liaison and a focus for decisions. Where this is not possible the
appointment of a project manager is desirable. Only one individual should
have the authority to instruct those carrying out the design or construction on
behalf of the client.
G 3.1.4.5 PHYSICAL RESOURCES
(a) Where physical resources such as land, plant and machinery have to be
provided by the client, it is self-evident that the client should ensure their
availability in a suitable form at the right time. Where alternative
accommodation is required, or where specific arrangements for decanting are
necessary, this is a matter for the client and/or the client’s organisation
although these are matters which can be handled by a project manager.
(b) Design and construction resources must also be appropriately selected and
in place at the right time.
(c) The criteria for the selection of the design team are outlined below and are
based upon the factors of capability, competence, staff and cost, with value for
money, rather than cost being the major influence in selection.
PART 3, SECTION 1
(d) The criteria for the selection of contractors are referred to below and are
broadly the same, but this tends to be a much more complex process and the
criteria are dependent upon the procurement strategy selected.
The basis for selection of constructors can be price competition, based upon a
fixed design and specification or can, in the case of design and build options,
be based upon competition for design solutions too. Selection can also be by
negotiation with one or two constructors, or can be based upon a two-stage
process. Suitable documentation for the selection process must be prepared
and the client should seek the advice of consultants or the project manager
who may also be required to manage the process.
(e) A number of Codes of Procedure for the selection process are available and
are referred to in sections 3.1.4.8 and 3.1.4.9.
G 3.1.4.6 ORGANISATIONAL STRUCTURE
(a) The client has a dual management role, part of which is to manage the
client input; to co-ordinate functional and administrative needs; to resolve
conflicts; as well as to act as the formal point of contact for the project.
(b) This will require the creation of an organisational structure for the life of
the project to enable communication to occur and to facilitate effective
decision-making.
(c) The organisational structure created may be headed by a key member of

the client organisation or may be headed by an imported project manager.
Whichever choice is made, the designated member must have sole authority
to communicate decisions to the project design and/or construction team.
Where more than one individual is empowered to instruct, or to require
changes, extreme confusion can take place.
(d) Building users, specialists, facilities managers, maintenance staff, finance

and accounts personnel, legal advisers and security personnel can all have
input to the project through the created organisational structure by invitation,
or right, and, as appropriate, can meet with designers or constructors to ensure
effective communication; but decisions are reserved to the in-house executive
or the project manager.
G 3.1.4.7 APPOINTMENT OF A PROJECT MANAGER (WHERE APPROPRIATE)
(a) Due to the complexity of modern building and the potentially large number
of parties involved in the process the client may wish to appoint a single
person to draw the process together and manage it to ensure that the overall
performance, time and cost requirements are achieved. The project manager
may be a member of the client organisation who is given sole, or predominant,
responsibility for the project. Project management practices also exist to
enable appointments to be made on a consultancy basis. In this case, selection
PART 3, SECTION 1
should be based upon resources, reputation and price, and duties should be
clearly identified.
(b) It should be emphasised that the role of the project manager should be to
act as part of the client organisation.
(c) The client’s role upon the appointment of a project manager should
include:
• explaining the project objectives and their priorities, defining the
project and outlining parameters associated with time, cost,
performance and risk;
• defining the criteria for control and management of the project;
• managing the project manager’s performance of delegated
responsibilities;
• monitoring the implementation by the project manager of control and
management systems;
• ensuring that the project manager receives decisions on time;
• assisting the project manager in the resolution of problems;
• receiving and reviewing detailed reports on the project from the project
manager;
• establishing with the project manager a common approach to major
issues which arise; and
• maintaining with the project manager at all times an overview of the
project status in relation to the established objectives.
(d) The client’s relationship with a project manager will be crucial to the
success of the project and will require careful development and nurturing
within the following guidelines:
• the client, though taking the project manager’s advice should lead, not
follow;
• no matter how much responsibility is delegated to the project manager,
the client will retain ultimate authority and therefore must have
adequate knowledge and information about the project to be able to
exercise the authority properly;
• the client should agree with the project manager the precise extent of
any delegated authority together with those decisions reserved for the
client;
• where a project manager has been appointed the client should not
formally communicate directly with consultants and contractors
employed on the project – such communications will always be routed
through the project manager, although the contracts will be direct with
the client;
• no matter what may be said in private, the client should publicly
support the project manager and avoid any actions which could
undermine that manager’s authority over the consultants and
contractors.
PART 3, SECTION 1
G 3.1.4.8 APPOINTMENT OF CONSULTANTS
(a) The process of selecting and appointing the design team and the cost
consultant is carried out by the client but he/she may seek the advice of his/her
adviser. The terms and conditions of these appointments are governed by the
procurement strategy adopted for the project. (The client is also required
under the Construction (Design and Management) Regulations 1994 to
appoint a competent planning supervisor to ensure that the design team have
met their responsibilities under these regulations and to advise the client and
the constructors how they can comply.)
(b) The following alternatives exist in selecting the design team:

• single appointment – either of a multi-discipline firm which can itself
provide the full range of architectural and engineering design services
required, or of a lead consultant, normally the architect on building
projects, who will subcontract design of other disciplines to
independent professional firms and be responsible for their work and its
co-ordination; or
• separate appointments – for each of the design disciplines required,
one firm being appointed design team leader with the responsibility for
co-ordinating the work carried out by the others.
The former has the benefit of administrative simplicity and of single source
responsibility for design. The latter offers the chance of selecting the best firm
in each discipline but makes communication more difficult. The final
selection will depend on the particular features of the project.
(c) The selection of the design team and the cost consultant (and other
consultants as appropriate) will require the client to make a balanced
judgement on the following factors:
• capability – the experience of the firm in projects of similar size and
function and the availability within the firm of sufficient uncommitted
resources for it to meet the demands of the project; the demands of the
project programme may be particularly important;
• competence – the performance of the firm on past projects, to be
ascertained by detailed, confidential references from past clients;
efficient performance by design consultants cannot be taken for
granted;
• staff – the personal capability and experience of the key staff whom the
firm proposes to employ on the project; and
• the cost – quoted by the firm, unless large differences exist between
offers from competing firms this should not be critical.
(d) Value for money, not lowest price, should be the aim in the selection of
design team members.
PART 3, SECTION 1
(e) Guidelines for the value assessment of competitive tenders in the

procurement of professional services are available1.
(f) Fees payable to professional consultants may be expressed in one of the

following ways:
• as a percentage of the construction cost of the project;
• as a lump sum;
• on a time charge basis; or
• a permutation of all three.
(g) Percentage fees based on the out-turn construction cost are not generally
recommended as they increase when cost overruns occur.
(h) Lump sum fees may be the most satisfactory form of remuneration
provided only that the scope, value and timescale of the project can be
established with reasonable accuracy before the appointments are made
and that the services to be provided by the consultants can be accurately
defined. Where lump sum fees are to be paid, the client will need to
establish systems for monitoring the consultants’ performance to ensure
that they provide the full, specified service and do not skimp their services
to save money.
(i) Where time charge fees are to be paid, the final amount of fees payable is
not fixed and there is a substantial risk that this amount may exceed initial
estimates.
G 3.1.4.9 APPOINTMENT OF CONSTRUCTORS
(a) The client is responsible under the Construction (Design and

Management) Regulations 1994 to be reasonably satisfied that the
constructors appointed are competent and have adequate resources.
(b) The timing of the need to appoint constructors (whether contractors or

trade contractors) will be dependent upon the procurement strategy which is
selected, but the client will have a formal role in this process. The client’s role
will include selecting those constructors with whom he will negotiate or who
will be invited to tender. In the case of the latter, it will be the client who
formally selects the constructor(s) to carry out the work and then contracts
with this company.
(c) Assistance with the selection, documentation for tender and advice in
relation to contract issues can be obtained by the client from professional
advisers and particularly the principal adviser. There are a number of codes of
procedure to assist in this process, of particular assistance is the Code of
Practice for the Selection of Main Contractors2 which has been approved by
the National Audit Office. In broad terms, the factors which affect the
1
Construction Industry Board, Selecting Consultants for the Team: balancing quality and price, Thomas Telford
Publishing, London, 1996.
2 Construction Industry Board, Code of Practice for the Selection of Main Contractors, Thomas Telford Publishing,
London, 1997.
PART 3, SECTION 1
selection of design and cost consultants shown above (capability, competence,

staffing and cost) will affect the choice of constructors, but the documents on
which selection is made (particularly for cost) can be extensive and very
complex.
(d) European Union legislation has an effect on the procurement of public

works and the supply of services in the public sector. Usually this relates to
projects over about ¤5 million and requires appropriate tender advertising and
selection. Clients from the public sector must be aware of the existence of and
the procedures demanded by such regulations.
(e) As with the selection of design and cost consultants, value for money,
rather than lowest price should be the aim in the selection of constructors.
Where clients regularly build, there may be a case for considering a special
arrangement with a construction firm as indicated in 3.1.1.15.
G 3.1.4.10 CONTRACTUAL ARRANGEMENTS
(a) Having selected an appropriate procurement strategy and methods of

consultant and constructor selection, this strategy should be implemented by a
range of contractual arrangements.
Many of these arrangements will be based upon standard forms of agreement

in common use in the construction industry. The distribution of major project
risks results from the wording of the contract selected. Most clients will need
specialist advice on contract selection. This is outside the remit of this
handbook.
G 3.1.4.11 SYSTEMS AND CONTROLS
(a) Once resources, organisational and contractual arrangements are in place,

the client should see that systems are put in place to ensure that the
procurement process can be implemented in fact.
(b) These systems should include:

• financial systems to ensure that payments are made in accordance with
contract agreements;
• decision systems to ensure that decisions made are communicated at
the appropriate time and with appropriate authority;
• design change systems to implement and monitor change as it becomes
necessary; and
• cost and time monitoring systems to inform the client of the current
position at any point in time.
This may mean delegating elements of the process to the project manager (if
appointed) or ensuring that existing company systems are specifically
adapted.
PART 3, SECTION 1
(c) Controls are also important to ensure that cost is controlled within budget,
pace is controlled within programme, quality is controlled within standards
set, and systems are properly employed.
(d) Cost control can be achieved by ensuring appropriate pre-construction cost

planning and an adequate system of regular cost reporting. These services can
be provided by the cost consultant.
(e) Pace can be monitored against a programme or time plan and can be
controlled by the imposition of contract completion dates. Programming can
be provided by a project manager or developed with the advice of the principal
adviser.
(f) Quality can be controlled through the provision of a sound contractual

specification. It may be appropriate to appoint a clerk of works to inspect the
works during progress and to ensure that work is satisfactory and matches the
specification.
(g) Controlling the client systems to ensure that they are appropriately applied
and not abused is a matter for the client’s management team – perhaps this is
the key management input from the client.
G 3.1.4.12 DESIGN OVERVIEW
(a) While responsibility for achieving a successful design solution to the

client’s requirements lies chiefly with the designer, the responsibility rests
with the client both for ensuring that his/her needs are met and for the impact
of such development on the local environment. The blame for a poor building
is likely to be ascribed to the client as well as to the designer. Equally, a
well-designed building reflects credit on those who commissioned it as well as
on the designers who conceived it.
(b) Design is an important factor in ensuring good working conditions for staff
and convenience for members of the public who need to visit the building. A
well-designed building is a good investment. Good design can contribute to
economy and efficiency – by efficient layout and economical use of space, by
energy efficiency (in heating, insulation, mechanical services, etc.) by low
maintenance costs, and by ensuring flexibility to meet changing requirements.
(c) No one person has all the design skills for any but the very simplest project
and therefore the collaboration of many designers will be necessary. This is
particularly the case in specialist buildings or buildings which have
sophisticated mechanical and/or electrical installations.
(d) The formulation of an accurate design brief and the development of design
in strict accordance with that brief are key processes for the client (or the
project manager) to oversee. In practical terms, the client will require:
PART 3, SECTION 1
• close collaboration between users and the design team in the

development of the design;
• formal checking that the developed design meets, but does not exceed,
the requirements of the design brief; and
• formal presentation of developed designs to the users and formal
sign-off by the client.
(e) It will also prove valuable for the client to indicate clearly his/her
intentions in respect of the programme and for the design team to respond in
terms of their strategy for meeting this programme. Methods for updating
progress should also be sought by the client.
(f) As the majority of users, and indeed the client, are likely to find the reading
and interpretation of design drawings a difficult task, it is important to ensure
that the design team present their proposals in a form that can be readily
understood. (Computer aided design [CAD] may enable three dimensional
presentation.) The setting of the design and not just the design in isolation
should be taken into account. The client should feel able to say ‘no’ and ‘try
again’ and to expect alternatives within the fee.
G 3.1.4.13 COST CONTROL OVERVIEW

(It is recommended that this be read in conjunction with Part 1, Section 1.)
(a) It is essential that the client understands the difference between:

• estimating – giving an informed opinion at a particular time of what
the final cost of the project is likely to be; and
• cost control – managing the consequences of the design and
construction processes so as to achieve value for money and ensure that
the final cost does not exceed the budget.
Estimates cannot be expected to be proved accurate unless they are based

upon reliable data and cost control is exercised.
(b) The techniques used to produce estimates vary according to the type and
level of data available when they are prepared. The general level of estimating
accuracy improves as the design of a project develops. Notwithstanding this
progressive improvement in accuracy, provided that cost control is being
exercised, the general level of accuracy of early estimates can be stated with
sufficient precision for them to be valid parameters for decision making and
for the management of the project.
(c) For estimates to be effective, the client should require that all estimates are
supported by:
• a risk analysis – an assessment of the potential risks, their probability
and the associated time and cost consequences if they should occur; and
• a sensitivity analysis – a statement of the comparative effects on the
total estimate of changes to principal data and assumptions on which
the estimate is based.
PART 3, SECTION 1
(d) The amount included in estimates to cover the uncertain cost of risks based
on the analyses described above is known as the contingency. It is important
that contingencies are sufficient to cover risks and are not eroded to facilitate
any lack of cost control.
(e) A primary concern may be the cost of running and maintaining the
building. The term ‘cost-in-use’ is used to describe how these costs can be
estimated, enabling the client to take these matters into account when
considering total project costs and building design. In some cases higher
initial costs will result in lower running or maintenance costs during the life of
the building.
(f) The earlier cost control procedures are instituted, the more effective they
will be. By way of simplistic illustration:
• cost varies with (but not in direct proportion to) size: once the size of a
building is fixed, so is the general level of cost;
• the selection of the most economical design for basic elements such as
foundations, structural frame, external cladding and roofing, is of far
greater cost significance than the types of finishings; and
• the overall cost of mechanical and electrical systems and the
effectiveness of the cost control procedures which can be applied to
them is largely governed by early decisions as to the type of system
selected.
(g) The methods used for cost control differ radically between the
pre-construction and construction stages of a project. Cost control during the
former depends partly on formulating an appropriate procurement strategy but
more on controlling the design process within that strategy; during the latter it
is a function of effective management and avoidance of change after
commitment.
(h) Pre-construction cost control, in simple terms, comprises:

• preparing a cost plan – an allocation of the control budget into cost
centres which match readily identifiable elements of expenditure, with
allowances for contingencies, reserves for changes in market prices and
the like; and
• cost checking each element as it is designed against its allowance in the
cost plan.
If the cost of an element as designed exceeds its allowance in the cost plan, the
excess can only be corrected by:
• redesigning the element to reduce its cost; or
• transferring money into that element from contingencies or from
another element yet to be designed.
PART 3, SECTION 1
If neither is done, the control budget will be exceeded.
(i) Successful cost control during the construction stage depends on:
• ensuring that all design work is completed and fully co-ordinated
before any commitment to construct is made (this applies in a
progressive way when design and construction overlap);
• administering the contract efficiently and promptly in strict accordance
with its terms and conditions; and
• minimising changes to the design, for any reason, after construction has
started.
(j) Regular cost reports can be produced throughout the construction stage
from which potential overspending can be identified before it occurs with the
intent that corrective action should be possible. The client should, however,
recognise that such corrective action is not always beneficial, since:
• cost savings can be made only by reductions in standards or by
omissions of part of the work remaining to be finalised, that is largely
in the visible finishings and fittings, with the resultant possibility that
the requirements of the brief will not be met; and
• late cost savings are inefficient as any amount saved will be reduced or
may be negated by the costs of disruption inherent in making the
changes needed to generate the savings.
(k) All estimates and cost control procedures should take account of inflation,
i.e. the increase in construction cost from the date when the estimate is
prepared to the date when the work will be carried out. It is essential for
effective cost control that:
• allowances should be made for inflation in all estimates and that the
assumptions on which such allowances were calculated be stated;
• these allowances for inflation should be clearly identified within the
estimates and not be allowed to be used to correct other overspending;
• the assumptions on which inflation allowances are calculated be
reviewed as each new estimate is prepared and the allowances
corrected in accordance with such reviews; and
• a clear policy and method for drawing down inflation reserves be
established and observed.
(l) The client should distinguish between inflation and the effect on
construction prices of market conditions at the time of tender. In simple terms,
contractors adjust their tender prices by reducing or increasing their target
profit margins in accordance with their need to obtain new work. It is unwise
to base early estimates on an assumption of favourable market conditions at
the time of tender as the construction industry is subject to wide,
comparatively swift, changes in workload in accordance with economic
conditions.
(m) Things will go wrong on the project. The unexpected will happen. Such
unforeseen happenings are covered in the cost control system by the
PART 3, SECTION 1
contingency. The client should develop a policy for management of

contingency funds to ensure that, at all times in the project, the remaining
contingencies match the remaining risks. The client may also establish and
control a client reserve, not disclosed to the consultants or the contractors, to
cover late changes in user requirements and unforeseeable third party
events.
G 3.1.4.14 TIME CONTROL OVERVIEW
(a) The overall programme of activities which will constitute the project
should be developed at a very early stage in the procurement cycle. This
programme will form the time framework within which the designers and the
constructors should complete their activities, and within which other key
stages, such as land purchase, funding and planning permission should be
completed.
(b) The programme of activities should be feasible and realistic. Insufficient

design time will have an effect upon client risk as will insufficient time
allowed for construction.
(c) The client should be aware of those tasks which are vital to completion on
time and those tasks where some flexibility may be available. Time for the
approval processes should be included as specific activities in the time plan
for the project. These are invariably vital as the need to obtain approval is
likely to be a prerequisite to further work on the project proceeding.
(d) The process of time control is in many ways analogous to that of cost
control. Thus a time control system can embrace:
• time budget – the overall project duration as fixed either by specific
constraints or by the selected procurement strategy; the period which,
once fixed, becomes a key parameter for management of the project;
• time plan – the division of total time into inter-linked time allowances
for readily identifiable activities with definable start and finish points;
the overall project programme; and
• time checking – monitoring closely actual time spent on each activity
against the allowance in the time plan; reporting divergence as soon as
it is observed.
(e) If the time taken for an activity exceeds its time allowance there are
essentially only two forms of corrective action available:
• the re-sequencing of later activities, which may involve abandoning
low priority restraints and/or phased transitions from earlier activities
to later activities logically following them; or
• shortening the time allowance for future activities by increasing the
resources to be made available for them.
PART 3, SECTION 1
If neither is done, the overall time budget will be exceeded and the project will
finish late.
(f) The client should recognise that time control is as important during the
design stages of the project as the construction stage. Designers should work
to a series of deadlines at which different elements of the design should be
agreed (i.e. frozen) if costs and the overall programme are to be kept under
control.
(g) The client should consider developing (with the help of the project
manager if appointed) a time contingency (reserve), with strict procedures for
allocating the reserve to specific events. This concept is essential on projects
which are subject to external time constraints, for example, where a building
has to be available for occupation before the lease on another building expires.
(h) The client should take account at all times of fundamental relationships
between time, quality and cost:
• any extension of the overall timescale for a project always generates
additional costs to either constructor or client; every project contains
time-related costs whether these are openly stated or not. Who carries
such additional costs depends on the detailed contractual arrangements
between the parties; it is likely that some of them will be borne by the
client; and
• making up lost time by re-sequencing later activities may be achievable
but often only at the risk of compromising quality or cost control.
G 3.1.4.15 WHOLE-LIFE COSTS
(a) In addition to considering project cost purely in terms of initial capital

costs the client may wish to consider costs over the projected life of the
building. Such considerations may review higher initial costs against lower
running costs or longer life to replacement or maintenance. This may be of
particular impact where shorter-life inherent assets, such as mechanical or
electrical equipment, or where planned maintenance or energy consumption,
are being considered.
(b) The techniques associated with whole-life costing are often complex and
predictive. The project manager or project cost consultant will be able to
advise the client of the availability of their application in each case.
G 3.1.4.16 VALUE MANAGEMENT
(a) Value management is usually reserved for relatively complex projects

where value for money is important and concerned with defining what ‘value’
means to the client in meeting a particular need. In general, any project seeks
to satisfy the differing requirements of several parties. Value management
provides a structured framework for the examination and discussion of these
requirements to reach a consensus before the project brief is finalised. It is
PART 3, SECTION 1
used to ensure that the need for and scope of any construction is thoroughly
analysed before any further commitment to proceed is made. The aim is to
establish a clear statement of a project’s objectives matched to their relative
values.
(b) Value management is usually carried out at the concept and feasibility
stages of a project. The aim is to ensure that:
• a project is commissioned in response to a careful analysis of balance
of needs;
• a wide range of options and alternatives to meet that need is considered;
and
• the project objectives are made explicit and are commonly understood
by all parties.
(c) The client may wish to appoint a professional adviser experienced in these
techniques and who will provide support in writing the objectives and
subsequent brief.
G 3.1.4.17 VALUE ENGINEERING
(a) This occurs later in the development of the project and is concerned with
how value is achieved rather than what the relative values are as defined in the
project brief and objectives.
(b) Value engineering studies are pre-planned, formal reviews of the design
philosophy and the detailed solutions at one or more stages of the design
development. They are sometimes carried out by firms or individuals not
connected with or employed on the project and are short exercises intended to
review the detailed design solutions against the objectives and to establish
whether they can be achieved in a more cost effective manner.
G 3.1.4.18 QUALITY CONTROL OVERVIEW
(a) The final quality of the project is governed, progressively, by:

• the project brief – a clear statement of the standards of quality
required; great care is needed to ensure that this standard is
unambiguous, such phrases as ‘the highest quality attainable within the
control budget’ should be avoided;
• the original design – the adequacy of the components selected for the
building; the interface between related components and systems; the
integration of mechanical and electrical systems into the overall design;
the completeness of design before construction starts;
• specification – the conversion of the quality standard demanded by the
project brief into precise requirements for both the supply and the
installation of materials, components and systems; the setting out of
criteria against which the standard of the finished work will be judged,
e.g. by reference to standards, codes of practice or the like;
PART 3, SECTION 1
• quality control – setting up control mechanisms to apply to the

execution of the work on site; the detailed, on-going supervision by the
contractor; the programmes for testing; the procedures for rectifying
any defective work; and
• inspection – the independent inspection and verification of the
contractor’s work by the design team; procedures for witnessing tests,
for commissioning plant and systems, for pre-completion inspection for
defects lists and defect rectification and for final hand over.
(b) The client may choose to appoint a clerk of works whose function is to act
as an inspector of work done to ensure quality, but who should recognise that
inspection and verification is the last line of defence. The key to quality
control on site is to specify clearly, and to monitor closely, the quality control
activities carried out by the contractor while work is being done.
(c) Many construction companies and firms of consultants within the building
industry have adopted, or are in the process of adopting, formal quality
assurance systems for their own work or services in accordance with ISO 9000
or equivalent standard.
G 3.1.4.19 CHANGE CONTROL OVERVIEW
(a) Clients should aim to make no changes once a particular design feature has
been decided because these are one of the more significant causes of cost and
time overruns in construction projects. The avoidance of change should be a
prime objective of the project strategy. If changes are unavoidable, they
should be dealt with as described in the paragraphs below.
(b) Client changes (as distinct from design development) are changes which
are made either by:
• the design team, with the approval of the client, to a design feature
which, it has been decided, should be frozen, or ‘improved’, or altered
to overcome design errors and inconsistencies; or
• the client after the design brief has been agreed. The most significant of
these are changes to the scope of the works.
(c) Client changes can be relatively minor, such as adding a few extra power
points, or can have major cost implications, such as the addition of an extra
storey.
(d) The cost of client changes depends on when they are made:
• before the construction contract has been let, the cost can be contained
to that of the changed feature itself, and perhaps some relatively small
resource cost; and
• after the construction contract has been let, the cost will be
disproportionate to the value of the change, it can disrupt the
contractor’s work and invariably gives rise to a higher cost than if the
change had been included in the contract as let. Many minor changes
PART 3, SECTION 1
can have a cumulative and serious effect. Disruption claims caused by

a large number of small changes are common.
(e) Some client changes are unavoidable. Examples of such changes are:
• compliance with changes in legislation;
• requirements of the health and safety or fire prevention authorities;
• those required by unforeseen ground conditions; and
• previously unforeseen users’ requirements.
(f) The contingency in the project budget should be sufficient to take account
of the likelihood of such changes based on risk assessments.
(g) Changes proposed prior to construction may either be unavoidable or

optional. If they are unavoidable, the client, if satisfied that they are, should
authorise a transfer from the contingency in the budget to cover them. If they
are optional they should be approved if it can be demonstrated that they offer
good value for money (or a saving) and that there are sufficient funds
available to pay for them.
(h) Changes proposed after the construction contract has been let can have
major time and cost implications and should be avoided if at all possible. If
they are not essential they should be deferred until the project is complete and
then reviewed to see if they are necessary and economically justified.
(i) The need for changes should be minimised by:

• ensuring, with the assistance of an experienced project team and
designers, that the project brief is as comprehensive as possible and the
users have ‘signed it off’;
• taking into account any proposed new legislation;
• having early discussions with outside authorities so as to anticipate
their requirements;
• undertaking adequate site investigation or condition surveys1 if
existing buildings are to be renovated;
• ensuring that designs are fully developed and co-ordinated before
construction contracts are committed; and
• imposing discipline on users to finalise and sign off their requirements
in strict accordance with the project programme.
(j) When changes do occur, the client should call for:

• the reasons for the change;
• the source of the change;
• the full cost and time consequence of the change;
• proposals for avoiding or mitigating time overrun; and
• source of funding of any cost overrun, e.g. contingencies, client cost
reserves, compensating savings elsewhere.
1
Stock Condition Surveys, RICS Guidance Note, RICS Books, Coventry, 1997.
Appendix A: Procurement Options

A1 TRADITIONAL (SEQUENTIAL)
(a) Under a traditional procurement strategy, design should be completed

before tenders are invited and before the main construction contract is let.
As a result, and assuming no changes are introduced, construction costs can be
determined with reasonable certainty before construction starts and a
completion date can be fixed. In most cases the price is established on the
basis of tender documentation, often including a bill of quantities which
describes the extent of work to be done.
(b) The contractor assumes responsibility and financial risks for the building
works as described whilst the client takes the responsibility and risk for design
team performance. Therefore, if the contractor’s works are delayed by the
failure of the design team to meet their obligations, the contractor may claim
against the client for additional costs and/or time to complete the project. In
turn, the client could possibly seek to recover these costs from the design team
members responsible, if negligence can be proven.
(c) Clients are able to influence the development of the design to meet their
requirements because they have direct contractual relationships with the
design team. When construction begins, they usually have a single contractual
relationship with a main contractor and are therefore able to influence (but not
control) the construction process through a single point of contact.
(d) The strategy is unfortunately open to a level of abuse if any attempt is

made to let the work before the design is complete. Such action may result in
many post-contract changes which could delay the progress of the works and
increase the costs. Where a traditional strategy is chosen because of its
particular advantages, the temptation to let the work begin before the design is
complete should be strongly resisted.
(e) It is possible to have an accelerated traditional procurement strategy where

some design overlaps construction. This can be achieved by letting a separate,
advance works contract, for example, by allowing ground works (site clearance,
piling and foundations) to proceed to construction whilst the design for the rest
of the building is completed, and the construction tendered separately. This
reduces the total time to complete the project at the risk of losing certainty of
cost before construction starts. More importantly, a substantial risk is created in
that the contractor who builds the superstructure will take no responsibility for
the foundation works carried out by another contractor.
(f) Another alternative is to let the work by a two-stage process or by

negotiation thus reducing the pre-construction time involved and enabling the
contractor to have some (limited) involvement in the design and planning
stage.
Appendix A (01/03)
FIGURE A1
PROCUREMENT ARRANGE MENT – TRADITIONAL
CONTRACTUAL RELATIONSHIP
CLIENT
CONSULTANTS
(fee contracts)
MAIN CONTRACTOR ARCHITECT

(standard lump sum contract) (fee contract)
SUPPLIERS
(various contracts)
SUBCONTRACTORS
(standard lump sum)
administrative responsibility on behalf of the client
ADVANTAGES DISADVANTAGES
competitive fairness slow to start on site (no parallel working)
satisfactory public accountability open to abuse where design incomplete
procedures well known (resulting in less certainty)
changes reasonably easily arranged contractor not involved in design or planning
and valued (no buildability)
adversarial potential
SEQUENCE
brief design competition construction
Risk
Low cost risk due to lump sum contract
Medium time risk due to fixed contract date (but contractor has right to claim extensions)
Low quality/design risk where the majority of the work is designed by insured consultants
working directly for the client
(g) The organisational structure of a traditional strategy is shown in Figure A1.

Standard forms of contract are available.
(h) The main advantages of a traditional contract strategy are:

• competitive fairness;
• design-led, facilitating high level of quality in design;
• reasonable price certainty at contract award based upon market forces;
• the strategy is satisfactory in terms of public accountability;
• the procedure is well known; and
• changes are reasonably easy to arrange and value.
Appendix A (01/03)
(i) The main disadvantages are:

• the strategy is open to abuse, resulting in less certainty;
• the overall programme may be longer than for other strategies as there
is no parallel working;
• no ‘buildability’ input by contractor; and
• the strategy often results in adversarial relationships developing.
A2 MEASUREMENT CONTRACTS
Measurement contracts are used when the work required cannot be accurately
measured for the tender bill of quantities. The contract sum is only established
with certainty on completion of construction, when re-measurement of the
quantities of work actually carried out takes place and is then valued on an
agreed basis. Measurement contracts are sometimes referred to as
re-measurement contracts and are based upon the prices tendered by the
contractor. The most effective use of a measurement contract is where the
work has been substantially designed but final detail has not been completed.
Here, a tender based on drawings and a bill of approximate quantities will be
satisfactory. Measurement contracts allow a client to shorten the overall
programme for design, tendering and construction but usually with the result
of some lack of price certainty at contract stage because the approximate
quantities reflect the lack of information on exactly what is to be built at
tender stage. The scope of the work, the approximate price and a programme
should be clear at contract stage. Measurement contracts provide more risk
than lump sum contracts for the client but probably with programme
advantages. They are typically used with civil engineering works where there
can be significant uncertainty about ground conditions.
(b) The organisational structure of a measurement contract strategy is shown

in Figure A2. Standard forms of contract are available for this strategy.
(c) The main advantages of the measurement contract strategy include:

• pre-construction time-saving potential;
• competitive prices;
• average public accountability;
• the procedure is well known;
• the strategy enables changes to be made easily; and
• there is some parallel working possible.
(d) The main disadvantages of the strategy are:

• the strategy offers poor certainty of price;
• there is no contractor involvement in the planning or design stage; and
• there is a potential for adversarial relationships to develop.
Appendix A (01/03)
FIGURE A2
PROCUREMENT ARRANGE MENT – ME ASUREME NT
CONTRACTUAL ARRANGEMENT
CLIENT
CONSULTANTS
(fee contracts)
MAIN CONTRACTOR ARCHITECT

(standard measurement contract)
SUPPLIERS
(various contracts)
SUBCONTRACTORS
(standard contracts)
administrative responsibility on behalf of the client
pre-construction time saving potential low certainty of price potential
competitive prices no contractor involvement in planning
average public accountability or design
procedures well known potentially adversarial
easy to arrange changes
some parallel working
SEQUENCE
brief design
competition construction
Risk
Variable cost risk as the final figure will be uncertain until the design and often construction is complete
Medium time risk as the extent of work will vary and contractors can claim extensions to the period for construction
Medium quality/design risk in the sense that design may not be complete at the outset
A3 CONSTRUCTION MANAGEMENT
(a) Under a construction management strategy, the client does not allocate risk
and responsibility to a single main contractor. Instead, the client employs the
design team and a construction manager is engaged as a fee-earning
professional to programme and co-ordinate the design and construction
activities and to improve the buildability of the design. Construction work is
carried out by trade contractors through direct contracts with the client for
distinct trade or work packages. The construction manager supervises the
construction management process and co-ordinates the design team on behalf
of the client. The construction manager, who has no contractual links with the
Appendix A (01/03)
design team or the trade contractors, provides professional construction

management expertise without assuming financial risk, and is liable only for
negligence by failing to perform the role with reasonable skill and care, unless
some greater liability is incorporated into the contract.
(b) On appointment, the construction manager will take over any preliminary
schedule and costing information already prepared and draw up a detailed
programme of pre-construction activities. Key dates are normally inserted at
which client decisions will be required. In adopting the construction
management system, the client will be closely involved in each stage of design
and construction. The client should have administrative or project
management staff with the time and ability to assess the recommendations of
the construction manager and take the necessary action. The client needs to
maintain a strong presence through a project management team that is
technically and commercially astute. This strategy is not, therefore, suitable
for the inexpert or inexperienced client.
(c) With this contract strategy, design and construction can overlap. As this
speeds up the project, construction management is known as a ‘fast track’
strategy. Although the time for completion can be reduced, price certainty is
not achieved until the design and construction have advanced to the extent that
all the construction work (trade) packages have been let. Also, design
development of later packages can affect construction work already completed.
The construction manager should therefore have a good track record in cost
forecasting and cost management. A package is made up of work for which one
of the trade contractors is responsible, e.g. foundations, concrete, electrical
installation or decorating. These packages are tendered individually, for a lump
sum price, usually on the basis of drawings and specification.
(d) The Latham Review1 recognised that construction management has been
used predominantly for large and/or complex projects, but suggested that
there is no intrinsic reason for this. Indeed, it is particularly recommended for
projects where there is a high degree of design innovation, where the client
wants ‘hands on’ involvement.
(e) The organisational structure of a construction management strategy is

shown in Figure A3.
(f) The main advantages of a construction management strategy are:

• the strategy offers time-saving potential for overall project time due to
the overlapping of procedures;
• buildability potential is inherent;
• the breakdown of traditional adversarial barriers;
• parallel working is an inherent feature;
• clarity of roles, risks, and relationships for all participants;
1
Latham, M., Sir, Constructing the Team: Joint Review of Procurement and Contractual Arrangements in the United
Kingdom Construction Industry: Final Report, HMSO, London, 1994.
Appendix A (01/03)
FIGURE A3
PROCUREMENT ARR ANGEMENT – CON STRUC TION MAN AGEM EN T
CLIENT
Fee contracts
CONSULTANTS
including
Lump sum contracts CONSTRUCTION MANAGER
WORK or TRADE
CONTRACTORS
time saving potential for overall project time no cost certainty at outset
trade packages let competitively needs informed client, able to take an
buildability potential active part
breaks down traditional adversarial barriers needs a good quality brief
parallel working inherent relies on a good quality team
clarity of roles, risks and relationships for needs time and information control
all participants
late changes easily accommodated
SEQUENCE
brief design
construction
Risk
Medium cost risk since the actual cost is unknown until the last package is let
Medium time risk since no one organisation carries the risk for timed completion
Low quality/design risk because there is a close link between client, designers and constructors
• changes in design can be accommodated later than some other

strategies, without paying a premium, provided the relevant trade
packages have not been let and earlier awarded packages are not too
adversely affected; and
• the client has direct contracts with trade contractors and pays them
directly. (There is some evidence that this results in lower prices
because of improved cash flow certainty.)
Appendix A (01/03)
(g) The disadvantages are:

• price certainty is not achieved until the last trade packages have been let;
• an informed, proactive client is required in order to operate such a
strategy;
• the client must provide a good quality brief;
• the strategy relies upon the client having a good quality team; and
• time and information control is required.
A4 MANAGEMENT CONTRACTING
(a) With this contract strategy, a management contractor is engaged by the

client to manage the building process and is paid a fee. The management
contractor is responsible for all the construction works and has direct
contractual links with all the works contractors. The management contractor
therefore bears the responsibility for the construction works without actually
carrying out any of that work. The management contractor may provide some
of the common services on site, such as office accommodation, tower cranes,
hoists and security, which are shared by the works contractors. The client
employs the design team and therefore bears the risk of the design team
delaying construction for reasons other than negligence.
(b) Management contracting is a ‘fast track’ strategy. All design work will not
be complete before the first works contractors start work although the design
necessary for those packages must be complete. As design is completed
subsequent packages of work are tendered and let. Cost certainty is thus not
achieved until all works contractors have been appointed. A high level of cost
management is therefore required.
(c) With the agreement of the client, the management contractor selects works
contractors by competitive tender to undertake sections of the construction
work. The client reimburses the cost of these work packages to the
management contractor who, in turn, pays the works contractors. The
management contractor co-ordinates the release of information from the
design team to the works contractors.
(d) Where the management construction team is not of the highest quality, or
where this fee is inadequate, the management contractor can be less than
proactive and the system can become a reactive ‘postbox’ approach. It is
therefore vital to select the management contractor carefully and to ensure that
the fee is appropriate bearing in mind market conditions. Similarly, resistance
to works contractors’ claims can be affected by the same circumstances.
(e) The organisational structure of a management contract is shown in

Figure A4.
(f) The main advantages of a management contracting strategy are:

• time-saving potential for overall project time;
• buildability potential;
Appendix A (01/03)
FIGURE A4
PROCUREMENT ARR ANGEMEN T – MA NAGEMENT C ON TRAC TING
CLIENT
MAIN CONTRACTOR
(standard fee contract)
CONSULTANTS
(fee contracts)
WORKS CONTRACTORS
(standard lump sum contracts)
time saving potential for overall project time need for good quality brief
buildability potential poor certainty of price
breaks down traditional adversarial barriers relies on a good quality team
parallel working inherent may become no more than a ‘postbox’
late changes easily accommodated system in certain circumstances
work packages let competitively removes resistance to works contractors’
claims
SEQUENCE
brief design
construction
Risk
Medium cost risk since the actual cost is unknown until the last package is let
Medium time risk since total construction time is a consequence of package selection
Low quality/design risk because there is a close link between client, designers and constructors
• breaks down traditional adversarial barriers;

• parallel working is inherent;
• changes can be accommodated provided packages affected have not
been let and there is little or no impact on those already let; and
• works packages are let competitively.
(g) The disadvantages are:

• need for a good quality brief;
• poor certainty of price is offered;
Appendix A (01/03)
• relies on a good quality team;

• it may become no more than a ‘postbox’ system in certain
circumstances; and
• removes resistance to works contractors’ claims.
A5 DESIGN AND MANAGE
(a) A design and manage strategy is similar to management contracting. Under a

design and manage contract, the contractor is paid a fee to manage and assume
responsibility, not only for the works contractors, but also for the design team.
(b) The main advantages of a design and manage strategy are:

• early completion is possible because of overlapping activities;
• the client deals with one firm only;
• it can be applied to a complex building; and
• the contractor assumes the risk and responsibility for the integration of
the design with construction.
(c) The disadvantages are:

• price certainty is not achieved until the last work package has been let;
• the client loses direct control over the design quality; and
• the client has no direct contractual relationship with the works
contractors or the design team and it is therefore difficult for the client
to recover costs if they fail to meet their obligations.
A6 DESIGN AND BUILD
(a) Under a design and build strategy, a single contractor assumes the risk and
responsibility for designing and building the project, in return for a fixed-price
lump sum.
(b) A variant, known as ‘develop and construct’, describes the strategy when
the client appoints designers to prepare the concept design before the
contractor assumes responsibility for completing the detailed design and
constructing the works. Often this strategy is associated with a process where
the contractor takes over the client’s designer (architect) contract in a form of
‘contract switch’ or novation. The designer is then employed for the rest of the
contract by the contractor who is usually responsible for all of the design
including that done prior to the switch.
(c) Design and build is a fast-track strategy. Construction can start before all
the detailed design is completed, but at the contractor’s risk.
(d) As explained in 3.1.1, by transferring risk to the contractor, the client loses
some control over the project. Any client requirement which is not directly
specified in the tender documents will constitute a change or variation to the
contract. Changes are usually more expensive to introduce after the contract
has been let, compared with other types of strategy.
Appendix A (01/03)
(e) It is very important, therefore, that the brief and performance/quality

specifications for important requirements in the project are fully and
unambiguously defined before entering into this type of contract. If
requirements are not specific, the client should provide contractors with a
performance specification at tender stage.
(f) The contractor develops the design from the specification submitting
detailed proposals to the client to establish that they are in accordance with the
requirements of the specification. Clients are, therefore, in a strong position to
ensure that their interpretation of the specification takes preference over the
contractor’s.
(g) Specification is a dangerous area for inexperienced clients:

over-specification can cut out useful specialist experience; under-specification
can be exploited.
(h) The client will often employ a design team to carry out some preliminary
design and prepare the project brief and other tender documents. Sometimes
the successful contractor will assume responsibility for this design team and
use them to produce the detailed design. If a design and build strategy is
identified as a possibility at an early stage, then the basis of the appointment
of the design team should reflect this possibility. If it does not, the client may
have to pay a termination fee to the design team. The client may wish to retain
the independent services of a cost consultant throughout the contract for early
cost advice involvement in the bidding process and cost reporting during
construction.
(i) Consideration may need to be given to the inclusion of a special clause in

design, or design and build, type contracts to ensure that the responsibility
for design performance is properly shared. Such a clause should identify
specific obligations that are absolute, that do not require the designer to be
an expert in the client’s business and, as a consequence, are reasonably
insurable.
(j) Current forms of contract for design and build vary their treatment of design
liability.
(k) To be effective, the client’s requirements will need to be stated clearly and
accurately and delivered on time.
(l) The imposition on contractors of fitness for purpose in design is usually

expressly excluded in standard forms of contract and it is a matter of
judgement for clients and their professional advisers, even though tenderers in
recessionary markets are likely to agree to undertake such risks.
(m) Non-availability of insurance to cover a higher than normal risk should

be weighed against the financial ability of contractors to meet design
default claims. It will normally be preferable and represent better value for
Appendix A (01/03)
money to impose a lesser, yet insurable, liability, which will be the subject
of an insurance payout in the event of a design fault, rather than an
insurance fitness for purpose requirement on a contractor of limited
financial assets.
Most importantly the client should ensure that adequate design liability
insurance is in place and maintained for the period of liability.
(n) Increasingly, collateral warranties are being used to place additional

responsibility on designers or subcontractors. In addition, the client may take
out insurance to cover post-construction liability, but this will be at a cost.
This is a matter for specialist advice.
(o) A range of options is available as illustrated in Figure A5. These range

from a package deal or turnkey where the client has little involvement in the
design development or building procurement process (effectively, a
complete hands off approach), to develop and construct where the client
appoints designers to develop the brief to a level of sophistication which will
leave the design and build contractor to develop detail or specialist design
elements.
FIGURE A5
P ROCUREMENT ARRANGEMENT – DESIGN AND BUILD
Some options available, showing proportional involvement in the design proces by client and
contractor between package deal, and develop and construct.
Turnkey
Package deal
Design and build

(competitive)
Design and build
(negotiated)
Develop and construct
The range of options enables the procurement arrangement to be used for a wide range of
client types, and for clients to be involved to a greater or lesser extent.
Client involvement
Contractor involvement
Appendix A (01/03)
(p) The project organisation structure for design and build is shown in
Figure A6. Contractors may use their own firms’ resources for undertaking
the design (in-house design and build), or may more usually subcontract
these to one or more professional firms whilst retaining control.
(q) The main advantages of a design and build strategy are:

• the client has only to deal with one firm;
• inherent buildability is achievable;
FIGU RE A6
PROC UREMENT ARRA NGEMEN T – D ESIGN A ND BU ILD
CLIENT
DESIGN AND BUILD CONTRACTOR

(standard lump sum contract)
SUPPLIERS
(various contracts)
SUBCONTRACTORS
(standard lump sum contracts)
single point contact and responsibility client needs to contract before design
inherent buildability is complete
early firm price possible no design overview unless consultants appointed
reduced total project time difficult for clients to prepare adequate brief
bids difficult to compare
design liability limited by standard contract
client driven changes can be expensive
SEQUENCE
brief competition design
construction
Risk
Low cost risk since most contracts will be let on a lump sum basis
Low time risk since the contractor will usually fix the time and be committed to it
High design/quality risk where the contractor controls design there are risks related to
both design suitability and to the capacity of the design-build firm to own such risks
Appendix A (01/03)
• price certainty can be obtained before construction starts provided that

the client’s requirements are adequately specified and changes are not
introduced; and
• reduced total project time due to early completion is possible because
of overlapping activities.
(r) The disadvantages are:

• the client is required to contract before the detailed designs are
completed;
• there is no design overview unless separate consultants are appointed
by the client for this purpose;
• difficulties can be experienced by clients in preparing an adequate
brief;
• bids are difficult to compare since each design, programme and cost
will vary;
• design liability is limited by the standard contract; and
• client changes to project scope can be expensive.
Appendix A (01/03)
PART 3, SECTION 2
PART THREE: CONSTRUCTION PLANNING AND

PROCUREMENT
SECTION 2: BUILDING SERVICES PROCUREMENT
3.2 Introduction
The guidance in this section is intended to improve the way in which the
procurement of building services is handled by all building professionals
active in this field.
It is aimed at clients, project managers, quantity surveyors and commercial

managers who are involved in the procurement of building services. It is
intended to provide guidance to clients on the production of clear appointment
criteria and the benefits that will manifest through the whole procurement
process. It is also intended for use by project managers advising on the
procurement strategy for both consultant services and construction work, and
for quantity surveyors/commercial managers involved in the selection of a
procurement route, production of tender documentation and the management
of the tender process.
The value of building services can represent anything up to 50 per cent of a

project’s total cost (see table 1) and a considerable proportion of the
construction risk. It is therefore important that guidance is given to all
professionals who provide advice in this field. It is hoped that this guide will
lead to a more consistent approach throughout the construction industry.
Table 1: Elemental Breakdown as a Percentage of Total Construction Cost
Group element Highly-serviced Air General

factories conditioned hospitals
offices
1. Substructure 19 8 6
2. Superstructure 62 44 33
3. Finishes 4 11 8
4. Fittings – 2 4
5. Services 15 35 49
Total 100 100 100
Data source: BCIS
This guide should be read in conjunction with ‘The Procurement Guide’ (see
Section 3.1). ‘The Procurement Guide’ provides both clients and their
advisers with a code of procedure to assist them in the selection of an
appropriate procurement strategy for a building project.
PART 3, SECTION 2
The fundamental difference between these sections is that this section

examines in greater detail the key aspects of building services procurement.
Consideration should be given to the guidance provided here, as it will have
an influence on the selection of the principal procurement strategy.
It is common for clients and their advisers to put enormous effort into
developing overall procurement solutions and the role of the principal
contractor within these solutions and yet, very often, they do not take an active
role in procurement further down the contractual chain. This may be historic
in that principal contractors would traditionally be held responsible for
procurement of sub-contractors. However, this approach cannot always
ensure that the client’s requirements in terms of cost, quality and time are
always as high on the principal contractor’s agenda as they are on the clients.
This often leads to inappropriate procurement methods manifesting in poor
quality, claim-ridden projects.
The report of the Construction Task Force, entitled ‘Rethinking

Construction’,1 calls for radical changes to the process through which the
construction industry delivers its projects. Supply-chain partnering is one such
change, and one that is increasingly more evident within industry today. With
this move towards partnering, and more specifically partnering through the
supply chain, it will be incumbent on both clients and their advisers to take a
more pro-active approach in the procurement of every element of a building,
and not just the principal contractor.
It is not the intention within the framework of this guide to cover every
procurement option, and therefore the guide is written with the most
commonly used procurement strategies in mind. This guide is intended to
provide a framework to supplement the reader’s own skill and judgement
when advising and implementing the procurement of building services, rather
than definitive guidance for any one of the many routes available.
HISTORICAL DEVELOPMENT
Cost and procurement advice for building services has historically been
provided by building services consulting engineers and the provision still
exists within the Association of Consulting Engineers (ACE) standard
conditions of engagement to provide such a service. However, with the
increased complexity and cost sensitivity of this element, the role is now more
commonly placed in the hands of a specialist quantity surveyor.
Without a technical background quantity surveyors have struggled to provide

such cost and procurement advice. This, together with the demand from
clients for a more pro-active approach to cost and value management at every
stage of a project, has led to an increase in the demand for specialists. It is now
generally accepted throughout the industry that building services cost and
procurement advice requires input and guidance from technically trained
specialist quantity surveyors.
With many more specialist quantity surveyors practising in this field,

guidance on good practice is essential if consistent standards are to be
PART 3, SECTION 2
maintained. Good practice in procurement necessitates a consistent and

logical approach, irrespective of the procurement route. It is hoped that by
following this guide clients and their advisers will be better placed to avoid the
many pitfalls that have historically been associated with building services, and
in doing so obtain greater value for money.
G 3.2.1 Appointing the Building Services Designer

3.2.1.1 INTRODUCTION
Most construction projects contain building services. In order to incorporate

these services successfully, design advice is required. The process of
designing the building services elements within a construction project is
complex, with detailed design often being undertaken by specialist
manufacturers and/or installers. This process usually begins with the
appointment of a building services engineer or a building services
designer/contractor. The question surrounding this appointment is, ‘who is
best placed to provide design advice and at what stage should it be sought?’
Before answering this question the meaning of the word ‘design’ needs to be
explored.
3.2.1.2 THE MEANING OF DESIGN
Once the client’s brief on a construction project is clearly established the

process of design proceeds. This includes the calculation of loads for heating,
cooling, ventilation power, and so on; sizing and selecting pipes, ducts and
plant and equipment; and consideration of spatial, architectural and structural
requirements. It is unusual for a single party to do all the design work and,
therefore, it is important to know who is responsible for what within the
various elements and stages of design.
Design is the exercise of providing a solution to a particular problem or

requirement, or set of problems or requirements. In practice it means different
things to different people. A common denominator would be a useful guide. A
good word to represent that common denominator and the essence of design is
‘choice’. Choice is exercised as to the way in which a problem is to be solved
or requirements are to be met. Design is a series of choices and decisions, both
in terms of who is required to make the choices and decisions and accepting
responsibility for them. As a starting point for investigating where design
liability rests asking the question, ‘who made the choice?’ is a good one.2
3.2.1.3 THE IDENTITY OF THE BUILDING SERVICES DESIGNER
The building services designer is a member of the client’s design team (which
also includes the architect, structural engineer and other specialist designers).
The designer can be:
(i) An independent design-only consulting engineer engaged by the client;
PART 3, SECTION 2
(ii) A general contractor or building services contractor who either engages

a consulting engineer or employs an in-house design engineer; or
(iii) A hybrid of (i) and (ii) above, with each being responsible for their
respective elements or stages of design.
The decision on which option to use should be based on important factors such
as:
• clarity and certainty of the client’s brief;
• size, complexity or specialist nature of the project;
• time available to deliver the project;
• required standard of the product; and
• financial constraints.
3.2.1.4 ALLOCATION OF DESIGN RESPONSIBILITIES
The concept of single-point responsibility makes it easier to establish where

liability lies. However, the best engineering expertise for different parts of a
design may not rest, in practice, with a single party. Unless a client works
solely with a design and build contractor from the outset, it is almost
inevitable that design responsibility will be split between the client’s
design-only consultant and the building services contractor(s). If conflict at
later stages of the project is to be avoided, great care must be taken to clearly
describe the allocation of different parts of design to different parties in the
building contract.
The Building Services Research Information Association’s (BSRIA) technical

note TN21/97, Allocation of Design Responsibilities for Building Engineering
Services provides practical guidance on the issues involved in the assignment
of design responsibility to the various parties to a contract.
The use of a table clearly stating the design activity and the assignment of that
activity to the party with contractual responsibility is likely to be the most
efficient way of avoiding conflict.
Table 2 is an example of how the pro formas for allocating responsibility

produced by BSRIA in their technical note can be configured. In this example
only one sub-system is considered and other consultants are included. In
practice, it would be necessary to create a single table for each sub-system of
the complete building services installation, as design responsibility may vary
from sub-system to sub-system.
Using a table in this way is infinitely flexible and should be configured on a

project-by-project basis to suit the particular demands of a particular project.
Table 2: Allocation of Design Responsibilites
Area type: Main building Allocation of design responsibilities

Service: Chilled water installation This example is based on the contractor being appointed as part of the design team
Activity Employer Project Building Structural Contractor Other Comments

manager services consultant (stated)
engineer
1.0 Surveys:

1.1 – Existing system ✔
1.2 – System wide ✔
2.0 Feasibility report ✔ ✔ Prepared in conjunction with

the contractor
3.0 Confirmation of client ✔ ✔ Brief to be issued by project

brief manager
4.0 Design:
4.1 – Sketch drawings ✔

4.2 – Schematics ✔
4.3 – Installation drawings ✔
4.4 – Specification ✔
4.5 – Builders work information ✔ Architect
4.6 – Manufacturers’ drawings ✔

4.7 – Record drawings ✔
5.0 Plant selection:
5.1 – Specify plant performance ✔

PART 3, SECTION 2
Page 5
Page 6
Table 2: Continued

PART 3, SECTION 2

engineer
5.2 – Propose procurement ✔ ✔ QS

route

5.3 – Agree plant manufacturers ✔ ✔
5.4 – Pre-tender plant ✔ QS To be done in conjunction with

(if required) the QS
6.0 O&M manuals:
6.1 – Format ✔

6.2 – Production ✔
6.3 – Sign off ✔ ✔
7.0 Spatial coordination:
7.1 – Coordinate all services ✔

and routes
7.2 – Review installation ✔

proposals and amend
schematics
7.3 – Re-select plant ✔

accordingly, including any
revised calculations

Table 2: Continued


engineer

8.0 Monitor the specialist ✔
design for compliance
with the design intent
9.0 Test and commission the

works:
9.1 – Commissioning ✔
specification
9.2 – Carry out testing, ✔

commissioning and

provide certification
9.3 – Accept/witness ✔
commissioning
10.0 Cost advice and QS

monitoring
11.0 Design team ✔

coordinator/contract
administrator

12.0 Lead designer ✔
PART 3, SECTION 2
Page 7
PART 3, SECTION 2
The tables should be compiled at the outset of a project by the employer or his
or her project manager and should be included as a contract document. In
practice, the completion of the tables in terms of timing will be dependent on
the procurement route chosen. For example, a pre-designed single stage
competitive tender would require the tables to be created as a basis for
appointing the building services engineer, as undoubtedly the level of design
responsibility will affect his or her fee. The tables should then be included as
part of the tender documents and included as a contract document in both the
employer’s contract with the principal contractor and its contract with the
building services engineer.
Alternatively, under a ‘partnering’ situation the tables could be compiled

jointly between the parties, with responsibility being allocated to the person
within the team best suited to manage the risk. Again, the completed tables
should be included as a contract document in all contracts between the
employer and his or her design team, which would include the principal
contractor.
3.2.1.5 APPOINTMENT OF AN INDEPENDENT DESIGN-ONLY ENGINEER
The first allocation of design responsibilities usually concerns the

appointment by the client of an independent design-only consulting engineer.
The ACE conditions of engagement, produced by the Association of
Consulting Engineers, are widely used to make this appointment. The 1981
conditions have been replaced by the 1995 conditions (2nd edition, 1988).
However, the 1981 conditions are still in use on some projects and therefore
need to be considered here.
(a) 1981 ACE conditions of engagement
The 1981 conditions include agreement 4A which offers a choice of the

following forms:
(i) full duties;
(ii) abridged duties; or
(iii) performance duties.
All three forms require the consultant (building services engineer) to exercise
all reasonable skill, care and diligence in the discharge of his or her duties. The
consultant does not warrant that his or her design will be fit for the intended
purpose.
The responsibilities of the consultant under full duties and performance duties
are easier to understand than abridged duties. The responsibilities under
abridged duties rest between the relative extremes of full duties and
performance duties.
PART 3, SECTION 2
One very important difference between full duties and abridged duties is that
the latter do not require the building services engineer to produce coordination
drawings. His or her duties under abridge duties are intended to harmonize
with those of the architect up to a certain point and this would require some
element of design coordination by the building services engineer. However,
the extent of this is unlikely to be clear.
Abridged duties have been the source of argument and dispute between
building services contractors and design-only consultants for many years.
Therefore, when it comes to engaging a design-only consultant, it is very
important that the extent to which the consultant will produce coordination
documentation is clear, particularly to the building services contractor who
will rely on the information. This is especially important where abridged
duties are used. Although the consultant is not required to produce
coordination drawings (as defined in the 1981 ACE conditions) under
abridged duties, he or she will almost certainly coordinate design to some
extent in conjunction with the other members of the design team. BSRIA
technical note TN21/97 provides practical guidance on deliverables.
(b) 1995 ACE conditions of engagement
The 1995 conditions comprise a range of forms, one of which is called

agreement B(2). The forms are not formatted into full, abridged and
performance duties. Agreement B(2) divides the duties into normal services
and additional services.
The 1995 conditions include the following guidance, ‘In connection with the
duties of building services engineers it should be noted that agreements A(2)
and B(2) list as normal services a level of services which corresponds roughly
to the abridged duties in the 1981 agreements 4A(ii) and 4B(ii). It is open to
the client and building services engineer to agree an equivalent of full duties
by importing some of the additional services into the normal services.
Similarly, an equivalent of performance duties may be agreed by listing in
A19 those services which are not to be included as normal services.’
It is important to note that coordination drawings are not part of normal

services. From this point of view, normal services are significantly less than
full duties under the 1981 conditions. If the client or the project manager want
the designer to produce coordination drawings under the 1995 conditions,
they must request the inclusion of these drawings.
Under normal services, the designer is required to prepare ‘detailed design

drawings’ from which, ‘it should be possible to produce coordination
drawings and installation drawings without a major re-routing of those
services’. In practice, the meaning of the words ‘major re-routing’ should be
discussed with the designer so that the implications of what they might mean
could be risk assessed at an early stage and clearly communicated through the
contract documentation.
Additional services is a list of services from which the client must choose and
add on to the normal services.
PART 3, SECTION 2
The main differences between the 1981 and 1995 ACE conditions of
engagement are outlined in table 3.
Table 3: Main Differences Between Appointments in the 1981 and 1995 ACE
Conditions of Engagement
1981 ACE Conditions 1995 ACE Conditions
Performance duties List in A19 what is to be excluded from

As agreements A(2) and B(2) normal duties to equate to
Least detailed design services performance duties
Abridged duties Normal duties

No requirement to produce coordination Roughly equivalent
drawings (Coordination to be addressed
Less detailed design duties separately)
(How is coordination of design to be
achieved?)
Full duties Additional services

Includes coordination drawings List of additional services to be agreed
Most detailed design duties with the consulting engineer
Should facilitate coordination drawing
‘without major re-routing’
Independent of who the designer is and how the appointment is made, it is

equally important to appoint him or her at the same time as appointing the
architect and the structural engineer. This is because the architectural and
structural design will impact on the building services design and vice versa.
Bringing the building services designer into a project at a later stage will mean
that the building services design is less advanced than the main structural and
architectural elements leading to possible conflicts as the design process
catches up. It will also mean that at a time when the client needs an accurate
estimate of the project cost, the engineering services element will be less
detailed.
3.2.1.6 SUMMARY
• The designer is the party who is required to make the choice. Complete
design expertise rarely lies with a single party.
• If allocation of design responsibility between the parties is not clearly

described in tender documentation, this can lead to disputes.
• The use of abridged duties from the 1981 ACE conditions agreement 4A
or their current equivalent needs very careful consideration. When
engaging a design-only building services engineer under abridged
duties, it is very important to have a clear definition of deliverables
expected from him or her.
• It is important to appoint the building services engineer at the same time

as the architect and the structural engineer.
PART 3, SECTION 2
Having established where the responsibility for design can lie, the next part of
this section deals more specifically with the coordination of design, its
potential impact on a project and the importance of recognizing appropriate
procurement strategies to deal with this impact.
G 3.2.2 Design Coordination
This section deals with design coordination. It is important to recognize the

distinction between ‘design coordination’ and ‘coordination of the
installation’. Whilst coordination of the installation (which is concerned with
the planning and sequencing of the works on site) is extremely important, it is
generally considered to be the principal contractor’s responsibility and is
therefore not covered here.
3.2.2.2 THE IMPORTANCE OF DESIGN COORDINATION
Disputes involving design coordination and installation responsibilities are a

major cause of conflict in the building services industry and, as such, are one
of the main reasons for delay and disruption on construction projects. The
roles of the various parties, and the extent of their design responsibilities, may
appear to be fairly straightforward for many elements of a building. However,
this is rarely the case when procuring buildings where the building services
element is of significant value and complexity.
Failure in the coordination of the building services design can create problems
with the building services installation and may have a serious impact on the
following areas.
(a) Installation time
Design coordination problems, which are not recognized during the drawing
process, may only become evident when the installation of the works is being
carried out. For example, if the ductwork was found to clash with a structural
element of the building, time may be needed for a design solution to be found
and implemented. The solution may require:
• preparation of revised calculations;
• preparation of a drawing/sketch;
• approval by others of the re-design;
• re-ordering of materials;
• re-installation of the ductwork; and
• re-programming.
PART 3, SECTION 2
(b) Installation cost
Remedying a design coordination problem often involves working out of

sequence and can give rise to additional costs, including those arising out of:
• engineering time;
• drawing time – if the works are done out of sequence;
• incidental items such as retaining the scaffolding in place for a longer

period; and
• the costs associated with a variation to the works which may

additionally involve loss of productivity and prolongation costs.
(c) Effect on other trades
The time needed to resolve the design coordination problem might cause a
critical delay to other trades or activities. For example, a ductwork problem
may prevent the ceiling installation from being completed to programme.
(d) Cooperation between the parties
Invariably, coordination problems arise as a result of incomplete design or

poorly-defined design duties which result in gaps in the design. In this
situation it is unlikely that any party will accept liability for the problem since
the consequences, and their associated costs, are unclear. This can give rise to
parties defending their positions, inevitably leading to conflict and delay.
Furthermore, even when duties and responsibilities are defined in the contract,
misunderstanding can still arise if reliance is placed on custom and practice
rather than liabilities under the contract.
(e) Standard of workmanship
When a building services contractor experiences a problem due to lack of

design coordination, the solution can necessitate a compromise of the quality
of the installation.
3.2.2.3 OBJECTIVE OF DESIGN COORDINATION
The process of design coordination should have a clear goal: to ensure that the
many different elements of construction fit together effectively to provide a
workable and economic solution.
It must be recognized that design coordination is an inherent part of the overall

design process and, as such, whoever is responsible for design should ensure
it is undertaken. Design coordination should be an objective and measurable
process that is transparent to all concerned.
PART 3, SECTION 2
This may appear to be self-evident. However, the functions of design and

design coordination are not always clearly defined, or there could, effectively,
be two stages associated with it for the reasons outlined in 3.2.1. This may
leave the contractor with a substantial amount of design coordination to
complete after the building services design engineer has fulfilled his or her
design obligation.
On projects containing a significant amount of building services, design

coordination takes on particular importance because of the large number of
trades involved, the complexity of their work and the likelihood that these trades
may have different design responsibilities. For example, there could be a
number of specialists responsible for the design of their own systems. Therefore,
a fully coordinated design would not be achieved until these designs are
complete. In these circumstances it is beneficial to select the relevant specialists
early in the procurement process to enable them to commence their designs and
advance the completion of a fully coordinated design.
Therefore, when drafting appointment and contract documents, a number of

key issues need to be addressed. These are:
• The documents should contain a clear and unambiguous definition of

design coordination and define the coordination responsibilities of the
various parties;
• The production of documents associated with coordination should be

clearly allocated to the various parties to the contract. The contract
should also specify the type and number of documents/drawings, the
level of detail, the number of copies and the scale to be used;
• Coordination of design should be included as a key activity in the

planning stage of the project and should be a measurable activity with
achievable milestones on the programme(s); and
• Recognition should be given to the impact which specialists have on

design coordination and the importance of appointing early enough in
the procurement process.
3.2.2.4 RESPONSIBILITY FOR DESIGN COORDINATION
It is essential, before contracts are entered into, to establish responsibility for

coordination of design. This could be scheduled into a simple table with tick
boxes indicating the various parties’ responsibilities, the results of which
would be transferred into the contract (see table 2).
Whatever method is used the contract should address the duties of the parties
as follows.
(a) Terms of appointment for the designer
Special care must be taken to understand the terms of appointment of the

designer. It should be clear if the designer is responsible for producing
PART 3, SECTION 2
Figure 1: Design Coordination
coordination drawings during the design and construction stage of the project
(see 3.2.1).
Whatever form of agreement is used, design responsibilities should be clear

and unambiguous. An express definition of the quality and quantity of
information to be provided by the designer should be included.
(b) Building services contractor’s contract
It should be clear if the building services contractor has a duty to coordinate

its work and/or the work of others into the overall design. Also, it should be
clear if the building services contractor is the lead coordinator. Ambiguity can
lead to a dispute. The contract should state whether the building services
contractor has any design responsibility (see 3.2.1).
If the building services engineer has design coordination liability and he or she
intends to delegate to the building services contractor(s), the following factors
need to be clear:
(c) Delegation under the contract
The designer needs to be sure that the terms of appointment allow this or that
the client is in agreement with them.
(d) Tender/contract documentation
Documents need to be clear on the extent of coordination to be undertaken by

the building services contractor and sufficient time must be allowed in the
programme to perform the task.
PART 3, SECTION 2
(e) Ability
Checks should be made to ensure that the building services contractor has
sufficient experience and resources to undertake coordination duties. A
method statement should also be obtained, detailing how the building services
contractor will undertake the process of design coordination.
(f) Computer Aided Design (CAD)
Where the scheme is designed on a CAD system, the building services

contractor should have a compatible system.
(g) Programme
There should be sufficient time within the overall programme of the works for
the building services contractor to properly undertake coordination of the
design.
(h) Establishment of the lead coordination contractor
Where possible, a lead coordination contractor should be appointed. It is

unwise to have a fragmented contractual arrangement with several contractors
undertaking design coordination work, none of whom are liable for the overall
design coordination.
3.2.2.5 PROCESS FOR IMPLEMENTING DESIGN COORDINATION
Once the responsibilities of the parties involved in the project are identified, a
process should be established to ensure that design coordination is being
carried out.
An example of good practice is detailed below:
(i) The client appoints a member of the project team as ‘design

coordinator’. The design coordinator’s duty is to manage the design
coordination process. Ideally this should be a project team member
who has no design responsibility in order to avoid a potential conflict
of interest. This appointment should be made as early as is practical in
the design process.
(ii) The design coordinator must establish a clear understanding of each

party’s responsibility for coordinating the design and should ensure
that they have the capability to perform their obligations.
(iii) The design coordinator is responsible for the programme and method
of implementation of design coordination. This should be prepared
with the input of all parties to ensure that it is in harmony with the
overall construction programme.
PART 3, SECTION 2
(iv) The design coordinator should review the coordination process on a

regular basis to ensure compliance. Reports should be issued to the
client and, if necessary, the contract administrator should issue
instructions to overcome any problems.
3.2.2.6 SPECIFIC PROBLEMS RELATING TO BUILDING SERVICES INSTALLATIONS
The following examples are typical problems that can give rise to
coordination difficulties.
(a) Selection of plant and equipment
Where the building services engineer is responsible for the selection of plant
and equipment, a provisional selection of certain equipment is often made.
This is in order to plan layouts and to provide information on space
requirements/loadings to the architect/structural engineer. The provisional
selection of plant is also necessary for information in preparation of cost
advice.
In tendering for the works, the building services contractor may propose an
alternative manufacturer for equipment to that chosen by the building services
engineer. The reasons for this can be varied, but usually it is because the
building services contractor receives more favourable commercial terms from
certain suppliers than others. The client may be in favour of this alternative if
the selected equipment achieves cost savings and/or improved delivery times
without the quality of equipment being reduced.
Questions often arise over design liability for the proposed equipment
‘meeting the design requirements’. Does it lie with the building services
contractor who proposes it or the building services engineer who approves it?
The answer in law appears to be that the person on whom the client relies to
make the decision must ultimately be responsible (see 3.2.1).
Changes in size, shape and manufacturer may not only lead to coordination
problems. It can also result in problems with functionality if the equipment
does not meet the specification.
On a practical level it is often better for the building services engineer to

undertake a re-evaluation of the design to ensure that the equipment complies
both in terms of specification parameters and coordination of the services.
However, this work is often not included as a duty in the terms of appointment
for the building services engineer or in the building services contractor’s
contract. Under the 1981 and 1995 ACE conditions of engagement, the
building services engineer is not responsible for re-evaluation, unless it is
agreed as an additional service. Therefore, the building services engineer
should be paid an additional fee to undertake this work.
In the event that the building services engineer does not undertake the
re-evaluation process, because either it is not in the terms of appointment or
the client is not willing to pay additional fees, the building services contractor
PART 3, SECTION 2
should be responsible for the design and coordination associated with the
change. The client should be advised that the disadvantage with this option is
that there is no independent check that the equipment complies with the
specification. If the building services contractor suddenly takes on this design
responsibility it must be reflected in its terms of contract. The associated
changes to warranty agreements must also be made. However, the cost of
these changes may prohibit the proposed change of equipment.
(b) Appointment of specialist installers
Depending on the type of project, a large element of the building services

works may consist of many specialist installations. Examples of such
installations include medical gases, lifts, BMS, refrigeration and sprinklers. It
is usual for the specialist companies to provide design information and this
information must be incorporated into the works to ensure a properly
coordinated design is achieved. One of the problems with this, however, is
that the amount of coordination required may vary substantially from
specialist to specialist.
Ideally, where the specialist company’s input is significant to the project, they
should be appointed at a stage which avoids assumptions being made
regarding the specialist’s requirements. Such assumptions can often turn out
to be incorrect.
If a specialist cannot be appointed at an early stage, allowance should be made

within the programme for the specialist to develop its design, and for this to be
coordinated with the overall design.
(c) Variations/changes to the works
Variations and changes to the works can have a significant impact on the
design coordination depending on their scope and timing. Such alterations
should be carefully considered.
3.2.2.7 LEGAL POSITION
The legal position with regard to design coordination cannot be considered in

any depth within this section. However, the law related to coordination is
considered briefly below.
(a) Express terms of the contract
The appointment of the building services engineer should clearly establish

whether there is a responsibility for design coordination. It is recommended
that the appointment of the building services engineer should be under the
appropriate ACE form of agreement.
Many of the standard forms of building contract deal adequately with

materials and workmanship requirements but fail to address, in sufficient
PART 3, SECTION 2
detail, design coordination issues. It is essential that when a building services

contractor is not specifically responsible for design (as, for example, in design
and build contracts), express terms are included to cover design coordination
duties and responsibilities.
(b) Implied terms of the contract
Where the contract is silent on an issue, terms may be implied by the courts,
common law, statute or by custom, irrespective of the parties’ intentions.
The application of implied terms is limited and uncertain. Therefore it is

important to insert clear express terms in contracts.
Where a building services contractor has no express design liability, the courts
are still likely to imply an obligation on to the building services contractor to
warn the client of any problems known to it.
(c) Tort
There is much less likelihood of an action in tort for coordination problems

than there is for more general design errors. This is because latent defects do
not generally originate from coordination problems. Most coordination
disputes arise during the course of the works and are dealt with under the
contract. The disputes usually relate to payment for additional work rather
than damages for defective work. Therefore, the application of tort is limited
but should not be ignored. In fact, the law of tort can increase the liability of
the building services contractor in terms of its duties, the number of parties it
is liable to and the length of time it has a liability for.
(d) Criminal implications
Negligent work and breach of statutory duty are normally considered as torts.
However, they can also have criminal penalties, particularly where injury is
caused to others. For example, the CDM (Construction (Design &
Management)) regulations 1994 do not differentiate between building
services engineers and building services contractors who undertake any
design duties, even if only restricted to design coordination.
Consequently, a clear understanding of liability for design is essential for

those taking on coordination work.
3.2.2.8 SUMMARY
• Recognize the importance of design coordination within the

procurement strategy.
• Documentation should clearly identify design coordination

responsibilities.
PART 3, SECTION 2
• Ensure there is a clear process and adequate time for design

coordination.
• Appoint specialists early where design input is key to coordination.
Having established an appropriate procurement strategy and terms of

appointment, the appointment of the building services contractor in the correct
manner is crucial to the success of a project. Section 3.2.3 deals with
appointing a building services contractor and examines the common
approaches and the pitfalls.
G 3.2.3 Appointing a Building Services Contractor
There are many criteria to be considered in the appointment of a building

services contractor, and different clients will put different emphasis on each
criterion. The lowest tenderer may not always provide the client with the best
value for money and there may be more important priorities to consider than
simply the initial build cost. The client may prefer to appoint a building
services contractor who can:
• build to the quality and standard required;
• provide the resources to condense the contract programme;
• take the lead in design coordination;
• provide a design service; or
• provide a lower whole-life cost.
The prioritization of the criteria to suit the client’s overall objectives

ultimately influences how the appointment of the building services contractor
is conducted.
3.2.3.2 TIMING OF THE APPOINTMENT
The timing of the appointment of the building services contractor depends on

the selected procurement strategy and/or the cost effectiveness of introducing
the building services contractor to the design process at an early stage. It also
depends on the size and complexity of the project. The more complex the
project, the longer the lead-in period prior to instruction will need to be.
The earlier the building services contractor is appointed, the greater the
influence it can have on:
• design;
• coordination;
PART 3, SECTION 2
• plant and equipment selection and procurement;
• buildability;
• programming;
• value engineering;
• commissioning advice;
• safety – in terms of maintenance and accessibility;
• the cost plan; and
• maintenance – post completion.
These influences should however be balanced with the disadvantages of early

appointment:
• limited price competition;
• limited pool of building services contractors able to develop and finalize

the design; and
• difficulty comparing tenders effectively.
There are several key considerations relative to appointment at the various

stages of design. These are as follows.
(a) Inception and feasibility stage
The building services contractor should only be appointed at this very early
stage if one or more of the following criteria is satisfied:
• the project is predominantly building services;
• very early design or design coordination input is required due to the

complexity of the project;
• the building services contractor’s work is of a very specialist nature; or
• advice on the programme is required due to long lead-in times for

equipment.
(b) Outline and scheme design stage
Appointment at this stage usually leads to a lump sum or a guaranteed

maximum price. The appointment would generally take place at outline and
scheme design stage when the building services contractor would be required
to develop the initial design into a full design.
At this stage an outline design, together with an accompanying preliminary

outline specification, may have been produced by the client’s appointed
building services engineer.
PART 3, SECTION 2
Alternatively, the building services contractor’s expertise can be utilized by

appointing it, for a fee, to work alongside the client’s design consultants in a
‘concurrent engineering approach’. In this approach the building services
engineer and the building services contractor work alongside each other to
produce the design and coordinated working drawings. For example, the
building services engineer could produce performance criteria and schematics
which are worked up into fully detailed working drawings with any survey
work and the coordination being done by the contractor. In this example, one
level of drawings is deleted from the process and the responsibility of design
coordination rests with the contractor.
(c) Full design stage
Appointment at this stage of the project usually follows a lead-in period

allowing design to be virtually completed by the client’s building services
engineer prior to appointment. It generally leads to a lump sum tender being
sought based on the client’s consultant’s design drawings and comprehensive
specification.
The building services contractor is appointed at this stage if it has little or no

design input. Some contractor design may still be required at this stage for
specialist systems.
In addition to these key considerations there are various minor advantages and
disadvantages. However, some clients may consider these to be of
importance. Tables 3 and 4 summarize these advantages and disadvantages.
3.2.3.3 PROCUREMENT OPTIONS
This section reviews how the building services contractor’s appointment fits
within the various project procurement strategies. A comprehensive review of
the overall project procurement options can be found in section 3.1 (‘The
Procurement Guide’).
The timing and contractual basis of the building services contractor’s

appointment largely depends on the overall project procurement route. The
client’s and team’s view on the benefits of the various appointments discussed
earlier will also influence this.
The building services contractor is generally appointed under a domestic

sub-contract or package arrangement under a principal contractor. The project
team should try to ensure that the terms of the appointment are no more
onerous than those of the main contract. The appointment of the building
services contractor under the main contract procurement routes is considered
below.
(a) Traditional procurement: where the building design is complete before

the principal contractor is appointed
The most commonly used procurement route is the traditional route of complete
design prior to tender with either bill of quantities or pricing schedules tendered
PART 3, SECTION 2
Table 4: Advantages of Appointment at Design Stage
Design stage Inception and Outline and Full design

feasibility scheme stage
stage design stage
Advantage
The client would have complete access to the building ✔

services contractor’s specialist knowledge.
The overall project programme could be shortened due to ✔

the time saving in the pre-tender period.
Simplification of the tender documentation. ✔
Early appointment generates a good understanding of the ✔

client’s objectives and an accurate brief.
The client will benefit from the building services ✔ ✔

contractor’s expertise in the selection of the most
competitive equipment and systems.
A variety of solutions may be provided allowing the client ✔ ✔

and his or her project team to assess the best solution for
the project.
A shorter tendering period compared to the traditional ✔ ✔

route.
Bills of quantities (BQs) or detailed pricing schedules can ✔

be readily produced by the quantity surveyor with the
inherent advantage of tender cost comparisons, cost
control and use in the valuation of variations. The
advantage is limited however as the BQs may not reflect
the way the contractor prices the work involving additional
work for the contractor. Also, and very obviously, unless
the design is fully coordinated a BQ reflecting the final
design cannot be produced.
The measurement process will also provide a check ✔

against the adequacy of the design information.
The quality control of the installation can be monitored by ✔

the consultant against the original design.
Optimum competition, provided the design is practically ✔

complete and the bills are correctly described and
accurately measured.
Tender period shorter together with reduced tendering ✔

costs and risk for the building services contractor.
PART 3, SECTION 2
Table 5: Disadvantages of Appointment at Design Stage
Design stage Inception and Outline and Full design

feasibility scheme stage
stage design stage
Disadvantage
Limited number of building services contractors with the ✔ ✔

required design expertise to develop and finalize the
design.
Clear tender proposals are not always possible due to ✔

variations in the tender design proposals.
Extensive tender preparation time and costs for the ✔ ✔

building services contractor.
The client and the client’s design team have less control ✔ ✔
over final design
The client may be forced to make compromises between ✔ ✔

price and quality depending on how comprehensive the
initial enquiry document was. The building services
contractor will tend to view the capital cost as the priority
rather than the quality and through life costs of the
building.
The pre-contract stage will tend to be longer due to the ✔

time taken to produce the design and the tender
documentation.
The cost of the building services consultant’s fee may be ✔

more than the contractor’s cost for developing the design.
No use made of the contractor’s expertise in terms of
buildability, programming, costing, equipment and
building services contractor selections during the
pre-contract stage.
Incorrect allocation of coordination responsibilities may ✔

lead to cost escalation.
Delay in appointment may affect the coordination of the ✔

services and delay builders work details.
Late tendered cost information may cause budget ✔

problems.
Limited use made of the contractor’s expertise in terms of ✔

buildability programming, equipment and building
services contractor selections, and so on during design
process.
PART 3, SECTION 2
on a lump sum basis through a main contractor. However, appointing a building

services contractor can be achieved in a number of ways:
(i) The principal contractor selects the building services contractor

This traditional domestic sub-contracting arrangement is usually most
appropriate when the project is small or the building services elements are
not complex, and the building services contractor is not required to have
any design input. However, the principal contractor’s choice is usually
price led and this method can lead to ‘Dutch auctioning’ by the principal
contractor. The employer has little control over the building services
contractor’s appointment.
This does not necessarily result in an inappropriate appointment,

particularly if the main contractor follows appointment procedures
similar to those set down in the Code of Practice for the Selection of
Sub-Contractors.3
(ii) Naming a number of alternative building services sub-contractors

This arrangement avoids some of the problems associated with domestic
sub-contracting. It provides some competition with a degree of control
maintained by the employer. It also reduces the overall cost of tendering
by restricting the number of building services tenderers. However, the
criterion used by the principal contractor to appraise tenders is likely to be
price. This method has the disadvantage of higher costs when compared
to traditional domestic arrangements. It also prevents the principal
contractor from working with sub-contractors with whom it has a good
relationship or partnering arrangements that may reduce conflict. This
method would be used where the employer wishes to maintain an element
of control.
(iii) Naming a single building services sub-contractor as sub-contractor in

the main contract
This method allows the employer to appraise building services tenders
and select a building services contractor using his of her own criteria. To
achieve this the building services sub-contract will either be negotiated or
tendered by the employer. This is done prior to letting the main contract
and inserting a name into the main contract. Alternatively, it can be done
after letting the main contract, in which case, a prime-cost sum is inserted
into the main contract.
(iv) Nomination
This arrangement allows even greater control by the employer and
usually provides a degree of comfort to the building services contractor.
However, part of the burden of risk is shifted to the employer. It is
extremely rare to see this method in use today. It would only be utilized if
the employer is the most appropriate person to shift risk too.
(v) Two-stage selective tendering

If early appointment is required, where for example the building services
contractor is required to assist the building services engineer with design
and coordination, a two-stage selective tendering method is appropriate.
PART 3, SECTION 2
At stage one a schedule of rates and preliminary costs is agreed. These are
then used at stage two to build up the contract sum. However, problems
occur when a sum at stage two cannot be agreed. This method usually
results in a higher contract sum than other methods. The building services
contractor is then required to enter into a domestic sub-contract with the
principal contractor.
To summarize, the choice depends on the amount of control the employer

wishes to maintain, balanced with the cost. The employer’s choice usually
depends on the amount of input and the size of the building services contract.
Personal preference for a particular building services contractor may also be a
factor.
If the building services element is very large, it may be more appropriate to

appoint the building services contractor as the principal contractor where it
has the necessary management skills to undertake this role.
If the employer wants to retain control over the tendering process and selects
the building services contractor, a number of options should be considered in
relation to the number of sub-contracts required and the timing of the
appointment, in relation to the principal contractor’s appointment.
(i) Number of sub-contracts: tender mechanical and electrical works as

separate sub-contracts
In order to tender the mechanical and electrical sub-contracts (or even
sub-divisions of these) the contract must be of sufficient size to negate the
efficiencies that would be gained by having a single sub-contract.
(ii) Timing in relation to the principal contractor appointment

Pre-tender the building services sub-contract(s)
This allows selection to be made prior to the appointment of the principal
contractor. It is particularly useful when the building services contractor
is required to take on design liabilities and its early input is required.
Tender the building services packages after the principal/main contract

This allows the principal contractor to comment and, if necessary, object
to the design team’s proposed tender list prior to the works being
tendered. However, the principal contractor must be prepared to enter
into a domestic sub-contract arrangement with the successful building
services tenderer. A prime-cost sum could be included in the contract
documents for the building services installer at tender stage to provide the
principal contractor with the opportunity to price its overheads and profit
and preliminaries.
This method allows the principal contractor to be appointed ahead of the

building services element. It is particularly useful to allow time for the
building services engineer to complete work on the building services
design prior to tendering where this is not as advanced as the main works
design.
PART 3, SECTION 2
However, the delay in appointment may adversely affect the coordination

of the services and delay builders work details. Also, there is the
possibility of a less competitive overall cost as the principal contractor is
incorporating the works after being awarded the building contract rather
than it forming part of its tendering strategy.
(b) Design and build
When the principal contractor is under a design and build contract it is more
usual, particularly on larger contracts, for the principal contractor to select its
own building services contractor. This is because a higher degree of
cooperation and integration is required between them. Joint ventures are often
used where the building services element is significant. However, named
building services contractors can be used if the employer has a particular
preference.
When the main contract is traditional and the building services element is to
be designed by the building services contractor, the criteria in section
3.2.3.3(a) should be applied. It is recommended that the employer maintains
an element of control over the building services element where complex or
prestigious building services design is involved.
If the building services contractor is to design, a performance specification,

and possibly outline drawings, will be produced by the building services
engineer. The building services tenderer is then required to complete the
design. The pricing document produced by the quantity surveyor is very
important in this situation. The quantity surveyor must have an understanding
of the final design in order to provide appropriate headings within the pricing
document. This will enable a meaningful analysis of the tender return to be
achieved. The tenderers under consideration would be required to submit a
quantified schedule of rates to allow post-contract cost management. This
should be done prior to the contract being awarded to them.
Performance specification or design and build may involve novation of the

design team to the chosen building services contractor.
(c) Management contracting or construction management route
This route involves the building services being subdivided into works
packages. This could consist of two packages, i.e. mechanical and electrical,
or it could be further subdivided into pipework, ductwork, plant, plumbing,
and so on. It is usually only beneficial to package the work when the project is
large and complex and/or dependent on current market forces. If this method
is chosen it is vital that the coordinating contractor has the requisite
experience in coordinating the various trades involved and fully understands
the project. The design coordination responsibilities discussed earlier in 3.2.2
take on even greater significance with an increasing number of interfaces.
There are three main reasons for introducing packages into a construction
project:
PART 3, SECTION 2
(i) It allows the management contractor/construction manager to retain

greater control of the project. When one package contractor becomes
too dominant on any project the site management can lose its hold on
the project;
(ii) By tendering the project in packages additional competition may be

introduced dependent on market conditions; and
(iii) It allows design development to proceed in parallel with construction.
To balance these points the following issues should be considered:
• Does the project easily divide itself into the separate work package? If
not, additional interfaces are being introduced which must be balanced
with any potential loss of control.
• Could cost savings be obtained by reducing the number of work

packages? Fewer packages result in lower cost due to less tendering,
better communications and lower preliminary costs for the project.
• If the number of packages any one contractor is allowed to win is limited

then competition on the final packages may be limited as the number of
competent tenderers is reduced as the tendering progresses.
• Design coordination responsibilities become more difficult to control as

the number of individual interfaces increases.
• If risk is not evenly distributed between packages this may lead to

difficulties in obtaining tenders for some packages.
3.2.3.4 SUMMARY OF PROCUREMENT ROUTES
When deciding on the appropriate procurement route the most important point
to remember is that the more prestigious and complex the project, the greater
the cooperation required between the design team and the building services
contractor. Under these circumstances there is a greater need for the client to
control the appointment of the building services contractor.
Each of the possible procurement routes must be objectively considered in

conjunction with the project as a whole. Every route has its own distinct
advantages and disadvantages and its inherent risks which have to be related
to the client’s objectives and the project characteristics.
Partnering or new strategies such as ‘supply-chain management’ and

‘concurrent engineering’ which lead to closer relationships between the
various construction parties can also benefit the project by reducing, or
eliminating, the amount of confrontation and allowing the parties to
concentrate their efforts on the needs of the project instead.
The selection of the principal contractor on complex projects should also be

considered carefully to ensure that it provides the necessary building services
PART 3, SECTION 2
Figure 2: Appointing a Contractor: Impact of Procurement on Design

Responsbilities
experience and input to ensure that the installations are properly controlled,
coordinated and programmed.
3.2.3.5 TENDERING
The main objective of any tendering process is quite simply ‘to employ a
contractor’. However, this is not the only objective. If it were, the client would
only have to invite the first contractor professing to have the required skills to
start work as and when it was convenient to proceed.
The aims of the tendering procedure can therefore be summarized as follows:
• to assess the skills of the contractor;
• to translate to the contractor through the tender documentation all the

project information, including the client’s objectives, required to form
the contract; and
• to obtain a competitive quote.
The selection of building services contractors for interview, tender or

negotiation is often made by committee. The ability of the quantity surveyor
to have a positive input into this process so that an appropriate selection is
made is very important. It is also important to ensure that the contractors
considered at an early stage are financially sound; are of appropriate size and
status; have the work capacity to undertake the project; and are sufficiently
committed to offer a competitive price.
(a) Short listing building services contractors
The following options can be considered when drawing up the short list of
tenderers:
PART 3, SECTION 2
(i) Client preference

An experienced client may have stated preferences for building services
contractors of whom they have knowledge or who have performed well
on previous comparable projects. The client may also have preferences
for approaches such as partnering.
(ii) Project team recommendations

Recommendations can be based on the past experience of building
services contractor’s performance on similar projects.
The design team evaluation of approved contractor application forms can

be used to assess references from other design teams.
(iii) Open advertising arrangements

Advertisements in the European Journal or similar recognized
publications can be arranged.
(b) Interviewing
Once a tender list has been drawn up, formal interviews should be undertaken
with the proposed potential tenderers. Interviewing can be costly and time
consuming for both the building services contractor and the design team.
Therefore, the length of interviews and the number of contractors interviewed
should be related to the size and complexity of the project.
It is important to understand the capabilities of the particular building services

contractor and whether there is a bias towards any one specialism, i.e.
mechanical or electrical. On larger contracts, where coordination with other
trades is a major priority, letting all the services to one contractor may prove
to be an advantage.
Small contracts may allow subdivision of particular trades, but their

integration into the overall services installation can lead to difficulties in the
later stages of a contract, particularly commissioning and the incorporation
of life safety testing and linking with final commissioning of mechanical
plant.
(c) Pre-qualifying
In some cases it may be desirable to investigate the companies under

consideration prior to including them on the project tender list. This is a
common activity in organizations that keep preferred or selected lists of
contracting companies for regular construction activities. However, it is also
increasingly frequent for large and/or complex projects. Companies who
qualify in this way may then be invited to tender for the works.
(d) Selection criteria
In all cases the following list represents the minimum information that should
be collected about prospective tenderers:
PART 3, SECTION 2
• quality of work;
• previous experience;
• size of company (a company’s turnover should be scrutinized in relation

to the proposed contract value and programme);
• insurance cover;
• health and safety experience/record;
• previous record of performance – preferably supported with a client

recommendation;
• financial stability;
• size of previous projects and the outcomes;
• CVs of the key personnel;
• company location;
• necessary specialist skills – e.g. planning, commissioning; and
• what trades the building services contractor has in-house and which will
be sublet.
(e) Preliminary enquiry
Once a preliminary list has been collated, the individual tenderers should be
issued with a scope of work and project programme. They should then be
asked if they are willing to tender. This should establish the current workload,
who is likely to carry out the work and the likely enthusiasm of the qualified
tenderers. It is wise to have a pre-tender meeting with the selected tenderers at
this stage. This gives the whole team a final chance to assess the building
services contractors prior to the tender documents being sent out.
(f ) Length of tender list
The number of building services contractors finally asked to submit a tender

should relate to the type of project, the complexity of the project and the
contractors’ responsibilities under the proposed contract. Guidance on
selecting a building services contractor can be found in the Code of Practice
for the Selection of Sub-Contractors. Generally, the more complex the
contract, the fewer tenderers are required. The complexity does not cover just
the construction work but also any design and/or design coordination
responsibilities which are devolved to the building services contractor.
PART 3, SECTION 2
(g) Tender period
Regardless of the procurement route chosen, an appropriate tender period

must be allowed so that the building services contractor can return a fully
considered tender. The tender period will mainly be dependent on three
factors:
(i) the procurement route;
(ii) the complexity of the project; and
(iii) the size of the project.
Tender periods can range between three weeks for a design-only contract to
ten weeks for a design and build project. Building services contracts should
have a tender period of four to eight weeks, depending on the parameters
mentioned above. If the design and build route is chosen, an appropriate
design period should be allowed for within the project programme to
minimize potential site problems.
3.2.3.6 AVOIDING THE PITFALLS
(a) Control of the appointment
The control of the building services contractor’s appointment can be retained

by the design team or it can be passed on to the principal contractor. At what
stage the principal contractor takes control of the appointment should be
carefully considered by the design team and may depend on a number of
factors (see section 3.2.3.3).
The amount of influence the design team has on the selection of the building
services contractor will increase the longer the project team retains control of
the tendering process. As long as the appointment is controlled by the design
team it is also vital that this is managed by a professional who understands the
commercial and contractual process. This would normally be undertaken by a
quantity surveyor.
Once the principal contractor takes control of the process, it is important to

have a single point of contact within the design team through which the
information flow to the building services contractor can be monitored.
The control of the building services contractor’s appointment is a key role in

the procurement strategy and one that must balance technical services
knowledge with commercial and contractual acumen.
(b) Tender documentation
The tender documentation should be clear, comprehensive and unambiguous.

This enables the building services contractor to fully understand the
obligations under the contract and to price for these within its tender.
PART 3, SECTION 2
Tender documentation which does not fulfil these criteria can lead to
confusion and to a proliferation of claims once the contract is awarded.
Section 3.2.4 explores tender documentation more fully.
(c) Coordination brief
A coordination brief, including a definition of terms from the project team to

the building services contractor, must be included in the building services
contractor’s contract. An example of a method of identifying and allocating
design and coordination responsibilities is illustrated in table 2 (see section
3.2.1.4). This type of table should be included as part of the contract
documents and professional appointments.
The design team must plan the interface of the building services contractor
with the other building trades, starting at the initial design stage. The earlier
the building services contractor is introduced into the design process, the more
likely it is that problems related to coordination of services and the physical
limitations of the structure can be avoided.
It is far cheaper to resolve these problems during the design period than run
the risk of escalating variations and claims for delay and disruption. In
addition, if the building services contractor is appointed early, it can advise on
services loadings, space planning, alternative schemes, coordination, interface
with the building trades, programming and value engineering (for guidance on
early appointment see section 3.2.3.2).
(d) Duties and responsibilities
The building services contractor’s responsibility for design, coordination,

commissioning, drawing requirements, etc. should be clearly defined in order
to avoid disputes occurring later in the contract.
The production of working drawings should not be confused with completing

the design (see 3.2.2).
It is also important that an appropriate response is obtained from the building

services contractor to ensure that it fully understands its role and
responsibilities.
The use of detailed method statements and a signed-off coordination brief at

tender stage on a service-by-service basis can often avoid many problems.
Those managing the project require an understanding of coordination. They
need to know which elements of which particular services are critical to the
other building trades.
In more complex installations, where the use of building management systems

form a major element of the services, it should be understood at the outset as
to how the building services contractor is intending to install/commission and
demonstrate its work.
PART 3, SECTION 2
The commissioning of the building services installation should only be

undertaken when all the other trades are complete, with the exception of the
final finishing trades. A contract that is late will rarely have an adequate
commissioning period. Therefore, the design team should insist that the
programmed commissioning period is maintained and that commissioning
does not start until the site is ready. Failure to do so will often result in
abortive costs or lead to a dissatisfied client when the building provides an
unsatisfactory environment.
(e) Track record
The track record of the building services contractor should be closely

scrutinized and an understanding gained of the type of contracts undertaken in
the past. In order to assess this it is useful to liaise with design teams with
whom the building services contractor has worked on similar projects in order
to assess its capability to undertake the work.
It is extremely important to ensure that the building services contractors being

considered for selection are of a size, and have the expertise, to undertake the
project. Mismatching of contractors will lead to uncompetitive bidding or a
complete lack of interest.
(f ) Design role
It is often advantageous to pass specialist design responsibility over to the

building services contractor. An example of such an area would be life safety
systems (sprinklers, fire alarms, etc.). There are often services where
difficulties arise with the interface between the building services engineer’s
design and the building services contractor’s design and where liaison with
third parties may have an influence on the final design.
(g) Programming
The lead-in period for the building services contractor must be sufficient to
allow adequate time for the design, working drawing production and
procurement of specialist plant. Far too often this period becomes compressed
and results in an increase in coordination mistakes or design errors because
there has been insufficient time to check the drawings properly.
In addition, the pressure placed on a building services contractor to commence

work on site too early creates the risk of cost escalation through potential
abortive work on site or an inability to adequately pre-plan work areas.
It is naive to cover up design delays and force the building services contractor
to try to achieve impossible end dates. Such behaviour can result in an
adversarial situation and a ‘raised claims’ consciousness from an early point
in the contract.
Good management of the project requires good programming techniques. This

is vital for successful services installations.
PART 3, SECTION 2
3.2.3.7 SUMMARY
• Assess the principal contractor’s ability to manage the building services

installation.
• Ensure selection is made in a methodical way and that the building

services contractor is of an appropriate size and ability in relation to the
project requirements.
• Only allow appropriate number of building services contractors to

tender.
• All tenderers should confirm their willingness to tender.
• The chosen procurement route should reflect the complexity of the

project.
• Determine at a very early stage the timing of the contractor appointment

to suit the client’s procurement objectives.
• Decide at an early stage who will control the appointment of the

building services contractor.
• Ensure adequate consideration is given to the scope of the building

services contractor’s appointment, including the design and
coordination role. The importance of design responsibility, size,
complexity and the degree of control required by the design team should
be recognized.
• Consider the elements of risk and consider who is best suited to take
these (using recognized risk-management techniques). It may be
desirable to keep the decision-making process with the design team.
G 3.2.4 Tender Documents

The aim of this section is to identify the problems associated with the
production of tender documents for the procurement of building services and
to develop potential solutions. When inadequate tender documents are
produced it is evident that the tender submissions will be of an equivalent,
poor standard. As a result, the tender returns are likely to be heavily quantified
technically, commercially and contractually. Poor tender documentation will
also give rise to inconsistencies between individual tender returns which
makes initial comparison of the bids on a like-for-like basis virtually
impossible. The ability to retain control over post-tender variations will also
be lost if the provision for such control is not adequately covered in the tender
process and defined within the contract.
PART 3, SECTION 2
This section provides a practical approach to document production. It can be

adapted to whichever procurement route is chosen. For more information on
the various procurement routes available, please see section 3.1 (‘The
Procurement Guide’).
Due to the various forms of procurement available and the wide range of
situations, it is not possible to refer to specific circumstances here. This is
intended to be a general introduction.
3.2.4.2 OBJECTIVES OF THE TENDER DOCUMENTATION
The aims of the tender documentation can be summarized as follows:
• obtain a competitive quote;
• define the conditions under which the contract will be administered;
• set out the required programme;
• define the scope and standard of work;
• set out the procedures for making payments to the contractors and
valuing variations, i.e. post-contract cost management procedures;
• establish the degree of proof required for any claims made and the
required procedures;
• identify the roles and responsibilities of the building services contractor

in terms of design and design coordination;
• identify the risks under the contract and the works which the building
services contractor is expected to include within the tender; and
• inform the building services contractor if a clerk of works will be

employed and what his or her duties will be.
It is important to understand that it is not only the ability of the building

services contractor that requires assessment, it is also the principal
contractor’s ability to coordinate and manage the building services
installation. On all large projects it is advisable that the principal contractor
employs an individual (or organization) to be directly responsible for the
management of the building services contractor(s). This person should have
the authority to make decisions and influence the overall management of the
project rather than be informed of the management’s decision. This individual
is the ‘linchpin’ of the construction process as far as the building services
installation is concerned and perhaps the project as a whole. The building
services contractor cannot be considered as simply another trade contractor
because they interface with almost every other trade on a project. For this
reason the appointment of the building services contractor takes on added
importance. The ability to resolve interface problems and to successfully
PART 3, SECTION 2
coordinate the building services works with other trades is central to achieving
a trouble-free contract.
The design team’s responsibilities must be clearly identified within the tender
documents. If the project is fully designed, the building services contractor
may have no design responsibility. However, detailed design is generally still
required. This switch in design lead usually occurs with specialist
sub-packages such as the BMS, fire alarms, and so on which require further
design input. The other extreme occurs when only a performance specification
is produced by the client-appointed building services engineer and the
building services contractor is responsible for the design.
As the building services packages can provide the main arena for
confrontation throughout the project’s life, it is important that the tenders are
analyzed in a professional manner. Once all technical queries are satisfactorily
resolved by the design team, the quantity surveyor is the most suited team
member to undertake a complete commercial appraisal of the submitted
tenders and provide a clear recommendation to the client as to the successful
tenderer. The pros and cons of this approach are discussed in section 3.2.4.5.
3.2.4.3 TENDER DOCUMENT FORMAT
The contents of every contract varies depending on the procurement route

chosen. However, the principal headings generally remain the same:
• Preliminaries
The preliminaries section of the tender documents contain similar
information to that of the principal contractor in a traditional
procurement strategy. This allows the contractor an opportunity to price
items such as contract insurance, employer’s requirements, contractual
issues and the contractor’s own general items, i.e. hutting, site staff,
on-site equipment that cannot be allocated to a specific item, and so on.
• Preambles
Preambles deal primarily with workmanship, materials, special
attendances required and any assumptions made while taking off the
quantities, and so on. If bills of quantities are not being produced this
section may be incorporated into the specification.
• Specification
The specification produced by the design engineer relates directly to the
tender pricing document.
• Scope
The scope should not only cover the construction work but also design
and who carries the responsibility.
• Drawings
Always list out the drawings the contract is based on.
PART 3, SECTION 2
• Conditions of contract
The type of contract, for example JCT 98, incorporating any required
amendments. Where the sub-contract conditions are to be negotiated
between the principal contractor and sub-contractor these can have a
significant effect on price. This is difficult for the employer to control.
• Precedence of documents
Somewhere within the tender documents the hierarchy of the documents
should be stated. This will help relieve some contractual conflict.
• Warranties
The wording of the preferred warranty should be provided within the
contract documents. If a standard wording is to be used, this should be
stated, e.g. COWA/F, COWA/P&T, MCWA/F or MCWA/P&T. A
design warranty may be required between the client and the
sub-contractor.
COWA/F, P&T = Collateral warranty for funder, purchaser and tenant

MCWA/F, P&T = Main contractors collateral warranty/funder,
purchaser and tenant
• Bond/parent company guarantee (PCG)

The preferred wording of any bonds/PCGs should be contained within
• Form of tender
The form of tender.
• PI insurance requirements
PI insurance is only required if design responsibility lies with the
building services contractor. With packages such as lifts, product
liability insurance may be acceptable.
• Programme
The overall project programme should be included within the tender
documents to provide the building services contractor with an idea of
how its works will be integrated with the other trades. Along with the
programme a key date schedule should be included. The tenderer should
be asked to produce an outline programme to be submitted with the
tender.
• Attendances
If the building services contractor is to provide any attendances on other
trades this should be quantified and described within the tender
documents. Likewise, it should be checked that any attendances
required by the building services contractors from other trades are
detailed in the appropriate documentation.
PART 3, SECTION 2
3.2.4.4 PRICING DOCUMENTS
(a) Pricing schedules
Historically, the building services contractor has a close relationship with the
building services engineer, with the building services engineer producing all
the tender documents inclusive of a pricing document. This can still occur and
so each consultant’s scope must be analyzed to assess who is to provide the
pricing documents. This avoids the risk that two different pricing documents
(or worse none) could be contained within the tender documents. It is good
practice for the quantity surveyor to get an early draft of the specification and
edit out the contradictions between the building services engineer’s
specification and the pricing documents/project preliminaries. Once this has
happened, a draft pricing document can be produced and agreed with the
building services engineer. By discussing the format of the pricing document
openly with the building services engineer confidence is generated between
the parties that everything will be covered.
The pricing schedule splits the specification into various headings under
trades or elements. The tenderers should, therefore, submit a fully completed
pricing schedule which breaks down their lump sum tender into various
headings that should correspond to the sections of the specification. By
creating the pricing schedule in this format everyone knows and agrees the
scope of work which is included within each heading. The pricing schedule
should also contain a statement of the contractors rates used within the tender
inclusive of overheads and profit. If this is not clear, a breakdown should be
requested. This breakdown must show the build up to the contract price
including all tender adjustments.
When the analysis of the submitted pricing schedules has identified the
tenderers who are likely to be considered further, a fully quantified schedule
of rates should be requested from each of the tenderers under consideration. It
should be detailed within the pricing document how long the tenderer will
have to provide the fully quantified schedule of rates. This will depend on the
programme available and is usually two to seven days from a request being
made by the quantity surveyor.
It is critical that any recommendation takes proper recognition of the tenderers

schedule of rates (see section 3.2.4.9).
Mechanical contractors usually sub-contract a larger proportion of their

works than electrical contractors and therefore more lump sums can be
expected within the pricing schedule. If the project is packaged, a fully
quantified schedule should be available since the number of sub-contractors
will be minimal. The schedule of rates should always add up to the headings
in the pricing document in order to avoid doubt at a later date if disputes
arise.
It is imperative that each contractor being considered achieves parity of tender

to enable a clear and unambiguous recommendation to be made to the client.
This occurs when all engineering aspects have been verified by the building
PART 3, SECTION 2
services engineer and the quantity surveyor is satisfied with the pricing and all
other commercial aspects of the tender. If, through the negotiations, anything
has changed from the tender documents, each tenderer must be made aware of
this change to maintain parity of tender. Once all this has occurred, the client
can be made aware of the final decision through a combined report from the
full design team. If this procedure is not followed there is the potential for
post-tender problems regarding supply and performance under the contract.
A section dealing with the tenderers overheads and profit and daywork rates is
required in the schedule. There are so many different rates that could be used
within the building services trades that it is recommended the quantity
surveyor asks the contractor to submit the latest trade rates that will be
employed on the contract.
In situations where there are complex interfaces in existing structures it is

beneficial to request a schedule that only identifies quantified material costs,
with labour rates and a labour histogram provided separately. This enables
post-contract costs to be controlled in an alternative manner while also
providing a management tool to monitor on-site resources.
An example of a typical pricing document is given in appendix A.
(b) Bills of quantities
Bills of quantities should only be used when a fully coordinated design and
specification has been prepared by the designers and a fixed lump sum cost for
the works is required. Bills of quantities are the traditional method of
procuring construction work within the UK where time permits. The specific
problems associated with the procurement of building services does not
exclude the use of bills of quantities, but the following are some of the issues
that should be reviewed to ascertain the benefit of producing bills:
• The package may only be partially designed to allow the building

services contractors to be responsible for the detailed design. In this case
bills of quantities should not be considered.
• Design development may still be in progress when the bills are started,
necessitating variations as soon as the tender process starts. The cost
certainty intended by the use of bills is immediately lost when variations
start. If the design varies greatly during the contract period the building
services contractor could have a case for a re-rate or claim.
• The production of bills introduces the need for detailed design

coordination between the various consultants and, consequently, the
potential for errors and omissions. Assumptions may often be forced on
a quantity surveyor producing the bills to a deadline where this is not
clear. This would again require variations to be issued.
• It should be considered whether the building services contractor actually

benefits from the production of bills. A bill description can contain so
much detail that the price is developed separately in the contractor’s
PART 3, SECTION 2
own estimating system. This results in the descriptions being priced in a

number of sections then drawn together for the bill. This could well be
as time consuming as doing all the measurement. For example, light
fittings may be described within the bill as ‘to include for all necessary
conduit and cabling for the light fitting’. The building services
contractor must measure and price the electrical circuit inclusive of
conduit and apportion the cost to each light fitting.
• The use of bills results in the risk being retained by the client as far as
quantities are concerned. This may result in more competitive prices
being obtained as risk is more evenly distributed with the client taking a
greater burden or the building services contractor may exploit errors
within the document.
• As each tenderer has the same document to price the tender analysis
should be easier. The tenderers do however have discretion as far as rate
build up is concerned.
• As discussed in section 3.2.4.4(a), building services contractors and

suppliers have traditionally had a closer relationship with the building
services engineer than the quantity surveyor. This relationship has
developed because the building services engineer may rely on the
expertise of the building services contractor or its suppliers to design
some individual systems. This can result in areas of the design being
described only in terms of its performance, i.e. the building services
contractor will need to offer a design solution to meet the performance
criteria established in the specification. This is inappropriate
information for quantity surveyors to prepare bills of quantities from.
To briefly conclude this section, the building services contractor generally has
responsibility for detailed design work such as final cable routes, bracket
details, and so on which limits the information available for billing. Also,
history has dictated that the building services design is not far enough
advanced within the procurement timetable to provide the quantity surveyor
with sufficient information to produce bills of quantities. A summary of the
advantages and disadvantages of bills is given in table 6.
3.2.4.5 PRICING OPTIONS
When dealing with pricing options there are two basic possibilities that can
occur:
(i) Options that are included in the tender

This often takes the form of a different finish to an exposed part of the
services installation. In the body of the pricing document the diffusers
could be priced as powder-coated steel but as an option, the extra
over-costs for a stainless steel finish can be provided.
(ii) Options that the tenderer may put forward

Directions should be given at tender stage as to whether or not contractors
options are required. If so, the tenderer can identify these options within
PART 3, SECTION 2
Table 6: Advantages and Disadvantages of Bills of Quantities
Advantages Disadvantages
Provides a fixed price lump sum Time consuming
Conformity of tender returns The measurement risk is retained by

the client
The design is checked while the Fully coordinated design is required

measurement is being carried out prior to building
More even spread of the risk Specific items of plant may have to be
uniquely specified which will reduce
competition
A design freeze is required which

increases the tendering period
The tenderer’s design skills are ignored
Specialist systems will be either

provisional or prime-cost sums,
reducing cost certainty. Integration of
these systems can be a problem
A small skill base exists within the

quantity surveying profession for
measuring mechanical and electrical
services
the document which may take the form of alternative suppliers, reduced
programme or variations on the contract clauses. This can be a cheaper
supply or where the after-sales support services in an area is better
provided for by an alternative supplier. It is for the building services
engineer to ascertain if the alternative achieves the specification. Any
option must include the full cost of ensuring design compliance. This
could be in the form of additional fees or additional coordination costs.
Both of these must be catered for in any tender document while still
maintaining a like-for-like comparison for tender analysis purposes. The
easiest method of obtaining this is by assuring that each tenderer prices what
will be called the base option. Each alternative can then be given as an
adjustment to the base scheme.
Clear direction should be provided within the tender document on how and
where options should be priced.
3.2.4.6 HOW TO TACKLE ADDENDUMS
The most obvious way to deal with tender addendums is not to have any.
However, since design can often progress during the tender period, this is an
unlikely occurrence. If addendums are required they can be either sent out
during the tender period or provided to the two lowest tenderers to price after
tenders have been returned.
PART 3, SECTION 2
If the design changes occur during the tendering period, addendums to the
documents should be sent out to each tenderer. The addendum should state if
the tender period is extended and each tenderer must acknowledge receipt of
the addendum. If mid-tender interviews have been arranged, the addendum
can be handed over and explained at this time. The addendum must still be a
precise document, clearly identifying the changes and scope, as it will form
part of the contract.
Each addendum should be individually referenced, regardless of when they

are issued, so an audit trail is apparent. If the quantity surveyor believes that
addendums provide non-essential design changes, these should be priced
separately. By providing a separate price for non-essential alterations, the
client and design team have the option of whether to accept the addendum.
3.2.4.7 TENDER CLARIFICATIONS
Tender clarifications can result in additional information being supplied to the

building services contractor. Each question from the building services
contractor should be sent to the quantity surveyor for distribution to the design
team. The response from the relevant consultant should be returned to the
quantity surveyor who distributes to the tendering companies. All tenderers
should receive all the tender questions so that each is tendering on the same
information. A single point for receiving, answering and managing the queries
is advisable. As the manager of the tender documentation, the quantity
surveyor is best placed to manage queries.
On receipt of a query, the name of the organization asking the query should be
removed and the question given a reference. Queries can then be forwarded on
to the appropriate consultant for comment. The quantity surveyor should read
each query and assess if another tenderer has asked it previously. A master
record of whom asked what question should be kept in order to provide an
audit trail for later reference.
3.2.4.8 ADDITIONAL INFORMATION REQUIRED FROM THE TENDERERS
The following information should be provided by all tenderers regardless of

their contractual status. This allows proper comparison and demonstrates an
understanding of the project and tendered scope:
• completed pricing schedule;
• quantified schedule of rates;
• health and safety information;
• programme and agreement to the tender programme;
• agreement to all the documents – i.e. warranties, bonds, and so on;
• list of main suppliers used – where choice is with the building services
contractor;
PART 3, SECTION 2
• list of any sub-contractors;
• acceptance of the conditions of contract – the tenderers, prior to tender

return, should forward a full list of any contractual qualifications. This
enables the client to take legal advice and minimize the potential delay
to the tender period;
• details of membership of trade bodies;
• corresponding reference numbers of the local standards when offering

options of products from a foreign standard;
• method statements;
• management histogram – this illustrates the resources the building

services contractor has allowed for managing the project and should
relate to their preliminaries section of the pricing document;
• labour histogram – the total labour resources required to complete the

project. This shows both the building services contractor’s
understanding of the project and provides for a monitor once on site; and
• cash flow – the cash flow translates the project programme into the
client’s anticipated financial commitment. If this can be agreed with the
successful tenderer early on in the project, there is an opportunity to use
this as a valuation tool provided the programme is adhered to. An agreed
cash flow can be invaluable when the client’s project funds are similarly
time related.
3.2.4.9 EVALUATION OF TENDERS
To ensure parity of tender, the specification should be priced in its original

form, with alternatives given separately. A comparison of the pricing
schedules supplied by each tenderer must be completed in conjunction with
the tender’s technical information, including all addendums and clarifications.
The building services engineer should check each submission to establish the
tenderers compliance with the specification while the quantity surveyor
should establish their compliance from a commercial viewpoint.
Evaluation should not be completed without reference to the building services

contractor’s schedules of rates. The quantity surveyor must take a view on the
competitiveness (or otherwise) of the submitted schedules as they may not
bear comparison with the competitiveness of the tenderers’ lump sum. This is
particularly relevant if there are large value provisional sums that will be
measured and valued using the schedules. Detailed analysis prior to award is
also essential if the schedules are to be bound into the contract as a contract
document.
During the review process it will probably be necessary to clarify points with
the tenderers. This should be done through the quantity surveyor, as before.
PART 3, SECTION 2
Post-tender interviews are to be encouraged so that the tenderers’ grasp of the

project can be established.
Once all the information has been gathered it will be necessary to establish a
comparable price. The final appointment decision should be made, not solely
on price but also considering the tenderers’ understanding of the project and
their ability to complete in time and to budget.
In this final analysis it is recommended that the tenderers’ procedures for cost
control and reporting are also examined. An up-front pro-active attitude on the
building services contractor’s part will result in potential problems being
identified early providing the design team with an opportunity to find a
beneficial resolution.
3.2.4.10 SUMMARY
• Make sure there is only one pricing document which directly relates to
the specification.
• Ensure the pricing schedule covers all the information required such as:
• overheads and profit;
• an all-in man hour rate;
• daywork rates inclusive of percentage uplifts;
• a fully quantified schedule of rates; and
• opportunity to price for alternatives.
• Ensure documentation is clear as to the method for managing tender

queries, identifying a single point of responsibility.
• A clear procedure for managing addendums should be agreed by the

design team.
• Careful analysis of the return tenders to obtain a clean unqualified bid on

which a clear recommendation can be made.
PART 3, SECTION 2
Notes
1) Department of Environment, Transport and the Regions (1998).
Rethinking Construction. London: DETR.
2) Clinton, M. (1995). Legal Liabilities. (Paper for seminar: ‘The Answer to

your Problems – Design & Build’).
3) Construction Industry Board (1999). Code of Practice for the Selection of

Sub-Contractors. London: Thomas Telford Publishing.
Appendix A: Typical Example
Preliminary Items
In the following typical example all general and preliminary items would normally be
detailed in the main preliminary documentation. The following clauses are suggested in
relation to the inclusion of a pricing schedule and can appear either in the main
preliminaries or as part of the sub-contract tender documents.
General Items
a) It is a pre-requisite that the following pricing summary is completed in full with every
item priced. Failure to do so will invalidate the tender submission.
b) The following descriptions are not necessarily complete. The building services
contractor is referred to the tender drawings, specification and accompanying
documents for a full scope of work.
c) The building services contractor is to include in its rates for any temporary works
considered necessary.
d) The building services contractor is to include in its rates for all necessary fixings,
connections, fittings, bolts, etc. unless otherwise stated in this document.
e) The building services contractor is deemed to have included in its tender for all items
of materials, plant, equipment and labour whether or not specifically mentioned or
shown in order to carry out the necessary works in accordance with good practice and
procedures.
f) No extra payments will be considered through the building services contractor/quotes

failure in this respect.
g) The building services contractor is to take into account all the requirements of the
contract documents and should price accordingly within the relevant section of the
tender summary.
h) For details of the scope of works refer to the specification.
Calculations of Preliminaries
j) The contractor shall detail below, or provide a separate document, detailing the build
up to all the preliminaries items priced in the pricing document.
k) The calculations shall show weekly rates, areas, periods of time, quotations and all
other details.
Appendix A ( 07/01)
Schedule of Rates
a) The contractor shall within 3 days of being requested, submit a fully priced schedule
of all items and quantities involved in the make-up of its tender. The sum total of the
schedule shall equal the price of the form of tender.
b) All prices included in respect of equipment and building services contractors must be
supported by the appropriate quotations.
c) The contractor is to detail its rates and percentages required for the following:
Percentage for overheads and profit on building services contractors _____ %
Percentage for overheads and profit on plant and equipment

if different from a) above _____ %
Percentage for overheads and profit on general materials,

if different from b) above _____ %
All-in man-hour rates inclusive of overheads, and profit £ ___

(Expand to include all trades)
Extra over the above rate for any non-productive overtime work £ _____
(Expand to include all trades)
d) The percentages and labour rates entered above will be deemed to include for all
contractor’s overheads, expenses, establishment costs, administration, off-site
services and all items of expenditure related to off-site management and profit.
e) The percentages and labour rates above will be the same as used in the preparation of
the tender sum and schedule of rates.
f) The schedule of rates shall be used for the purposes of pricing any future variations
and assisting in the calculation of interim valuation payments.
g) If the contractor does not complete any of the above percentages or rates, they will be
deemed to be priced at NIL.
Page 2 Effective from 1/9/01 Part 3, Section 2 The Surveyors’ Construction Handbook
Appendix A (07/01)
Pricing Schedule
The following is a typical example of a pricing summary for a commercial office

development. It is intended to depict the detail required in the pricing summary and will
require amendment so as to be project particular.
ELECTRICAL SERVICES INSTALLATION
Electrical Incoming £ p
Provide electric incoming supply, switchroom and

metering (supplied and installed by utility) Item
11KV supply cable and switchgear terminating in

the 11KV switchgear to the transformer room Item
Lighting and small power installation associated with

HV switchroom Item
Include for obtaining design and construction

information coordination and necessary meetings
associated with the utility provider Item
Utility switchroom, transformer room and generator

earthing, supply and install necessary earth rods,
cabling and earth bars Item
Low voltage switchboard, supply and install

packaged sub-station comprising two main sections
as specified Item
Allow for adjusting all protective device settings and

carrying out discrimination study Item
Switchboard reference Item
Standby Power
Life safety generator installation incorporating skid

mounted heat exchanger installation and fuel
system, including all necessary hoisting/craneage Item
Generator flue installation, including acoustic

treatment, future tenants generator flue and all
necessary silencers Item _________
To Collection £
Appendix A (7/01)

(Continued) £ p
Test generator at full load inclusive of inductive

loads at manufacturers works Item
Test and commission generator installation on site

complete with resistive and inductive load banks Item
LV Distribution
Sub-mains power distribution cables Item
Rising bus bar installation Riser A Item
Rising bus bar installation Riser B Item
Rising bus bar installation Riser C Item
Automatic transfer switches to all life safety MCCS

and fire fighting controllers and fire service plant Item
Earthing and bonding Item
Lighting Installation
Lighting installations, including luminaires, lamps,

louvres, final circuit wiring and cable containment
system as necessary to the following:
Office area lighting Item
Lift lobbies Item
Entrance hall, including dimming Item
Toilets and shower rooms Item
Staircase lighting Item
Lift shaft lighting Item
Plantroom and circulation space Item
External lighting Item
Emergency lighting installation Item _________
To Collection £
Appendix A (07/01)

(Continued) £ p
Small power installation Item
Small power distribution Item
Electrical Power for Mechanical
Electrical work associated with mechanical services Item
Protection
Fully automatic addressable analogue fire detection

and alarm system Item
Generator room fire protection system Item
Security installation comprising the following:
Door entry control system Item
Alarm system Item
Closed circuit television system Item
Lightning protection system Item
Ancillary equipment installations:
Fix only free issue warm air hand dryers Item
Fix only free issue hair dryers Item
Disabled persons assistance call system Item
Shaver outlets Item _________
To Collection £
Appendix A (7/01)

(Continued) £ p
Electrical heating installations:

Lift plantroom installation Item
Utility switchroom Item
Temporary electrical heating installation Item
Data Installation
Telecommunications and data communications incoming

ducts and cable tray systems Item
General:
Buildings work drawing Item
Electrical sub-contractor’s design and installation
drawings, including any necessary manufacturer’s
shop drawings Item
Testing and commissioning the complete electrical
installation, including compliance with the
commissioning manager’s requirements Item
As installed documents, drawings and O&M
manuals in the required format as specified by
the document production manager Item
Client instruction and operation training Item
Provision of samples and mock-ups as required Item
Provision of tools and spares Item
Any other items not listed above
(the sub-contractor to state) Item _________
To Collection £
Appendix A (07/01)
MECHANICAL INSTALLATION £ p
LPHW heating installation:

Central boiler plant and associated equipment Item
Boiler flue installation Item
LPHW pressurization units Item
LPHW circulation units Item
LPHW pipework installation, fittings, valves, etc. Item
Main entrance overdoor heaters Item
Staircase fan convectors Item
Thermal insulation to LPHW installation Item
Water treatment, dosing and flushing Item
Hot and cold water installations:

Allow for all negotiations/liaison, coordination
associated with the new supply Item
Water storage tanks Item
Cold water packaged booster set Item
Water supplies for window cleaning Item
Electric showers Item
Hot water heaters Item
Overflow systems Item
Domestic hot and cold water pipework, fittings
and valve installation Item
Final connection to sanitaryware Item
Potable water booster pump set Item
Thermal insulation to hot and cold water services Item _______
To Collection £
Appendix A (7/01)
MECHANICAL INSTALLATION
(Continued) £ p
Hot and cold water installations:

Eye wash facilities Item
Water chlorination, dosing and flushing Item
Condenser water system:

Cooling towers Item
Filter system Item
Packaged water softener Item
Condenser water circuit, water treatment
equipment Item
Chilled water installations:

Main A/C condenser water pumps and water
make up pumps Item
Cooling tower make up water storage tanks Item
Condenser water system pipework fittings and
valves installation Item
Condenser water system installation Item
Chilled water system Item
Centrifugal refrigeration machines Item
Cooling system plate heat exchangers Item
Chilled water circulation pumps Item
Water treatment, flushing and dosing Item
Chilled water system pressurization unit Item
Chilled water system pipework, fittings and
valves installation Item __________
To Collection £
Appendix A (07/01)
(Continued) £ p
Chilled water installations (Continued):
Chilled water system insulation Item
Refrigeration leak detection system Item
Water leak detection system Item
Fan coil units:

Fan coil units Item
Air conditioning and ventilation:

Ductwork installation, including all duct
mounted accessories and fittings Item
Ductwork cleaning requirements Item
Independent ductwork cleanliness inspection,
etc. Item
External louvres Item
Ductwork thermal insulation Item
Fire and smoke rated ductwork Item
Grilles and diffusers Item
Flexible connections Item
Air handling units fans, etc. Item
Duct mounted heater batteries Item
Humidifiers Item
Acoustic connections/attenuation Item
Louvre connection plenums Item
Duct mounted control items Item _________
To Collection £
Appendix A (7/01)
(Continued) £ p
Natural gas service:

New gas service – allow here for all
negotiations, liaison, coordination associated
with the new supply Item
Allowance for selection of ‘gas shipper’ as
described in the specification Item
Gas distribution pipework, fittings and valves Item
Gas meters Item
Gas detection system Item
Sprinkler installation Item
New fire main allow here for all negotiations, liaison,

coordination associated with the new supply Item
Dry riser and falling mains installation Item
Hosereel system Item
Condensate system:
Condensate drains from various equipment Item
Building management system and automatic controls

central processing unit and field processing units:
Control valves, actuators, sensors and detectors Item
Interfaces with other systems and equipment Item
New motor control centres, life safety MCC and
control panels Item
Fireman’s ventilation control panel,
pressurization panel, sprinkler panel and wiring Item
All control wiring, trunking, conduit, etc. Item
BMS/automatic controls software Item _________
To Collection £
Appendix A (07/01)
(Continued) £ p
Building management system and automatic controls

central processing unit and field processing units
(Continued):
Attendance on other trades during
commissioning of their systems Item
Attendance during demonstration to fire
brigade, client’s maintenance staff, the engineer
and building control on separate occasions Item
Setting to work, testing and commissioning
including trend logging, etc. Item
Generator oil storage and distribution system:

Bulk oil storage tank Item
Fuel oil transfer pumps Item
Pipework, fittings and valves Item
Oil fill station Item
General:
Trace heating to pipework system as necessary Item
Allow for all works/factory tests and demonstrations
of plant and equipment as specified Item
Preliminary items Item
Allow for mock-ups and samples specified Item
Test and commission the complete mechanical and
public health services installation in accordance
with the commissioning manager’s requirements Item _________
To Collection £
Mechanical and public health contractor’s design
and installation drawings including
manufacturers/suppliers shop drawings as necessary Item
Builders work drawings Item
Appendix A (7/01)
(Continued) £ p
General (Continued):
As installed documents, drawings and O&M
manuals in the required format as specified by
the document production manager Item
Client instruction and operation training Item
Provision of tools and spares Item
Any other items not listed above,
the sub-contractor to state Item __________
To Collection £
Appendix A (07/01)
PUBLIC HEALTH INSTALLATION £ p
Rainwater installation Item
Above ground drainage installation (note under-ground

drainage may not be part of this sub-contract) Item
Fire fighting lift drainage installation Item _________
To Collection £
Appendix A (7/01)
PART 4, SECTION 1
PART FOUR: CONSTRUCTION ADMINISTRATION AND

MANAGEMENT
SECTION 1: THE PROBLEMS OF PRACTICAL

COMPLETION
Introduction
The law and practices in relation to the completion of building and

engineering projects are complex issues that often give rise to conflict. Whilst
the title of this section refers to practical completion the subject has been
approached at a more generic level. Thus, for example, the concepts of
‘substantial completion’ and ‘taking over’ have been included and
commented upon, and standard forms other than JCT variants have been
considered.
The following related and subsidiary topics are, however, not addressed:
• the acceptance of defective work either before or after practical
completion;
• wider consideration of the matter of adjudication upon practical
completion;
• the law concerning latent defects and its inter-relationship with
contractual defects liability provisions generally;
• closer examination of the issues surrounding early completion (although
analysis of the general scheme of the subject under JCT forms is
included);
• the changing law concerning final certificates;
• the operation of fluctuation provisions after practical completion;
• the significance of practical completion in relation to performance
bonds; and
• the concept of temporary disconformity in building contracts.
G 4.1.1 What Happens in Practice
There is a considerable number of approaches adopted for the certification of

completion in standard forms of contract used in the UK construction industry
(see 4.1.2). Similarly, there are a variety of methods by which some of the
problems could be dealt with (see 4.1.3).
Surprisingly, however, there is an almost universally accepted procedure

adopted for both building and civil engineering with regard to the actual
practice carried out on site.
PART 4, SECTION 1
This may be described as follows:
(a) Contractor ‘Offering Up’

• The contractor writes to the employer’s representative/contract
administrator suggesting that works will be (or are now) ready for
handover by a particular date.
• This may be accompanied by the contractor’s own list of uncompleted
works, especially, for example, where outstanding information,
statutory authorities, or employer’s direct works may be preventing
completion of a specific element of the contractor’s work.
(b) Snagging List

• Either in advance of the contractor’s notice mentioned above, or
prompted by it, the architect, engineer or contract administrator will
prepare a list of defects and outstanding works which will be issued to
the contractor.
• Often, but not always, this list is prepared during a joint inspection with
the contractor.
(c) Clearing the Snagging List

• The contractor will endeavour to reduce the length of the snag list, but
here is where the disputes will start. Many points will be argued by the
contractor to be unreasonable quality demands, or work constituting a
variation.
• The management of this process is often poor, with the architect or
engineer producing a new list each time he or she revisits the site.
Confusion and distrust is often generated.
(d) Certification
• Eventually a point will be reached where completion can be certified in
the opinion of the architect, engineer or contract administrator.
Although not defined as such in the majority of standard forms (see
4.1.2), the most commonly held belief is that this should occur when the
employer can enjoy beneficial occupation and use of the building or
facility, and that the making good of any remaining works or removal of
snags will not unduly impede that occupation.
• Such an approach is supported by case law (see 4.1.5).
(e) Influences upon Certification

• Inevitably, the client often strongly influences the certification process,
despite the contract demanding otherwise. The strength of this influence
may be dependent upon the demands or otherwise for use or transfer of
the building or facility, or the commencement of fit-out works.
• The process is also influenced by the relationships which exist between
the client, the professional team, and the contractor, and indeed the
pressures brought by the contractor, perhaps motivated by substantial
levels of liquidated damages.
PART 4, SECTION 1
G 4.1.2 Standard Form Approaches
4.1.2.1 JCT 98 ‘PRACTICAL COMPLETION’:
(a) JCT 98 does not define practical completion. At clause 1.3 (Interpretation,
Definitions, etc.) the following unhelpful entry is made:
‘Practical Completion: see clause 17.1’
Clause 17.1 provides the following
‘When in the opinion of the Architect Practical Completion of the Works

is achieved and the Contractor has complied sufficiently with clause
6A.4, and, if relevant, the Contractor has complied with clause 5.9
(Supply of as-built drawings etc. – Performance Specified Work), he
shall forthwith issue a certificate to that effect and Practical Completion
of the Works shall be deemed for all the purposes of this Contract to have
taken place on the day named in such certificate.’
(b) Clause 17.1 is inextricably bound with the provisions relating to defects,
shrinkages or other faults appearing within the defects liability period, or frost
damage. Clause 17.2 commences: (Clauses 17.2 to 17.5).
‘Any defects, shrinkages or other faults which shall appear within the
Defects Liability Period … .’
These provisions therefore support a view that practical completion cannot be

certified under JCT 98 unless all known (patent) defects have been resolved.
This is because the duty of the contractor to rectify defects during the defects
liability period is limited to those defects appearing after practical
completion.
Thus, a defect which was apparent at practical completion cannot be a defect

for the purposes of clause 17.2 and, strictly speaking, the architect cannot
require the contractor to make good such items of work. However, this
distinction is often ignored by architects and contract administrators.
4.1.2.2 NOMINATED SUB-CONTRACT NSC/C
Under clause 35.16 of JCT 98, the architect must issue separate certificates
of practical completion for each nominated sub-contractor when, in his or
her opinion, the nominated sub-contract works have reached practical
completion.
Clauses 2.10 and 2.11 of NSC/C state the following:
‘2.10 If the Sub-Contractor notifies the Contractor in writing of the

date when in the opinion of the Sub-Contractor the Sub-Contract
PART 4, SECTION 1
Works will have reached practical completion, the Contractor shall

immediately pass to the Architect any such notification together with
any observations thereon by the Contractor and the Sub-Contractor has
complied sufficiently with clause 5E.5. A copy of any such
observations must immediately be sent by the Contractor to the
Sub-Contractor.
2.11 Practical Completion of the Sub-Contract Works shall be deemed to

have taken place on the day named in the certificate of practical
completion of the sub-Contract Works issued by the Architect under
clause 35.16 of the Main Contract Conditions or, where clause 18 of the
Main Contract Conditions applies, as provided in clause 18.1.11 of the
Main Contract Conditions.’
4.1.2.3A DOMESTIC SUB-CONTRACT 2002 EDITION
(a) This form of sub-contract generally maintains the provisions of DOM/1.
(b) Clause 2.13 requires the sub-contractor to notify the main contractor of the
date on which the sub-contractor considers the domestic sub-contract works
have reached practical completion.
(c) If the main contractor does not dissent from that date within 14 days of
receiving the sub-contractor’s notice, practical completion is deemed to have
occurred on the date notified by the sub-contractor.
(d) Clause 2.14 requires that if the main contractor does dissent, the date must
either be established by agreement or determined by an adjudicator. In the
absence of such agreement or determination, the date will be that stated by the
main contractor in his/her notification of dissent under clause 2.13 or if earlier
or no date is stated in the notification of dissent, on the date of Principal
Completion of the Works certified by the architect under clause 17.1 of the
main contract.
4.1.2.4 JCT INTERMEDIATE FORM (IFC 98)
(a) The Intermediate Form closely follows that described above for JCT 98.
(b) Clause 2.9 provides:
‘When in the opinion of the Architect/the Contract Administrator

Practical Completion of the Works is achieved and the Contractor has
complied sufficiently with clause 5.7.4 he shall forthwith issue a
certificate to that effect. Practical Completion of the Works shall be
deemed for all the purposes of this Contract to have taken place on the
day named in such certificate.’
(c) Clause 2.11 provides for partial possession. The effect is similar to the
partial possession provisions of JCT 98 (see 4.1.6.5).
PART 4, SECTION 1
4.1.2.5 JCT 98: WITH CONTRACTOR’S DESIGN
(a) Under this form there is no architect to enable a certificate of practical

completion to be issued. Accordingly, the responsibility passes to the
employer.
‘When the Works have reached Practical Completion and the Contractor
has complied with clause 6A.5.1 or has complied sufficiently with clause
6A.5.2, whichever clause is applicable, the Employer shall give the
Contractor a written statement to that effect, which statement shall not be
unreasonably delayed or withheld, and Practical Completion of the
Works shall be deemed for all the purposes of this Contract to have taken
place on the day named in such statement.’
(c) Any dispute as to the issuing or withholding of a practical completion

certificate must be referred to adjudication for an interim binding decision or
to arbitration.
4.1.2.6 JCT MINOR WORKS: MW98
(a) The JCT Minor Works form provides a crisp, clear statement which has the
same effect as the provisions for the main JCT forms.
‘The Architect/The Contract Administrator shall certify the date when in

his opinion the Works have reached practical completion and the
Contractor has complied sufficiently with clause 5.9.’
(c) It should be noted, however, that whereas the mechanism for certifying
practical completion is the same as JCT 98, the provisions for defects liability
differ.
(d) It has been held2 that the MW80 form (predecessor to MW98):
• does not require a written schedule of defects and, therefore, oral
notification is sufficient;
• in clause 2.5 the words ‘any defects, excessive shrinkages or other
faults which appear within three months of the date of practical
completion …’ extend to defects which appear before practical
completion;
• the words ‘defects, excessive shrinkages, or other faults’ are not
qualified by any reference to the ‘works’ and so would, therefore, extend
to an existing structure.
Note: JCT 98 clause 17.2 refers to ‘shrinkages’, whereas MW98 refers to

‘excessive shrinkages’.
PART 4, SECTION 1
4.1.2.7 JCT PRIME COST CONTRACT 1998 EDITION
The Prime Cost Contract uses the same wording as the Intermediate Form.
See 4.1.2.4.
4.1.2.8 JCT MANAGEMENT CONTRACT 1998 EDITION
The Management Contract also uses similar wording to the Intermediate

Form. See 4.1.2.4.
4.1.2.9 JCT WORKS CONTRACT/2
(a) Under clause 2.14 of the WC/2, the management contractor is required to
issue separate certificates of practical completion for each works contract. The
management contractor is, however, obliged to obtain the architect’s consent
under clause 8.3.4 of the Management Contract, signifying that the relevant
works have, in the architect’s opinion, reached practical completion.
(b) Therefore, these provisions more closely resemble the nominated

sub-contract provisions of the JCT main forms (see 4.1.2.2) than the
procedures found in the domestic sub-contract DOM/1.
4.1.2.10A THE ACA STANDARD FORM OF CONTRACT FOR PROJECT PARTNERING PPC2000
(a) The ACA form of Project Partnering adopts a different approach.
(b) Clause 21.1 requires the constructor when it considers that the project has
achieved Project Completion to give the client representative not less than five
working days notice requesting the client representative to attend, inspect and
test as appropriate.
(c) Clause 21.2 requires that within two (working) days of completion of such
attendance, inspection and testing the client representative shall issue a notice
that either:
(i) confirmed that the project has achieved Project Completion;
(ii) indicates any aspect of the project which is not in accordance with the
Partnering Documents after which the constructor will again present
the Project in accordance with Clause 21.1.
(d) At Clause 21.3 there is provision for Part Project Completion by

agreement between the client and constructor using a procedure equivalent to
that described in Clauses 21.1 and 21.2.
(e) Rectification of defects after Project Completion is provided for in Clause

21.4 which requires the constructor to make good any defects, excessive
shrinkages or other faults notified by the client. It is important to note that
these defects etc. may have appeared either before project completion or
within the Defects Liability Period.
PART 4, SECTION 1
4.1.2.10B THE ACA STANDARD FORM OF SPECIALIST CONTRACT FOR PROJECT PARTNERING
SPC2000
(a) The provisions of the Standard Form of Specialist Contract SPC2000 are
similar to those on PPC2000, although the time frames are a little longer.
(b) Clause 21.1 requires the specialist to give the constructor seven working
days notice to attend, inspect and test as provided for in the Specialist
Working Brief.
(c) Clause 21.2 requires that within four working days of completion of the
attendance, inspection and testing the constructor and other appropriate
Partnering team members should issue a notice either:
(i) confirming that the specialist works have achieved Specialist

Completion: or
(ii) indicating where any aspect of the specialist works is not in accordance
with the Specialist Documents. The specialist is required to rectify
non-compliance and thereafter present the specialist works in
accordance with clause 21.1.
(d) Clause 21.3 again provides for Part Specialist Completion of any part of
the specialist works using a procedure equivalent to clause 21.1 and 21.2.
(e) With regard to defect rectification clause 21.4 requires the specialist to
attend site whenever notified by the constructor of any defects, excessive
shrinkages or other faults. This defect rectification can include defects arising
either before Specialist Completion or during the defects liability period for
the specialist works.
4.1.2.11 ICE 7TH EDITION: ‘SUBSTANTIAL COMPLETION’
(a) Though not as fully developed as the ACA form (see 4.1.2.10) it may well
be said that the ICE 7th edition provides a framework for completion which
reflects better than the JCT forms what actually happens in practice. In this
form, the contractor ‘offers up’ the works, and a process is provided for
dealing with outstanding works and defects.
(b) Clause 48 provides:
(1) When the Contractor considers that:
(a) the whole of the Works or
(b) any Section in respect of which a separate time for completion is provided
in the Appendix to the Form of Tender has been substantially completed and
has satisfactorily passed any final test that may be prescribed by the Contract
he may give notice in writing to that effect to the Engineer or to the Engineer’s
PART 4, SECTION 1
Representative. Such notice shall be accompanied by an undertaking to finish

any outstanding work in accordance with the provisions of clause 49(1).
(2) The Engineer shall within 21 days of the date of delivery of such notice
either:
(a) issue to the Contractor (with a copy to the Employer) a Certificate of

Substantial Completion stating the date on which in his opinion the Works
were or the section was substantially completed in accordance with the
Contract; or
(b) give instructions in writing to the Contractor specifying all the work which
in the Engineer’s opinion requires to be done by the Contractor before the
issue of such certificate.
If the Engineer gives such instructions the Contractor shall be entitled to

receive a Certificate of Substantial Completion within 21 days of completion
to the satisfaction of the Engineer of the work specified in the said
instructions.
Note: It is the Engineer, not his representative, who is authorized to issue the
certificate.
(c) Clause 49(1) deals with outstanding work and defects as follows:
The undertaking to be given under clause 48(1) may after agreement between the
Engineer and the Contractor specify a time or times within which the outstanding
work shall be completed. If no such times are specified any outstanding work
shall be completed as soon as practicable during the Defects Correction Period.
The difficulty of this provision, notwithstanding that it reflects common

practice, is that there is often a dispute as to the extent of outstanding works
permitted. This will be of considerable importance when large liquidated
damages are potentially claimable.
The clause gives the engineer a discretion and, as in other forms, his or her
decision may be reviewed by an adjudicator or arbitrator.
It should also be noted that the ICE 7th edition form caters expressly for the
circumstances where the employer uses or occupies the works or part of the
works prior to a 48(2) certificate being issued.
(d) Clause 48(3) provides:
‘If any substantial part of the Works has been occupied or used by the
Employer other than as provided in the Contract the Contractor may request in
writing and the Engineer shall issue a Certificate of Substantial Completion in
respect thereof. Such certificate shall take effect from the date of delivery of
PART 4, SECTION 1
the Contractor’s request and upon the issue of such certificate the Contractor
shall be deemed to have undertaken to complete any outstanding work in that
part of the Works during the Defects Correction Period.’
Note: The ICE Design and Construct Clause 48(3) provisions in respect of
operation and maintenance instructions are not present in the 7th edition.
4.1.2.12 ICE 6TH EDITION:
In respect of substantial completion, the same as ICE 7th Edition.
4.1.2.13 ICE DESIGN AND CONSTRUCT FORMS
(a) These provisions are identically worded to the corresponding clauses of

the ICE 7th edition, except that reference to the engineer or engineer’s
representative is replaced by the ‘Employer’s Representative’.
(b) It is to be noted, however, that there is an express requirement under clause

48(3) for the contractor to provide operation and maintenance instructions
prior to the issue of any certificate of substantial completion.
4.1.2.14 ICE MINOR WORKS
(a) The ICE Minor Works is unique amongst standard forms in that it defines
completion against the readiness of the works to be used by the employer.
(b) Clause 4.5 states as follows:
(1) Practical completion of the whole of the Works shall occur when the
Works reach a state when notwithstanding any defect or outstanding items
therein they are fit to be taken into use or possession by the Employer.
(2) Similarly practical completion of part of the Works may also occur but
only if it is fit for such part to be taken into use or possession independently of
the remainder.
(3) The Engineer shall upon the Contractor’s request promptly certify in
writing the date upon which the Works or any part thereof has reached
practical completion or otherwise advise the Contractor in writing of the work
necessary to achieve such completion.
(c) Clause 4.7 deals with the completion of outstanding works or defects after
practical completion has occurred.
4.1.2.15 FCEC ‘BLUE FORM’ OF SUB-CONTRACT
The FCEC sub-contract form approaches completion of the sub-contract

works quite differently from completion under the building sub-contracts.
PART 4, SECTION 1
Under this form, the sub-contractor must complete within the period for
completion specified in the Third Schedule (clause 6.1). The schedule could
provide that such a period is to end prior to substantial completion of the
main contract works. However, the sub-contract does not provide an
effective means to establish when completion of the sub-contract works has
been achieved. Therefore, unless the parties otherwise agree, it is probable
that completion of the sub-contract works may not be acknowledged until
substantial completion of the main contract works and only then by the
implication that the main works have completed. If the sub-contract works
are completed prior to main contract works completion, clause 13(1) of the
FCEC ‘blue form’ places the sub-contractor with an absolute obligation to
maintain the sub-contract works until substantial completion of the main
works.
4.1.2.16 THE NEW ENGINEERING CONTRACT (NEC) 2ND EDITION
(a) The NEC eschews the system set out in the ICE form which reflects current
practice, namely the contractor offering up the works and
completion/handover occurring together with clear provisions for dealing
with outstanding works and defects.
(b) Instead it may be thought that the NEC is in some respects closer to JCT:
completion takes place when the project manager decides so. As if completion
was not vexed enough already, the NEC gives the project manager three terms
to deal with: ‘Completion’, ‘taking over’ and ‘termination’.
(c) The NEC provisions are found in the core clauses as follows:
• Part 1 – General – Clause 11.2 (identified and defined terms) (13) states:
Completion is when the Contractor has
• done all the work which the Works Information states he is to do by the
Completion Date and
• corrected notified Defects which would have prevented the Employer
from using the works.
• Part 3 – Time – Clause 35 (Take over) states:
35.1 Possession of each part of the Site returns to the Employer when
he takes over the part of the works which occupies it. Possession
of the whole Site returns to the Employer when the Project
Manager certifies termination.
35.2 The Employer need not take over the Works before the
Completion Date if it is stated in the Contract Data that he is not
willing to do so. Otherwise the Employer takes over the Works
not more than two weeks after Completion.
35.3 The Employer may use any part of the Works before Completion
has been certified. If he does so, he takes over the part of the
Works when he begins to use it except if the use is:
PART 4, SECTION 1
• for a reason stated in the Works information

• to suit the Contractor’s method of working.
35.4 The Project Manager certifies the date upon which the Employer
takes over any part of the Works and its extent within one week of
the date.
4.1.2.17 GOVERNMENT CONTRACTS – GC/WORKS/1 (1998)
(a) GC/Works/1 (1998) provides that the works are to be completed to the
satisfaction of the Project Manager, who is required to certify completion. In
addition, the Employer may choose to take partial possession of a part of the
works.
(b) Condition 34(2) (commencement and completion) states the following:
‘34(2) The Contractor shall, at all times, keep the Site tidy and free from
debris, litter and rubbish and shall, not later than the Completion of the
Works, remove from the Site all Things for incorporation in the Works or
any relevant Section which are unused, together with all things not for
incorporation. The Contractor shall, by the due date, clear and remove all
rubbish and deliver up the Site and the Works in all respects to the
satisfaction of the PM. The Contractor shall comply at his own cost with
any Instructions relating to the removal of any things and rubbish.’
(c) Requirements for a completion certificate are to be found in clause 39:
‘The PM shall certify the date when the Works, or any Section, or any
completed part within the meaning of Condition 37 (Early Possession),
are completed in accordance with the Contract. Such completion shall
include sufficient compliance by the Contractor with Condition 11(7)
(Statutory notices and CDM Regulations). After the end of the last
Maintenance Period to expire, he shall issue a certificate when the
Contractor has complied with Condition 21 (Defects in Maintenance
Periods).’
(d) Clause 37 deals with partial possession before completion:
‘The Employer shall be entitled, before the completion of the Works, to

take possession of any part of the Works (in this Condition referred to as
a “completed part”) which is certified by the PM as having been
completed in accordance with the Contract and is either –
(a) a Section; or
(b) any other part of the Works in respect of which the parties agree, or the
PM has given an instruction, that possession shall be given before the
completion of the Works or the relevant Section; and the completed part, on
and after the date on which the certificate is given, shall no longer form part
PART 4, SECTION 1
of the Works for the purposes of Condition 19 (Loss or damage) and 30

(Vesting).’
4.1.2.18 INSTITUTION OF CHEMICAL ENGINEERS FORMS: ICHEME
(a) ‘Red Book’ for lump sum contracts. ‘Green Book’ for reimbursable
contracts.
(b) The IChemE forms recognize that on large process plant projects or
similar, the concepts of completion and taking over have distinctly separate
ramifications, from both contractual and safety points of view. These are
reflected in the contractual procedures provided in the IChemE forms. The
procedures, therefore, are closer to a true contractual definition of completion
than can be found in any other standard form. There are three aspects of
significance which are considered:
• compliance with the specification

with the description of works
• time finishing tasks according to programme or
with reference to financial incentive
• transfer of responsibility.
(c) Five points in the completion process are thus recognized.
• Clause 33.1 (Red Book), clause 32.1 (Green Book) requires the
contractor to notify the project manager by means of a construction
completion report when he or she is of the opinion that the plant is
substantially complete.
When the plant has satisfactorily completed tests set out in the
specification and the contractor has adequately demonstrated
completion in accordance with the specification, the project manager
and contractor sign the construction completion report. There may, of
course, be a number of these reports related to different elements of the
plant.
If the project manager is not satisfied he or she may endorse the report
accordingly and the contractor must repeat the procedure described in
clause 33.1.
• Once all the construction completion reports have been signed by the
project manager, and where the contract schedule specifies a date for
completion of construction, the project manager issues a certificate of
completion of construction, under clause 33.4.
• The purchaser normally takes over responsibility for the plant just
before any raw materials are to be fed into the plant to undergo the
designed process change.
The IChemE forms, therefore, provide for the carrying out of take-over
procedures, including tests, as may be specified within the contract
schedules, to follow on from construction completion. As soon as all the
procedures have been successfully carried out, the project manager
issues a take-over certificate to be signed by the purchaser and delivered
to the contractor under clause 34.7. The purchaser is thereafter
PART 4, SECTION 1
responsible for the care, safety, operation, servicing and maintenance of

the plant.
• The contract may prescribe performance tests embodied by specific
guarantees of the contractor. The IChemE forms provide for acceptance
certificates in respect of the satisfactory operation of the plant in
accordance with these tests (clauses 35 and 37).
• Finally, the IChemE forms lay down procedures for the certification
of the correction of defects at the end of the defects liability period
where the project manager must issue to the purchaser and contractor
a final certificate (clause 38) which provides conclusive evidence that
the contractor has completed the works and made good all defects
therein.3
G 4.1.3 Effects of Practical Completion
The various standard forms differ in their treatment of the transfer of rights
and obligations between the parties at completion.
The following issues are however common to most forms:
(a) liability to pay damages for delay ceases (whether liquidated and
pre-ascertained, or unliquidated);
(b) possession of the site returns to the employer and the risk of security and
damage to the works and third party liability transfers back to the employer
(but not damage to the works caused by the contractor during the defects
liability period);
(c) commencement of the defects liability period;
(d) payment to the contractor of one half of the retention fund; and
(e) no further instructions may be issued for variation works or the

rectification of works other than those appearing during the defects liability
period.
Dependent upon the form of contract, certain other factors are conditional
upon the certificate of completion. For example, under JCT 98:
(a) the employer may assign the right to bring proceedings in his or her name
(clause 19.1.2);
(b) the commencement of the period of the final adjustment of the contract
sum (clause 30.6);
(c) liability for frost damage is transferred from the contractor to the employer
(clauses 17.2, 17.3 and 17.5); and
PART 4, SECTION 1
(d) the period for final review of extensions of time expires 12 weeks from this
date (clause 25.3.3).
These factors also impact upon sub-contractors. For example, the

sub-contractors’ protection under the main contract all-risks’ policy ends.
In addition to mechanisms under the construction contract, the issue of a

certificate of completion may have direct impact upon third parties, such as
for example, to bring an end to obligations of a surety in respect of a guarantee
or performance bond.
G 4.1.4 Methods for Dealing with Practical Completion
There are a number of principal methods which might be used to reduce the
problems associated with practical completion. The following are seen as the
main options available:
(a) The Contract Administrator’s Opinion

Under this method there is no contractual definition of practical completion,
this being left entirely to the architect/engineer or contract administrator’s
opinion to certify when practical completion has been achieved.
The remedy available to the employer or contractor in the event they consider
the certificate has been wrongly issued or withheld is to adjudicate. This
option is used in the traditional JCT contract.
(b) Contractor’s Initiative

The contractor notifies its own completion which becomes contractually
binding unless dissented from by the recipient within a set number of days.
This is the model used in DOM/1, further developed to deal with the ‘dissent’
of the recipient under a main contractor and sub-contractor relationship.
(c) Definition of Standards

Inclusion within the contract of a definition of the tests or standards which the
contractor will be required to meet in order to achieve practical completion.
(d) It is possible that this could be dealt with as a ‘code of practice’ bound
within the contract document and expressly referred to in the conditions, in
similar fashion to the code of practice for opening up and testing under clause
8.4.4 of JCT 98.
(e) The IChemE forms come closest to this option, by prescribing tests and
standards to be achieved by the installed plant prior to completion. It is
suggested, however, that to define completion similarly for universal
application in building or civil engineering projects would be extremely
difficult. The primary area of difficulty lies in aspects of subjective evaluation
PART 4, SECTION 1
such as finishes, and it is doubtful whether this would be lessened by a

definition which called for ‘100% fault free works’ (see 4.1.4.2) since there
will always be disputes on quality issues.
(f) Appendix A offers a number of practical tests for judging the state of
completion.
4.1.4.1 READINESS FOR OCCUPATION
(a) Many commentators have agreed that practical completion should be

defined in the contract as that point when beneficial occupation may be
obtained by the employer. The decided cases have tended towards a
preference for this approach in any event, and the ICE Minor Works form is
an example of appropriate wording.
(b) Nonetheless, it is difficult to see how this reduces the incidence of

disputes: it is merely shifting the point at which arguments will be made.
Employers have argued that this represents a weakening of their position. The
building may be capable of being occupied, yet the standards required by the
employer may not have been met.
(c) As a qualification to this approach, an option is to add a rider to the effect

that the rectification of outstanding works and defects are capable of being
carried out in such a manner and within such a time that the employer’s
beneficial occupation will not be impeded.
4.1.4.2 PERFECT COMPLETION
(a) Here completion would not be granted until all outstanding works are
completed and defects rectified.
(b) This is not a favoured option in the UK, and the Courts have given
credence to the view that it is a difficult, if not impossible, yardstick to apply.
Nonetheless it is closer to the model applied in other European countries, and
an increase in the use of latent defects or ‘build’ insurance (such as the
mandatory decennial type liability in France) may bring a move towards ‘fault
free’ buildings at completion.
4.1.4.3 TWO-STAGE COMPLETION
(a) Various models have been suggested for a two-stage process for the
certification of completion.
(b) Clearly, the intent is to divide into two the numerous benefits and obligations
which fall upon the contractor and employer at completion (see 4.1.3).
(c) The first stage may be denoted by the issue of a ‘provisional certificate’ and,
by example, may be due when beneficial occupation is achieved or achievable.
PART 4, SECTION 1
(d) At this point, the employer would re-take possession and insurance risks
are transferred.
(e) The second stage would be perfect completion of the works. Only at this
point would the contractor be released from liability for liquidated and
ascertained damages. This would also mark the commencement of the defects
liability period. It is thought that the first release of retention would also not
occur until this point.
G 4.1.5 Definitions
Generally, as can be seen in 4.1.2, the standard forms of contract do not

provide definitions of what constitutes practical completion, although the ICE
Minor Works form contains a useful development of the term by stating it is
contingent upon the works being ‘fit to be taken into use or possession’.
(a) Fault Free Completion

Various definitions are available from decided cases and the principal
textbooks on construction law. Some definitions lean towards perfect, fault
free completion:
One would normally say that a task was practically completed when it
was almost, but not entirely finished; but Practical Completion suggests
that is not the intended meaning and what is meant is the completion of
all the construction work that has to be done.4
And in the same case:
… The defects liability period is provided in order to enable objects not

apparent at the date of practical completion to be remedied. If they had
been apparent, no such certificate would have been issued.5
(b) Completion for All Practical Purposes

The above quotations need to be compared with the opinion expressed by
Salmon LJ when the same case had earlier been heard by the Court of
Appeal:
The obligation on the contractors under clause 21 to complete the

works by the date fixed for completion must, in my view, be an
obligation to complete the works in the sense in which the words
‘practically completed’ and ‘practical completion’ are used in clause 15
and clause 16 of the contract. I take these words to mean completion for
all practical purposes, i.e. for the purpose of allowing the council to
take possession of the works and use them as intended. If completion in
clause 21 meant completion down to the last detail, however trivial and
unimportant, then clause 22 would be a penalty clause and as such
unenforceable.6
PART 4, SECTION 1
(c) The De Minimis Rule

This idea of practical completion being permitted despite the existence of
minor defects has been expressed elsewhere:
I think the word practically … gave the architect a discretion to certify

that [the contractor] had fulfilled its obligation under clause 21(1) (of JCT
63) where very minor de minimis work had not been carried out, but that
if there were any patent defects in what [the contractor] had done the
architect could not have given a certificate of practical completion.7
(d) Impossibility of Perfection

The development of this argument has involved contrasting the construction
industry with other forms of manufacture:
Probably the most important background fact which I should keep in

mind is that building construction is not like the manufacture of goods in
a factory. The size of the project, site conditions, use of many materials
and employment of various types of operatives make it virtually
impossible to achieve the same degree of perfection as can a
manufacturer. It must be a rare new building in which every screw and
every brush of paint is absolutely correct.8
And in the same case, Judge John Newey said:
In my opinion there is room for ‘completion’ as distinct from ‘practical

completion’. Because a building can seldom if ever be built precisely as
required by drawings and specification, the contract realistically refers to
‘practical completion’, and not ‘completion’ but they mean the same. If,
contrary to my view, completion is something which occurs only after all
defects, shrinkages and other faults have been remedied in accordance
with clauses 17.2 and 17.3 and a certificate to that effect has been given
under clause 17.4, it would make the liquidated damages provision in
clause 24 unworkable and in practice would require the defects liability
period to be added to the time initially negotiated by the parties for the
carrying out of the works. The construction industry recognizes a
difference between the carrying out of new works and ‘snagging’ that is
to say dealing with minor defects in them.9
(e) Substantial Performance

These arguments applied to practical completion have been used in explaining
the doctrine of substantial performance. This doctrine is concerned with
establishing when payment will be due of an amount payable under an ‘entire’
contract:
In considering whether there was substantial performance I am of

the opinion that it is relevant to take into account both the nature of the
defects and the proportion between the cost of rectifying them and the
contract price. It would be wrong to say that the Contractor is only
entitled to payment if the defects are so trifling as to be covered by the ‘de
minimis’ rule.10
PART 4, SECTION 1
In the same case, the key element for defining a failure to achieve substantial
performance was emphasized to be:
the general ineffectiveness of (the work) for its primary purpose …11
Substantial performance has been held to have occurred even though the
works were in part defective. The defendants were held liable for the sum
claimed less a deduction based upon the cost of making good the defects:
The question here is whether in a contract for work and labour for a lump
sum payable on completion the defendant can repudiate liability under
the contract on the ground that the work though ‘finished’ or ‘done’ is in
some respects not in accordance with the contract … I think on the facts
of this case the work was finished in the ordinary sense, though in part
defective …12
It has recently been held by the Court of Appeal in Hong Kong that practical
completion should be interpreted in a similar manner to the doctrine of
substantial performance.
We return to the issue of practical completion which we cannot

distinguish from substantial performance.13
The judge reached his conclusion that practical completion had not been
achieved in circumstances where, by reason of the failure to modify the
sprinkler system, the work contracted for was, in the words of Somervell LJ in
Hoenig v. Isaacs, neither ‘finished’ nor ‘done’ in the ordinary sense.14
The direct connection between cases dealing with substantial performance and
the definition of practical completion is, however, to be treated cautiously.
It may be doubted whether cases concerned with substantial performance

are relevant to the determination of practical completion as the term is
used in the standard form contracts where the event is not directly related
to payment obligation (as in the contract considered by the Hong Kong
court) but rather with consequences such as liability for liquidated
damages, repossession and the release of retention.15
(f) Substantial Completion

Definitions of the term ‘substantial completion’ appearing in the ICE forms
have been similar to those applied to practical completion.
This term (or equivalent words) used in clause 48(1) of the ICE 7th Edition
form ‘… substantially completed …’ now appears consistently throughout the
Conditions, inter alia, in clauses 43 and 47. The term is not defined, but the
expressed reference to ‘outstanding work’ to be completed within the Defects
Correction Period indicates a state plainly falling short of literal completion.
Neither is there any definition of ‘outstanding work’. There is no reason to
limit it to work that has not been carried out. It may include work which is
PART 4, SECTION 1
defective, but is to be re-executed or remedied in accordance with the

Contract.16
The Concise Oxford Dictionary equates ‘substantial’ with ‘virtual’ which is

defined as ‘that is such for practical purposes though not in name or according
to strict definition’. It is at least clear on the one hand that the fact that the
works are or are capable of being used by the employer does not automatically
mean that they are substantially complete (‘any substantial part of the Works
which has both been completed … and occupied or used’) and on the other
hand that the engineer may not postpone his or her certificate under this clause
until the works are absolutely completed and free from all defects. The many
reported cases on the question of ‘substantial’ completion in relation to
payment under an entire contract, a different legal problem, are of doubtful
relevance. Obviously both the nature and extent of the uncompleted work or
defects are relevant, and to say that substantial completion allows for minor
deficiencies that can be readily remedied and which do not impair the
structure as a whole is probably an accurate summary of what is a question of
fact in each case.17
4.1.5.1 KEATING’S ANALYSIS
Practical Completion is perhaps easier to recognize than to define. No clear

answer emerges from the authorities as to the meaning of the term. It is
submitted that the following is the correct analysis:
(1) The Works can be practically complete notwithstanding that there are
latent defects;
(2) A Certificate of Practical Completion may not be issued if there are

patent defects. The Defects Liability Period is provided in order to
enable defects not apparent at the date of Practical Completion to be
remedied;
(3) Practical Completion means the completion of all the construction

work that has to be done;
(4) However, the Architect is given a discretion under clause 17.1 to

certify Practical Completion where there are very minor items of work
left incomplete, on ‘de minimis’ principles.18
4.1.5.2 HUDSON’S APPROACH
It is desirable to be clear as to the precise meaning of ‘completion’ in a time

obligation. There is surprisingly little English authority on the point, but it is
clear that the requirement will be less rigorous than in other contractual
contexts. Usually it will mean bona fide completion free of known or patent
defects so as to enable the owner to enter into occupation. The words
‘practical’ or ‘substantial’ in the English standard forms probably do no more
than indicate that trivial defects not affecting beneficial occupancy will not
PART 4, SECTION 1
prevent completion (the more so, of course, if the contract provides for a
maintenance or defects liability period).19
In the last resort the degree of required completion needed to discharge the
contractor’s obligation to complete to time will be a matter of interpretation,
but can be expected to differ from other aspects of the contractor’s obligations
to complete. In English standard forms of contract employing liquidated
damages clauses for delay, this is often expressly described as ‘practical’ or
‘substantial’ completion, but there is no reason to suppose that these
expressions mean anything very different from the word ‘completion’
simpliciter when used or implied in the context of completion to time. It is
submitted that this will, in the absence of contrary indication, mean when the
work reaches a state of readiness for use or occupation by the owner, and free
from any known omissions or defects which are not merely trivial.20
4.1.5.3 REMEDYING DEFECTS
Another ingredient which it is suggested affects practical completion is the

extent of disruption an employer would incur in allowing access to a
contractor to remedy defects or complete works outstanding after the issue of
a practical completion certificate.
Furthermore, an employer must wish to reduce to the very minimum the

disruption that is caused by the presence of works going through a
snagging list and an architect should not issue a certificate of practical
completion until all such work has been completed – unless the employer
waives the right to insist upon it being done, and the contractor is willing
to continue to work in an occupied building and suitable arrangements
have been made for the insurance.21
G 4.1.6 Subsidiary Issues
4.1.6.1 FINANCING CHARGES AFTER PRACTICAL COMPLETION
(a) A specific question was raised in the Rees & Kirby case22 as to whether
financing charges incurred by a contractor upon primary elements of loss and
expense would cut off at the certificate of practical completion.
(b) The defendant argued that financing charges, which were to be considered
as a component part of the loss and expense claimed by the contractor as a
result of events occurring during the construction of the works, could not be
recoverable after practical completion, since the causative events complained
of must, by that stage, have come to an end.
(c) This contention was rejected by the Court.
As I read the clauses, given that (on the clauses in the form which they
take in the contract now before us) successive applications are made at
PART 4, SECTION 1
reasonable intervals. I can see no reason why the financing charges

should not continue to constitute direct loss or expense in which the
contractor is involved by reason of, for example, a variation, until the date
of the last application made before the last issue of the certificate issued
in respect of the primary loss or expense incurred by reason of the
relevant variation.
At the date of issue of the certificate, the right to receive payment in

respect of the primary loss or expense merges in the right to receive
payment under the certificate within the time specified in the contract, so
that from the date of the certificate the contractor is out of his money by
reason either (1) that the contract permits time to elapse between the issue
of the certificate and its payment, or (2) that the certificate has not been
honoured on the due date.
But I can for my part see no good reason for holding that the contractor
should cease to be involved in loss or expense in the form of financing
charges simply because the date of practical completion has passed.
4.1.6.2 INSTRUCTIONS ISSUED AFTER PRACTICAL COMPLETION
(a) Often practical completion is certified in an extremely hurried manner to

allow the employer occupation, for example, to commence fit-out works.
Where substantial outstanding works remain, this causes considerable
difficulty to architects or contract administrators who find they must issue
instructions after practical completion, in order to enable the contractor to
effectively finish the works.
(b) This brings about the absurd situation of contractors’ claims for extension
of time after practical completion, or arguments that time is ‘at large’ in order
to defeat the imposition of earlier delay damages.
(c) The Practice and Management Committee of the RICS published an

answer to this question in 199023 as follows:
Q Under JCT 80, is the architect empowered to issue instructions, other

than for rectifying defects, after the issue of the certificate of practical
completion. If the answer is yes, under which clauses of the contract is
this power given.
A The Architect is not so empowered. However, as a matter of

convenience, the parties may agree that further work is to be carried
out and paid for through the machinery of the contract
(Ref.Q/89/136).
(d) It is considered that whether or not payment is made through the

machinery of the contract, the additional work will, in effect, become the
subject of a supplemental contract.
PART 4, SECTION 1
4.1.6.3 CERTIFICATION OF PRACTICAL COMPLETION WHEN WORKS NOT COMPLETE
(a) As can be seen in 4.1.3 the issue of a practical completion certificate

transfers rights and obligations between parties to a construction contract and
furthermore often releases a surety from its obligations in respect of a
guarantee or bond. It may also be envisaged that a prospective future owner of
a newly-built property may decide to proceed with the purchase upon the issue
of a practical completion certificate.
(b) It is not uncommon for consultants to be pressured by both client and

contractor, albeit for differing reasons, for issue of the completion certificate.
However, the owner/occupier could be exposed to considerable financial risk
if practical completion is certified when in fact the works are not practically
complete (i.e. more than minor ‘de minimis’ works remaining) and by reason
of subsequent insolvency, incomplete and defective works remain just so. The
consultant might be held liable for such a loss in these circumstances.
(c) In one case,24 the Court did not accept the consultant’s defence that
because it had qualified its issued completion certificate by a list of ‘reserved
matters’, that this issued certificate should not have been taken to be the
completion certificate required by the terms of the contract. Even though the
employer was alleged to have instructed the consultant to issue an early
certificate, the consultant had not properly advised its client of the relevance
and importance of its issue including, amongst other things, the effect it would
have of depriving the employer of the benefit of the performance bond.
(d) In another case25 a consultant was held liable under a collateral warranty
to a future owner, for breach of a term to ‘exercise all proper professional
skill and care’, as it had purported in a letter to the architect that the
mechanical and electrical works were complete, when in fact they were not.
The architect subsequently certified practical completion, which induced the
purchase of the property. Although the representation to the architect was
made upon the employer’s request, the consultant should have declined the
request as it was in conflict with the future owner’s interests (i.e. the interests
of the beneficiary of the warranty that the consultant had agreed to) and the
consultant did not have the future owner’s express written agreement in this
regard.
4.1.6.4 OCCUPATION BY EMPLOYER PRIOR TO PRACTICAL COMPLETION
(a) A question often raised is whether occupation by the employer will be

deemed to constitute practical completion.
(b) Certain standard forms of contract contain clauses that expressly state this
to be the case.
(c) ICE 7th edition, clause 48(3), is an example, although it is qualified by

‘substantial part’:
PART 4, SECTION 1
If any substantial part of the works has been occupied or used by the
Employer other than as provided in the Contract, the Contractor may
request in writing and the Engineer shall issue a Certificate of Substantial
Completion in respect thereof …
(d) The New Engineering Contract (NEC) is also clear on this point, clause
35.3:
The Employer may use any part of the works before Completion has been
certified. If he does so, he takes over the part of the works when he begins
to use it …
(e) It has been argued that since some standard forms expressly deal with this
subject as above, then those forms of contract which do not include similar
express provisions should be interpreted to the effect that no assumption of
deemed practical completion may be made upon occupation or use of part or
all of the works. In other words, the express requirements of the contract
should be considered to be exhaustive of the circumstances whereby practical
completion can be established.
(f) The JCT forms of contract, including JCT 98, do not expressly provide for
‘automatic’ practical completion upon use or occupation by the employer of a
part or whole of the works. On the contrary, clause 23.3.2 of JCT 98 provides
for use or occupation in circumstances where practical completion or partial
possession will not occur (see 4.1.6.5(a)).
(g) A number of cases have looked at this question. In Big Island Contracting
v. Skink,26 although the owner’s occupation of the building was not argued as
key to the determination of the issues, the Court held that it could not
distinguish practical completion from ‘substantial performance’. On the facts
of this case, the Court held that practical completion had not been achieved,
despite the fact that the defendants had been in occupation of the building.
(h) A somewhat different view was held in Hoenig v. Isaacs,27 where Lord
Denning said:
It is always open to a party to waive a condition which is inserted for his

benefit.
There, by entering into possession and using the fitted furniture, the employer
was held to have waived a condition precedent of entire performance and
could no longer rely on it.
(i) In English Industrial Estates v. George Wimpey28, the Court held that
occupation did not amount to completion.
(j) In spite of the employer’s tenant installing and using machinery and storing
large quantities of paper in parts of the works, the court of first instance and
PART 4, SECTION 1
the Court of Appeal found that partial possession had not occurred and held
the contractor and his insurers liable for damage caused by a fire occurring
during the employer’s occupation.
(k) In an Australian case29, the contract allowed the employer to have access
before practical completion for the purpose of fitting out the building. The
contractor argued that as the liquidated and ascertained damages provision
gave no credit for this benefit, it could not be a genuine pre-estimate of loss,
and would fail as being an unenforceable penalty.
(l) The Court summarily rejected this argument. The contract contemplated
staged completion, and any occupation of the premises prior to practical
completion for fitting-out was a contractual right and not a ‘benefit’ conferred
on the employer by delayed completion.
4.1.6.5 PARTIAL POSSESSION/SECTIONAL COMPLETION
Under JCT 98 it may be seen that there are four levels of ‘occupation’ which
can be attained by the employer.
(a) The first level is use or occupation of the site or a part thereof generally for
storage or fit-out.
Clause 23.3.2 states:
Notwithstanding the provisions of clause 23.3.1 the Employer may, with

the consent in writing of the Contractor, use or occupy the site or the
Works or part thereof whether for the purposes of storage of his goods or
otherwise before the date of issue of the certificate of Practical
Completion by the Architect. Before the Contractor shall give his consent
to such use or occupation the Contractor or the Employer shall notify the
insurers under clause 22A or clause 22B or clause 22C.2 or .4 whichever
may be applicable and obtain confirmation that such use or occupation
will not prejudice the insurance. Subject to such confirmation the consent
of the Contractor shall not be unreasonably delayed or withheld.
It can be seen that such a mechanism is consensual and that the insurers also
must confirm their consent to the occupation. Clause 23.3.3 provides that any
increase in the insurance premiums which results must be added to the
contract sum.
(b) The second level is partial possession. Again, this must be by the consent
of both parties, which the contractor must not unreasonably withhold.
Clause 18.1 provides:
If at any time or times before the date of issue by the Architect of the
certificate of Practical Completion the Employer wishes to take
possession of any part or parts of the Works and the consent of the
PART 4, SECTION 1
Contractor (which consent shall not be unreasonably delayed or withheld)

has been obtained, then notwithstanding anything expressed or implied
elsewhere in this Contract, the Employer may take possession thereof.
The Architect shall thereupon issue to the Contractor on behalf of the
Employer a written statement identifying the part or parts of the Works
taken into possession and giving the date when the Employer took
possession …
The effect of partial possession under clause 18 is quite different from use or
occupation described under clause 23.3.2 above. With partial possession,
practical completion is deemed to have occurred in respect of that part with all
the consequences of a practical completion under clause 17 (see 4.1.4).
The architect’s written statement is used to compile the value of the part taken
into possession, such that retention (clause 30.4.1.2) and liquidated damages
(clause 24) will be reduced pro rata to the contract sum.
Reference is also made to insurance which must be dealt with in the event of
any partial possession (clause 18.1.3).
(c) The ‘third level’ is sectional completion.
The contract documents may prescribe predetermined sections of the works,

with separate dates for completion for each.
This again is different from partial possession, since it is not consensual in

nature. The contractor is under an obligation to complete the works under each
section on or before the dates set down in the contract appendix.
Thus, the architect or contract administrator must administer the project

having regard to these dates, including allocating separate extensions of time
where these apply, and separate practical completion certificates (sectional
completion) in respect of each part. The contract will also state the separate
amounts of liquidated damages which are to be applied to each section in
respect of any separate delays, whether or not the whole of the works is
delivered up by the overall date for completion.
(d) Finally, there is practical completion.
The architect or contract administrator must certify completion of the whole

of the works according to clause 17 (see 4.1.2.1).
PART 4, SECTION 1
Notes
1. Clause 18.1.1 refers to partial possession.
2. William Tomkinson & Sons Ltd v. The Parochial Church Council of St Michael and
Others (1990) 8-CLD-08-01.
3. Matthew Hall Ortech Ltd v. Tarmac Roadstone Ltd (1997) 87 BLR 96.
4. City of Westminster v.. J. Jarvis & Sons Ltd (1970) HL, 7 BLR 64.
5. Ibid, at page 75.
6. Ibid, CA [1969] 1 WLR 1448, at page 1458.
7. H W Neville (Sunblest) Ltd v. William Press & Sons Ltd (1982) 20 BLR 78.
8. Emson Eastern Ltd v. EME Developments Ltd (1991) QBD, 55 BLR 114.
10. Bolton v. Madheva (1972) 1 WLR 1009, at page 1013.
12. Hoenig v. Issacs (1952) 2 All ER 176, at page 179.
13. Big Island Contracting (HK) Ltd v. Skink Ltd (1990) CA of Hong Kong,
52 BLR 110.
15. Commentary by Editor of Building Law Reports, 52 BLR, at page 112.
16. Engineering Law and the ICE Conditions, 4th edition, Max W Abrahamson,
at page 160.
17. Keating’s Building Contracts, 6th edition, at page 590.
18. Hudson’s Building and Engineering Contracts, 11th edition, at page 1109.
20. Commentary by Editors of Building Law Reports, 52 BLR, at page 111.
21. Rees & Kirby Ltd. v. Swansea City Council (1985) CA 30 BLR.
22. Chartered Quantity Surveyor June 1990 (ref Q/89/136).
23. George Fischer Holding Ltd v. Multi Design Consultants Ltd and Davis Langdon
& Everest & others (1998) CILL 1362.
24. Environment Agency v. Hilson Moran [2000] CA (unreported to date).
25. Big Island Contracting (HK) Ltd v. Skink Ltd (1990) CA of Hong Kong,
52 BLR 110.
26. Hoenig v. Issacs (1952) 2 All ER 176.
27. English Industrial Estates Corporation v. George Wimpey & Co Ltd (1973) CA 7
BLR 122.
28. Multiplex Construction Pty Ltd v. Abgarus Pty Ltd (1992) APCLR.
Appendix A: General Objectives to be Achieved at Practical

Completion for Small to Medium-sized Building Projects
The following are a number of practical tests by which it is considered an architect or
contract administrator can judge whether or not practical completion has been
achieved.
A1 THE CONTRACT DOCUMENTS

A1.1 The works should have been undertaken as intended by the specification and
drawings, etc.
A2 COMPLIANCE WITH STATUTORY REQUIREMENTS

A2.1 All relevant statutory requirements should have been complied with,
including all appropriate requirements for health, safety, means of escape
and the requirements of the statutory supplies, including confirmation that all
planning conditions and building control matters have been satisfactorily
resolved.
A2.2 Certificates confirming safety of the various installations should be

provided. Electrical test certificates and confirmation of compliance with
relevant statutory requirements for fire alarm or smoke-detector installations
should be available. In addition, test certificates for pressure vessels as well
as for hoists (whether they be for equipment or people) should be produced.
A2.3 Where appropriate (e.g. under design and build arrangements) the contractor
shall have satisfied all local authority requirements with regard to, for
example, refuse collection and postal address confirmation.
A3 THE SITE
A3.1 External works should be substantially complete so that the occupier has
unfettered access. Normally, all building impediments such as skips and site
huts should have been removed from the site, such that no potential safety
hazard remains present. (Note: Particular attention should be paid to this
when considering sectional completion for any part of the works.)
A4 ENTRANCES
A4.1 It is normally expected that the entrance to the premises and access way
would be clear and complete, sufficient for the client to operate for all intents
and purposes in a normal fashion.
A5 STRUCTURE
A5.1 Structural works should be complete and no part of the structure should be
unsafe.
A6 CLADDING
A6.1 The building should be wind and watertight and the cladding should be
properly secured. Under normal circumstances, roofs and claddings would
be tested by the elements. If, for some reason this has not taken place, then
the specification should include for water testing or, alternatively, an
instruction should be given to so test these elements.
Appendix A (4/98)
A7 FINISHES
A7.1 This is the area of works where most reasons for delay in the issue of a
certificate of practical completion tend to arise.
A7.2 As suggested above, either a detailed view needs to be taken or potentially a

more lenient stance adopted.
A7.3 All the decoration works should be complete. For example, the reception
area and staircases should be finished, as should in general terms, the internal
areas. However, decorations incomplete to a store room in the depths of the
basement would not necessarily be considered as important.
A7.4 External works should be complete, including car-park lining, signage and
the like.
A8 PLANTING
A8.1 If, in the specification, external planting is included and it is acknowledged
that practical completion may take place during a period when undertaking
planting may be impractical, then the documentation should state this to
enable such works to be undertaken without detriment to the parties.
A9 MECHANICAL AND ELECTRICAL SERVICES

A9.1 The origins of all the appropriate commissioning and test certificates should
be issued to the architect or contract administrator. For such elements as air
conditioning, a definition which allows for balancing to take place following
occupation should be considered.
A10 MANUALS
A10.1 The requirement for the provision of operating and maintenance manuals and
as-installed drawings should be considered closely. Manufacturers’
warranties may well be nullified if mechanical plant is not maintained in
accordance with their instructions during the warranty period. Particular
attention will be required to be paid to the CDM regulations which call for
the ‘Safety File’ to be produced prior to practical completion.
Appendix A (4/98)
Appendix B: Table of Cases

1. Big Island v. Skink (1990)
Occupation did not mean practical completion.
2. Bolton v. Mahdeva (1972)

Substantial performance – it would be wrong to say that the contractor is only
entitled to payment if the defects are so trifling as to be covered by the de
minimis rule.
3. City of Glasgow District Council v. Excess Insurance Co (Scotland) (1988)

Performance bond survives practical completion.
4. Emson Eastern v. EME Developments (1991)

A building can seldom be built precisely.
No set-off for remedial works after practical completion where main
contractor insolvent (JCT(80) pre-amendment 11, July 92) – common law
claim.
Completion in determination provisions is equal to practical completion.
5. English Industrial Estates v. George Wimpey (1973)

Fire is the contractor’s risk after possession if clause 16 of JCT 63 is not
observed. Occupation before practical completion without certificate does not
amount to partial possession.
6. Hoenig v. Isaacs (1952)

Substantial performance was held to have occurred even though the works
were in part defective.
7. Jarvis & Sons Ltd v. City of Westminster (1970)

What is meant by completion is the completion of all the construction work
that has to be done. If (defects) had been apparent (at practical completion)
no such certificate would have been issued.
8. London Merchant Securities v. London Borough of Islington (1986)

The architect’s certificate was not conclusive (for rating purposes) –
substantial completion being a broad question of fact.
9. Multiplex Construction Pty v. Abgarus (1992)

Occupation prior to practical completion is a right not a benefit.
10. HW Neville v. William Press (1982)

The word ‘practically’ gave the architect a discretion to certify … where very
minor de minimis work had not been carried out.
11. Rees & Kirby v. Swansea City Council (1985)

Financing charges continue after practical completion.
12. University of Glasgow v. William Whitfield & John Laing (1988)

Continuing duty of architect for negligent design after practical completion.
Appendix B (revised 10/00)
PART 4, S ECTION 1, A PPENDIX C
Appendix C: Further Reading

Books
Engineering Law and the ICE Conditions, (4th Edition), Max Abramson, Applied
Science Publishers, 1979
Hudson’s Building and Engineering Contracts, (11th Edition), IN Duncan-Wallace,

Sweet & Maxwell, 1995
Keatings Building Contracts, (6th Edition), Sir Anthony May, Sweet & Maxwell, 1995
Appendix C (revised 10/00)
PART 4, SECTION 2

MANAGEMENT
SECTION 2: ASCERTAINING THE AMOUNT OF LOSS AND

EXPENSE INCURRED IN BUILDING PROJECTS
Introduction
The purpose of this Section is to provide practical advice to those who are
required to ascertain the amounts due in reimbursement of direct loss and/or
expense incurred in building projects.
Surveyors are particularly reminded that their role in these matters is set out in
their building contract and is normally limited to determining quantum; it does
not usually extend to determining liability.
Reference has been made to the contract administrator throughout this

document. This reference includes architects where that function exists under
the contract.
It cannot be emphasised too strongly that the ascertainment of loss and/or

expense is an exercise in calculating as precisely as possible that which is
incurred by the contractor directly and solely due to the matters listed in the
contract. It is not an attempt to impose a penalty on an employer or design
team for failing to live up to obligations or expectations.
Equally, it is not the quantity surveyor’s role (to whom the task of
ascertainment is usually given) to seek to get away with as little a payment as
he can. The contractor, for his part, may understandably press hard for a
significant figure and on occasions overstate his case either in words or money
or both. Too often the quantity surveyor is seen, or even sees himself, as being
at the opposite end of a tug-of-war rope to the contractor. This is incorrect.
Whilst the quantity surveyor is perfectly entitled to probe such submissions by
weighing all the contrary evidence, his ultimate task is to determine a proper
ascertainment in accordance with the conditions of contract and the
circumstances that have prevailed.
4.2.1 General Principles

G 4.2.1.1 Under common law, if one party to a contract is in breach then that party is
liable to the other for damages. The level of such damages has been
established by a number of Court cases.
PART 4, SECTION 2
G 4.2.1.2 However, the level of damages payable at common law has never intended to
act as a penalty or deterrent but simply to ensure that, in respect of the
aggrieved party, “he is, so far as money can do it, to be placed in the same
situation with regard to damages, as if the contract had been performed”.1
G 4.2.1.3 Nor are such damages intended to recompense the aggrieved party for all
losses whatever their nature. In the case of Hadley v. Baxendale2 it was
established that damages ought to be of a kind which “should be such as may
fairly and reasonably be considered either arising naturally, that is,
according to the usual course of things, from such a breach of contract itself,
or such as may reasonably be supposed to have been in the contemplation of
both parties, at the time they made the contract, as the probable result of the
breach of it”.
G 4.2.1.4 Where building contracts contain clauses dealing with the entitlement of the
contractor to recover direct loss and/or expense for any delay or disruption to
the regular progress of the Works caused by the client or his team or other
designated causes, such clauses have been developed against this general
background.
G 4.2.1.5 There are important distinctions to be drawn between the express provisions
in a form of contract on the recovery of direct loss and/or expense, and
recovery of damages at common law. In the case of the former the
requirements laid down in the contract must be rigidly adhered to; if they are,
then reimbursement is a contractual entitlement and does not require
judgement of the Court or an arbitrator.
G 4.2.1.6 The provisions of the loss and/or expense clauses are generally without
prejudice to any other rights and remedies which the contractor may possess,
and which he may wish to pursue through arbitration or the Courts. This
consideration is, however, outside the scope of this Section of the Handbook.
G 4.2.1.7 To determine the contractor’s entitlement one must calculate the difference
between the costs arising from the application of the following two questions:
(a) What is the reasonable cost of carrying out the particular element of work
in the delayed or disrupted circumstances that were created directly as a result
of the matter under consideration (for example late instructions)?
(b) If that delay or disruption had not been so caused what would those costs
have been?
G 4.2.1.8 An element of judgement and even conjecture is almost always inevitable in

answering the second question; and judgement may indeed be involved in
answering the first question, for even if there are verified cost records of the
1 Robinson v. Harman (1848) 1 Ex.850

2 Hadley v. Baxendale (1854) 9 Ex. 341
PART 4, SECTION 2
work that was carried out it does not follow necessarily that all such costs were
properly incurred.
G 4.2.1.9 Thus, even if the form of contract refers to ‘ascertaining’ the loss – as does the
JCT form (see G 4.2.1.13) – complete proof in the way of invoices or
verified cost records is unlikely to be available. Indeed, as outlined elsewhere
in this Section, the surveyor is not required to establish ‘complete proof’ but
is instead required to use professional judgement. This should not, however,
detract from the critical importance of ensuring that proper and reasonable
records are maintained by the contractor and contract administrator.
G 4.2.1.10 The primary purpose of this guidance is not to provide a legal treatise on the
matter of claims but to provide practical comment on how to go about
determining, as reliably as possible, the contractor’s monetary entitlement.
G 4.2.1.11 The correct ascertainment of the amount of any direct loss and/or expense to
be reimbursed to the contractor requires sound knowledge and experience of
building practice, careful study of the conditions of the relevant contract and
an understanding of their legal application, together with knowledge of the
relevant and up-to-date case law. In addition, the person undertaking the
evaluation requires access to the best records and other information that is
available on that particular contract.
G 4.2.1.12 The principles referred to are generally applicable to all cases where a
contractor is entitled, by the conditions of contract, to reimbursement of his
direct loss and/or expense. This entitlement is provided in most, but not all,
forms of building contract, even where the expression ‘direct loss and/or
expense’ may not be used.
G 4.2.1.13 This guidance is based predominantly upon the provisions of the 1998 edition
of the Standard Form of Building Contract, published by the Joint Contracts
Tribunal – referred to as JCT 98. The wording used in the form is either
identical, or very similar, to that adopted in many of the other forms published
by the JCT, for example the Works Contracts used in association with the JCT
Standard Form of Management Contract and the JCT Standard Form of
Building Contract with Contractor Design.
G 4.2.1.14 It should be noted that in this text extracts from printed forms are frequently
paraphrased. Readers therefore should in all cases check the precise wording
used in the particular form with which they are involved in practice,
particularly where the form is not one of those promulgated by the JCT. It may
even be that, although a JCT Standard Form has been used, particular clauses
have been amended.
G 4.2.1.15 Following the terminology used in the JCT forms, an event or failure which
gives the contractor grounds for seeking reimbursement of any resultant loss
and/or expense is referred to as a ‘matter’; whereas an event or failure which
PART 4, SECTION 2
gives the contractor grounds for seeking an extension of time for the
completion of the works is referred to in this Section as an ‘event’ (also
see G 4.2.3.2).
4.2.2 Definitions
G 4.2.2.1 LOSS AND/OR EXPENSE
Any monies which a contractor has a proper expectation of receiving but has
not received and/or monies properly expended or to be expended by him.
G 4.2.2.2 DIRECT
“The direct consequence of the act giving rise to the claim”,1 or “that which
flows naturally from the breach, without other intervening cause”.2 Clearly
this word ‘direct’, when used in conjunction with the words ‘loss and/or
expense’, is a very restricting one and disqualifies all costs and/or expenses
that do not arise as a direct result of the matter under complaint. Thus, any
costs due, for example, to mismanagement, to other causes not recognized as
matters by the wording of the contract or to other concurrent delays should be
excluded from those reimbursable to the contractor as they are not the direct
result of the matter under consideration.
G 4.2.2.3 ASCERTAINMENT
The definition of this word should be seen in the context of the subject of the
ascertainment. Given that judgement is almost always called for (see G
4.2.1.5 and G 4.2.1.6) it follows that ‘to ascertain’ can rarely mean to prove
comprehensively with invoices and records but rather to establish by the use
of such facts as are available and by the use of expert judgement.
4.2.3 Entitlement
G 4.2.3.1 LIMITATIONS
Appendix D provides a checklist of items on which entitlement is allowed

under JCT 98.
The contractor’s entitlement to reimbursement under the terms of the contract

should be determined as set out below:
(a) The loss and/or expense must arise directly as a result of one of the matters
referred to under the terms of the contract. Such matters do not usually extend
to the contractor underpricing the rates to be used in valuing variations. Thus,
losses arising from any such underpricing are not usually reimbursable.
1 A & B Taxis Ltd v. The Secretary of State for Air (1922) 2KB 328
2 Saint Line Ltd v. Richardson Westgarth & Co (1940) 25 BLR 140 refers to the case only in passing
PART 4, SECTION 2
(b) Indirect costs – i.e. costs not arising directly as a result of the matter under
consideration – should be excluded. In this respect the link between cause and
effect is a vital factor.
(c) Costs incurred in respect of which the contractor has not compelled with
the conditions laid down in the contract in relation thereto cannot be dealt with
under the terms of the contract (but see G 4.2.1.6). For example, JCT 98
requires the contractor to make an application in writing to the contract
administrator as soon as it is reasonably apparent that disruption will occur as
a result of a matter referred to in clause 26 of that contract (or under clause 34
in the case of loss and/or expense arising from the discovery of antiquities).
For the contractor to be able to obtain reimbursement in accordance with the
contract he must first have complied with that provision (see G 4.2.3.3 for
more detailed advice on the validity of written applications).
(d) Reimbursement is restricted to loss and/or expense which the contractor is

not entitled to recover under any other provision of the contract. For example,
the payments made to the contractor may include allowances for working
under changed conditions, fluctuations in prices, or preliminaries associated
with variations. None of these costs should therefore be duplicated in an
ascertainment of loss and/or expense under clause 26.
(e) It is important to consider the mitigation of loss and/or expense. To the

extent that any part of the loss and/or expense incurred could reasonably have
been avoided by the contractor taking reasonable steps, that amount would not
be reimbursable. This requirement to mitigate requires the contractor to act
reasonably in all the circumstances. It may be reasonable, for example, for a
contractor to bring additional plant or labour to a site in order to reduce the
overall effect of a matter on the project as a whole. Even where such an act
was not entirely successful the contractor would be entitled to the
reimbursement of the costs incurred provided that he acted reasonably in so
doing. It is important, therefore, that in reviewing with hindsight what was
reasonable, the quantity surveyor may have good cause to reject certain costs
put forward by the contractor. The contractor has to make day-to-day
decisions in developing situations that may, in retrospect, be shown to be
wrong. The test must be: “Was the action reasonable in the circumstances
prevailing at the time?”
(f) On the other hand, a contractor who through good management is destined
to increase the profit he anticipated making at tender stage cannot be denied
this prospect by the incidence of a matter giving rise to a loss and/or expense
claim. For example, at tender stage the contractor might have anticipated
removing some element of plant by, say, the twentieth week. In the event he
may be beating this target and be destined to be able to remove it by, say, the
fifteenth week. If a delay caused by a matter recognized by the contract occurs
which requires that plant to be retained for a further four weeks, i.e. until the
nineteenth week, he is entitled to additional reimbursement for those four
weeks.
PART 4, SECTION 2
G 4.2.3.2 EXTENSIONS OF TIME
Under JCT 98 and other forms of contract in the same series, the expression
‘extension of time’ is replaced by the words ‘fixing a new completion date’
but the more traditional ‘extension of time’ is used in this Section. Extension
of time does not necessarily mean that the contractor has an entitlement to
reimbursement of loss and/or expense. On the other hand, the contractor may
have an entitlement to such reimbursement even when there is no extension of
time. Each matter needs to be treated on its merits whether or not an extension
of time is due or granted. Nevertheless, under JCT 98 there is a requirement
that the contract administrator declares the amount of any extension of time
granted for any event which also constitutes a matter under clause 26 where
such a declaration is necessary for the ascertainment of loss and/or expense.
Thus, in ascertaining the contractor’s entitlement to reimbursement of loss
and/or expense, the existence and amount of any attendant extension of time
must be revealed where this is relevant to that ascertainment.
G 4.2.3.3 WRITTEN APPLICATION
Before the contractor is entitled to any reimbursement in respect of loss and/or

expense he should first have made an application, at the appropriate time, to
the appropriate party named in the conditions of contract. The purpose of this
written application is to enable the contract administrator to form his opinion
on whether or not there has been, or will be, loss and/or expense incurred
which would not be reimbursed under any other provision in the conditions of
the contract. In addition, it should be noted that, with reference to the matter
of applications:
(a) Applications must be made by the contractor as soon as it reasonably

becomes apparent to him that the regular progress of the Works is likely to be
materially affected by any of the relevant matters listed in the conditions of
contract.
(b) Applications to the quantity surveyor, in contrast to those made to the

contract administrator, are not valid unless specific authority has been given
by the employer.1
(c) Reference to loss and/or expense in site meetings or the like, or references
to ‘delays’ which do not mention loss and/or expense, do not constitute valid
written applications to recover loss and/or expense.
G 4.2.3.4 ADEQUACY OF THE DETAILS
JCT 98 requires that the contractor provides the contract administrator (or if
so instructed, the quantity surveyor) with all the documents necessary for
1 John Laing Construction Ltd v. County and District Properties Ltd (1982) 23 BLR 1
PART 4, SECTION 2
adjusting the contract sum. This will include documents in support of

ascertainments of the contractor’s entitlement to reimbursement of loss and/or
expense (see clause 30.6.1.1). Moreover, clause 26.1.3 requires the contractor
to supply to the contract administrator or quantity surveyor, upon request,
such details as are reasonably necessary for the ascertainment of any
reimbursable loss and/or expense. But note that these details have to be
requested and clearly, for such details to be of maximum use, the request for
them should be made at the earliest opportunity.
G 4.2.3.5 In practice, what is going to be adequate data will depend upon the nature of
the disruption or delay. Thus, the request for the contractor to keep such
details should not only be timely but should also be as specific as possible as
to the data required.
G 4.2.3.6 NOMINATED SUB-CONTRACTORS
In general the same principles apply to ascertaining the loss and/or expense to
be reimbursed to a nominated sub-contractor as apply to the main contractor.
It must be recognized, however, that a nominated sub-contractor may have an
entitlement under the terms of the sub-contract to reimbursement by the main
contractor (due, for example, to the latter’s mismanagement) which should be
passed on to the employer.
4.2.4 Ascertainment
G 4.2.4.1 RESPONSIBILITY FOR ASCERTAINMENT
Under JCT 98 the responsibility for ascertaining the amount due is the
contract administrator’s, unless he instructs the quantity surveyor to undertake
this task. Where the contract administrator so instructs the quantity surveyor
this instruction should be in writing, to be copied to the contractor, and be
specific as to the matters which are covered in such an instruction. However,
the contract administrator cannot delegate to the quantity surveyor, or anyone
else, the task of forming an opinion on whether or not there is a case in
principle for loss and/or expense to be ascertained. A checklist of steps
required under JCT 98 is included at Appendix E.
G 4.2.4.2 The quantity surveyor should be careful to ensure that the contract administrator
undertakes this task of forming an opinion before embarking upon any
ascertainment. The quantity surveyor should also ask the contract administrator
for all the data he has upon which he formed that opinion; for the quantity
surveyor’s task is always one of determining quantum in respect of the items
which in the opinion of the contract administrator are admissible in principle. It
is not for the quantity surveyor to usurp the role of the contract administrator in
matters which the contract conditions specifically reserve for him.1
1 John Laing Construction Ltd v. County and District Properties Ltd (1982) 23 BLR 1
PART 4, SECTION 2
G 4.2.4.3 However, once the quantity surveyor has been properly instructed to ascertain
the amount due he should proceed with this task without delay. It is for the
contract administrator or quantity surveyor, as the case may be, to ascertain
the amount and not to await a detailed submission from the contractor.
G 4.2.4.4 In general the surveyor should ensure that the basis, calculations and
evidential records used in the ascertainment are recorded in writing. This may
be a mandatory requirement on public sector contracts.
G 4.2.4.5 USE OF JUDGEMENT IN MAKING AN ASCERTAINMENT
An element of professional judgement is often inevitable in ascertaining the

contractor’s entitlement to reimbursement of loss and/or expense. This is
because what the contractor’s cost would have been had the relevant delay or
disruption not taken place has to be estimated (see G 4.2.1.6
and G 4.2.1.7). However, in forming that judgement the best evidence
available should always be used in reference. For example, where there is
contiguous work that has not been affected by delay or disruption this might
well provide good evidence of the progress that the contractor could have been
expected to have made generally.
G 4.2.4.6 Clause 26.1 of JCT 98 requires that ascertainment is made from time to time.
This means that ascertainment should be an ongoing process where the facts
are sufficiently established to make a proper and finite calculation. Moreover,
clause 30.2.2.2 of JCT 98 states that any amount ascertained under clause 26
should be included in interim certificates.
G 4.2.4.7 Thus, wherever ascertainment can properly be made of part of a contractor’s

entitlement it is important that this is done and the relevant amounts be
certified for payment. If part of a contractor’s entitlement can be wholly
ascertained then it should be, but there is no provision in this form of contract
for provisional assessment to be made.
G 4.2.4.8 COSTS VERSUS
When ascertaining a contractor’s entitlement it is the actual loss or actual

expense which is relevant. The prices in the contract bills or schedule of rates
should not be used as the actual costs may be more or less than these.
Additionally, the general rule of damages is that the type or kind of loss
payable is that “as may reasonably be supposed to have been in the
contemplation of both parties, at the time they made the contract, as the
probable result of the breach of it” (see G 4.2.1.3).
G 4.2.4.9 GLOBAL OR INDIVIDUAL ASCERTAINMENT
In recent years there has been much discussion on whether claims should
properly be considered on a global basis or whether each item should be
considered in isolation. In this respect the quantity surveyor need only be
concerned with the points in G 4.2.4.10 below.
PART 4, SECTION 2
G 4.2.4.10 It is important that a contractor makes proper applications on each and every
occasion that an entitlement to make a claim arises.
(a) It is necessary that each application conforms fully with the rules written
into the contract about them (for example timing, in writing, sent to the
contract administrator).
(b) The contractor must keep such records as are necessary for the
ascertainment of the amount due.
(c) Only where the effect of a series of matters (for example the late issue of a
number of instructions or the instructing of a number of variations) is such as
to create extra costs which by their nature are indistinguishable from one
another can an application on a global basis be entertained. Simply because
there is, for example, a series of variation instructions which create
overlapping or contiguous disturbance, it does not follow that all other matters
on that project can be added in to make a global claim. A global approach to
ascertainment should be restricted solely to events which create
indistinguishable effects. Thus, no contractor should be penalised by being
denied reimbursement simply because extra costs were incurred which could
not by their nature be particularised. On the other hand, the facility of global
ascertainment should not be used to mask facts and figures that could properly
have been particularised and presented.
4.2.5 Admissible Items

G 4.2.5.1 GENERAL
A list of possible items admissible as part of an ascertainment of loss and/or

expense (which is to be read as including those attributable to sub-contractors)
is as follows:
• extended and/or increased use of ‘preliminaries’, for example more

supervision, more plant etc.;
• reduced labour outputs;
• extra waste or abortive purchase of materials;
• increase in the price of resources, i.e. inflation;
• increased cost of head office overheads;
• loss of profit; and
• finance charges.
More often than not the dominant items will be the first two from the above
list.
G 4.2.5.2 PRELIMINARIES
A representative list of the items normally comprising the preliminaries is

given at Appendix A.
PART 4, SECTION 2
G 4.2.5.3 When ascertaining the extra cost of ‘preliminary’ items (but see G 4.2.4.8)
it is important to break each item down into the following components:
(a) Setting-up costs would be admissible where additional plant is properly

brought onto the site. If plant is already on site, setting-up costs would rarely
be admissible unless setting up has been delayed by a relevant matter and
inflation has occurred which is not reimbursable under the fluctuations
clauses.
(b) Removal costs are admissible in the same way as setting-up costs.
(c) Extra hire charges would be reimbursable if the particular item is required
to be kept on site longer than otherwise would have been the case due to the
relevant matter. The comparison is between the period that the item would
have been on site had the matter not occurred and the period that it was
reasonable to have been on site given that the matter did occur
(see G 4.2.1.7). Where the plant in question is owned by the contractor the
measure of his loss is the amount (if any) that he could have earned by using
the plant elsewhere had it not been tied up on the site for longer than would
have been the case if the matter in question had not occurred.
(d) Extra running charges would be reimbursable if, due to a relevant matter,
the particular item is required for a longer period than otherwise would have
been the case. Again the comparison is between the period that the item would
have been in use had the matter not occurred and the period that it was
reasonable to have been in use given that the matter did occur
(see G 4.2.1.7).
G 4.2.5.4 DISRUPTION OF LABOUR
The ascertainment of the cost of disruption to labour is invariably a difficult

process. It is impossible to give precise and definitive advice as all will depend
upon the circumstances in each case. However, the following general pointers
should be of some assistance:
(a) In all circumstances avoid the application of an overall percentage to

global labour costs; rarely if ever are the whole labour costs on a project
disrupted.
(b) Wherever possible request that contemporary records be kept, noting the
output achieved in practice by the particular workmen who are disrupted.
Clerk of works’ records and diaries can be invaluable evidence of this.
(c) Have regard to whether any delay comprises a series of small recurrent
delays or one large one. In the former case the proportional loss of output can
be very high, whereas in the latter case the loss can be mitigated by
redeploying resources elsewhere.
PART 4, SECTION 2
(d) Recognize that there is a learning curve in all activities. The advantage of
this can be lost if a new gang of men is brought in to undertake work which
has become familiar to others; the resultant extra cost will be reimbursable.
Moreover, if additional labour has to be recruited at short notice it may be
necessary to pay premium rates which would in principle be reimbursable.
(e) Whatever the level of variation orders, late instructions and so on, much of
the work of labour will not actually be significantly affected. For example,
bricklaying or fixing pipework once under way may suffer little or no delay.
The delay may be associated with becoming familiar with an unexpected or
unplanned task. The ‘coal face’ operation may not be affected at all.
(f) Recognize that great economies can flow from a repetitive task, for
example fixing partitions in a series of identical dwellings, the interruption of
which can result in far-reaching losses.
G 4.2.5.5 A list of items relevant to the calculation of reimbursable extra costs of

disruption is given at Appendix B.
G 4.2.5.6 EXTRA WASTE AND/OR ABORTIVE PURCHASE OF MATERIALS
These may not be significant elements in an ascertainment but it may be that

the constant moving of materials, stores or compounds following a relevant
matter will result in extra waste. As long as this has not resulted from a lack of
proper management this cost will properly form part of any ascertainment.
Alternatively, it may be that materials purchased for the works have been
omitted by a subsequent variation order. Provided that such materials were not
purchased prematurely the cost would again properly form part of any
ascertainment.
G 4.2.5.7 INFLATION
If work is executed later than otherwise would have been possible as a result
of a relevant matter and if inflation has caused the cost to rise then, provided
that such costs are not reimbursable under the fluctuations clause, they will
form part of the ascertainment. Even where the contract contains a
fluctuations clause, if it contains a non-adjustable element, a delay in the
execution of work might well increase the non-recoverable element, which
would be reimbursable.
G 4.2.5.8 INCREASED COST OF HEAD OFFICE OVERHEADS
Loss in the recovery of head office overheads is an admissible item but the
amount of such loss may be difficult to substantiate. Overall percentages, not
related to the particular circumstances, cannot be used.1
G 4.2.5.9 Wherever possible, proof should be sought of such items as extra site visits by
head office staff or the greater involvement of head office staff in managing
1Tate & Lyle Food and Distribution Co. Ltd & Another v. Greater London Council & Another (1982)
1WLR 149
PART 4, SECTION 2
the project as a result of the matters giving rise to a claim. Appendix C gives
further guidance on the components and methods of such an ascertainment.
G 4.2.5.10 Account should be taken of the extent to which extra costs are already being
reimbursed through the pricing of the variation account.
G 4.2.5.11 Where there has been a delay as a result of a relevant matter but no consequent
increase in value (thereby excluding some contribution to extra head office
costs) some extra recovery is an entitlement provided that this does not extend
to include costs that should have been mitigated. It should also be shown that,
but for this delay and the consequent tying-up of head office resources for a
longer period than would otherwise have been the case, those resources could
have been productively used elsewhere. The Courts have increasingly
recognized that, providing all the pre-conditions are met, a formula approach
to calculating this element maybe permissible.1
G 4.2.5.12 As with the recovery of loss of profit, however, it is important that overriding
consideration be given to the level of recovery that would have been possible
on alternative work had the contractor been free to do so (see G 4.2.5.13).
G 4.2.5.13 LOSS OF PROFIT

If, as a direct result of a matter referred to in the conditions of contract, loss of
profit is suffered which could have been earned in the normal course of
business elsewhere, there is an entitlement to reimbursement of that profit.2
This amount should be calculated by reference to the level of profit to have
been made by the use of the resources on other projects during the period of
retention on site as a direct result of the cause of delay. The level should be
that prevailing in the market during the period immediately following the
original date for completion or such earlier date at which the resources would
have been released from the contract. It might, therefore, be higher or lower
than that contemplated in the contract sum. Moreover, where loss of profit is
being calculated as a result of a delay caused by the execution of variations it
is important that a deduction be made for any other profit reimbursed to the
contractor for those variations priced at contract rates.
G 4.2.5.14 FINANCE CHARGES

Clause 30.1.1.1 of JCT 98 now provides for the payment of interest, at 5%
over the base rate of the Bank of England, for any payments which are
overdue. This is in line with the statutory right now available to certain
classes of businesses under the Late Payment of Commercial Debts
(Interest) Act 1998. The JCT form expressly notes that the payment of
contractual interest may not be construed as a waiver by the contractor of his
or her rights to proper and timely payments. However, finance charges are
not an interest on a debt, but a debt which has interest charges as one of its
component parts which have been paid by a contractor on money which was
1 St Modwen Developments Ltd v. Bowmer & Kirkland Ltd (1996) 1996 CILL 1203
2 Peak Construction (Liverpool) Ltd v. McKinney Foundations Ltd (1970) 1 BLR 114
PART 4, SECTION 2
borrowed (or interest that could not be earned on capital) in order to finance
the prime cost of the loss and/or expense. Such finance charges are
reimbursable.1
G 4.2.5.15 Finance charges are recoverable from the date that the primary loss and/or
expense was incurred up to the time that the certificate, which included the
payment of that loss and/or expense, was issued, provided, as always, that the
conditions in the contract in that respect have been met (see G 4.2.3.3 (c)).
G 4.2.5.16 The rates and manner of interest payable should be those actually incurred (or
being earned on capital).
4.2.6 Inadmissible Items

G 4.2.6.1 GENERALLY
It is not possible to list all the items which are inadmissible. However, it might
be helpful to comment upon certain items which are occasionally claimed as
being reimbursable when they are not. Among these the most usual are:
(a) The costs of acceleration, unless specifically approved by the employer

beforehand (see G 4.2.6.2).
(b) The cost of preparing a submission for the reimbursement of loss and/or
expense.
G 4.2.6.2 THE COST OF ACCELERATION
In common with most lump sum contracts JCT 98 does not contain provisions
for instructions to be given to accelerate the works. If acceleration is required
it should be achieved by means of a separate agreement.
G 4.2.6.3 However, the contractor’s obligation whenever he is, or is likely to be,

delayed is to “use constantly his best endeavours … to prevent the completion
of the Works being delayed”. It is generally thought that the use of ‘best
endeavours’ is likely to be limited to the rescheduling of resources and the
taking of such measures as may be appropriate to allow the works to proceed
without incurring (significant) costs.
G 4.2.6.4 THE COST OF PREPARING A SUBMISSION FOR REIMBURSEMENT OF LOSS AND/OR

EXPENSE
There is no contractual requirement for a contractor to prepare details of the
amount of loss and/or expense and thus there is no entitlement to any
reimbursement for so doing.
G 4.2.6.5 Where, however, he provides the data which might be required by the quantity
surveyor under clause 26.1.3 the cost of so doing may be reimbursable.
1F G Minter Ltd v. Welsh Health Technical Services Organization (1980) 13 BLR 2
Appendix A: Ascertaining the Cost of Running a Site

The items given below are intended only as a guide; the list is not comprehensive.
A1 STAFF AND ADMINISTRATION

Note: This includes security and welfare personnel and the supervisory time
of trades foreman and the like.
Consider:
• staff salaries (including subsistence, guaranteed bonuses and allowances

where paid);
• travel costs, including cars and fuel;
• national insurance, pensions etc. – employer’s contributions;
• private health insurance – employer’s contributions;
• employer’s liability insurance, third party insurance;
• training levy;
• redundancy fund, holidays with pay, superannuation; and
• agency staff where applicable.
A2 TEMPORARY ACCOMMODATION
Consider:
• temporary offices – rental/repairs and maintenance;

• stores – rental/repairs and maintenance;
• canteen – rental/repairs and maintenance;
• canteen equipment;
• canteen consumables;
• canteen subsidy;
• signs, boards and notices;
• fire-fighting equipment;
• first-aid equipment;
• nurse/first-aider;
• site welfare and safety;
• gas and electricity;
• rates on temporary buildings;
• telephone/facsimile lines/system rental;
• telephone/facsimile calls;
• mobile phone calls;
• office furniture;
• computers, including servers and data lines;
• photocopiers – equipment and consumables;
• office consumables and stationary;
• drawing and copying;
• postage/franking machine;
• office cleaning;
• sanitary accommodation and welfare facilities;
• general cleaning and disposal;
• general site wear; and
• progress photographs.
Appendix A (4/99)
A3 PLANT
This covers plant owned by the contractor or hired from a subsidiary or
specialist company. It is advised that the conditions of hire are examined.
There is often a guaranteed minimum period of hire which would have been
paid for in any case. When long delays have occurred, loss must be mitigated
by use elsewhere or the termination of the hire contract.
Consider:
• tower cranes;
• mobile cranes;
• banksmen and slingers;
• weighbridge;
• wheel washing facilities;
• compressors;
• mixers;
• pumps;
• hoists;
• site surveying equipment;
• site/crane radio system;
• concrete testing;
• general site equipment;
• small plant and tools; and
• rubbish removal (skips).
A4 TEMPORARY WORKS/ACCESS
Consider:
• temporary roads – maintenance; and
• clean access and site roads.
A5 FENCING AND SECURITY

Consider:
• site boundary fencing/hoarding;
• site compound fencing;
• site security (including guards if appropriate); and
• temporary weather proofing.
A6 DISTRIBUTION
Consider:
• service gang –cleaning, attendance and distribution;
• forklifts and drivers;
• dumpers and drivers;
• telescopic hoists, including driver;
• internal site transport; and
• hoist drivers.
Appendix A (4/99)
A7 SCAFFOLDING
Consider:
• extra hire;
• adaptations; and
• additional work – for example safety rails where scaffolding removed.
A8 TEMPORARY ELECTRICS
Consider:
• equipment – generators, transformers etc.;
• fuel consumption;
• consumables; and
• maintenance.
A9 TEMPORARY WATER
Consider:
• water and sewerage – rates/metered consumption; and
• maintenance.
A10 INSURANCE
Consider:
• contractor’s all risk;
• public liability;
• professional indemnity; and
• performance bond.
A11 HEAD OFFICE STAFF COSTS

Consider:
• that proportion of time spent on project which is only applicable if not
booked directly to the project. See general comments at G 4.2.5.8
to G 4.2.5.12 and Appendix C.
Appendix A (4/99)
Appendix B: Disruption
B1 THE EFFECTS OF DISRUPTION
B1.1 Labour
Factors to be taken into account include:
• loss of productivity (labour resources must have been available and able
to have been used profitably elsewhere had the loss of productivity not
occurred);
• standing time;
• overtime; and
• changes in labour strength on the site and in gangs;
B1.2 Plant
Refer to invoices to indicate additional costs due to:
• relocation of plant, on or off site;

• additional plant;
• additional tools;
• alterations or additions to scaffolding; and
• standing time.
B1.3 Materials
Extra costs can be incurred due to the:
• double handling of materials;

• waste and damage of materials;
• return of materials to the store or supplier; and
• substitution of materials.
B2 INFORMATION AVAILABLE TO THE CONTRACT ADMINISTRATOR/QUANTITY

SURVEYOR
B2.1 Apart from issued drawings, written instructions and correspondence, other
information that should be referred to includes:
• contractor’s programme and amendments;

• site reports;
• site measures;
• clerk of works’ reports;
• daywork records;
• photographs; and
• minutes of meetings.
B2.2 This information can assist in the ascertainment of the effects of instructions
upon progress.
B3 QUANTITY SURVEYOR’S CONSIDERATIONS

B3.1 It is important to receive from the contractor proper, detailed records of
delays which disrupt progress. Ideally, this information needs to be in diary
form and should indicate:
Appendix B (4/99)
• the immediate effect upon working trades;

• the knock-on effect upon succeeding trades, particularly sub-contractors;
• the effect upon allied trades working in the vicinity;
• the inability to divert labour elsewhere (i) on the site, and (ii) to other
contracts;
• evidence of efforts made to divert labour to other contracts, or to
otherwise mitigate the costs of construction and effects of disruption; and
• the relationship with nominated firms and sub-contractors and records
from them to substantiate the claim of disruption.
B3.2 There may be further items not covered above which the contractor could
bring to the notice of the quantity surveyor. In making an assessment of
disruption, the quantity surveyor may require the tender progress intentions
of the contractor, and to examine data on which projections of progress were
based in order to indicate the effect that changes have had upon the planning.
The information may include critical path analyses and similar information.
B3.3 The quantity surveyor should give careful consideration to all this
information and judge its relevance to the particular matters being examined
(but see G 4.2.4.2).
Appendix B (4/99
Appendix C: Ascertaining the Cost of Head Office Overheads
C1 HEAD OFFICE OVERHEADS
A contractor seeking direct loss and/or expense in relation to head office
overheads will probably include some or all of the following:
• company offices, rents and rates;

• plant yards;
• running costs/maintenance costs of these units;
• directors’ and staff’s salaries, emoluments and allowances (estimating and
sales staff should not be included);
• expenses, including office equipment, postage, telephones etc.;
• cost of travelling, including allowances for company’s motor cars etc.;
• professional legal and/or accountancy fees; and
• depreciation.
C2 ESSENTIAL BACKGROUND INFORMATION

C2.1 Consider the method adopted by the contractor as policy in incorporating
these costs in his tenders:
• percentage;
• lump sum(s) (specify how compiled); and
• spread in rates of all items.
C3 ASCERTAINMENT OF THESE COSTS

C3.1 Check:
• time records or diaries which may indicate additional time spent with
consequential financial disbursements (this should be time arising from
relevant events over and above that which would have been spent on
ordinary administration of the contract);
• proof of payment made on all admissible items; and
• details showing build-up of general head office costs at the relevant time
or throughout any relevant period.
C3.2 For a contractor to succeed, it is recommended that the quantity surveyor is

reasonably satisfied that:
• time expended was additional to that reasonably to have been expected;

• the extra costs have not been recouped in other ways (for example from
set-off or other arrangements with sub-contractors);
• any loss and/or expense sought has not been avoided by re-deployment of
resources on other contracts;
• additional costs have not been recovered through rates for measured
works;
• additional costs have not been recovered in dayworks; and
• head office staff costs have not been recovered elsewhere.
Appendix C (10/02)
C4 FURTHER CONSIDERATIONS FOR THE QUANTITY SURVEYOR
C4.1 At what stage in the contract did delays occur and what was the impact
on head office costs? (The costs are unlikely to have been incurred
until the end of original contract period.) While it is correct that the
actual sum allowed in the contract price for head office overheads will
not necessarily be expanded by the contractor until after the end of the
original contract period, the contractor will actually incur the
additional costs at the time of the delay and since it is likely that
overhead recovery will be delayed as a result of the later execution of
original contract work then the additional overheads could be payable
before the end of the original contract period.
C4.2 What were the relevant events giving rise to delays under the
conditions of contract? Were head office costs applicable to those
events?
C4.3 To what extent was the head office involved in, for example, site visits,
meetings etc.?
C4.4 Was there a need to employ additional head office staff whether or not
a delay had occurred?
C4.5 How effectively did the firm employ staff on this contract as against
other contracts that they were undertaking?
C4.6 What was the size of the contract in relation to the size of the firm and,
therefore, the impact of the delay to progress on the business of the
firm?
Appendix C (10/02)
Appendix D: Checklist of Items for which Loss and/or Expense are

Allowed
The contract clause numbers referred to in this form are from JCT 98
Contract Item Tick

clause
number
26.2.1 The contractor not having received in due time necessary:

instructions
drawings, details; and
levels
for which he specifically applied in writing provided the date
of application was neither unreasonably close to nor distant
from the date the contractor needed them bearing in mind the
date of completion
26.2.2 Inspection – tests under clause 8.3:

opening up for inspection any work covered up and
making good testing of any executed work and making
good unless inspection reveals items not in accordance
with the contract
26.2.3 Discrepancy or divergence between the contract drawings

and/or the contract bills
26.2.4 Execution of work (not forming part of the contract) by the

employer or by persons engaged by him; failure by these
parties to execute such work
26.2.5 Postponement by the architect of any work to be executed

under the contract
26.2.6 After receipt of any notice the contractor is required to give,

failure by the employer to give ingress or egress in due time
to the contractor from the site of the works or any part thereof
in the possession and control of the employer, in accordance
with the contract bills/contract drawings:
through or over land, buildings, way or passage adjoining
or connected with the site
through or over land etc. as last item as otherwise
agreed between architect and contractor
26.2.7 Instructions issued regarding expenditure of provisional sums

except work being carried out as a PC sum by the contractor
after submission of a tender for it, but excluding variations for
which a clause 13A quotation has been accepted
26.2.8 Execution of approximate quantity work where bills are not a

reasonably accurate forecast
Appendix D (revised 07/01)
Appendix E: Checklist of Steps Required when Considering

Submissions by Contractor
The contract clause numbers referred to in this form are from JCT 98.
Contract Item Comments from Tick

clause the quantity
number surveyor
26.1 The contractor has applied in writing stating:

he has incurred/is likely to incur direct loss
and/or expense not reimbursed by any other
contract provision
progress has been/is likely to be materially
affected by the items listed in clause 26.2
26.1.1 The contractor has made application as soon as it

was reasonably apparent that:
the regular progress of the works/or part of
the works has been/is likely to be affected
the contract administrator has requested
supporting details to enable an opinion to be
formed
26.1.2 The contractor has upon request:

supported the application with information to
enable an opinion to be formed
26.1.3 The contractor has upon request:

provided details of loss and/or expense to
assist ascertainment
The architect has:
requested information from the contractor
(26.1.2, 26.1.3) to form an opinion
has ascertained/requested the quantity
surveyor to ascertain the amount of loss and
expense
The architect has stated in writing:
the extension of time granted (if any) from
time to time during the contract
the relevant event(s) for which it is given
(clause 25) and more particularly defined in
clause 26.3
25.3.4 A new completion date; not later than 12 weeks

after receipt of this notice, sufficient particulars
and estimate (where completion is less than 2
weeks distant, set a date not later than completion
date)
Appendix E (revised 07/01)
Appendix F: Further Reading
BOOKS
Chappell, David. Powell-Smith and Sims’ Building Contract Claims, 3rd Edition,
Blackwell Science Ltd, 1998
Duncan-Wallace, I N. Hudsons Building and Engineering Contracts, 11th Edition,

Keating, Donald and May, Anthony Sir. Keating on Building Contracts, 7th Edition,
Parris, John. The Standard Form of Building Contract JCT 80, 2nd Edition, Collins,
1985
Powell-Smith, Vincent and Furmston, Michael. A Building Contract Casebook, 2nd

Edition, BSP Professional Books, 1990
Trickey, G G and Hackett, M. The Presentation and Settlement of Contractors’

Claims, E & FN Spon, 2000
LAW REPORT SERIES
Building Law Reports
Construction Industry Law Letter
Construction Law Digest
Construction Law Reports
Appendix F (revised 07/01)
PART 4, SECTION 3

MANAGEMENT
SECTION 3: THE MANAGEMENT OF RISK
Introduction
Risk is present in all projects and surveyors are routinely involved in making
decisions which have a major impact on risk. Risk management is concerned
with establishing a set of procedures by which risk is managed, rather than
being dealt with by default. Major clients, such as Network Rail and BAA,
already have formal procedures in place for managing risk. Other clients are
likely to seek guidance from their professional advisers, which includes
surveyors, on how best to deal with risk.
The effective management of risk can only be achieved by the actions of the
whole project team, including the client. The role of a risk manager is to
facilitate input into the project management process such that risk is
effectively dealt with. With further training, surveyors are well placed to
undertake the role of risk manager. The role can be either full- or part-time,
combined with other responsibilities on the project.
The risk management process outlined in this section can be applied to any
procurement route and to new build or refurbishment-based projects,
regardless of cost or technical complexity.
Risk management formalises the intuitive approach to risk which project

teams often undertake. By utilising a formal approach, risk may be managed
in a more proactive manner. Essentially, there are three steps to perform:
• identification – collect the information available which might affect the
achievement of an objective;
• analysis – assess to what extent these aspects might affect the objective;
and
• response – review what can be done to limit this effect.
In addition, there needs to be an overall management strategy such that this

three-step process is implemented in a co-ordinated fashion. This strategy
should include how risk management will be integrated into the project
management process on a project.
This section of the handbook provides an overview of the principles of risk

management. The procedures outlined should produce a framework that can
be utilised on the majority of construction projects. Surveyors who want to
PART 4, SECTION 3
specialise in the application of risk management are advised to undertake

further training in this area with a recognised training provider.
I 4.3.1 Definitions
In the context of this section of the handbook, risk management is considered

to be a process for identifying, assessing and responding to risks associated
with delivering an objective, for example, a construction project, and the focus
is on commercial type risks. Health and safety related risks are likely to need
separate consideration and the Health and Safety Executive (HSE) provide
specialist guidance in this area.
Definitions for key terms used in this section are:
4.3.1.1 Risk: An uncertain event which, should it occur, will have an effect on the
achievement of the project’s objectives. A risk can be measured in terms of
likelihood (probability) and consequence (impact).
4.3.1.2 Risk management: A structured and auditable process for the benefit of all
members of the project team which is dedicated to the sole purpose of
controlling and mitigating uncertainty in a project.
4.3.1.3 Risk identification: The utilisation of methods assessed as effective and

appropriate (desk-top studies, interviews, brainstorming, etc.) to collate all the
potential uncertainties in delivering an objective.
4.3.1.4 Risk analysis: An adequate and effective assessment of the individual and
combined effect of identified risks on the successful delivery of the objective.
4.3.1.5 Risk response: An action to reduce either the probability of risk arising or the
significance of its detrimental impact if it should arise.
4.3.1.6 Risk management plan: An auditable document which describes the risk
management approach (identification, analysis and response) to be adopted
for a specific project or objective delivery and which states who should
undertake it and when.
4.3.1.7 Risk register: A document listing all the risks identified for the project,
explaining the nature of each risk and recording information relevant to its
assessment and management.
I 4.3.2 The rationale for risk management in the construction process
4.3.2.1 Surveyors will invariably be called upon to advise clients as to whether they
should undertake risk management on their project. While the benefits of risk
PART 4, SECTION 3
management may not be immediately apparent to clients, the direct costs of

undertaking the process will be.
4.3.2.2 The demands of delivering a construction project are extremely onerous. The
desire to deliver projects cheaper and faster, while moving closer to the
boundaries of innovative design, all increase the risk profile of a project. In
this respect risk is good, without it there would be no opportunity. It is the very
presence of risk that represents the opportunity for a building project to go
ahead in the first place.
Furthermore, the actual impact of risk is unique to a project even though its
presence may be commonplace. The risk management process may not be at
fault just because risks were realised. Indeed, if no risks were realised, the
effectiveness of risk assessment would be questioned because without risk
there would be no opportunity.
4.3.2.3 Risk management is not a panacea and there are likely to be times when it may
not be effective to practise all its facets. However, the delivery of any
objective can be made more effective if the risks are fully appreciated. There
is a need for appreciation of risk not just its analysis. The extent of analysis
necessary is related to the extent to which the cumulative effects of risks can
be appreciated.
4.3.2.4 Risk management, together with other services provided, should be flexible,
adapting to the circumstances of the client’s needs and the project. Some
clients require a snapshot of the risks at the outset of the project, with an initial
risk assessment, the provision of a one-off risk register and a quick estimate of
the combined effect. Other projects may require a full risk management
service with risk being continually addressed throughout the project.
4.3.2.5 A concern often voiced by clients is how to quantify the benefits of risk
management. Since risk management has a major emphasis on reducing
potentially detrimental effects, it is not usually politic to demonstrate its
effective application as having minimised the impact of cost overrun to,
say, 15%.
4.3.2.6 THE RECOGNITION OF UNCERTAINTY
By undertaking risk management, it is possible to ensure that clients

appreciate just how sensitive their projects are to changing circumstances.
This leads to:
• increased confidence in achieving the project objectives and therefore
improved chances of success;
• ‘surprises’ being reduced, such as cost and/or time overruns and/or
forced compromises of performance objectives. These surprises usually
result in ‘fire fighting’ and the ineffective application of urgent
remedial measures;
PART 4, SECTION 3
• identification of opportunities as risks are diminished, perhaps by

relaxing overcautious practices such as duplicating insurances or
seeking performance bonds unnecessarily;
• all ranges of parameters which might affect the project being
incorporated, rather than a single-point estimate (for example, the cost
for bricks can be between £200 and £300 per 1000 rather than £225); and
• the team recognising and understanding the composition of
contingencies, thus avoiding duplicating any allowance already made.
4.3.2.7 JUSTIFIABLE DECISION MAKING
Risk management allows decision making to be based on an assessment of

known variables. Judgement can become far more objective and justification
for action (or inaction) demonstrable both at the time and at a later date,
should it be questioned. There are a wide range of techniques which can be
utilised to facilitate effective decision making. The use of risk management
provides an audit trail which can be used should problems occur during later
stages of the project.
4.3.2.8 TEAM DEVELOPMENT
During risk management workshops a ‘snapshot’ of what might happen to the

delivery of a project is taken. During the workshops the project team discusses
its concerns and agrees a common way forward. As with other types of
facilitated workshops, such as value management, this benefit alone can
justify undertaking risk management. The advantages are:
• it facilitates team development;
• it is a communication tool;
• it opens up discussion on what could go wrong without fear of penalty;
• it acknowledges but transcends contractual restrictions;
• it challenges preconceptions; and
• it affirms the project procedures.
4.3.2.9 In summary, to fully realise the benefits of risk management, certain

principles should be understood and appropriately applied:
• risk management is an awareness of uncertainty;
• awareness of uncertainty can lead to positive attributes if recognised
early enough;
• risk management will add both direct and secondary benefits to the
delivery of any objective;
• the management of risk should not remove incentive;
• allocation of risk is to be gauged by the various parties' abilities to bear
and control that risk;
• complete transfer of risk is rarely wholly effective;
• information about and perception of a risk are fundamental to its
assessment and acceptance; and
• all risks change with time and any action (or inaction) taken (or not
taken) upon them.
PART 4, SECTION 3
I 4.3.3 The risk management process

There are three basic steps to the risk management process; identification,
analysis and response. These three steps are iterative in nature and it is this
iteration which constitutes risk management.
The risk management process
4.3.3.1 A risk cannot be managed effectively unless it is identified. The earlier a risk is
identified, the more time is available for analysis and the development of a
suitable response. Although the process is linear it does allow for iteration and
is designed to be proactive. Unfortunately, most risk is still dealt with in a
reactive manner where a response has to be devised and implemented as soon as
the risk arises. This reactive response does not allow any time for identification
and analysis and the right response may not always be implemented.
4.3.3.2 The risk management process also needs to be integrated into the project
management process. Since any risk management workshop or assessment is
a snapshot in time, the process has to be undertaken on a repetitive basis.
Essentially, the risk management process should be commenced as early as
possible in a project life cycle and each of the three stages repeated as
necessary to effectively manage the risks associated with that project. At the
start of the process a risk management plan should be developed. The risk
management plan is similar in nature to the project execution plan and may
form part of that document.
4.3.3.3 RISK IDENTIFICATION
The identification stage should commence as early as possible, preferably as

part of any feasibility study for the project. One of the key principles is that the
identification of risks should be undertaken at various stages of the project life
cycle. Identification is not just undertaken at the start of the project and then
simply monitored during construction. The construction phase itself will
generate new risks and the project team is expanded by new members in the
form of trade contractors who can bring additional information to the risk
identification process.
(a) Methodology
(i) Structured identification of all sources of risk to the project
The risk management process is based on the concept of providing a
structured approach to dealing with risk. It may seem obvious that ground
PART 4, SECTION 3
conditions are one source of risk, but how would this impact on other risks that
might be identified on the project? It is this inter-relationship between risks
that can only be drawn out through the use of a structured workshop and
identification methods where the whole project team have the ability to
contribute.
(ii) Preliminary analysis to establish probable major risks for further

investigation
The identification stage is designed to prompt team thinking and to bring out
all possible risks that might impact on the project. Several hundred risks could
be identified and the team may not have time to analyse and develop responses
to them all. It is normal during the identification stage to begin by sifting and
removing those risks which the team feel are not worth investigating further.
(iii) The true risk needs to be identified. Risks are caused by background
conditions which are essentially ‘givens’ e.g. location of site. If the risk does
occur it will affect the project. This is shown diagrammatically below.
Cause, risk and effect

It is all too easy to mistakenly manage the effect rather than the risk itself. By
identifying and managing the true risk, effort is expended managing the risk
rather than the effect.
(b) Techniques
(i) Research
While exactly the same project will not have been executed before, something
similar will have been. Investigation into projects on neighbouring sites or
projects previously undertaken by the client should be instigated.
(ii) Structured interviews/questionnaires

Interviews with key members of the project team (including client and
suppliers) will elicit the greatest insight into risks to the project and how they
are perceived by individuals. Interviews allow a greater depth of understanding
to be achieved than group discussions but do take up a lot of time.
PART 4, SECTION 3
(iii) Checklists/prompt lists

A simple and effective way to stimulate the team into thinking about risk is to
use a checklist. An easy way to start a checklist is for each team member to
write down all the variation orders on their last project, with the reasons for
their issue.
(iv) Brainstorming in a workshop environment

Bringing the team together in a focused workshop creates a powerful
environment in which to discuss risk. The team can have a better
understanding of how each member perceives risk differently. One important
aspect of such workshops is that lateral thinking is encouraged. The workshop
gives the team an opportunity to experiment with different viewpoints which
individuals might normally reject out of hand if working alone.
(v) Risk register

A risk register is probably the most useful tool in the risk management
process. It enables risks to be logged and tracked through the life of a project.
While a risk register can be maintained by hand, it is much more useful to use
a computer spreadsheet package. This allows the information to be sorted into
different categories. Specialist risk management software is also available
which integrates the risk register with risk analysis tools.
An example of a risk register is shown in figure 1. The example is very generic

in nature and additional information may be shown, such as who is
responsible for undertaking actions in response to the risk and by when.
Typical column headings for a risk register are:

• Risk number – a unique identifying number for the risk.
• Risk description – a written description of the risk.
• Ownership – who is responsible for the management action in
responding to the risk.
• Probability – how likely is the risk to occur.
• Impact – what happens if the risk does occur.
• Risk factor – probability multiplied by impact.
• Response – what actions need to be taken to deal with the risk.
• Status – the status of the risk can be shown as:
– done: the risk has arisen and been dealt with;
– active: the risk is currently being managed; and
– monitor: the risk has been identified but no analysis or response
has yet been developed for it.
• Comments – allows notes to be kept on the risk.
The probability and impact of the risk can also be shown; the importance of
these factors is discussed in 4.3.3.4(a). Finally the response to the risk can be
shown.
The risk register is a very useful format for showing a wide range of
information in the risk management process. If the register is placed on a
PART 4, SECTION 3
Figure 1: Typical Risk Register
PART 4, SECTION 3
computer spreadsheet it is easy to sort the risks in a variety of ways, for

instance by category or magnitude of probability. The risk register allows
risks to be logged but can also display additional information linked to the
project management process.
It is also possible to place identified risks into categories, for example, ‘client
control’. In figure 1 six categories are shown, but these can be altered to suit
the circumstances of each project. The use of categories allow risk to be
bundled together and can help responses to be tailored to deal with a category,
rather than an individual risk.
(vi) Database of historic risks

Experience is a ‘great teacher’ and the provision of a risk register allows
information to be stored in a convenient format ready for use on the next
project. The benefit of historical risk registers is that you know if a risk
actually occurred and whether the appropriate response was set in place. The
historic database should be used as a starting point in the risk management
process, but although it may save some time in the identification stage, this
stage cannot be completely omitted.
4.3.3.4 RISK ANALYSIS
The analysis stage is concerned with trying to achieve a better understanding

of the nature of the risks identified during the previous stage.
(a) Methodology
(i) Analysis of risks to assess the severity of impact and the probability of
occurrence
Risks have two dimensions:
• probability – this is the likelihood of the risk occurring and is generally
expressed as a percentage; and
• impact – if the risk did occur what impact would it have on meeting the
project’s objectives.
For each of the risks identified, its probability and impact should be assessed,
normally in a workshop environment with key stakeholders present.
Before the risks can be entered onto the risk register, a scale should be set for
the probability and impact dimensions. Setting a common scale will ensure a
consistent approach to placing newly-identified risks on the matrix at a later
stage in the project life cycle. An indicative layout for defining scales is shown
in figure 2.
While the probability scale shown in figure 2 may be utilised for any project,
the impact scale should be set for each project. In figure 2 the cost and time
impacts are shown as a percentage of the original cost and time. Hence a very
high impact would mean the cost of the project would increase by more than
50% of the original budget.
PART 4, SECTION 3
Figure 2: Scoring of probability impact scales
PROBABILITY IMPACT
Cost Time
Very high 70% – 95% > 50% > 50%
High 50% – 70% 20 – 50% 20 – 50%
Medium 30% – 50% 10 – 20% 10 – 20%
Low 10% – 30% 5 – 10% 5 – 10%
Very Low 5% – 10% < 5% < 5%
Although time and cost impacts have been shown separately it is possible to
combine them, or to use other criteria such as performance. Again, the scale
should be set according to the needs of a project. Once set the scales should
not be changed during the life of a project. This allows risks to be compared
on a common scale throughout a project and for the risk profile of a project to
be accurately monitored.
A higher level of sophistication can be applied to the ranking of the risks on

the probability/impact matrix. By assigning generic units to a matrix, the
relative importance of each cell can be seen, as shown in figure 3.
Figure 3: Example of weighting of probability and impact scales
The method of having the probability scale linear and the impact scale
non-linear emphasises the significance of low probability/high impact risks.
The matrix allows each risk to be ranked and compared on an even basis.
Where resources are scarce it also allows attention to be focused on those risks
which sit in the high-risk category of the matrix.
Once assessed, plotting risks on to a matrix, as shown in figure 4, indicates

very quickly those risks which require detailed consideration and those which
only need a cursory glance. So, a risk with a high probability of occurring,
which does occur, would have a very high impact on the project and would
require detailed consideration. This allows the right amount of resource to be
PART 4, SECTION 3
used in managing risk. The risk ID numbers from the risk register in figure 1
have been plotted in figure 4 to demonstrate the principle more thoroughly.
Figure 4: Mapping risks onto the probability/impact matrix
The probability/impact matrix (figure 4) allows a risk profile for a project to

be developed. For instance, if most of the risks are plotted in the top left
section of the matrix it indicates a high-risk project. This matrix is very useful
for providing a graphical representation of the risk on a project. The risk
management strategy is to manage these risks proactively through the project
life cycle. During later risk assessment exercises, the profile should show risks
plotted more in the bottom right section of the matrix.
(ii) Synthesis of all risks to predict the most likely project outcome
Risk tends to have a ‘knock-on’ effect and so it is important to consider not
only the effect of individual risks but their cumulative effect as well.
(iii) Investigation of alternative course of actions

Analysis allows for different scenarios to be developed to provide a high
degree of confidence that the appropriate course of action has been chosen.
The alternative courses of action may be plotted on the probability/impact
matrix to obtain a clearer understanding of their relative merits in relation to
the risk profile.
(b) Tools and techniques
The probability/impact matrix is the easiest technique to use and allows all
project team members to participate in the process via a risk workshop. More
sophisticated tools and techniques may be applied to provide a better
understanding of the identified risks. There are a wide range of such tools and
techniques available, many of which are supported by computer software
packages:
PART 4, SECTION 3
• Monte Carlo simulation modelling of cost and time risks;

• cost movement forecast;
• decision trees;
• sensitivity analysis;.
• hard/soft money analysis;
• ‘what if?’ analysis;
• influence diagrams;
• simulation packages;
• multiple estimate risk analysis (MERA);
• spider diagrams;
• multi-decision criteria analysis;
• linear regression;
• spreadsheets; and
• flowcharts.
It is not possible to provide an explanation of all the tools and techniques

available. However, further information can be obtained from one of the texts
in the further reading section (appendix A).
4.3.3.5 RISK RESPONSE
The analysis stage provides the team with a better understanding of the risks.
The next stage is to develop a response to those risks.
(a) Methodology
(i) Choose the appropriate course of action

The principle is to choose the right response based on available information.
It might be that the response changes with time as more information becomes
available. The response will generally fall into one of the following
categories:
• avoid;
• transfer;
• mitigate; and
• control.
An important point to consider when developing responses concerns the

generation of secondary risk. When a response is proposed, its full
implications should be assessed to ascertain if a secondary risk arises out of
implementing the response. If the sum of the secondary risk plus the reduced
risk (the original risk with the response in place) is greater than the original
risk, then an appropriate response has clearly not been identified and an
alternative should be found.
PART 4, SECTION 3
Figure 5: The creation of secondary risks
(b) Tools and techniques
The techniques available are primarily integrated with the project

management process, for example:
• contract acquisition plan;
• contingency management; and
• project controls.
The tools available are not usually related purely to risk management. For
instance, most surveyors would recommend to their clients that the contractor
has third party insurance for the project. This is a risk management response
designed to reduce clients’ exposure to claims for damages if a particular
incident were to occur. This is a risk management tool, although most
surveyors would consider it to be common project procedure. Typical tools
available are:
• insurances/bonds/warranties;
• contingency plans;
• forms of contracts;
• contingency drawdown models;
• special cost schedule allowance;
• earned value analysis;
• resource levelling; and
• training.
All responses to risks that are put in place should be managed. This should
form part of the project management system. Unless responses are effectively
managed, the whole risk process fails. Until a response is actioned, the risk
may still occur, regardless of how well it has been identified and analysed.
PART 4, SECTION 3
I 4.3.4 Summary
In conclusion, the key components of a risk management strategy are:
• identify staff and resources assigned to the risk management process;
• define lines of reporting and responsibility for the risk management
process;
• link the risk management plan to other project tools such as safety
(including CDM), quality and environmental management, and
planning and reporting systems;
• consolidate all risks identified into an appropriate and digestible
response strategy in order that cumulative effects can be perceived;
• state risk audit intervals and key milestones;
• include risk milestones in project plan;
• identify possible response strategies and programmes for each risk
category including contingency plans and how to handle new or
unresolved risks;
• assess cost involved; and
• monitor success of responses strategies and produce feedback for
reporting into future projects.
Appendix A: Further reading

Akintoye, A. et al., Local Authority Risk Management and the Private Finance Initiative,
Royal Institution of Chartered Surveyors, London, 1999 (ISBN 0 85406 990 9)
Akintoye, A. et al., Public Private Partnerships: Managing Risks and Opportunities,

Blackwell, Oxford, 2003 (ISBN 0 63206 465 X)
Boothroyd, C. et al., Risk Management: a Practical Guide for Construction

Professionals, Witherby Publishing, London, 1996 (ISBN 1 85609 120 1)
BSI, Project Management. Guide to the Management of Business Related Project Risk
(BS 6079–3:2000), British Standards Institute, London, 2000 (ISBN 0 580 33122 9)
Chapman, C. and Ward, S., Project Risk Management: Processes, Techniques and
Insights, John Wiley and Sons, Chichester, 1997 (ISBN 0 47195 804 2)
Edwards, L., Practical Risk Management in the Construction Industry, Thomas

Telford, London, 1995 (ISBN 0 72772 064 3)
Flanagan, R. and Norman, G., Risk Management and Construction, Blackwell

Scientific Publications, Oxford, 1993 (ISBN 0 63202 816 5)
Godfrey, P. S., Control of Risk: a Guide to the Systematic Management of Risk from
Construction (SP125), CIRIA, London, 1996 (ISBN 0 86017 441 7)
Smith, N. J. et al., Managing Risk in Construction Projects, Blackwell Science,

Oxford, 1998 (ISBN 0 63204 243 5)
Taylor, M., Avoiding Claims in Building Design: Risk Management in Practice,

Blackwell Science, Oxford, 2000 (ISBN 0 63205 326 7)
Tweeds, Laxton’s Guide to Risk Analysis and Management,

Laxton’s/Butterworth-Heinemann, Oxford, 1996 (ISBN 0 75062 973 8)
Appendix A (5/03)
PART 4, S ECTION 4

MANAGEMENT
SECTION 4: VALUATIONS FOR INTERIM

CERTIFICATES
Introduction
Many construction projects require interim payments to be paid to a
contractor. This is in order to relieve the contractor of the burden of financing
the whole of the works until completion; works which may take many months
or years to complete.
The purpose of valuations is to provide advice to the certifier on a

construction project (usually the architect) for the issue of interim certificates.
The certificates issued by the certifier to the contractor are then presented by
the contractor to the employer who pays the contractor on an interim or
instalment basis.
Within each contract there will be clauses which set out the criteria under
which interim payments will be made, the timing of these payments and the
administrative rules under which quantity surveyors, architects, employers
and contractors must operate. In many contracts, whilst the completion and
calculation of the value is important, the method and procedure of the interim
payment which the contractor receives is equally as important.
This section of the handbook provides guidance to surveyors carrying out

such valuations.
I 4.4.1 Valuations
An interim valuation involves a revaluation of the whole work, not the work
done since the last certificate was issued. The valuations should be treated
almost as ‘mini final accounts’ as they generally reflect all the matters and
items which appear in a final account. Interim valuations may now be
subjected to the same scrutiny as final accounts as they may be the subject of
adjudication provisions in contracts and per se are required to be compiled
with care.
The valuation must be a realistic assessment. A low valuation creates

unreasonable financial problems for a contractor whereas a high valuation
creates a risk to the employer of paying sums for which he or she obtains no
benefit.
PART 4, S ECTION 4
The quantity surveyor’s purpose is to assess value as distinct from cost,

particularly with reference to prices of certain items, for example temporary
works.
The quantity surveyor carrying out the valuation must be aware of the overall
position of any valuation within a project; to assess what remains of the
anticipated final contract value after each valuation and ensure that within the
terms of the contract this will be adequate to complete the works. This action
is particularly valid towards the end of the contract.
I 4.4.2 Assumptions
It has been assumed throughout this section of the handbook that the interim
valuation by the quantity surveyor is provided for the benefit of an architect:
the person who certifies the amount of the valuation to the employer. Under
JCT contracts that person is normally the architect but could be referred to as
the contract administrator.
This section has been prepared from the standpoint of a quantity surveyor
acting for an employer, assuming normal terms of appointment.
A basic checklist of actions necessary for practicing quantity surveyors is

provided below. However, it should be noted that any specific directives
within the quantity surveyor’s own organisation (such as those within quality
assurance schemes) should supplement this advice.
4.4.2.1 JCT FORM OF CONTRACTS
Most quantity surveyors carry out interim valuations under a JCT Form of
Contract. Therefore, this section is based on the JCT Standard Form of
Building Contract With Quantities 1998 (JCT 1998 With Quantities). This
contract is only intended for use where the client has engaged a professional
consultant to advise on and to administer its terms.
It is recognised that there are differing methods of procurement and differing

forms of contract being used. However, the principles set out here will remain
valid. Variations required for different contract terms will be noted later.
4.4.2.2 ROLE OF A QUANTITY SURVEYOR IN CARRYING OUT VALUATIONS FOR INTERIM

PAYMENTS
This section of the handbook assumes that the quantity surveyor has normal
terms of appointment and the relative roles of the quantity surveyor carrying
out a valuation for an employer under a normal JCT contract.
The guidance in this section is equally relevant to a quantity surveyor acting

for a contractor who will be required to produce valuations in similar
circumstances to that of a quantity surveyor acting for an employer.
PART 4, S ECTION 4
4.4.2.3 DEFINITIONS
Quantity Surveyor This refers to a valuer acting independently for an

employer and carrying out a valuation under a JCT
1998 contract. In this section the quantity surveyor
may be a quantity surveyor acting for an employer or a
quantity surveyor acting for a contractor.
Architect This generally refers to an architect acting for an

employer or, if the local authorities version of the JCT
contract is used, a contract administrator.
Employer The client as used in JCT 1998.
Contractor In JCT 1998 With or Without Quantities the contractor

is assumed to be a main contractor who may be asked
to employ nominated sub-contractors or request
permission to sub-contract portions of work to
domestic sub-contractors.
4.4.2.4 LEGISLATION
The requirement to provide stage or interim payments is now contained in the

Housing Grants and Reconstruction Act 1996 where it is stated in Section 109
that, ‘A party to a construction contract is entitled to payment by installments,
stage payments or other periodic payments for any work…’
Parties to the contract are free to agree the amounts of the payments and the
intervals at which, or circumstances in which, they become due.
Section 110 of the Act states that every construction contract shall provide an
adequate mechanism for determining what payments become due under the
contract and provide for a final date for payment in relation to any sum which
becomes due.
Section 111 states that a party to a construction contract may not withhold
payment after the final date for payment of a sum due under the contract
unless an effective notice of intention to withhold payment has been given.
I 4.4.3 Valuation Under a JCT Contract: Background

The current JCT contract (and the one referred to in this part of the section)
is the JCT Standard Form of Building Contract With Quantities 1998 (JCT
1998 With Quantities).
JCT 1998 With Quantities contains the right of the contractor to interim
payments at clause 30 (Certificates and Payments). Clause 30.1.1.1 states
that, ‘The Architect shall from time to time ... issue Interim Certificates
PART 4, S ECTION 4
stating the amount due to the Contractor from the Employer specifying to
what the amount relates and the basis on which that amount was calculated.’
Clause 30.1 also sets out a timescale for payment and the right of the
contractor to interest if the timescale is not adhered to by the employer.
The employer has to advise the contractor of the amount which he or she is
due to be paid and the amount of, and reason for, any deduction to that
payment.
Clause 30.1.2.1 states, ‘Interim valuations shall be made by the Quantity

Surveyor whenever the Architect considers them to be necessary for the
purpose of ascertaining the amount to be stated as due in an Interim
Certificate’. Clause 30.1.2.1 allows the contractor to submit an application for
payment to the quantity surveyor which should set out what the contractor
considers to be the amount of the gross valuation. The quantity surveyor, in
response to the contractor’s submission, ‘shall make an interim valuation’. It
is essential that the quantity surveyor makes and issues a valuation even if the
interim payment calculation is zero.
Under clause 30.1.3 the dates for the first and subsequent interim certificates
are set out in the Abstract of the conditions.
Clause 30.2 states how the amounts due in an interim certificate are to be
ascertained. It follows that any interim valuation prepared by the quantity
surveyor should follow the same method as that for an interim certificate.
In clause 35.13 it is stated that the architect shall direct the contractor as to
interim payments to nominated sub-contractors. The ascertainment of
amounts due to nominated sub-contractors are calculated in accordance with
clause 4.17 of the JCT 1998 Nominated Sub-Contract Conditions (NSC/C).
Clause 4.17 contains step-down provisions similar to clause 30.2 of JCT 1998
With Quantities and the works of nominated sub-contractors are assessed in
the same manner as that of the main contractor.
G 4.4.4 Recommended Action at the Start of a Contract

4.4.4.1 CONTRACT REQUIREMENTS
(i) Check that the architect requires regular valuations for interim
certificates and refer to the contract for the frequency;
(ii) Note whether there are any ad hoc amendments made to the standard
form of contract that have a bearing on interim certificates; and
(iii) Prepare a job progress chart and cash flow forecast ready for checking
against the value of work completed at successive valuations.
PART 4, S ECTION 4
4.4.4.2 EMPLOYER’S REQUIREMENTS
(i) Check that the programme of valuations and certificates matches the
employer’s programme of payments;
(ii) Confirm the programme of valuations and certificates with the

architect; and
(iii) Check whether the employer requires valuations to be built up under

various headings.
4.4.4.3 GENERAL ADMINISTRATION
(i) Obtain a breakdown of preliminaries from the contractor (if not

previously supplied);
(ii) Note any adjustments to the contract price made in the summary of the
bills of quantities or elsewhere;
(iii) If not already detailed, establish which preliminaries are one-off

expenditure items and which are related to time or to value of work
done; similarly, with the items in the summary of the bills of quantities;
(iv) Where there are to be fluctuations, refer to 4.4.9.3 of this section; and
(v) Calculations made in the course of the interim valuation should be set
out in a clear form and retained for future reference. Any details which
are applicable to the final account should be collected together as a
running record.
G 4.4.5 Communications
4.4.5.1 PRELIMINARY DISCUSSIONS WITH THE CONTRACTOR
(i) Agree with the contractor the programme of valuations decided with
the employer, in line with the employer’s arrangements for payment;
(ii) Arrange a procedure for the receipt and verification of invoices,

daywork sheets and other supporting information. Remind the
contractor that you will be keeping/organising a close watch in the
monitoring and checking of daywork and labour returns, and that your
own records will be kept. Stipulate that the provision of the contract for
submitting daywork records (clause 13.5.4) must be seen as
representing the latest permissible time for submission; and
(iii) Agree the basis on which preliminaries and sums in adjustments to the
tender (and/or in the correction of errors) will be incorporated into
valuations.
PART 4, S ECTION 4
4.4.5.2 PRELIMINARY DISCUSSIONS WITH THE CONSULTANTS
(i) Provide the consultants responsible for preparing valuations for

specialist work with details of the interim valuations programme and
agree deadlines for the consultants submission to you; and
(ii) Arrange with the architect a detailed procedure for recording the
contractor’s resources on site. Obtain the architect’s agreement that you
set up this procedure, including briefing and controlling the clerk of
works in this respect. Remind the architect that he or she (or authorised
deputy) has responsibility for verifying daywork.
4.4.5.3 PRELIMINARY DISCUSSIONS WITH THE NOMINATED SUB-CONTRACTORS
(i) Inform the nominated sub-contractors of the valuations programme and

make arrangements for the valuation of their work (the evaluation to be
made by you, or by the consultant (vetted by you) in the case of
specialist work where a specialist consultant is appointed).
4.4.5.4 PRELIMINARY DISCUSSIONS WITH THE CLERK OF WORKS
(i) Impress on the clerk of works (or site engineer or any person to whom
the responsibility has been given to record contractor’s resources, time,
materials, plant, etc.) that diligence and accuracy in checking on
resources used is crucial and that, therefore, he or she must keep a
reliable daily record. Inform him or her that you will be visiting the site
to make spot checks unannounced;
(ii) Acquaint the clerk of works with the valuation dates programmed.
Request that you are notified of all items of work likely to become
hidden so that you can ensure that records are made, ready for
measurement; and
(iii) Arrange with the clerk of works to receive his or her labour record
(which is required for checking wages fluctuations).
G 4.4.6 Approach
4.4.6.1 METHOD
(i) The method of approach for preparing the valuations should be

determined by the quantity surveyor after consideration of all the
employer’s, contractor’s and architect’s requirements;
(ii) The format for the valuations will be suited to the particular project,
and for measured works, the format of the bills of quantities (for
example, separate buildings, elements, trades) may well determine the
order of sections that best suits the contract basis (for example,
grouping as that required for fluctuations);
PART 4, S ECTION 4
(iii) In approaching each valuation, the quantity surveyor should note first
in general terms the position of the particular valuation in relation to
the overall project and the progress that has been made relative to the
forecast of payments; and
(iv) The quantity surveyor should ensure that backup information and
documentation which he or she requires from the contractor is available
in time for each valuation.
4.4.6.2 CONTRACTOR’S SUBMISSION
(i) The JCT 1998 With Quantities allows the contractor to submit an
application for payment to the quantity surveyor;
(ii) The format in which the contractor presents his or her valuation should
be agreed in the same manner as detailed earlier in 4.4.5.1 and 4.4.6.1
of this section.
Whilst the format which the contractor uses will, in normal

circumstances, be pre-agreed, there is no requirement for the contractor
to use an agreed format. However, it is necessary for the quantity
surveyor to respond to the contractor’s submission in the same detail as
that used by the contractor; and
(iii) The contractor has the opportunity when submitting his or her
valuation to include with it all the relevant documentation. Agreement
should be made with the contractor at the outset of the contract that he
or she must submit this documentation at the same time as his or her
valuation.
4.4.6.3 SITE VISIT
(i) It is important (and necessary) to visit the site of the works. First, to
assess the overall progress of the works and, secondly, to assess the
various aspects of the valuation in detail.
It is also necessary to assess the materials on site for incorporation in

the works. The details and quantities should be checked.
4.4.6.4 DETAIL OF VALUATION
(i) It is important to detail the calculations made to assess the interim

valuation and to retain these calculations for future reference;
(ii) When the valuation is complete, sufficient calculations should be

supplied to the contractor in order for him or her to understand how the
valuation was calculated. It is good practice for the contractor to be in
attendance when the quantity surveyor is carrying out the valuation so
that most of this information will be known to him or her;
PART 4, S ECTION 4
(iii) It is important for the contractor to be aware of these calculations,

particularly the calculation of the amounts in respect of work which he
or she has sub-contracted; and
(iv) If the contractor has made a submission under clause 30.1.2.1 of the
contract, the quantity surveyor must respond to the contractor’s
submission in the same detail as was supplied by the contractor.
G 4.4.7 Content of a Valuation

4.4.7.1 A valuation is likely to consist of the following elements (although not all of
these elements will be found in every valuation):
Work Executed
Measured Work
Approximate Quantities
Preliminaries
Sub-Contracts – Nominated
Sub-Contracts – Domestic
Suppliers
Variations
Dayworks
Materials – On Site
Materials – Off Site
Fluctuations
Loss and Expense
Special Payments
Deductions
4.4.7.2 WORK EXECUTED
(a) Measured Work
Work under this category relates to work included in the tender documents
and, subsequently, the contract as measured either in bills of quantity format
or schedules, or descriptions of work items.
Include an assessment of the work properly executed using rates within the
bills of quantities. Consider whether an adjustment shall be made to the rates
where the item is partially executed, allowing for the location of the work and
for inflation if it is a fixed price contract.
This assessment will normally be carried out using rates within the bills of
quantities. However, where the item is only partially executed, adjustment to
the rates will be necessary having due regard to the location and
circumstances of the work.
PART 4, S ECTION 4
(b) Approximate Quantities
During the construction the quantity surveyor should take regular

measurements in respect of work for which there is an approximate quantity in
the bills. If measurements are taken regularly, the quantities for these items will
be up to date and available for valuations, or to check against the contractor’s
submission. The rates for the work are contained in the bills and adjustments
made in valuations as described in 4.4.7.2 (a) for partially completed work.
(c) Preliminaries
From the detail of preliminaries items (see 4.4.4.3 (i)) include one-off
payment items as circumstances dictate.
Assess items which are related to value, including those items which appear
in the summary of the bills of quantities.
Assess time-related items in relation to the programme.
Consider adjustments where the contract is behind schedule.
Preliminary items should be further divided into set-up, running and removal
costs where appropriate.
(d) Sub-Contractors – Nominated
The work carried out by nominated sub-contractors should be assessed in the

same way as the main contract works.
The work represented in the categories Measured Work and Approximate

Quantities, together with Variations to Special Payments are equally
applicable to nominated sub-contracts and should be considered as part of the
nominated sub-contract work values. They should not be included with the
main contractor’s value headings.
(e) Sub-Contractors – Domestic
Under JCT 1998 With Quantities the contractor is permitted to sub-contract

with his or her own choice of sub-contractor (defined as domestic sub-
contractors in the contract). However, work carried out in a project by
domestic sub-contractors may comprise a substantial proportion of the whole
of the works. The contractor will provide the quantity surveyor with
documentation from the domestic sub-contractor as part of his or her
substantiation of the valuation.
The quantity surveyor must ensure that the detail and information provided
from this source is in the terms of the main contract and not the values which
occur in the contract between the contractor and domestic sub-contractor as
these values may be different.
PART 4, S ECTION 4
(f) Suppliers
The value of goods on site supplied by nominated suppliers should be

included at the rates stated in the nomination. Invoices confirming the values
should be obtained and the relevant discounts checked.
4.4.7.3 VARIATIONS
It is not possible to cover all the required information on variations within this
section. However, the following simple rules should be followed:
(i) Only variations properly instructed under the terms of the contract
should be included in a valuation. The valuation of variations is
described in clause 13 of the Conditions of Contract.
(ii) For simplicity, variations have been categorised in accordance with the
following:
• Pre agreed – where the variation has been agreed both in terms of
content price and time before being instructed.
• Agreed in terms of price but not in terms of effect on the contract.
• Instructed to be carried out and to be evaluated in terms of the
contract.
• Items identified by the contractor as variations but not instructed
by the architect at the time of valuation.
(iii) All variations should be identified in the quantity surveyor’s valuation

in a separate section so that they can be easily identified.
Items pre-agreed in all facets – for the purposes of valuations items in

this category are easily dealt with by following the rules for valuation
under Work Executed. It is relevant to keep the variation items separate
even if the work within the variation is the same as that within
Measured Work.
Items agreed in terms of price but not in terms of effect on the contract
– the price for work in this category, having been agreed, can be dealt
with as for pre-agreed items. The quantity surveyor has to seek further
information from the architect and contractor regarding effect on
contract. There may be no easy answer in respect of this item.
Instructed to be carried out and to be evaluated in terms of the contract

– the variation must be evaluated in terms of the contract (clause 13)
and the rules are set out in that clause. The quantity surveyor must seek
agreement with the contractor for the way in which any variation is
accounted for at an early stage. Remember, the contractor will be
seeking to maximise his or her interim recovery in respect of the item
until final agreement is reached. In an ongoing situation the contractor
will be basing his or her level of recovery on the amount which he or
she is having to pay out and for an interim valuation the quantity
PART 4, S ECTION 4
surveyor should seek from the contractor the same information,

invoices, etc. so that he or she can make a judgement using the same
information.
Contractor’s price statement – an alternative to evaluation of an

architect’s instruction or of an approximate quantity, which the
contractor is free to adopt, is for the contractor to submit a ‘price
statement’ within a prescribed timescale. The contractor’s price in this
statement must be based on the provisions of clause 13.5 of the contract
and then, if the price statement is accepted, when the work related to the
instruction is being carried out, appropriate amounts will be included
in interim valuations. If the price statement is not accepted, the
instruction is evaluated in the normal way.
A price statement may include loss and expense or the price may be
accepted without an assessment of the effect on the contract. The
quantity surveyor should be aware of the content of any price statement
before including it in an interim valuation.
(iv) Clause 13A quotation
When the architect issues a variation instruction it is at the employer’s

option to ask the contractor to submit a clause 13A quotation on the
premis that after a suitable timescale the instruction may not be ratified
and thus falls.
If accepted, a clause 13A quotation becomes an instruction with an

agreed price for the scope of work represented by that instruction. Care
should be taken by the quantity surveyor when including the value or
part of the value of the clause 13A quotation in an interim valuation as
it may include loss and expense as part of the evaluation of the variation
instruction, together with the cost of preparing the quotation.
4.4.7.4 DAYWORKS
Include dayworks only if they are prepared in accordance with clause 13.5.4
of the contract and verified by the architect.
If dayworks are to be included, check that the percentage additions to prime

costs are in accordance with those quoted in the contract documents.
4.4.7.5 MATERIALS – ON SITE
Include materials on site in accordance with the provisions of clause 30.2.1.2

of the contract.
Value materials at current rates where it is a fixed price contract under

clause 38.
PART 4, S ECTION 4
Value materials at base rates where it is a fluctuating price contract under

clause 39.
Value materials at current rates where it is a fluctuating price contract under

clause 40.
4.4.7.6 MATERIALS – OFF SITE
The value of materials or goods intended for the works but stored off site are
not included in interim valuations except those which were noted as ‘the listed
items’ prior to the contract.
Clause 30.3.1 of the contract states that the property in uniquely identified
listed items must be demonstrated by the contractor to the architect to be
vested in the contractor.
Where the items listed are not uniquely identified the contractor must provide
evidence of vesting.
The means by which the contractor supplies ‘reasonable proof’ of ownership

is explained by a special note in the guidance notes which accompanied the
publication of Amendment 18 to JCT 80 (see Appendix B of this section of
the handbook).
A bond (details of which are set out in Annex 1 to the appendix to the
contract) is provided by the contractor if required by the contract.
Clause 30.3.4 sets out the conditions under which the materials are to be
stored before payment is included in a valuation.
The quantity surveyor may be asked by the architect to view and assess the
materials off site. If so, the quantity surveyor should ensure that all the
relevant conditions have been met before including the value of the materials
or goods in the interim valuation.
4.4.7.7 FLUCTUATIONS
Where there are to be fluctuations these should be added as described in

4.4.7.3 of this section of the handbook (or deducted, if appropriate (see
4.4.7.10 (e)).
4.4.7.8 LOSS AND EXPENSE
Loss and expense may be included within an interim valuation. The basis of
the loss and expense in a contract must be established before any monies are
included in an interim payment.
PART 4, S ECTION 4
4.4.7.9 SPECIAL PAYMENTS
Within the terms of the contract there may be other costs which are required
to be added into the valuation.
Examples of special payments include:

• Clause 6.2: Statutory fees and charges – fees and charges detailed
in this clause shall be added to the contract sum only under the
conditions outlined in clause 6.2.
• Clause 8.3: Inspection and tests – the cost for this work, together
with making good, is to be added to the contract sum if the tests
show that the works or materials being tested are in accordance
with the contract.
• Clause 9.2: Royalties – where, in compliance with the architect’s
instructions, the contractor is liable to pay royalties or other monies
for patent rights, these royalties are added to the contract sum.
• Clause 21.2.1: Insurance – the premiums incurred by the contractor
to affect 21.2.1 insurance (which is a joint insurance indemnifying
against injury or damage to adjoining buildings which are not the
property of the employer) are included in interim valuations.
4.4.7.10 DEDUCATIONS
(a) Retention
Retention should be deducted from the gross valuation at the rate stated
in the contract. The gross valuation is calculated in the total derived in the
categories referred to above (Work Executed to Special Payments).
Retention is applied in terms of the contract. Clause 30.4 sets out the
rules for ascertainment of retention and clause 30.2.1 clarifies the items.
The items described in the categories Work Executed to Materials – Off

Site are subject to retention; Fluctuations is generally subject to
retention; Loss and Expense is excluded from the retention calculation;
and the items detailed in Special Payments (statutory fees and charges)
are not subject to retention.
For retention at practical completion or partial possession see

4.4.7.10(c) below.
(b) Work not properly executed
The architect should advise the quantity surveyor in writing of work

which, although having been carried out, is not in accordance with the
contract. The value in the contract for this work should not be included
within an interim valuation. The quantity surveyor, when compiling his
or her valuation, assumes that all work completed is in accordance with
the contract. It therefore follows that he or she must then deduct the
value of work which is not.
PART 4, S ECTION 4
The quantity surveyor should compile a list of the work and values
deducted and include the list with the notes passed to the contractor.
The previous two paragraphs assume that, in deducting for work which
is not in accordance with the contract, the work will require to be
redone or amended in accordance with the contract. However, under
clause 8.4.2 the work not in accordance with the contract may be
accepted by the architect and a reduction in value allowed for it. This
reduction will be shown as a deduction to the valuation.
In a similar manner, if defects, shrinkages, etc. are not made good, a

deduction may be made under clauses 17.2 and 17.3.
(c) Amounts previously certified
Although it may be obvious, the amount previously certified should be

deducted. It is important to check the amount certified by the architect
and not to assume that the amounts within the quantity surveyor’s
previous valuation have been used. However, payment to the contractor
by the employer as distinct from certification by the architect is a
different matter. Payment to the contractor is determined by the
employer, and the quantity surveyor should ignore the amounts paid.
The quantity surveyor’s valuation should refer to the total value to that
proscribed date less the amount certified by the architect.
Retention held at interim valuations is partially released at practical

completion of the works and where the employer takes partial
possession of part of the works. Clause 30.4.1.3 of the contract refers
to this.
(d) Advance payments

(This item does not occur in the local authority version of JCT 1998
With Quantities)
If an advance payment has been made to the contractor, the amount of

the advance will be stated in the appendix to the contract. The amount
of the advance will be reimbursed to the employer in the amounts and
at the times stated (this is also stated in the appendix).
(e) Fluctuations
Where the operation of the fluctuations clauses and the subsequent

calculation indicates a reduction, a deduction will have to be made to
the valuation.
For additional information please see 4.4.9 below.
PART 4, S ECTION 4
(f) Errors in setting out
Under clause 7 of the contract, if errors have been made in setting out,
these errors may not be amended (at the sole cost to the contractor). A
deduction may be made to the contract in lieu.
(g) Nominated sub-contracts (clause 4.17.3)
Where work has not been properly executed, as stated in 4.4.7.1(b)

above, the rules apply equally to the work of nominated sub-
contractors. An appropriate deduction is made but kept separate from
that of the main contractor.
G 4.4.8 Administration
4.4.8.1 GENERAL
The quantity surveyor should ascertain the way in which the architect requires
the valuation and whether any additional explanation and information is to be
provided at the time of valuation.
The use of a standard form, such as that issued by the Royal Institution of
Chartered Surveyors (RICS) for interim valuations is recommended.
As indicated in 4.4.3 above, under clause 30.1.1.1 of the contract, the

architect, when issuing the certificate to the employer, must specify to what
the amount of the certificate relates and the basis on which that amount was
calculated.
Whilst the same wording is not used in the contract in the context of the
quantity surveyor issuing a valuation to the architect, it is prudent for the
quantity surveyor to provide additional detail of the valuation to the architect
than is required by the contract terms. The architect may well require this
additional detail when explaining the content of the certificate to the
employer.
One way for the quantity surveyor to achieve this additional detail is for the
quantity surveyor to use in his or her advice, a similar format that is used in
the example in Appendix C of this guidance.
4.4.8.2 COVERING LETTER
When making his or her recommendation for payment, the quantity surveyor
should state the basis of his or her calculations in a covering letter to the
architect, if not detailed separately (as described in 4.4.6.1 above) or on the
valuation form. This covering letter would need to include a statement on the
authority for part release of retention and details of defective works not
included in the valuation.
PART 4, S ECTION 4
In a letter advise the architect whether all the work executed is included in the
valuation (the quantity surveyor may have been instructed to exclude specific
items). It is prudent to remind the architect that he or she is to adjust the
recommended figure if there are further works or unfixed materials that are
not acceptable to him or her. The wording of the RICS standard form at note
(iii)(a) refers to this point, but it is advisable to mention the matter in the
letter.
Where appropriate, advise the architect in respect of matters regarding

previous valuations, for example, whether nominated sub-contractors have all
received their payments under previous certificates.
G 4.4.9 Special Situations

4.4.9.1 DETERMINATION OF THE EMPLOYMENT OF A CONTRACTOR OR NOMINATED
SUB-CONTRACTOR
There are special provisions relating to valuations in the case of a

determination of the employment of a contractor (or of a nominated sub-
contractor) under the Conditions of Contract.
The detail of the requirements for valuations are to be found in clause 27 of

the contract and will depend on the circumstances of the determination.
4.4.9.2 LIQUIDATED DAMAGES
The application of liquidated damages affects payments to the contractor, but

it is generally not an element of a valuation which should be included (or
amounts deducted) by the quantity surveyor.
Advice to the employer and the architect should include:

• In a contract, where there is a provision for liquidated damages to be
applied at the rate included in the contract, the quantity surveyor may
be required to advise of the amount of liquidated damages for which
the contractor is liable.
• On there being an appropriate certificate issued under clause 24 of
the contract, when issuing valuations the quantity surveyor should
advise the employer and/or the architect of the amount of liquidated
damages for which the contractor is liable and continue to advise
thereafter, each time stating the amount.
4.4.9.3 FLUCTUATIONS
The contract will state the basis of adjustment: whether there is to be detailed
cost recovery (clause 38 or 39) or the use of price adjustment formulae (clause
40). Where detailed cost recovery is to be the basis, check that basic prices of
materials goods, electricity and fuels have been agreed. Note any imported
PART 4, S ECTION 4
goods which will be subject to currency fluctuations. If fluctuations are to be

dealt with by the price adjustment formulae method, agree with the contractor
the allocation of bill items to categories, as this method requires.
G 4.4.10 Other Contract Terms (relative to valuations)

4.4.10.1 PRIME COST SUMS
Prime cost sums are expended on the written orders of the architect in respect
of nominated sub-contractors or nominated suppliers.
A separate section of the quantity surveyor’s interim valuation should be

created for all work carried out under the expenditure of prime cost sums.
4.4.10.2 PROVISIONAL SUMS
Provisional sums are expended on the written orders of the architect. The
valuation of work instructed under this method may be dealt with by reference
to the other sections.
A separate section of the quantity surveyor’s interim valuation should be

created for all work carried out under the expenditure of provisional sums.
4.4.10.3 PERFORMANCE SPECIFIED WORK
JCT 1998 With Quantities allows for performance specified work which shall
not be carried out by nominated sub-contractors or nominated suppliers.
The contractor is required by the contract to supply an analysis of the portion

of the contract sum to which the performance specified work relates. This
analysis may then be used for interim valuations.
4.4.10.4 STAGE PAYMENTS
In clause 30.2 the contract allows the parties to agree to stage payments. If
stage payments were included in the contract for all or part of the works, the
values for these parts or sub-portions have been pre-agreed. The stage
payment will be included in valuations when the scope of work to which the
stage payment relates has been completed and so indicated by the architect.
4.4.10.5 ACTIVITY SCHEDULE
An activity schedule may be included in the contract. Clause 30.2.1.1 states

how the value of work in an activity schedule is to be included in an interim
valuation.
An example of an activity schedule issued by JCT is included in Appendix C

of this section of the handbook.
PART 4, S ECTION 4
4.4.10.6 ELECTRONIC DATA INTERCHANGE (EDI)
Annex 2 of the contract allows for an agreement between the parties in respect
of the exchange of communications by electronic means. Therefore, interim
valuations can be communicated by such means.
The simplest form of electronic communication is by fax machine and the use
of this is now widespread. Information is simply reproduced by a fax and the
recipient receives a copy. This is useful where invoices and the like require to
be transferred.
The transfer of information through computers does not generally provide

‘copies’ of material to the recipient unless the original material was scanned
into the computer. When using computers to transfer the valuation, backup
care should be exercised where originals or copies of invoices and the like are
required to be provided.
The Code of Practice for Electronic Data Interchange states that parties
proposing to contract on terms which expressly give administrative or other
responsibilities to third parties should not adopt EDI in connection with that
contract without the agreement of those third parties.
It would appear to be prudent that when EDI is being set up at the outset of
the contract the ‘rules’ for interim valuations should also be set out clearly.
I 4.4.11 Valuations Under Other Forms of Contract

The principles and procedures set out in this section for valuations carried out
under JCT 1998 With Quantities will largely be pertinent to other forms of
JCT contract, together with forms of contract produced by other bodies.
The guidance provided in this section will apply equally to the JCT Without
Quantities edition, the Local Authority editions, and these forms used with the
sectional completion supplement and with the contractors designed portion
supplement.
4.4.11.1 OTHER JCT CONTRACTS
In general terms other JCT contracts will have the principles set out here
applied although the detail may be different.
4.4.11.2 OTHER FORMS OF CONTRACT
Contracts issued by other bodies will, in general terms, have the principles set
out here applied although the detail may be different.

JCT. Practice Note 26 (’94) Valuation and Certification for Interim Payments
including Variation, RIBA, London, 1994
Seeley, I.H. Quantity Surveying Practice, Macmillan Press Limited,

Basingstoke, 1997
The Aqua Group. Contract Administration for the Building Team, Blackwell
Science, London, 1996
Appendix A (05/00)
Appendix B: JCT Definition of ‘Reasonable Proof’

1. Clause 30.3.1 makes it one of the conditions of the inclusion, in the amount
stated as due in an Interim Certificate, of the value of what clause 30.3
defines as ‘listed items' before their delivery to or adjacent to the Works, that
the Contractor has provided the Architect with 'reasonable proof ' that the
property (ownership) in the listed items is vested in the Contractor.
2. The Contractor is only required to provide ‘reasonable proof’. Thus if,

notwithstanding the provision of such reasonable proof, it transpires that the
property in the listed items is not vested in the Contractor the risk of having
paid for listed items for which the Contractor cannot give a good title to the
Employer is with the Employer. In practice however Employers will only pay
pursuant to clause 30.3 if the proof provided of the Contractors ownership is
as water-tight as possible.
3. Where the listed items are purchased from a supplier by the Contractor, the
Contractor should give the Architect a copy of the written contract of sale
applicable to the listed items; and a written statement from the supplier that
any conditions in that sale contract that must be fulfilled before the property
passes to the Contractor have been fulfilled. The statement of the supplier
should also say that the supplier's property in the listed items is not subject to
any charge or encumbrance which would prevent the passing of the property
unconditionally to the Contractor after fulfilment of all the relevant terms of
the sale contract with the Contractor.
4. Where the listed items have been purchased from a supplier by a sub-contractor
the Contractor should give the Architect a copy of the written sub-contract with
the sub-contractor which should expressly state the conditions that have to be
fulfilled before the property in these listed items passes from the sub-contractor
to the Contractor; and a written statement from the sub-contractor that any
conditions in that sub-contract that must be fulfilled before the property passes
to the Contractor have been fulfilled.
5. Where the listed items are manufactured or assembled by any sub-contractor,

the Contractor should give the Architect a copy of the written sub-contract
with the sub-contractor which should expressly state the conditions that have
to be fulfilled before the property in those listed items passes from the sub-
contractor to the Contractor; and a written statement from the sub-contractor
that any conditions in that sub-contract that must be fulfilled before the
property passes to the Contractor have been fulfilled.
Appendix B (05/00)
Appendix C: Example of Priced Activity Schedule

A Preliminaries – see breakdown on page 2 170,000.00
B Demolition 40,000.00
C Substructure including ground floor slab 178,000.00
D Structural frame 265,000.00
E Upper floor and staircase structures 112,000.00
F Roof structure and coverings 58,000.00
G External walls 203,000.00
H Windows and external doors 102,000.00
J Internal walls and doors therein 75,000.00
K Partitioning and doors therein 45,000.00
L Plasterwork 21,000.00
M Screeds 33,000.00
N Suspended ceilings 53,000.00
P Wall tiling 16,000.00
Q Floor tiling 11,000.00
R Other floor finishings 64,000.00
S Metalwork 30,000.00
T Fittings and fixtures 35,000.00
U Decorations 12,000.00
V Sanitary installation and fittings 48,000.00
W Rainwater installation 8,500.00
X Mechanical services – see breakdown on page 3 297,000.00
Y Electrical services – see breakdown on page 4 222,000.00
Z Underground drainage 16,500.00
AA External works 75,000.00
___________
£ 2,190,000.00
___________
Note that the above excludes the prime cost sums and profit thereon,
provisional sums and provisional quantities.
Appendix C (05/00)
Preliminaries breakdown
A Site accommodation (offices, stores, toilets, etc.) 16,000.00
B Services (power, lighting, telephones, small plant,

rubbish disposal, etc.) 11,000.00
C Mechanical plant 8,500.00
D Temporary works (roads, walkways, scaffolding,

hoardings, etc.) 5,000.00
E Management and staff 122,500.00
F The contract, etc. (insurance premiums,

cost of providing bond, etc.) 7,000.00
___________
£ 170,000.00
___________
Appendix C(05/00)
Mechanical Services breakdown
A Heating installation 235,000.00
B Hot water installation 6,000.00
C Cold water installation including

rising main and tank 14,000.00
D Gas installation 2,500.00
E Mechanical ventilation 25,000.00
F Controls and wiring 9,000.00
G Testing and commissioning 3,000.00
H As installed record drawings 1,500.00
J Operation and maintenance manuals 1,000.00

___________
£ 297,000.00
___________
Appendix C (05/00)
Electrical Services breakdown
A Distribution boards, switchgear and

sub main cabling 28,000.00
B Power installation 72,000.00
C Lighting installation including fittings 92,000.00
D Fire alarm system 14,500.00
E Security system 6,000.00
F Earthing and bonding 5,000.00
G Testing and certification 2,500.00
H As installed record drawings 1,250.00
J Operation and maintenance manuals 750.00
___________
£ 222,000.00
___________
Appendix C(05/00)
PART 4, SECTION 5

MANAGEMENT
SECTION 5: EXTENSION OF TIME
Introduction
There are probably more disputes about extension of time and consequential
cost issues than any other disputes under construction contracts. It is therefore
imperative that extension of time issues are dealt with in a proper manner by
the contract administrator.
The majority of standard form construction contracts enable the contract

administrator to grant extensions of time for completion of the work where
delay occurs due to certain specified causes. Such provision is of benefit to
both parties to the contract. The contractor will benefit because the effect of
the provision, if operated, will be to reduce or avoid liability to pay liquidated
or unliquidated damages in the event of the delay in question. However, the
primary benefit is to the employer. This is because the absence of extension of
time provisions can have the effect of preventing the employer’s entitlement
to liquidated damages in cases where the delay, or even a small part of it, is
due to some prevention or default of the employer or his or her agents, or any
other matter for which the employer would be responsible.
Therefore the primary purpose of extension of time is to preserve the

effectiveness of the liquidated damages provisions for the benefit of the
employer.
Standard forms and bespoke construction contracts contain extension of time

clauses setting out the criteria under which extensions of time will be
awarded. This includes:
• the provisions for the timing and content of delay notices by the
contractor;
• the parameters that a contract administrator needs to work within to

assess a contractor’s entitlement to an extension of time;
• the administrative procedure to be adopted in awarding an extension of

time;
• the events that entitle a contractor to an extension of time.
However, most forms of construction contracts do not include practical

guidance on how a contract administrator should carry out an assessment of an
extension of time entitlement. Instead, practitioners have to look at guidance
PART 4, SECTION 5
provided by case law as well as good practice as defined by legal

commentators.
This section of the handbook provides guidance to surveyors who are required
to carry out assessments of extension of time entitlement under a construction
contract by virtue of appointment under the contract as contract administrator.
It is also for surveyors who are asked to advise either party to a construction
contract on extension of time issues.
G 4.5.1 Extension of Time Clauses

There are several forms of construction contract and each form will have its
own procedure for dealing with extension of time. Whilst the principles to be
adopted may be similar, the exact procedure and events that entitle a
contractor to an extension of time may well be different depending on the
form or edition of contract adopted or indeed the amendments made thereto.
The practitioner should therefore always be primarily guided by the words
contained in the relevant contract.
G 4.5.2 Assumptions
This section has been prepared from the standpoint of the surveyor who has to
assess extension of time entitlement under a construction contract by virtue of
appointment under the contract as contract administrator.
4.5.2.1 JCT FORMS OF CONTRACTS
This section introduces the principles of an extension of time. For illustrative

purposes, it is based on the JCT Standard Form of Building Contract With
Quantities 1998 (JCT 1998 With Quantities).
It is recognized that there are other forms of contract being used. However, the
principles set out here will remain valid. Extension of time procedures for
different contract terms are briefly noted later (see 4.5.11 and 4.5.12).
4.5.2.2 DEFINITIONS
Contract administrator This refers to the person undertaking the functions of

the ‘architect’ on behalf of the employer under a JCT
1998 With Quantities contract.
Employer The client as used in a JCT 1998 With Quantities
contract.
Contractor In JCT 1998 With Quantities the contractor is assumed
to be a main contractor who may be asked to employ
nominated sub-contractors or request permission to
sub-contract portions of work to domestic
sub-contractors.
PART 4, SECTION 5
G 4.5.3 Extension of Time Under a JCT Contract
JCT 1998 With Quantities contains the provision for the contract
administrator to award an extension of time at clause 25.
Clause 25.2.1.1 provides that:
If and whenever it becomes reasonably apparent that the progress of the

Works is being or is likely to be delayed the Contractor shall forthwith
give written notice to the [contract administrator] of the material
circumstances including the cause or causes of the delay and identify in
such notice any event which in his opinion is a Relevant Event.
Clause 25.2.2 provides that:
In respect of each and every Relevant Event identified in the notice

given ... the Contractor shall, if practicable in such notice, or otherwise in
writing as soon as is possible after such notice: (25.2.2.1) give particulars
of the expected effects thereof; and (25.2.2.2) estimate the extent, if any,
of the expected delay in the completion of the Works beyond the
Completion Date resulting therefrom whether or not concurrently with
delay resulting from any other Relevant Event...
Clause 25.3.1 provides that:
If, in the opinion of the [contract administrator], upon receipt of any

notice, particulars or estimate ... (25.3.1.1) any of the events which are
stated by the Contractor to be the cause of the delay is a Relevant Event
and (25.3.1.2) the completion of the Works is likely to be delayed thereby
beyond the Completion Date the [contract administrator] shall in writing
to the Contractor give an extension of time by fixing such later date as the
Completion date as he then estimates to be fair and reasonable.
The contract administrator is required to state which relevant events he or she

has taken into account and fix a new completion date within 12 weeks. This
should not be later than the completion date that applies at that time, from
receipt of the notice and of reasonably sufficient particulars or estimates.
The contract administrator, by virtue of clause 25.3.3, also has the power to
carry out a final review of the completion date not later than 12 weeks after the
date of practical completion. This can result in the fixing of an earlier or later
completion date than previously set under clause 25.3.1. (It should be noted
that the contract administrator cannot set a completion date earlier than that
stated in the appendix.) This final review is not subject to receipt of a notice or
particulars and estimate from the contractor.
Clause 25.3.4 provides the award of an extension of time is always dependant

on the contractor using ‘constantly his best endeavours to prevent delay in the
progress of the Works, howsoever caused, and to prevent the completion of
the Works being delayed or further delayed beyond the Completion Date.’
PART 4, SECTION 5
Clause 25.4 includes reference to relevant events. Each of these relevant

events entitles the contract administrator to award an extension of time in the
event, and to the extent, that they cause a delay. Whilst all relevant events may
give rise to entitlement to an extension of time, not all of them entitle the
contractor to be reimbursed for any loss and expense arising therefrom. (In
any event it should be noted that JCT 1998 With Quantities contains separate
provisions under clause 26 in dealing with the financial effect of delay to the
Works. It specifically deals with the separate notice provisions required and a
list of matters that may entitle the contractor to be reimbursed for any loss and
expense incurred arising from the Works being delayed.) Whilst it is
convenient to categorize relevant events which are not also set out in the list
of matters under clause 26 as neutral events and those which are also set out
under clause 26 as employer risk events, it should be emphasized that clause
25 does not provide for financial adjustment of the contract sum. If the
contractor wishes to claim loss and expense arising from delay to the Works,
he or she is required to make the necessary applications under clause 26.1. The
granting of an extension of time under clause 25 is not a condition precedent
to a right to direct loss and expense under clause 26.11.
G 4.5.4 Notice by the Contractor of Delay to Progress

To receive entitlement to an extension of time during the contract period and
before practical completion, the contractor is required to give notice
‘forthwith’ where ‘the progress of the Works is being or is likely to be
delayed’. The contractor must give written particulars of the expected effects
of the relevant events delaying the Works, estimate the expected delay and
keep the particulars and estimates up to date.
It is implicit that the contractor should provide information that the contract
administrator reasonably requires in order to assist the contract administrator
in his or her duty in relation to extensions of time.
Whilst the contractor is required to give notice forthwith, the courts have held
that such notice (in relation to the JCT 1963 form) was not a condition
precedent to the performance of the contract administrator’s duties in respect
of giving an extension of time2. Whilst this was in relation to an earlier form
of contract, case law further indicates that for something to be a condition
precedent a time for compliance must be given and the consequence of
non-compliance stated3.
Therefore, whilst it may well be that if the contract administrator is unable to

take steps to reduce the delay as a result of the contractor not giving notice
forthwith, then the contractor should only be entitled to the extension of time
that would have occurred had the notice been given. The failure to give notice
forthwith does not prevent the contract administrator from awarding an
extension of time during the contract period and before practical completion if
notice is given later.
Further, it should be stressed that, by virtue of clause 25.3.3.1, the giving of

notice per se is not a condition precedent to the granting of an extension of
time after practical completion.
PART 4, SECTION 5
G 4.5.5 The Award of an Extension of Time during the Contract Period and
Before the Completion Date
Clause 25.3.1 requires the contract administrator to give extensions of time if

he or she is of the opinion that the completion of the Works is likely to be
delayed beyond the completion date by one or more of the relevant events
notified by the contractor. The contract administrator has 12 weeks (subject
always to a cut-off point of the completion date in place at that time) from
receipt of the contractor’s notice and reasonably sufficient particulars and
estimates.
‘Sufficient’ particulars and estimates are thought to be those that comply with
clauses 25.2.2.1 and 25.2.2.2. Therefore it follows that, provided a contractor
gives the best particulars and estimates it can in the circumstances that exist at
the time of the notice, the contract administrator will not be able to delay
granting an extension of time beyond the 12 weeks (or such shorter period if
notice is given within 12 weeks of the completion date), on grounds that he or
she cannot yet judge the effect that the cause of delay will have on the
progress.
Whilst the granting of an extension of time is subject to the opinion of the

contract administrator, ultimately the opinion may be subject to review by an
arbitrator or judge. Therefore, it important that the principles adopted by a
contract administrator in assessing an extension of time entitlement are sound.
When assessing an extension of time during the contract period and before
practical completion, the contract administrator, by virtue of clause 25.3.1.2,
can only take into account relevant events that occur before the original or
previously fixed (in the event of further extension of time assessments)
completion date. Relevant events that occur after the completion date are dealt
with when the contract administrator reconsiders extensions of time after
either the completion date or practical completion under clause 25.3.3.
The contract administrator is required to award an extension of time that he or

she estimates to be ‘fair and reasonable’. This reflects that the assessment of
the extension of time entitlement will not be an exact science, but will have to
be the result of a consideration of various factors such as:
• the exact terms and application of the facts of the relevant event in
question;
• the amount of the immediate delay in the progress of the Works;
• the effect of any delay caused by the contractor’s default;
• the effect of concurrent causes of delay and whether one of them is an

effective dominant cause; and
• the extent to which the contractor has used its best endeavours to prevent
delay in accordance with clause 25.3.4.
PART 4, SECTION 5
The courts have held that a contract administrator, in assessing an extension of

time, should conduct a logical analysis in a methodical way of the impact
which events, whether relevant events or not, were likely to have on the
planned programme4. A contract administrator is required to make a
calculated, rather than impressionistic, assessment of extension of time
entitlement. Therefore the contract administrator, having satisfied him or
herself that an event is relevant, is required to assess whether the affected
activities were on the critical path or not.
In assessing delay the contract administrator could consider the effect of the
causes of delay as a whole by carrying out a retrospective delay analysis. This
will involve assessing the effect of each individual delaying event in
conjunction with other delaying events. This will inevitably involve the
preparation of an ‘as built’ record or programme to identify the delayed
activities and a subsequent analysis of the causes of the delayed activities and
assessment of whether the causes of delay are relevant events. A comment on
the approach in dealing with the effect of concurrent delays and consequential
entitlement is made later in this section (see 4.5.8 and 4.5.9).
Further, if the contract is drafted to include sectional completion dates, the

contract administrator is required to assess the effect of each delay in respect
of each section and decide whether appropriate extensions of time need to be
issued.
There will be times where the records either do not exist or are inadequate to
construct an ‘as built’ record. Further, an assessment of an extension of time
entitlement may have to be considered before the effects of delays are known,
thereby preventing a retrospective delay analysis. In these instances the
contract administrator should undertake an objective analysis of the likely or
probable impact on the critical path activities based on logical analysis and not
an impressionistic assessment.
G 4.5.6 The Award of an Extension of Time after the Completion Date
Clause 25.3.3. requires the contract administrator to reconsider any previous

extension of time awards and/or deal finally with the question of extension of
time within a period of 12 weeks from the date of practical completion. In
reviewing the completion date, the contract administrator is required again to
grant an extension of time that is fair and reasonable. The contract
administrator is not limited to relevant events notified by the contractor and,
in reviewing earlier extension of time awards, can fix an earlier completion
date by taking into account any omissions justifying a reduction in any
extension of time awards granted previously.
Prior to 1993 it has been argued, in relation to the JCT 1963 form of contract,
that if a variation was issued after the completion date, that is, after the date of
any previous extension of time awards, the employer would be prevented from
deducting liquidated damages for the period up to the date of the issue of the
instruction to undertake the variation. However, it has been held that this
PART 4, SECTION 5
principle does not apply to the JCT 1980 form and, by virtue of the same
wording being adopted, its successor the JCT 1998 form. The correct position
now is that if instructions for additional work are issued at a time when the
contractor is in culpable delay, that is, the Works being incomplete after the
latest extended completion date, the contractor is only entitled to a fair and
reasonable ‘net’ addition (sometimes referred to as the ‘dot on’ principle) to
the previously fixed completion date and not by fixing as the completion date
the calendar date upon which the work would reasonably be expected to be
completed having regard to the calendar date upon which the variations were
instructed5.
G 4.5.7 Relevant Events
The relevant events have been categorized as ‘employer risk’ (4.5.7.1) and
‘neutral’ (4.5.7.2) events.
4.5.7.1 EMPLOYER RISK EVENTS
Clauses 25.4.5.1 and 25.4.5.2:
Compliance with [contract administrator’s] instructions under clauses

2.3, 2.4.1, 13.2 (except for a confirmed acceptance of a 13A Quotation),
13.3 (except compliance with a [contract administrator’s instruction for
the expenditure of a provisional sum for defined work or of a provisional
sum for Performance Specified Work), 13A 4.1, 23.2, [34, 35 or 366] or
in regard to opening up for inspection of any work covered up or the
testing of any of the work, materials or goods in accordance with clause
8.3 (including making good in consequence of such opening up or
testing) unless the inspection or test showed that the work, materials or
goods were not in accordance with this Contract.
A contract administrator will need to examine the cause of instructions being

issued in the first place (for example, was it a result of defective
workmanship?) before assessing the effect of its timing and scope of work on
the progress of the Works. It will also be necessary to assess whether the
contractor was already in culpable delay or if there are competing causes of
delay for which the contractor is responsible.
Clauses 25.4.6.1 and 25.4.6.2:
Where an information release schedule has been provided, failure of the

[contract administrator] to comply with clause 5.4.1 [or] failure of the
[contract administrator] to comply with clause 5.4.2.
If there is to be an information release schedule the contract administrator will

be required to follow it. To the extent that it is not complied with and such
non-compliance causes a delay, the contractor will be entitled to an extension
of time. However, if there is no provision for an information release schedule,
by virtue of clause 5.4.1 being deleted, or if the information release schedule
PART 4, SECTION 5
does not cover the issue of information that is required, then the contract
administrator is required to provide any other drawings and details to explain
and amplify the contract drawings when they are reasonably necessary.
It has been held that a contractor’s programme or document presented at the

commencement of the Works could constitute a specific application for
instructions or information provided that the date specified for delivery for
each set of instructions met the requirement of not being unreasonably distant
from nor unreasonably close to the relevant date7, subject to it being modified
if the Works did not progress to plan.
It has also been held (by analogy to a House of Lords decision in relation to a
similar clause in JCT 1963) that whilst the withdrawal of a nominated
sub-contractor may not come within this clause, delay by the employer in
making a timeous re-nomination was covered8.
Clauses 25.4.8.1 and 25.4.8.2:
The execution of work not forming part of this Contract by the Employer
himself or by persons employed or otherwise engaged by the Employer as
referred to in Clause 29 or the failure to execute such work [or] the supply
by the Employer of materials and goods which the Employer as referred
to in clause 29 or the failure so to supply.
This clause is also known as the ‘artists and tradesmen’ clause. Its scope
includes work by a local authority or statutory undertaker under a contract
with the employer.
Clause 25.4.12:
Failure of the Employer to give in due time ingress to and egress from the
site of the Works or any part thereof through or over any land, buildings,
way or passage adjoining or connected with the site and in the possession
and control of the Employer, in accordance with the Contract Bills and/or
Contract Drawings, after receipt by the [contract administrator] of such
notice, if any, as the Contractor may be required to give, or failure of the
Employer to give such ingress or egress as otherwise agreed between the
[contract administrator] and the Contractor.
This clause is not concerned with possession of the site itself, but with access
to it over other land in the possession and control of the employer as stated in
Clause 25.4.14:
By reason of the execution of work for which an Approximate Quantity

is included in the Contract Bills which is not a reasonably accurate
forecast of the quantity of work required.
What constitutes a reasonably accurate forecast will be a matter of fact.

However, it is suggested that empirical studies of the accuracy of quantity
surveyor’s estimates may give guidance, that is, +/– 5 per cent accuracy.
PART 4, SECTION 5
Clause 25.4.17:
Compliance or non-compliance by the Employer with clause 6A.1.
Clause 6A.1 relates to the employer ensuring that the planning supervisor (and
the principle contractor, where the contractor is not the principle contractor)
carries out his or her duties under the CDM regulations.
Clause 25.4.18:
Delay arising from a suspension by the Contractor of the performance of

his obligations under the Contract to the Employer pursuant to clause
30.1.4.
Clause 30.1.4 relates to the contractor’s rights to suspend the Works as a result
of failure by the employer to pay the contractor in accordance with the
contract payment terms and procedure in compliance with the Housing
Grants, Construction and Regeneration Act 1996. Therefore, if the contractor
is entitled to suspend the Works under clause 30.1.4 it will be entitled to an
extension of time in the event that the Works are delayed as a result. It is
interesting to note that the corresponding matter clause (26.2.10) is more
restrictive in that it only entitles the contractor to recover any direct loss and
expense if the suspension was not ‘frivolous or vexatious’.
4.5.7.2 NEUTRAL EVENTS
Clause 25.4.1:
‘force majeure’
This term is used in reference to all circumstances independent of the will of

humankind which is not in our power to control, such as war, inundations and
epidemics. It is wider than ‘Acts of God’, but it is generally thought that in
relation to standard forms of construction contracts it has a restricted meaning.
This is because matters such as war, strikes, fire, weather and government
action are expressly dealt with in the contract.
Clause 25.4.2:
‘exceptionally adverse weather conditions’
The correct test to be applied by the contract administrator is whether the

weather itself was exceptionally adverse9 so as to give rise to delay. This
should be decided in light of the historic norm for the area and the status of the
Works when the delay occurred. Therefore, the contract administrator should
examine local meteorological and site records, looking at details and timing of
rainfall, high wind speed, temperature and assess the effect on the labour,
plant and work operations on site for the relevant periods.
PART 4, SECTION 5
Clause 25.4.3:
‘loss or damage occasioned by any one or more of the Specified Perils’
These are defined by clause 1.3 and include:
• fire;
• lightning;
• explosion;
• storm;
• tempest;
• flood;
• bursting or overflowing of water tanks;
• apparatus or pipes;
• earthquake;
• aircraft and other aerial devices or articles dropped therefrom; and
• riot and civil commotion.
However, they exclude:
• ionizing radiations or contamination by radioactivity from any nuclear

fuel or nuclear waste from the combustion of nuclear fuel;
• radioactive toxic explosive or other hazardous properties of any

explosive nuclear assembly or nuclear component thereof; and
• pressure waves caused by aircraft or other aerial devices travelling at

sonic or supersonic speeds.
The scope of the specified perils is very wide and could stem from acts of
negligence by the contractor.
Clause 25.4.4:
Civil commotion, local combination of workmen, strike or lock-out

affecting any of the trades employed upon the Works or any of the trades
engaged in the preparation, manufacture or transportation of any of the
goods or materials required for the Works.
The terms strike and lock-out should be given their ordinary meaning. The
courts have given guidance on the meaning of civil commotion in relation to
insurance contracts to include a stage between ‘riot and civil war’10.
PART 4, SECTION 5
Clause 25.4.5.1:
Compliance with [contract administrator’s] instructions under clauses ...

34, 35 or 36...
Clause 34 instructions relate to ‘fossils, antiquities and other objects of

interest or value’ found on site during excavation. Clauses 35 and 36 relate to
instructions connected with nomination. Whilst the contractor is seemingly
not protected for recovering loss and expense monies by virtue of there not
being a corresponding ‘matter’ listed under clause 26, with regard to a late
nomination it would appear that a contractor could seek to rely on clause
26.2.1 for late instruction of the expenditure of a provisional sum relating to a
nominated sub-contractor or supplier.
Clause 25.4.6:
Delay on the part of nominated sub-contractors or nominated suppliers

which the contractor has taken all practicable steps to avoid or reduce.
The effect of this clause is that if such a delay causes an extension of time,
even if the delay is due to the default of the nominated sub-contractor, the
employer is deprived of the right to deduct liquidated damages. However, it
should be noted that if a nominated sub-contractor has completed its work and
has to return to site to remedy defective workmanship which in turn causes a
delay to the Works, then this clause does not apply11. In this scenario an
extension of time would not be granted. Whilst the employer is not liable to
the contractor for losses caused by nominated sub-contractors and nominated
suppliers, the contractor may be able to recover its losses directly through its
nominated sub-contract or supplier contract.
Clause 25.4.9:
The exercise after the Base Date by the United Kingdom Government of
any statutory power which directly affects the execution of the Works by
restricting the availability or use of labour which is essential to the proper
carrying out of the Works or preventing the Contractor from, or delaying
the Contractor in, securing such goods or materials or such fuel or energy
as are essential to the proper carrying out of the Works.
The effect of this sub-clause is to reduce the scope of the force majeure
sub-clause (clause 25.4.1) to those events not contained within this wording.
Clauses 25.4.10.1 and 25.4.10.2:
The contractor’s inability for reasons beyond his control and which he
could not reasonably have foreseen at the Base Date to secure such labour
[goods or materials] as is [are] essential to the proper carrying out of the
Works.
These words limit the effect of the sub-clause in respect of shortage of labour,
materials or goods that the contractor could have foreseen by reasonable
enquiry were likely to continue or arise at all.
PART 4, SECTION 5
Clause 25.4.11:
The carrying out by a local authority or statutory undertaker of work in

pursuance of its statutory obligations in relation to the Works, or the
failure to carry out such work.
This sub-clause is limited to situations where the relevant authority or

undertaker carries out work using its statutory powers, as opposed to under a
contract with either the employer or contractor, and such work hinders the
Works and causes delay.
Clause 25.4.13:
Where clause 23.1.2 is stated in the appendix to apply, the deferment by

the Employer of giving possession of the site under clause 23.1.2.
Clause 23.1.2 enables the employer to defer possession of the site by six
weeks without being in breach of contract. This clause enables the completion
date to be extended accordingly without the employer losing his or her right to
deduct liquidated damages for any delay for which the contractor is culpable.
Clause 25.4.15:
Delay which the Contractor has taken all practicable steps to avoid or
reduce consequent upon a change in the Statutory Requirements after the
Base Date which necessitates some alteration or modification to any
Performance Specified Work.
The effect of this clause is limited to legislative changes that affect

performance specified work, the effects of which the contractor has made
attempts to mitigate. There is no requirement for the contractor to have made
reasonable enquiry at or before the base date.
Clause 25.4.16
The use or threat of terrorism and/or the activity of the relevant

authorities in dealing with such use or threat.
The effect of this sub-clause is to reduce the scope of the force majeure
sub-clause (clause 25.4.1) to those events not contained within this wording.
G 4.5.8 Concurrent Delays

When assessing a contractor’s entitlement to an extension of time, the contract
administrator will need to assess the effect of concurrent causes of delay. This
is important for two reasons:
1) In relation to the granting of an extension of time: for example in

assessing whether delay is caused in total or in part by an event for which
the contractor is culpable under the contract.
2) In relation to clause 26 which deals with loss and expense: that is, some
relevant events are paying and some are non-paying.
PART 4, SECTION 5
The contract administrator may be faced with a scenario where there are
concurrent causes of delay, each of which could have an equal delaying effect,
or alternatively could have significantly unequal effect. The law is unclear on
the correct approach. However, the generally accepted approach is that it is the
dominant delaying event that should govern the award of an extension of time.
Therefore, if a contractor seeks to rely on late instructions as entitlement for
an extension of time and at the same relevant time the contractor is also
delayed by events for which it is culpable, the contract administrator will need
to satisfy him or herself that the delay caused by the late instructions was the
dominant delay in order to award an extension of time. Which cause is
dominant is a question of fact. This is not solved by the mere point of order of
time but is to be decided by applying common sense standards12.
The court had to consider the question of concurrent delays in 1999 and held
that a contract administrator is entitled to consider the contractor responsible
for concurrent delays when establishing whether or not a relevant event has in
fact caused a delay13. Therefore, the question for consideration by the contract
administrator when there are competing causes of delay, one of which is a
relevant event and one which is not, is which cause was the dominant cause of
delay. The courts also commented that where those competing causes were of
equal causes, then if the contract administrator considers it fair and reasonable
to do so, he or she is required to grant an extension of time14.
G 4.5.9 Consequential Entitlement
Consequential entitlement is where a delay that is a non-paying relevant event

could fall to be an ‘employer risk’ event or ‘matter’ under clause 26. For
example, the Works could be delayed by the issue of contract administrator’s
instructions that cause the Works to overrun into an ‘exceptional adverse
weather’ or industry shutdown period. It is generally thought that the
extension should be given under the primary cause.
G 4.5.10 Administration
A notification granting an extension of time must be taken with great care. Use
of the RIBA and/or RICS Notification of Extension of Time form is
recommended. The notification should include:
• the job title and number (if any);
• the contractor’s name;
• the date of issue;
• the completion date;
• a list of the relevant events for which an extension of time has been
given;
PART 4, SECTION 5
• the extent to which the omission of work has been taken into
consideration;
• the date of the contractor’s written notice of delay (if any); and
• the revised completion date.
G 4.5.11 Extension of Time under an ICE Contract

Although the specific contract clauses differ, the principles set out in relation
to JCT contracts equally apply to the ICE contracts. The contractor can apply
for an extension of time by giving notice, although such notice is not a
condition precedent for the giving of an extension of time as the engineer can
make an assessment in the absence of such notice. In assessing a contractor’s
entitlement for an extension of time, the engineer is required to make an
assessment of the delay suffered and consider whether that delay fairly entitles
the contractor to an extension of time. The engineer is required to undertake a
final review within 14 days of substantial completion.
G 4.5.12 Extension of Time under a GC Works Contract

The project manager or supervising officer under GC/Works forms of contract
has the power to award an extension of time. However, it should be noted that
some forms do make the giving of a notice by the contractor a condition
precedent of an extension of time being awarded.
PART 4, SECTION 5
Notes
1. Fairweather v. Wandsworth (1987) 39 BLR 106
2. London Borough of Merton v. Leech (1985) 32 BLR at pp.89 et seq.
3. Bremer Handelgesellschaft MBH v. Vanden Avenne-Izegem [1978] 2

LLR 109
4. John Barker Construction Limited v. London Portman Hotel Limited

(1996) BLR 83
5. Balfour Beatty v. Chestermount Properties (1993) 62 BLR 1
6. Instructions under clauses 34 (antiquities), 35 and 36 (nomination of

sub-contractors and suppliers) are non-paying
7. London Borough of Merton v. Leach [1985] 32 BLR 51 at pp.85-89 issue 5
8. Percy Bilton v. GLC [1982] 1 WLR 794 (HL)
9. Walter Lawrence v. Commercial Union Properties (1984) 4 ConLR 37
10. Levy v. Assicurazioni Generali [1940] 3 All ER 427 at p.437
11. Jarvis J. & Sons v. Westminster Corporation [1970] 1 WLR 637 (HL)
12. Leyland Shipping v. Norwich Union [1918] AC 350, Yorkshire Dale

Steamship v. Minister of Ware Transport [1942] AC 691
13. Henry Book Construction (UK) Limited v. Malmaison Hotel

(Manchester) Limited 1999) TCC 18.10.99
14. Henry Book Construction (UK) Limited v. Malmaison Hotel

(Manchester) Limited 1999) TCC 18.10.99 at paragraph 13

Eggleston, B. (1997) Liquidated Damages and Extensions of Time in Construction
Contracts, 2nd edition, Oxford: Blackwell Science
Emden’s Construction Law, Butterworth Tolley
Duncan Wallace, I.N. (1994) Hudson’s Building and Engineering Contracts, 11th
edition, London: Sweet & Maxwell
Ramsey, V. & Furst, S. (2000) Keating on Building Contracts, 7th edition, London:
Sweet & Maxwell
Pickavance, K. (2000) Delay and Disruption in Building Contracts, 2nd edition,

Lloyds of London
RIBA, The Architect and Extensions of Time
Appendix A (12/01)
Surveying safely
Your guide to personal safety at work
Surveying safely Your guide to personal safety at work
Why is
health and
safety
important?
Because it affects you! We take significant risks in our jobs

regularly, be it driving in connection with our work, being at a
premises or on site.
Serious accidents at work destroy and disrupt family and personal lives. The loss of a parent,
breadwinner, partner, friend is devastating and trying to rebuild a life after an accident can be
equally traumatic, especially if it could have been avoided.
You have a critical role, whatever part you play in the industry. Decisions taken in the
boardroom can have as much influence on health and safety as working practices in the
office, travelling on business or being at a property or on site. Adequate planning,
innovation and best practice, good design, sufficient resources and effective training will
provide a better product more safely and more economically.
This guide has been produced by the new RICS Health and Safety Forum to help you to put
health and safety first when carrying out your duties and responsibilities. It will also
remind you of the many aspects of our industry that can be hazardous.
Using effective health and safety procedures will:

• Provide a safer environment for those involved in managing property and construction
• Result in higher productivity, and
• Lessen the chance of having accidents or suffering illness.
If we are to make a difference, and make our industry a safer place to work, we have to
take personal responsibility to make it happen by eliminating or reducing risks, and
planning and controlling the risks that remain for ourselves, to our colleagues and the
public at large.
You can make a difference by putting health and safety first.
Ian Watson, FRICS MCIArb MaPS

Chairman of RICS Health and Safety Forum
2
Contents
General statement of employers’ and employees’ duties 4
Safety of employees 4
Your workplace 5
Identifying hazards and undertaking risk assessments 6
Before visiting premises/sites 7
Upon arrival and during visits to premises/sites 9
Safety of yourself and others 11
Your legal duties 12
Case studies 14
For more information 15
3
General statement on employers’ and employees’ duties

The Health and Safety at Work etc Act 1974 places a statutory duty on all employers,
including their managers, to provide and maintain equipment and systems of work that
are safe and without risk to the health of employees, or others who may be affected by
their undertaking.
Equally, employees need to take reasonable care of their own safety and that of others who
may be affected by their acts or oversights.
In addition, both employers and employees have a duty of care in tort (particularly
negligence) towards those who may be affected by their actions or instructions.
Safety of employees
Make sure you comply with the provisions of the Health and Safety at Work etc Act 1974.
Other regulations that are important to know and adopt include:
• The Workplace (Health Safety and Welfare) Regulations 1992

• The Management of Health and Safety at Work Regulations 1999.
Employers must:
• Provide information on health and safety
• Have emergency procedures
• Carry out risk assessments
• Eliminate and control risks
• Have insurance
• Carry out health surveillance
• Provide Personal Protective Equipment (PPE)
• Provide for those with special needs
• Control working hours
• Provide regular health and safety training.
Employers with five or more employees must:
• Have written health and safety documents. The HSE document ‘Successful Health and
Safety Management (HS(G) 65)’ provides guidance on how to satisfy the legal
requirements of the regulations
• Have a policy statement by the chief executive/managing director/senior partner
outlining the organisation’s commitment to health and safety, and that it will be
reviewed on a regular basis
• Detail the organisation’s health and safety structure, with roles and responsibilities for
managing health and safety
• Make sure arrangements are in place that show the organisation’s approach to health
and safety, and how the management system is planned and implemented (including
hazard identification, risk assessments and control measures)
• Measure, audit and review the organisation’s health and safety performance on a
regular basis.
4
Employer’s actions
You have a special responsibility for people in your charge, particularly those in training or
who are inexperienced.
• Make sure employees in your charge take the right equipment with them on visits.
Check they know how to use it
• Make sure scrupulous records are kept of employees’ movements
• Keep available, records of hazards on particular sites. Make sure all relevant
people are notified
• Make sure a supply of the right equipment is available. Helmets, steel capped shoes, ear
defenders, face masks, overalls, torches and batteries – these should be in your office as
appropriate and in good condition
• Make sure your offices are safe:
Are there fire precautions and means of escape?
Washing facilities?
Is electrical equipment up to date and safe?
Do you prepare and store food and drink safely?
Have you carried out Display Screen Equipment Assessments?
Are you aware of the stress that some employees may be suffering?
• Assess the risks of manual handling in the office or look at the materials being used or
stored and whether COSHH assessments are needed
• Provide guidance on driving on your organisations business or the use of hand held
devices while driving.
Finally, the best way to make sure safe practice by people in your charge is to set a
good example.
Your workplace
The Workplace Health Safety and Welfare Regulations 1992 provide information on what
assessments you should be making and the facilities you should provide, depending on the
size and nature of your organisation:
Welfare
Smokers
Rest room
First aid
Pregnant mothers
Fire – The Fire Regulations Act 1991 and Fire Regulations 1997 need you to maintain
adequate fire safety equipment. Your employees need to have training on how to use it.
Occupiers of premises must also carry out fire risk assessments.
First aid – accident books – you should have the correct form of accident book, which
allows personal details to be extracted from the book and placed in a secure location to
comply with the Data Protection Act 1998.
5
Signage – in addition to helpful Health & Safety signs on first aid, fire or manual handling,
you should have safety signs displayed for any other significant risks, whether it be very
hot water or fragile roofs.
Portable Appliance Testing (PAT) – around 25% of reportable electrical accidents involve
portable appliances. Make sure you have them tested regularly (recommended annually)
by an approved tester.
Contractors – to protect yourselves, you should have procedures to make sure no one
comes into your building to work without you knowing they are competent, a risk
assessment has been carried out and a safe system of work has been established.
Asbestos – everyone in control of premises must proactively locate and manage any
asbestos that exists.
Disability Discrimination Act 1995 (DDA) – the DDA and the Disability Rights Commission
Act 1999 requires anyone providing a service from their building and receiving visitors, to
suitably provide for people with disabilities.
Legionnaires disease – depending on the use of the building with which you may be
involved, you should make sure you are not at risk, by employing a WTC (Water Treatment
Company) to carry out an assessment. And get advice on how to reduce any risks and how
to carry out your own checks.
Identifying hazards and carrying out risk assessments

An underlying principle of effective management of health and safety is that of risk
assessment.
In the words of the Health and Safety Executive (HSE), risk assessment is ‘nothing more
than a careful examination of what, in your work, could cause harm to people so that you
can weigh up whether you have taken enough precautions or should do more to prevent
harm.’ Risk assessment involves two key concepts, being those of hazard and risk.
Hazard and risk

Hazard is something with the potential to cause harm to someone.
Risk is the likelihood (whether high or low) of the harm being caused.
Importantly, risk increases as both the severity or likelihood of the harm increases.
Working with risk assessments

The principles of risk assessment are based on common sense. Familiarity with the basis of
risk assessment will make the process a natural part of your day to day work and will give
you the mental skills to deal effectively with hazards on site.
However, it is important to write down a summary of the risk assessment process so there
is a record of it and so that other people can refer to it. A range of HSE and other guidance
is available that will allow you to develop a system suitable for you and your business.
6
Managing risk
Having identified a hazard and assessed the risk involved, consider how the risk might be
reduced to a level as low as reasonably practicable by looking at:
• Removal of the hazard by re-planning the work process or activity

• Accepting the hazard will remain but re-planning of the work process or activity to
reduce the likelihood of harm happening or to reduce the severity of the consequences
if it does.
Either option will involve a consideration of the method of working and if necessary
documenting a ‘Safe system of work’ or ‘Method statement’ for the activity.
Before visiting premises/sites

When you receive instructions to inspect a site or premises, make sure you get relevant
information about the property, identify likely hazards and carry out a risk assessment.
You must make as full an assessment as reasonably possible, consulting with others as
necessary. The sorts of factors you need to take into account include:
Travelling to and from site

• Plan the journey to avoid driving too fast, for too long or when tired
• Be aware of where to park (clear, secure, easy to exit, well lit).
Lone working
• Is lone working a safe option and if so what provisions are made for communications in
an emergency. Does the office have a record of employees’ mobile numbers?
• Who has a record of where the lone worker is and when to expect them back in the
office or at home?
• Have procedures been made for regular ‘check-in’ calls?
• How would access for rescue be achieved?
• Does a lone worker suffer from any medical condition which could affect personal
safety, ie epilepsy, diabetes, etc?
Condition of site
• If a construction site, what stage has been reached? hat are the site rules?
• Are the premises known to be derelict or in poor condition, and if so what is the extent
and nature of the damage?
• Are areas to be defined as unsafe for access?
• Are security measures in force and how is access to be gained?
• Is protective clothing or special equipment needed (see later)?
Occupation
• Is the property occupied? If so, does the occupant know you are coming and have they
made any special access arrangements?
• Who are you likely to encounter on the building or site, eg children, squatters,
vagrants, animals?
• Are the occupants or neighbours likely to be aggressive or disaffected?
7
Activity
• If a building/site is occupied, what is the nature of that occupation, i.e. residential,
manufacturing, warehousing, etc, and what might you encounter, e.g. noise, fumes,
vehicle movements, electronic equipment etc?
Site rules and welfare

• Does the client/premises manager have ‘house rules’?
• Are there ‘Permit to work/enter’ procedures to be followed?
• If a site, is there a ‘Construction phase health and safety plan’ including induction
procedures to be followed?
• Might toilet, wash and first aid facilities be needed and how will these facilities
be provided?
High structures
• If a scaffold exists, it is safe to use? When it was last inspected by a competent person?
• Are any towers, masts or tall chimneys involved?
• Are they to be inspected, and if so how will they be accessed?
• Is a ‘cherry picker’ or other special access equipment needed and who is to
provide/manage it?
Dangerous substances
• Is the inspection likely to bring you into contact with hazardous substances such as
chemicals, radiation, asbestos, gas or other noxious atmosphere, explosives etc?
• Are records such as a Register of Asbestos Containing Materials or environmental
reports available? What do they reveal and what special precautions need to be taken?
Diseases
• Is the nature of the site such that it could be contaminated with any form of
clinical waste?
• Are you likely to encounter used syringes/needles, condoms, razor blades etc?
• Could the site be a source of anthrax which, for example, could be present in
haired plaster?
• Could legionella be present in disused water storage systems?
• What hazards might arise from vermin (eg Weil’s disease)?
Special access
• Will special access arrangements be required (eg underground) and who will provide
it and manage it?
• Is special training needed?
Special risks
• Is the nature of the building or site such that it presents special hazards, eg railway
premises, security establishments, confined spaces, plant rooms, etc?
Special equipment
In certain circumstances any of the following equipment may be necessary:
• Gloves
• Respirator or face mask
• Safety helmet
8
• Ear defenders
• Eye protection
• Boots
• Temporary lighting
Having considered the ‘physical hazards’ that might exist, you need to consider these in the
light of personal and environmental issues:
Environmental
• Will weather conditions and/or light levels increase risk?
(eg windy conditions and high structures)
• Will temperature extremes present a hazard?
Personal
• Does gender or level of fitness have any bearing on the hazards which have been
identified? Pregnant or nursing mothers need special consideration. Would lack of
fitness present a hazard in itself?
• Are special skills needed and do you have those skills?
• Do you have any phobias or suffer from vertigo or claustrophobia that would impair
judgement with regard to personal safety?
The above lists are by no means exhaustive and the extent to which any of the items
might be relevant in a particular circumstance will vary.
Arriving and during visits to premises/sites

However well a survey or inspection is planned in advance, you need to be alert to matters
that are unknown until arrival at the premises or site. This may arise simply through a
general lack of information about the site, or because the condition of the property, its
occupation or other factors have changed unexpectedly.
Review the risk assessment as necessary and be alert during the inspection to other
hazards such as.
Structures
• The chance of partial or total collapse of:
• Chimney stacks, gable walls or parapets
• Leaning, bulged and unrestrained walls (including boundary walls)
• Rotten or corroded beams and columns
• Roofs and floors.
Timbers and glass
• Rotten and broken floors and staircases. Flimsy cellar flaps and broken pavement lights
• Floorboards, joists and buried timbers weakened by age, decay or attack
• Projecting nails and screws, broken glass
• Glazing in windows and partitions may be loose, hinges and sashcords weak or broken.
Glass panels in doors and winglights may be painted over.
9
Roofs
• Fragile asbestos cement and plastic coverings
• Fragile rooflights (often obscured by dirt or temporary coverings)
• Low parapets or unguarded roof edges, loose copings
• Rusted, rotten or moss covered fire escapes, access ladders and guard rails
• Rotten roof decking and joists
• Slippery roof coverings (slates, moss or algae covered slopes)
• Broken access hatches
• Mineral wool dust, mortar droppings and birds’ nesting material and excrement in
roof voids. Cornered birds and vermin
• Insects, including bee and wasp colonies
• Water cooling plant may harbour legionella
• Unguarded flat roofs
• Broken, loose, rotten and slippery crawling boards and escape ladders
• Weak flat roofs and dust covered rooflights
• Slippery roof surfaces
• High winds during roof inspection
• Ill-secured or flimsy, collapsible, sectional or fixed loft ladders
• Concealed ceiling joists and low purlins
• Ill-lit roof voids.
Unsafe atmospheres
• Confined spaces with insufficient oxygen including manholes, roof voids, cellars, vaults,
ducts and sealed rooms
• Rotting vegetation which may consume oxygen and give off poisonous fumes
• Accumulation of poisonous of flammable gases in buildings on contaminated land
• Stores containing flammable materials such as paint, adhesives, fuel and cleaning fluids
• Hazardous substances, including toxic insecticides and fungicides
• Gas build-up in subfloor voids.
Danger from live and unsecured services
• Electricity, gas, water and steam supplies
• Awkward entrances into sub-stations and fuel stores
• Temporary lighting installations: mains connections and generators
• Buried cables and pipes
• Overhead electrical cables.
Hidden traps, ducts and openings
• Lift and services shafts, stairwells and other unguarded openings
• Manholes, including those obscured by flimsy coverings. Cesspools, wells and
septic tanks.
Intruders and others

• Physical dangers from squatters, vagrants or guard dogs
• Disease risks from discarded syringes and condoms
• Structures weakened by vandalism or arson
• Aggressive tenants or property owners.
10
Contamination
• Asbestos, lead and other substances hazardous to health
• Chemicals in storage or leaked
• Contaminated water supplies
• Contaminated air conditioning systems (legionella)
Rural Environments
• Hazardous operations such as tree felling or tractor work
• Shafts, holes, pits, ditches, etc
• Farm animals
• Chemicals in storage or in use.
Vermin and birds

• Rats and mice (Weil’s and other diseases)
• Bird droppings
• Lice and fleas may be present in bedding, soft furniture and carpets.
Securing the site and leaving
• Upon completion of the visit, the property should be left secure
• Inform any occupier or staff in site office that you are leaving
• Someone in the office or at home should know where you are and when you are due to
return. Let them know as you leave and confirm when you expect to be back.
Safety of yourself and others

All employees of any organisation must, under the health and safety legislation, take
reasonable care of their own health and safety and that of others who may be affected by
their acts or omissions. As well as cooperating with their employer as necessary to help
their employer to comply with their statutory duties.
It is equally a criminal offence for you to intentionally or recklessly interfere with or misuse
any thing provided in the interests of health, safety or welfare. If you are a manager within
an organisation you are also personally liable if you do not carry out the health and safety
responsibilities associated with your duties.
Safety of yourself
• Make sure you are familiar with your organisation’s health and safety policy and
arrangements for implementing safe working procedures
• Comply with the office safety policy and ensure that any equipment you may use is in
good and safe condition
• Comply with your organisation’s safe systems of work, or ensure one is put in place prior
to carrying out work, particularly where a risk assessment shows that a hazard exists
• Refuse to condone unsafe working practices by yourself or others and distribute
information on hazards
• Make sure your advice to clients will minimise the risk to the health and safety of others
11
• Make sure you are aware of any hazards which may exist, together with any safe
working instructions, which have been issued by clients prior to carrying work at
their premises
• If you are working alone, make sure you follow your organisation’s lone working procedures.
In other words, follow the dictates of common sense.
Safety of others
You are responsible for anyone under your supervision, particularly those in training or who
are inexperienced, and also towards anyone who may be affected by your or their work.
• Make sure anyone in your charge takes the right equipment with them on visits. Check
that they know how to use it and that it is safe to use
• Make sure a suitable and sufficient risk assessment has been carried out of the tasks to
be performed, and a safe working method is in place that has been communicated to
and understood before any field work taking place
• Make sure everyone has suitable and sufficient information, training and instruction on
health and safety matters for the task in hand
• Check available records of hazards on particular sites and make sure that all relevant
people are notified
• Make sure, wherever necessary that precautions are put in place to safeguard anyone
who may be in the vicinity of works and unaware of the possible hazards
• Make sure the right equipment is used. Helmets, safety shoes, ear defenders, face masks,
overalls, torches and batteries. Do not use any equipment that is defective – report it to
your employer.
Finally, the best way to ensure safe practice by people in your charge is to set a good example.
Your legal duties

Criminal liability
The wide ranging requirements of the Health and Safety at Work etc Act 1974 are
implemented principally through the Management of Health and Safety at Work
Regulations 1999. These must be followed to make sure there are satisfactory and safe
systems in place for the carrying out of surveying activities, many of which by their very
nature (particularly when working alone) must be regarded as hazardous activities.
The regulations need you to have a health and safety policy and to have effective
management systems in place for the planning, organisation, control and review of safe
working practices (identified through the risk assessment). You will find the key elements
of such systems in HSE publication HS(G) 65 – Successful Health and Safety Management.
Not taking the necessary actions to protect people from avoidable dangers in the
workplace is in itself a criminal offence and charges may be brought against both the
organisation, the directors/partners and individual managers for non compliance with any
health and safety regulations. An accident does not have to happen before action is taken
against you for non-compliance. If action is taken, it is for you to prove everything
reasonably practicable was done to comply with the relevant legislation.
12
Employers may develop generic sets of safe working practices for each activity carried out.
However, individual managers/team leaders also have a further responsibility for making
sure any generic safe working practices are either sufficient or expanded as necessary for
any particular activity taking place within their area of responsibility (Armour v Skeen, see
case studies).
Equally employees must be given sufficient training in hazard identification and reduction/
control techniques to ensure that any non-foreseeable hazards arising during the course of
their work do not give rise to otherwise avoidable accidents occurring.
Civil liability
Employers and employees owe a duty of care to anyone who may be affected by their
actions, where effects of their actions are reasonably foreseeable.
The duty to provide safe systems of work is illustrated by the judgement in General
Cleaning Contractors v Christmas which stated: ‘It is the duty of the employer to consider the
situation, to devise a suitable system, to instruct his/her men what they must do, and supply
any implements which may be required.’
An increasing area of liability in negligence is that of stress through work overload,

particularly in cases where the result is reasonably foreseeable (Barber v Somerset County
Council see case studies).
Key regulations
This publication sets down the background to health and safety legislation as it affects the
work of surveyors. Bearing in mind the wide ranging nature of the profession it is not
intended to specify every piece of health and safety legislation, code of practice or
guidance notes published by the HSE.
The employer or employee must seek out the relevant information themselves. Where in
doubt get specialist advice.
13
Case studies
Criminal offence caused by neglect of director, manager or secretary of an organisation
Armour v Skeen Strathclyde Regional Council and its director of highways were both
prosecuted following the death of one of its employees due to lack of a safe system of
work and failure to make notification of certain works taking place. While it was held that
it was SRC (as the body corporate ) that had committed the offence, its director of roads
(being a manager or similar officer within the meaning of the Health and Safety at Work
etc Act 1974) was found to have been negligent in not having a sound safety policy,
developed from the authority’s overall policy, in place for his department, failing to provide
information to his subordinates, and failing to provide training and instructions in safe
working practices.
Criminal offence caused by failure to ensure persons not in an organisations employment

were not exposed to safety risks
A heating engineer was working on a development in Fitzroy Square, London. He climbed
an unguarded ladder to a half platform from which he fell some 2.5metres and suffered
fatal injuries. The principal contractor on site had not carried out a risk assessment in the
area in the engineer was working, the half platform had no edge protection, nor had the
area been declared an exclusion zone. The principal contractor was found guilty of failing
to make sure people not in their employ were not exposed to health and safety risks under
S3(1) of the Health and Safety at Work etc Act 1974.
Criminal offence caused by employer’s failure to manage asbestos

High street retailer Poundstretcher Ltd was ordered to pay £15 000 in fines and costs after
exposing employees to asbestos fibres. A routine inspection by environment health officers
found damaged asbestos insulation boarding and asbestos debris on the floor. Employees
had been exposed to asbestos fibres over a period of time during routine work activities.
Civil liability for safe systems of work

General Cleaning Contractors v Christmas A person was employed by a contractor to clean
the outside windows of a club. To carry out this work he stood on the sill on the outside of
the window, using one hand on the window sash to steady himself. The second sash fell on
to his fingers, causing him to let go, fall and injure himself. It was decided, in the House of
Lords, that his employers were negligent in failing to devise a safe system for carrying out
such operations on the properties their employees had to visit. And they ought to have
instructed their employees how to avoid accidents and supply any implements that may
be needed.
Civil liability relating to stress at work

Barber v Somerset County Council The House of Lords decision published in April 2004 is
the leading case relating to stress at work. Mr Barber was a teacher who was forced to take
three weeks off work due to stress, which was known to his employers. When he returned
to work, his employers took no action to help, monitor his situation or reduce his workload.
This resulted in his being forced to retire through work related stress and the court
awarding him £100 000 damages.
14
For more information
www.rics.org
www.hse.gov.uk
www.hse.books.com
www.shponline.co.uk
www.iosh.co.uk
www.rospa.com
www.britishsafetycouncil.co.uk
http://agency.osha.eu.int/
www.aps.org.uk
15
www.rics.org
RICS is the mark of property professionalism worldwide, promoting

best practice, regulation and consumer protection for business and
the community. It is the home of property related knowledge and is
an impartial advisor to governments and global organisations.
The Royal Institution

of Chartered Surveyors
12 Great George Street
Parliament Square
London SW1P 3AD
United Kingdom
T +44 (0)870 333 1600

Oct 2004/5 000/40236/D.Freeman
F +44 (0)207 334 3811

contact@rics.org
www.rics.org
PART 5, SECTION 2
SECTION 5.2: CONSTRUCTION (DESIGN AND

MANAGEMENT) INFORMATION
Health and Safety, and CDM in particular, is a growth industry and is
supported by a plethora of books, publications and other sources of reference.
The number of publications is daunting and the members of the RICS working
party on CDM are frequently asked for advice in this respect.
In response to this, guidance has been prepared which is based on the personal
experience of the working party members. The list is not exhaustive and has
been prepared impartially without inference or preference or ranking and no
doubt there are many other equally suitable sources of information not
included.
Other eminent organizations, not the least of which is the Library Service of
the Institution, produce reading lists which contain much more comprehensive
information, if this is required.
This schedule attempts to meet the widest needs, ranging from introductory
background for the beginner to more detailed coverage on specific topics for
the more experienced reader. A variety of available media has been included
such as videos and audio tapes, as well as the written word. Where possible,
data has been collated on a functional basis under the heading of the various
representatives of the project team for whom it is felt that the information is
most useful.
THE RICS HEALTH AND SAFETY IN CONSTRUCTION PRACTICE PANEL
PART 5, SECTION 2
5.2.1. Schedule of Sources of Useful CDM Information
Regulations
The Construction (Design and Management) Regulations 1994, HMSO, 1994
[0110438450]
The Construction (Design and Management) (Amendment) Regulations 2000, HMSO,

2000
‘Managing Construction for Health and Safety’ Construction (Design and

Management) Regulations 1994. Approved Code of Practice and Guidance, HSC, 2001
[071 7621391]
The Construction (Health, Safety and Welfare) Regulations 1996, HMSO, 1996
[0110359046]
Accident Awareness/Statistics
‘Blackspot Construction’ – Study of fatal accidents in the building and civil engineering
industries 1981–1988 (out of print), HSE, 1988 [0118839926]
‘Not Just an Accident.’ Video, CIRIA, 1993 [Video SP100V]
Health and Safety Statistics of HSE 2000/01, HSE, 2000/01 [0717621103]
Risk Assessment
5 Steps to Risk Assessment, HSE, 1998 [0717615804]
Clients
Engaging an Architect: Guidance for Clients on Health and Safety, RIBA, 1995
[1859460062]
Clients and The CDM Regulations: What You Need to Do, APS, 2002
Construction Sheet No. 39 Construction (Design and Management) Regulations 1994:

The Role of the Client, HSE, 2000 [CIS 39]
Clerk of Works
The CDM Regulations: Their Implications for Practice. A Guidance Note for Clerk of
Works, ICW GB
Page 2 Effective from 1/12/02 Part 5, Section 2 (10/02) The Surveyors’ Construction Handbook
PART 5, SECTION 2
Forms of Appointment for Planning Supervisors

Form of Appointment as Planning Supervisor, RIBA, 2000 [PS/99]
Form of Appointment as Planning Supervisor, APS, 2000 [FOA/2000]
Where a Consulting Engineer is Engaged to Act as Planning Supervisor, ACE, 1995

[Agreement F]
Designers
Designing for Health and Safety in Construction (The Green Book), CONIAC, 1995
[0717608077]
CDM Regulations Case Study Guidance for Designers: An Interim Report, CIRIA,
1995 [0860174212]
Information on Site Safety for Designers of Smaller Building Projects, by Sylvester

Bone, HSE, 1995 [0717607771]
A Safer Bet: An Introduction to the Principles of the CDM Regulations 1994, CERCI,
1995 [Video 1898671044] Out of Print
Construction Safety Sheet No. 41. Construction (Design and Management) Regulations
1994: The Role of the Designer, HSE, 1995 [CIS 41]
Site Safety Handbook, CIRIA, 2001 3rd edition [08 601 78005]
Building Design: Easibrief. CDM Primer by Henry Haverstock, Building Design, 1997
Out of Print
Planning Supervisor
Construction Sheet No. 40. Construction (Design and Management) Regulations 1994:
The Role of the Planning Supervisor, HSE, 2000 [CIS 40]
CDM Documents
(See also ‘Comprehensive Guidance’)
Construction Sheet No. 42: CDM – The Pre-Tender Stage Health and Safety Plan, HSE,
1995 [CIS 42]
Construction Sheet No. 43: The Health and Safety Plan During the Construction Phase,
HSE, 1995 [CIS 43]
PART 5, SECTION 2
Construction Sheet No. 44: The Health and Safety File, HSE, 1995 [CIS 44]
The Building Centre Maintenance Manual & Health and Safety File, Building Centre
Trust, 1997 [0901919136]
Comprehensive Guidance
CDM Regulations: How Do Regulations Affect You? HSE, 1995 [PML 54] Out of Print
A Guide to Managing Health and Safety in Construction (The Brown Book), HSC, 1995
[0717607550]
CDM Regulations Explained by Raymond Joyce, Thomas Telford 2nd edition 2001
[0727730363]
Croner’s Management of Construction Safety (includes 2 updates and 12 newsletters

p.a.), Croner, 1997
CDM: The View from Here, CITB, 1995 [GCI]
Health and Safety in Construction, HSE, 1996 [HS G 150] [0717621065]
Construction Health and Safety Manual (includes 2 updates/year), CIP, 1997 [1852630
027]
Specific Hazards
Safety in Excavations, HSE, 1997 [CIS 8 rev]
Tower Scaffolds, HSE, 1997 [CIS 10 rev]
Inspections and Reports, HSE, 1997 [CIS 47]
General Access, Scaffolds and Ladders, HSE, 1997 [CIS 49]
Dust and Noise in the Construction Process, Contract Research Report, HSE, 1995
[CRR73] [0717607682]
Control of Substances Hazardous to Health in Construction by HSC, HMSO, 1990

[M20 6/90] Out of Print
Prevention of Falls to Window Cleaners: Guidance Note, HSE, 1991 [GS 25

0118856820] Out of Print
Contractors
(See also ‘Comprehensive Guidance’)
PART 5, SECTION 2
Safety Policies for Construction – BEC Guide, BEC, Newsletter [SPOL]
Construction Safety Manual (2 Volumes), BEC, 1997 [CHSMAN]
Construction Site Safety: Safety Notes Loose-leaf, CITB, 2000 [GE 700] CD-Rom
Audio Tapes
CONDAM – CDM Regulations. RICS and College of Estate Management, Owlion
1995 [ASP 10100]
Construction Radio: Talking Point on the CDM Regulations, CITB, 1995 [AT 1]
Health and Safety in Property. RICS and College of Estate Management, Owlion, 1995
[ASP 17230]
Key to References Used

Name Address Telephone
ACE (Association of Alliance House 020 7222 6557
Consulting Engineers) 12 Caxton Street
London SW1H 0QL
APS (Association of Planning 16 Rutland Square 0131 221 9959

Supervisors) Edinburgh EH1 2BB
Building Centre Trust The Building Centre 020 7692 4000

26 Store Street
London WC1E 7BT
Building Design CMP Information 020 7861 6467

City Reach
5 Greenwich View Place
Millharbour
London E14 9NN
CIC (Constructio 26 Store Street 020 7637 8692

Industry Council) London WC1E 7BT
CIRIA (Construction Industry 6 Storey’s Gate 020 7222 8891

Research and Information London SW1P 3AU
Association)
CITB (Construction CITB Publications 01485 577577

Industry Training Board) Bircham Newton
Kings Lynn
Norfolk PE31 6RH
CONIAC (Construction HSE Books 01787 881165

Industry Advisory Committee) PO Box 1999
Sudbury
Suffolk CO10 2WA
PART 5, SECTION 2
Construction Federation Construction House 020 7608 5000

56–64 Leonard St
London EC2A 4JX
Croner Croner CCH Group Ltd 020 8547 3333

145 London Road
Kingston upon Thames
Surrey KT2 6SR
HSE/HSC (Health and Safety HSE Books 01787 881165

Executive/Commission) PO Box 1999
Sudbury
Suffolk CO10 2WA
ICW GB (Institute of Clerks 1st & 2nd Floors 01733 564 033
of Works of GB) The Old House
The Lawns
33 Thorpe Road
Peterborough PE3 6AD
LPC (Loss Prevention Bracknells Lane 01923 66 4000

Council) Garston
Watford WD25 9XX
Owlion RICS Books Mail Order 020 7222 7000

Surveyor Court (mail order)
Coventry CV4 8JE
RIBA (Royal Institute 66 Portland Place 020 7580 5533

of British Architects) London W1B 4AD
The Stationery Office 0870 600 5522

(previously HMSO)
Thomas Telford Publishing The Institution of Civil 020 7987 6999

Engineers
London SW1P 3AA
PART 5, SECTION 3
PART FIVE: ADDITIONAL GUIDANCE AND INFORMATION
SECTION 3: BUILT ENVIRONMENT GROUP ROLES AND

INFORMATION
Introduction
The articles and guidance published in the Construction Handbook are largely
the responsibility of three faculties and their associated forums.
The contributing faculties are:

BUILDING SURVEYING
The Building Surveying Faculty aims to increase the public perception and
appreciation of the core values offered by a building surveyor and in particular
the building surveying specialisms. The faculty wants to be identified as the
principal source of knowledge and innovative thought on building surveying
matters. It also seeks a clearer understanding for the public, employers, media
and other construction professionals of the skills building surveyors hold and
an awareness of what can be added through their appointment.
CONSTRUCTION
The Construction Faculty is responsible for:
• strategic construction consultancy;

• construction management, economics, planning, contracts and materials
procurement, management, and health and safety relating to all forms of
construction; and
• surveying profession services in civil, heavy, mechanical, electrical,
petrochemical and instrumentation engineering.
PROJECT MANAGEMENT
This Faculty is responsible for project management in the property and

construction industries.
The associated forums are:

BUILDING CONTROL
The Building Control Forum was initially established as a consequence of the

members of the former Institute of Building Control (IBC) taking up
membership of RICS on 1 January 2001. It represents the building control
discipline within RICS but also has a remit to provide a mechanism for all
those interested, involved or affected by building control issues to network. It
currently has a membership of approximately 4000.
PART 5, SECTION 3
BUILDING CONSERVATION
The Building Conservation Forum was founded in 1987 to develop a forum

for chartered surveyors linked by common interest in conservation. Since its
formation the forum has contributed to increasing the profile of building
conservation. It represents the building conservation discipline within RICS
but also has a remit to provide a networking mechanism for all those
interested, involved or affected by building conservation issues. It currently
has around 1000 members.
The forum runs an accreditation scheme for surveyors in conservation. This

highly respected scheme was started to help surveyors win church work and
grant-aided work. Now there is an architects’ accreditation scheme in
operation and one for engineers in prospect. English Heritage and Historic
Scotland will be making it a requirement that professionals involved in
grant-aided work be accredited by their professional organisation. The forum
publishes a regular series of short guides on matters related to historic
buildings, and has arranged an active programme of events for members. Most
of these are low cost, and are a very pleasant way to achieve CPD. The events
range from an annual seminar to half-day visits to work in progress at historic
buildings.
I 5.3.1 Faculty working groups and committees of selected members have the
following roles in respect of defined spheres of surveying services:
• to help members meet the market’s requirements for their professional

services;
• to respond to consultation papers from other bodies on the content of
professional services and to developments in the market;
• to produce or contribute to responses to government consultation papers;
• to assist in answering queries on the content and quality of professional
services (from members, lawyers, the public, the media, etc.);
• to make strategy recommendations for new marketing activity and to assist
in the implementation as appropriate; and
• to receive market briefings and advice on developments in the market and
to provide appropriate support to members.
Groups and committees fulfil these roles primarily by providing these types of
outputs:
• Practice Statements, Guidance Notes, and Information Papers, after

consultation with members;
• information and articles in RICS Business and (if produced) faculty
journals;
• electronic communications;
• dedicated web-sites;
• model and standard conditions of engagement and standard services, e.g.
Appointing a Building Surveyor (guidance note);
• seminars and conferences;
PART 5, SECTION 3
• representations to other bodies;

• advice to others on the content of professional services; and
• proposals for marketing and policy initiatives.
I 5.3.2 Faculty working groups and committees are responsible for producing
material for this handbook.
Within the Faculties and Forums department there is a Professional

Information Section which provides a free professional and technical enquiry
service. The section can be contacted:
• by telephone on +44 (0)20 7334 3791;

• by fax on +44 (0)20 7334 3844; or
• by email to profinfo@rics.org.uk
I 5.3.3 Working groups and committees are not permanent and are subject to
continuous review.
The following working groups are currently in existence and are listed by
faculty:
BUILDING SURVEYING FACULTY
Asbestos – management of asbestos regulations, guidance and related

asbestos matters.
Building Insurance and Assessment of Claims
Construction Administration and Management
Building Survey and Maintenance
Dilapidations
DDA
Construction Design and Economics – certification of domestic structures
Boundaries and Party Walls
CONSTRUCTION FACULTY
IT – working with construction IT

Railways – cost planning and cost control of major infrastructure projects and
maintenance contracts
Cost Planning
Taxation – capital allowances, etc.
Health and Safety
Oil and Gas
M&E
Engineering
JCT
Consultant QS
Procurement
Contractors
PART 5, SECTION 3
PROJECT MANAGEMENT FACULTY
Project Management – PM Agreement
FACULTY CONTACTS
The relevant faculties can be contacted by Email at the following addresses:

Building Surveying: bs.faculty@rics.org.uk
Construction: construction.faculty@rics.org.uk
Project Management: pm.faculty@rics.org.uk
or by fax on +44 (0)20 7334 3844.
GENERAL ENQUIRIES
For general enquiries, please get in touch with the RICS Contact Centre on
+44 (0)870 333 1600, by Email at contactrics@rics.org.uk or by post to:
RICS Contact Centre
Surveyor Court
Westwood Way
Coventry
CV4 8JE
United Kingdom
If you already know who you need to speak to, please call our main
switchboard on +44 (0)20 7222 7000. The postal addresses of our
headquarters (Parliament Square) and two other central offices are:
RICS RICS RICS

12 Great George Street Surveyor Court 3 Cadogan Gate
Parliament Square Westwood Way London
London Coventry SW1X 0AS
SW1P 3AD CV4 8JE United Kingdom
United Kingdom United Kingdom
PART 5, SECTION 4
SECTION 5.4: BUILDING COST INFORMATION SERVICE

(BCIS)
I 5.4.1 BCIS provides current, accurate building cost and tender price information for
the construction industry and the property market. It is regarded as
authoritative, reliable and useful by subscribers, who include quantity
surveyors, building surveyors, general practice surveyors, architects,
engineers, building contractors, developers, financial analysts and property
owners in both public and private sectors.
I 5.4.2 The BCIS database is collated by analyzing unique data submitted by

members and incorporates material from all other relevant sources. The
information is interpreted by BCIS professional staff and presented to
subscribers in two accessible and practical formats: the comprehensive BCIS
Bulletin Service, which provides hard copy data; and BCIS Online for those
preferring to receive it electronically via the internet.
I 5.4.3 BCIS Online

BCIS Online gives direct access to the BCIS database of information and is
therefore always complete and up-to-date. It includes the following information.
I 5.4.3.1 ANALYSES
Elemental analyses have been at the heart of BCIS since the first printed
service was launched. Using analyses allows the cost of a new building to be
forecast using examples of buildings priced in the market place. BCIS Online
has a search capability which allows you to quickly and easily find the most
appropriate examples to match your current project from the database of over
14,500 projects.
Subscribers can also automatically recalculate the costs to reflect a selected

location and date.
I 5.4.3.2 INDICES
BCIS compiles a full range of building cost, tender and output indices; a range
of derived regional tender price indices and trade price indices; together with
indices for certain sub-markets in the construction industry. A wide range of
background statistics is available, including consumer prices, construction
output and new order statistics.
I 5.4.3.3 AVERAGE PRICES

BCIS average prices can be used to give indicative costs prior to producing
elemental estimates and they can also be used as a cost check. Five studies are
available:
• £/m2 study;
• Element cost per m2;
PART 5, SECTION 4
• Element unit rate study;

• Functional unit prices; and
• Group element prices
I 5.4.3.4 BRIEFING
BCIS Online Briefing carries the latest news in areas of key importance to the
construction economy, together with the BCIS commentary and background to
the forecasts. This section also includes the annual BCIS Five Year Forecast.
I 5.4.3.5 STUDIES
Tender price studies report on the effect on tender prices of location; regional
trends; selection of contractor; building function; building height; type of
work; site conditions and contract sum.
Contract percentage studies report on preliminary percentages and percentage

additions to PC sums.
I 5.4.3.6 DAYWORKS
BCIS interprets the definitions of prime cost of daywork for all the main types
of operative in the industry. Current and historic base rates are provided,
together with the build-up for the latest rates. Details of construction wage
agreements, national insurance and CITB levy supplement this part of the
service.
I 5.4.4 Other BCIS Publications and Services

I 5.4.4.1 BCIS Review Online provides access to summary level information for the
BCIS Database. It includes the following sections:
• Indices
BCIS Cost and Tender Price Indices are available together with Retail Price
Indices.
• Average Prices
Two studies are available:
• £/m2 study
• functional unit prices
Briefing
BCIS Review Online Briefing carries the latest news in areas of key
importance to the construction economy. Together with the BCIS
commentary and background to the forecasts. This section also includes the
annual BCIS Five Year Forecast.
Page 2 Effective from 1/12/02 Part 5, Section 4 (revised 10/02) The Surveyors’ Construction Handbook
PART 5, SECTION 4
Studies
Tender price studies report on the effect on tender prices of location; regional
trends; selection of contractor; building function; building height; type of
work; site conditions and contract sum.
I 5.4.4.2 QUARTERLY REVIEW OF BUILDING PRICES

The BCIS Quarterly Review contains a selection of BCIS data which gives
guidelines on the general level of building prices. It also carries a brief
commentary on market conditions and tender prices, location factors and
average £/m2 building prices.
I 5.4.4.3 BULLETIN SERVICES

BCIS Bulletin Services contain information selected from the BCIS database
published in regular bulletins. They include:
(a) Indices and Forecasts

Published quarterly, this bulletin contains a complete series of BCIS indices,
including tender prices, regional prices, input costs and output costs. It also has
an executive summary, commentary on market conditions and projected trends.
(b) Surveys of Tender Prices

This quarterly publication contains a range of current pricing studies and an
update of the BCIS Tender Price Index.
(c) Elemental Analyses

The key source of price information from accepted tenders available at either
concise or detailed level. Detailed analyses break down tender prices into 34
elements. Published quarterly.
(d) Labour, Hours and Wages and Dayworks

BCIS publishes details of the principal wage rates in the building and allied
industries. The information shows the rates and operative dates for current and
recent settlements.
(e) Digests
Digests give the source of publication and a brief summary of articles on
construction economics.
I 5.4.4.4 GUIDE TO DAYWORK RATES AND UPDATING SERVICE

This annual guide covers the daywork rate for 63 grades of operative. An
updating service informs subscribers of any changes.
I 5.4.4.5 RICS SCHEDULE OF BASIC PLANT CHARGES

For use in connection with Daywork under a Building Contract. The 2001
edition of the schedule has been revised and extended to reflect the types of
plant likely to be available on a building site.
PART 5, SECTION 4
I 5.4.4.6 GUIDES TO DOMESTIC REBUILDING COSTS FOR INSURANCE PURPOSES
(a) Guide to House Rebuilding Costs
This annual guide is widely used by professionals when assessing rebuilding

costs for insurance valuations. It contains sixteen main tables of costs for:
• four regional groups;

• five house types;
• three sizes of house; and
• three quality specifications
(b) Guide to Rebuilding Cost of Flats
This new guide provides cost per unit area tables for:
• modern low-rise and medium-rise flats which will be applicable to many

flats built post 1950; and
• flats in converted houses built between 1900 and 1950 which will also
be applicable to low-rise purpose built mansion blocks
Additional cost advice is given to help to adjust the base figures for a range of
specific circumstances.
(c) Regional Supplement
The Regional Supplement contains separate tables of costs for each of the
Standard Regions. It helps surveyors and valuers take account of differences
in various parts of the country.
(d) ABI/BCIS House Rebuilding Cost Index
This index assists in the updating of the figures in the guides between the
annual issues. A monthly figure is circulated to all subscribers.
I 5.4.5 Further details are available from:

BCIS Ltd
Parliament Square
London
SW1P 3AD
Tel: 020 7695 1500
Fax: 020 7695 1501
Email: bcis@bcis.co.uk
Website: www.bcis.co.uk
PART 5, SECTION 5
SECTION 5.5: BUILDING OCCUPANCY COST

INFORMATION (BMI)
5.5.1 BMI provides an independent cost information service for professionals in
facilities management, maintenance and refurbishment. Subscribers are
provided with information on current, historic and forecast costs of building
maintenance and occupancy in a readily accessible form.
The BMI information will help in budgeting, forecasting, benchmarking, cost

control, contract administration and life-cycle costing.
The publications listed below are included in the full BMI subscription service
but are also available separately.
I 5.5.2 BMI Quarterly Cost Briefing

The BMI Quarterly Cost Briefing provides information o current and forecast
trends in maintenance costs making it an essential tool for the facilities and
maintenance manager. Cost indices track the general movement of costs in
different industry sectors allowing users to monitor their own costs against
general maintenance cost inflation.
Indices are included for:
• redecoration;
• fabric maintenance;
• services maintenance;
• cleaning (labour and materials);
• lift service labour; and
• energy (coal, gas, fuel, oil, electricity)
I 5.5.3 Building Maintenance Price Book

The BMI Building Maintenance Price Book is the only annual guide to
estimating and pricing exclusively for building maintenance and repairs. The
Price Book gives labour constants and measured rates for over 1,300 items as
well as current wage rates and materials prices. It contains guidance on letting
maintenance work. It is a valuable working document for all those involved in
estimating, checking and negotiating rates for maintenance and repair work. It
is widely used as a schedule of rates to ensure competitive prices.
PART 5, SECTION 5
I 5.5.4 Special Reports for Benchmarking

BMI publishes regular reports on maintenance, occupancy and rehabilitation
costs covering a range of common building types, detailed occupancy cost
plans and special benchmarking studies. The annual surveys of information
provide estimated annual average costs for a range of common building types:
• maintenance (redecoration, fabric, services);
• occupancy (cleaning, utilities, administrative costs); and
• rehabilitation.
Detailed occupancy cost plans for typical buildings show maintenance and
occupancy costs projected over a 20 year period. Two plans a year are
published and recent examples include retail centres and sports centres.
I 5.5.5 News, Digests and Reports

BMI also monitors changes in the maintenance and facilities management
industries and reports the findings to keep subscribers up to date. BMI
occasional reports include:
• The Economic Significance of Maintenance; and
• Guide to Information Sources for Facilities Management
BMI News summarizes the latest industry developments and contains

statistical and editorial articles designed for quick reading to keep subscribers
well informed.
BMI publishes digests of articles with a bearing on property occupancy from

a wide cross-section of the building maintenance and facilities management
press. This information can save subscribers hours of reading time and is
backed up with a photocopying service.
I 5.5.6 Annual subscription rates, further details, a full list of BMI special reports,
up-to-date prices and special rates for chartered surveyors are available by
contacting:
BMI
Parliament Square
London
SW1P 3AD
Tel: 020 7695 1500
Fax: 020 7695 1501
Email: bmi@bcis.co.uk
PART 5, SECTION 6
PART FIVE: ADDITIONAL GUIDANCE AND INFORMATION
SECTION 6: ELECTRONIC DOCUMENT STORAGE –

LEGAL ADMISSIBILITY
G Introduction
The production and storage of documents and other information on computer
systems has become increasingly common and it is, therefore, inevitable that
these stored documents will be used in their electronic form as a basis for
business transactions, and will be produced, transmitted and stored in
significant numbers.
There is a need to store and retain records for professional and legal purposes.
However, paper storage is a significant problem for many practices. The
quantity of paper produced is increasing year on year and would do so even
without expansion of the business. Two factors have led to the increase in the
amount of documentation being produced by businesses. First, there is far more
regulation being introduced into everyday life, and this is linked directly to a
more litigious population. The need is now to be able to prove what actions
occurred and when. Secondly, the growth in management systems generally, as
previously promulgated in BS EN ISO 9001:1994 and now in BS EN ISO
9001:2000, has led to an increase in documentation. In fact, the processes
involved in compliance with ISO 9001 are designed to provide the documentary
evidence which will satisfy the regulations which are relevant to the particular
business and, it is hoped, provide acceptable evidence in the event of litigation.
The requirement for storage also has implications – not least of which is the
cost of dedicated storage areas. Storage conditions must be right to ensure that
storage is effective. Using a local lock-up garage will probably not be
adequate to prevent deterioration of paper copies over a period of time.
Increasingly, businesses are turning to electronic storage. This is a medium

that requires far less floor space and ensures longer term storage, without
deterioration, under the right conditions. However, there are a number of
problems related to electronic storage which have to be addressed. In
particular, legal admissibility has to be considered: there has to be a certainty
that electronically stored documents will have the same weight and validity as
the original versions.
There is no current standard which guarantees legal admissibility (some

countries have made a move towards this), but there is a shift of emphasis away
from admissibility towards evidential value or weight which is in line with the
Civil Evidence Act 1995. Annex G of the Code of Practice (see Part 1) gives
information on relevant national legislation. The purpose of this text is to
provide information on the best practice principles which have thus far been
identified.
The Surveyors’ Construction Handbook Part 5, Section 6 (12/03) Effective from 12/03 Page 1
PART 5, SECTION 6
G 5.6.1 Code of Practice – DISC PD 0008: 1999 A Code of Practice for

Legal Admissibility and Evidential Weight of Information Stored
Electronically
There has been considerable discussion about the value of documents stored
on a document management system (DMS) when documents are required to
be kept as evidence for a considerable time. It has been accepted by most
commentators that a common discipline needs to be agreed so that the value
of these documents as evidence can be maximised.
It has not been possible to develop a set of requirements and may not be for
some time. The difficulty is the range of issues which have to be considered,
the rate of change of technology and the need to consult our European partners
on all legal aspects. The Civil Evidence Act 1995 would have to be updated
annually just to keep pace and this clearly cannot happen. Instead, a Code of
Practice (DISC PD 0008) has been developed, which is evolving as
technology and electronic commercial practices mature. It defines best
practice in document management and provides guidance that will help
maximise the value and integrity of information in a court of law. First
prepared and published in 1996, the Code came about as a result of the
merging of the research carried out by two organisations, namely the Legal
Images Initiative (formed by the Information and Document Management
Association) and the Document Management Forum (a group of the
Computing Suppliers Federation). In the absence of a formal set of
requirements approved by the courts through case law or by Parliament
through the Civil Evidence Act, leading institutions took the view that a Code
was required which recognised new technologies and would give a framework
which reflected the existing legal precedents but applied to the new
technologies. A document entitled Principles of Good Practice for
Information Management, written by two of the authors of the Code of
Practice, contains a detailed explanation of the background to each of the
sections of the Code.
The Code of Practice should be used as a basic reference document. It covers

data files stored on Write-Once-Read-Many times (WORM) optical storage
systems and as such covers WORM, multi-function media systems used in a
write-once mode, and compact-disc-recordable (CD-R) systems. It has also
been extended from the original version to cover any type of electronic storage
medium, including those that are rewriteable. The use of rewriteable media
requires additional controls, as it is necessary to be able to demonstrate not
only that the correct data was stored in the first place, but also that the data
now present has not been modified in any way.
It should be emphasised that the Code does not guarantee legal admissibility.
It seeks to define the current interpretation of best practice.
In this guidance note, where it is stated that an action ‘should’ be carried out
in relation to the Code, the word ‘should’ indicates that such action is
necessary in order to claim compliance with the Code.
Page 2 Part 5, Section 6 (12/03) Effective from 12/03 The Surveyors’ Construction Handbook
PART 5, SECTION 6
The Code pays particular attention to the setting up of authorisation

procedures and to the subsequent ability to be able to demonstrate, in a court
of law, that these procedures have been followed. Whilst the Code defines
essential procedures to be implemented, it does not follow that documents
held on a system that does not conform are not legally acceptable. It is likely,
however, that it will be more difficult to prove their integrity in a court of law.
The Code contains examples of compliance statements at Annex I and

recommends that the Compliance Workbook PD 0009 be used to demonstrate
compliance with the Code.
G 5.6.2 Weight of evidence and document destruction

Each business will have its own requirements and it is important to determine,
in advance, how a document would be presented to a court of law, and if
weight of evidence or courtroom tactics could be unduly influenced by the
destruction of the original document, the document storage system or the
access control systems. It will rarely be possible to give a definitive
recommendation regarding the destruction of original documents because,
until there is a request to produce a document, the reason behind the request
may not be known. It is the reason for the request that will indicate whether, if
possible, the original document should be produced. Each business should
consult its solicitor, who will be able to provide a view as to which types of
document are most likely to be disputed regarding their authenticity rather
than their content.
There are different considerations for civil and criminal law. In a criminal
case, the prosecution faces a much higher burden of proof ‘beyond reasonable
doubt’ than in civil proceedings ‘on the balance of probability’.
G 5.6.3 Authenticity
It is important to be able to demonstrate that the computer has been
functioning properly (i.e. according to agreed procedures) in order to
authenticate documents stored on the system. Documents may be rejected if
this cannot be shown. There are three methods for doing this:
(1) A maintenance record should be kept recording regular servicing of the

equipment and any repair work either by the supplier/maintenance contract or
by the in-house IT support where qualified/trained to do this.
(2) By having a control set of documents which have been used, scanned and
reproduced from the scanned version to set a benchmark for the quality of
copy.
(3) By keeping proper records of scanning and scanning difficulties,

especially of any modifications to settings required. This is explained in more
detail below (see 5.6.7).
PART 5, SECTION 6
In most cases, arguments are over what a document says rather than the
authenticity of the document. However, the adversarial legal process means
that the other party may try to discredit evidence on the basis of authenticity,
to avoid dealing with the content. Arguments over authenticity of evidence
can lead to an investigation into the system that produced the paper and the
method of storage; operation and access control; and even the computer
programs and source code.
It could be necessary to satisfy the court that the information is stored in a

proper manner. This issue could be used by the opponent to try to discredit the
evidence and to make inadmissible that and any similarly stored documents
that are produced. By questioning hardware reliability, for example, an
opponent could establish, to the satisfaction of the court, that the document
storage system is flawed and cannot be trusted. This would allow the whole
system to be brought into question and any documents stored within it ruled
inadmissible.
G 5.6.4 Photocopies, microfilm and image processing
In very general terms, image processed documents will be treated as

secondary evidence in the same manner as a photocopy or microfilm image.
However, photocopies and microfilm images are admissible as evidence.
Indeed, some photocopies use a raster scan copying mechanism which is
essentially the same as an image processing scanner. It follows that image
processed documents are likely to be admissible with the same weight of
evidence as photocopies and microfilm images, although no cases have yet
been reported where this has been tested.
G 5.6.5 Document storage
It is very important to note that, no matter how an organisation stores business

documents, it is the responsibility of the executives of the organisation to be
able to produce the documents when required. The company secretary or
partners and the manager of the document storage systems are responsible for
this document retrieval process, not the vendor of the storage system.
Therefore, the advice of the company secretary (or solicitor) should always be
sought before implementing any document storage system, particularly when
the original documents are subsequently destroyed.
The Code recommends that all interested third parties should be consulted,
and it would be prudent to include professional indemnity insurers. It could be
disastrous for a business to find that it was uninsured because it had
introduced a scan and destroy procedure.
The procedures by which documents are stored and accessed are vital in
satisfying a court of law about the authenticity of a ‘copy’ of a document and
the inability to tamper with it. All copies of documents (photocopy, microfilm
or image processing) will be treated as secondary evidence by a court of law,
PART 5, SECTION 6
with a subsequent reduction of weight of evidence if the authenticity of the

copy can be questioned. For example, where the content of a document is
under question, the original or a copy should be treated with equal weight, but
if a signature is being disputed then the original is likely to carry more weight
than the copy.
There may be some confusion about ‘originals’ and ‘copies’. Many items to
be scanned are actually themselves photocopies. The original document may
reside in a file elsewhere. It may be necessary, if this is not readily apparent,
for the image processing system to indicate whether an image taken was from
the original or from a copy of it.
G 5.6.6 Storage and access procedures
Due to the duration of storage of many documents, the person who ‘certified’
a system, or a document stored on it, may not be able to give evidence in
person. It is essential that a proper system for auditing and certifying is
implemented to demonstrate that the integrity of the system has been
maintained from the time the document was stored.
Regular audits of the system should be performed, and certificates obtained

from the company auditors. This is in line with current procedures for
microfilmed documents. Although formal affidavits will not usually be
necessary, advice should be sought from a company solicitor, particularly if
the original documents are to be destroyed.
It may help demonstrate the proper functioning of a system if a copy of the

audit record is stored in the image system at the time of audit.
As well as the specific details included in the Code, users should also comply
with the relevant sections of BS 7799-1:2000 – Information Technology – A
Code of Practice for Information Security Management.
Of major importance to this Code is the Civil Evidence Act 1995. The Act
introduces a flexible system whereby all documents and copy documents,
including computer records, can be admitted as evidence in civil proceedings.
However, the court judge or arbitrator still has to be persuaded to treat the
evidence as reliable and so organisations have to put in place procedures to
prove the authenticity and reliability of the record.
Sections 8 and 9 of the Act address the hub of this issue:
8 (1) Where a statement contained in a document is admissible as

evidence in civil proceedings, it may be proved:
(a) by the production of that document; or
(b) whether or not that document is still in existence, by the

production of a copy of that document or of the material part of it,
authenticated in such manner as the court may approve.
PART 5, SECTION 6
(2) It is immaterial for this purpose how many removes there are
between a copy and the original.
9 (1) A document which is shown to form part of the records of a

business or public authority may be received in evidence in civil
proceedings without further proof.
(2) A document shall be taken to form part of the records of a business

or public authority if there is produced to a court a certificate to that
effect signed by an officer of the business to which the records
belong.
Similar work is being undertaken by the Home Office on a Police and

Criminal Law amendment.
G 5.6.7 Format of the Code of Practice
The Code of Practice contains an introduction and six sections, each of which
includes details of processes and procedures that need to be put into place to
ensure conformity with the Code. In addition, there are ten annexes, including
one which identifies the changes since the previous edition.
Sections 2 to 6 are structured in accordance with a set of five principles

established in BSI DISC PD 0010 Principles of Good Practice for
Information Management which are as follows:
1) recognise and understand all types of information;
2) understand the legal issues and execute ‘duty of care responsibilities’;
3) identify and specify business processes and procedures;
4) identify enabling technologies to support business processes and

procedures; and
5) monitor and audit business processes and procedures.
5.6.7.1 GENERAL
Scope
The Code describes the use of electronic management systems to store

information, where the issues of legal admissibility, authenticity and
evidential weight of information contained in these stored documents is
important. It is used with a document management system (DMS)
incorporating write-once optical media as the storage device, covering
Write-Once-Read-Many times (WORM), multi-functional media systems
used in a write-once mode, and compact-disc-recordable (CD-R) systems. It
now incorporates rewriteable media (for example, magnetic storage).
PART 5, SECTION 6
The Code covers any type of data file controlled by the DMS. Data files may
be created by the DMS, or may be imported into it. The Code covers all such
data files, either created or imported, directly or through a network system,
from the time at which the system assumes complete control of the data file.
Such networks may be local or wide area.
While the Code covers aspects of document management that impinge upon
the issue of legal admissibility of digitised images, it also covers aspects that
may affect the use of images in a legal context, even where admissibility per
se is not at issue. Such aspects include the legibility and completeness of the
document images, and the transfer of the images to other systems.
The Code covers the capture of digitised images both from the original
documents and from microform versions of the original documents. In the
latter case, users should be aware of the implications of the processes used in
the microfilming of the original documents.
The Code is intended for:
• systems integrators and developers whose equipment provides facilities

to meet the requirements of end users; and
• end users who wish to ensure that the information created by, entered
into and/or stored within the information management systems can be
used with confidence as evidence in a court of law.
Where users wish to claim adherence to the Code, the paragraphs identified by
text in bold type in the Code are considered essential in so far as they apply to
the specific application concerned. Other paragraphs contain recommendations
in italics that should be followed where practical.
DISC PD 0008 was first published by the BSI in 1996, covering legal
admissibility of information stored on electronic management systems. It has
since been revised and reissued in 1999, and re-titled ‘A Code of Practice for
Legal Admissibility and Evidential Weight of Information Stored
Electronically’. Prior to this, BS 7799:1995 was published in 1995 setting out
best practice for information security management. The Code is heavily
reliant on this document, which has now been revised as Information
Technology – Code of Practice for Information Security Management.
BS ISO/IEC 17799:2000 (BS 7799-1:2000) specifies eight controls which are

either essential requirements, for example, legislative requirements, or are
considered to be fundamental building blocks for information security. These
are designated ‘key controls’ and apply to all organisations and environments.
They are intended as a basis for use by organisations setting out to implement
information security controls.
PART 5, SECTION 6
The recommendations for essential controls include the following:
a) data protection and privacy of personal information;
b) safeguarding of organisational records;
c) intellectual property rights.
The recommendations for common best practice include the following:
a) development of an information security policy document;
b) allocation of information security responsibilities;
c) information, security, education and training;
d) reporting of security incidents;
e) business continuity management.
BS 7799-1 is to be read in conjunction with BS 7799-2:2002 – Information

Security Management Systems – Specification with Guidance for Use.
5.6.7.2 INFORMATION MANAGEMENT POLICY
The Code advises that a policy document should be produced, dealing with the
policy on:
• what information is covered;
• security classification, where appropriate;
• storage media;
• data file format and version control;
• relevant information management standards;
• retention periods and destruction;
• responsibilities; and
• legal advice sought and acted upon, including any special regulations. In
addition, such bodies as professional indemnity insurers may wish to be
consulted.
This policy must be approved by senior management and reviewed at regular

intervals. It is also recommended that the policy document details the
responsibilities for compliance with the Code by identifying a person or job
function and specifying retention periods for compliance documentation.
PART 5, SECTION 6
The requirement for an information retention and destruction schedule is

amplified as being critical to the successful implementation of the revised
Code.
In order to define the organisation’s information management policy, the

Code recommends that information should be grouped into types, with the
policy for all information within a type being consistent.
The policy should list all types which are to be stored in compliance with the
Code such as:
1) information generated by a computer system – also known as encoded

data files;
2) scanned images/digitised voice and/or video; and
3) information generated at a remote user or third party site, in either of the

above two types.
5.6.7.3 DUTY OF CARE
It is essential that an organisation is aware of the value of information that it

stores and executes its responsibility with regard to that information under the
duty of care principle. Appropriate levels of security for managing
information should be agreed and documented; systems should be adequately
managed; and relevant sections of the Code should be implemented.
Consultation with interested third parties at the planning stage, before the
system is installed, is also critical.
The revised Code contains more details of information security requirements

which would be satisfied by compliance with BS 7799. Where the full weight
of BS 7799 is not applicable, the controls listed in the Code should be
implemented.
In any event, there should be business continuity planning to ensure that all
data can be recovered successfully following major failures of equipment,
environment or personnel.
5.6.7.4 BUSINESS PROCEDURES AND PROCESSES
The organisation should develop its own manual for the DMS. This can be
incorporated in the quality management system, where the organisation
already has one. Such a procedures manual, in addition to any
vendor-supplied manuals for the system, should include the following topics:
• document capture;
• data capture;
• indexing;
PART 5, SECTION 6
• authenticated output procedures;
• authentication of copies of data files;
• file transmission;
• information destruction;
• backup and system recovery;
• system maintenance
• security and protection;
• use of contracted services;
• use of trusted third parties;
• workflow;
• self-modifying files;
• date and time stamps;
• video, audio and voice data (if applicable);
• version control; and
• maintenance of documentation.
Procedures need to be implemented to ensure that staff who operate the

system will comply with the requirements. Any changes to procedures have to
be documented and checked, and it is necessary to keep copies of previous
versions of the procedure.
All procedures must be reviewed at least annually and the results of reviews
must be documented.
Document capture
There must be procedures dealing with the situations either where data files
are created by the system or where they are imported into the system.
If the information management system is used for storing images, then these
procedures should be documented and users should comply with the
recommendations set out in Annex C of the Code.
Preparation of paper documents
The Code requires documents to be examined before scanning to ensure that

they are suitable. The business should, therefore, have procedures for the
examination process documented in its procedures manual.
PART 5, SECTION 6
Factors which may affect the scanning process should be considered and
there must be a procedure to deal with scanning difficulties. There should
also be a method for identifying such things as ‘post-it’ notes attached to the
original document or physical amendments which might not be visible after
scanning.
Detailed procedures need to be established for general document preparation

and collation.
Document batching
Wherever possible, documents should be grouped in batches. Where

workflow is used, alternative methods of controlling the scanning process
may need to be established.
Photocopying
It may be necessary to photocopy a document prior to scanning and the

procedures used must ensure that there is no loss of quality or of the total
image. It is also advisable to provide some method of distinguishing between
scanned originals and scanned photocopies.
Scanning processes
The Code requires that the procedures manual should include details of the
operational procedures used in the scanning process and that records be kept
of all audit trails. In particular, it requires each document to have a unique
identity that cannot be changed or removed except on deletion and then only
under tightly controlled circumstances.
Information held in the records is expected to include as a minimum:
• a unique identifier for each batch;
• the date and time of scanning;
• the name of the person who performed the scanning;
• the type of material scanned;
• the number of documents; and
• details of post-scanning processes, if any.
In practice, the scanning software will take care of many of the requirements
and a paper record will fill the gaps. (Appendix A shows a specimen form for
recording scanning information.)
The procedures should also describe how it is ensured that all documents in a
batch are scanned.
PART 5, SECTION 6
Quality control
To be able to assess the validity of any scanned copy, it is necessary to prepare

a benchmark for evaluation. The operator, using normal settings, should make
scanned copies of a range of types and conditions of document. Prints are then
obtained through the normal printing process. All hardware and settings are
recorded and the quality of each reprint is checked against the originals to
ensure it is acceptable by the standards required by the business. (It may be
acceptable, for example, for the copy to be fractionally smaller than the
original, where no scale is needed or where a drawn scale is available.)
This set of prints and originals is retained and periodically rescanned and
checked.
The Code gives a number of criteria which may be appropriate to the user,
including print size and grey scale, which can be used to establish the quality
of the scanned image.
The results of all quality control checks (including audits) should be recorded,
as should any problems or difficulties which are experienced. In addition the
equipment should be properly maintained at all times.
Rescanning
If, following an audit, a document has to be rescanned, the procedures should

ensure that the original image is replaced and that the batch numbering and
audit trail are not compromised.
Image processing
If image processing is used to improve the quality of the image, this could
conceivably lead to image manipulation. The procedures manual should
define how this is managed.
Annex D of the Code describes some of the different documents and

associated image processing facilities that may be used.
Data capture
This is mainly used where the original data is provided by such methods as
Optical Mark Reading (OMR) or manual entry from an existing document.
Procedures need to be established which specify the quality and accuracy

level required and that records of accuracy checking are retained.
There should also be a procedure to deal with data migration from one system
to another.
PART 5, SECTION 6
Indexing
The procedures manual must describe the indexing technique to be used and
should include a method for checking the accuracy of the records. This is often
built into scanning software and electronic document management systems.
Any changes to the index should be fully explained and audit trails dealing
with the amendment should be available. The Code also advises that in all
cases the index files should be retained for at least as long as the information
to which they relate.
There should be procedures for rebuilding indexes and for

amending/correcting information held in the indexes and ensuring its accuracy
at all times.
Authenticated output procedures
For the prints to be legally admissible, there should be a formal process for
recovery whereby the operator certifies that all equipment is operating
normally and identifying the storage index data and document information
which confirms that the reproduction is a true and complete record. Appendix
B shows a specimen retrieval record for a scanned document/file, which
allows the operator to effectively certify that the document/file has been
correctly retrieved.
The Code also places great stress on the authentication process and for
controls where the output is not an exact reproduction, for example,
monochrome rather than coloured. If some aspect of the layout such as font or
pagination is not maintained, then retrieval characteristics must be agreed and
documented.
Authentication of copies of data files
It may be necessary to be able to identify whether a data file is original or a

copy. In these instances, the Code suggests that an electronic/digital signature
can be stored with a trusted third party and could then be used to demonstrate
whether a file is a true copy of the original.
File transmission
If the documents are to be transmitted within a system, via a network or

external, wide-area communications system to the storage device, then
procedures should be defined to ensure that changes cannot occur during the
transmission either accidentally or deliberately.
When a data file is transmitted to another party, the original should be stored
on the system. Equally, a data file received from an external source must be
saved on the system and the time and date of any data file should be stored as
part of the audit trail.
PART 5, SECTION 6
The Code goes on to explain the benefits of this in questions of authenticity

where, for example, the original file purports to have been saved at a later date
than the copy.
Information retention and destruction
The procedure for retention and/or destruction of originals must be properly

documented. For the sake of the business, it should not be possible to
destroy an original before it is confirmed it has been safely stored.
In some cases the original document will need to be retained, for example,
where the original is of poor quality or holds annotations which cannot be
scanned, or where fraud is suspected. In each case, the procedures should deal
with this.
Backup and system recovery
Backup facilities on the system should allow for automatic backup and
verification of all data files and associated information, including audit trails
at regular intervals. Procedures used in these systems should be documented
in the procedures manual, including the requirement for secure off-site storage
of the backups. There should also be a record kept in the system audit trail of
all backup activity, which should include details of any problems incurred
during the procedure.
It is important to ensure that the files can be read even when the original
hardware is no longer available.
Where backup data is used to recover from a system failure, there should be
documented procedures to ensure that data file integrity has not been
compromised. It is therefore important that the backup media be tested
regularly.
System maintenance
Obviously, the hardware and the software should be operating normally. It is

necessary, therefore, to have complete maintenance records, including records
of any down-time and reasons for faults and to undertake routine preventative
maintenance.
Under certain circumstances, it will be necessary to rescan documents

following the identification of a fault (see Information retention and
destruction).
Where document scanning is used, the procedures for checking of quality

should be followed after maintenance procedures have been completed.
PART 5, SECTION 6
Security and protection
The system should operate within the guidelines provided in BS 7799-1:2000,

although this is not now referred to directly in the Code. The procedures
implemented should be described in the procedures manual and should
include the following:
• appropriate security controls, e.g. limited access, encryption keys and

digital signatures;
• mixed media may not be in write-once mode. This should be assessed;
• removable media must be handled and stored as recommended;
• data file transfers must be strictly controlled;
• all media must be kept secure, with at least one backup off site;
• user facilities may be in open areas, but the central system should be in
a secure area;
• virus protection should be installed;
• hardware must be protected against power failure; and
• all information on status of documents, maintenance and quality control

and audit trails should be kept in a secure manner and be available for
inspection and audit.
Use of contracted services
Having gone to the trouble of defining an internal procedure which complies

with the Code, it would be unacceptable if the business used outside services
which afforded any less protection. The procedures manual should contain all
information relevant to the service provider; copies of their procedures and
audit records may be necessary.
Details of the procedures used and the transfer of documents and/or media
from the client to the service provider and from the service provider to the
client should be documented in the procedures manual.
The Code recommends that the contract between the supplier and the client
should set out details of the extent to which compliance is claimed.
In addition, where the supplier also performs an indexing service, the client
should check that the required accuracy is being achieved.
If the documents have to be transported physically, there should be a

procedure for despatch and receipt, including checking.
The Code also describes the procedure where a copy is stored with a trusted
third party as a secure means of detecting tampering with data files.
PART 5, SECTION 6
Workflow
This process allows a number of individuals to review a document at various

stages. This record of review needs to be stored in conjunction with the
original document as a complete record.
Some workflow applications link documents by virtue of changes to the index

information. The creation and destruction of these links should be recorded in
the audit trail of each document affected.
The Code requires operational details such as flow diagrams to be

documented, as well as the process definition classification and the process
definition life cycle.
Self-modifying files
In some cases, document files contain automatic functions such as date entries
which change to the current date when the file is opened. This means that the
file cannot be ‘frozen’ in the sense required by the Code. Either the automatic
functions need to be disabled before storing or there need to be procedures
which define how the files are to be stored and retrieved to ensure that
authenticated copies of the original can be produced.
Date and time stamps
Of key importance is an accurate record of the date and time and, to this end,
it is essential that the system is maintained with the correct information.
Regular checking of system clocks and changes to reflect seasonal changes,
i.e. ‘summer time’ must be incorporated into the procedures. Only authorised
personnel should be able to change the system clocks.
Voice, audio and video data
The procedures should define how voice, audio and video data are to be dealt
with. Where the recording is not under the control of the information
management system, the recording system must be up to the same standard as
that required by the Code for the information management system. There also
needs to be a procedure dealing with authentication of the source data.
Version control
If changes are allowed to stored data files, then this must be in accordance
with a documented procedure which includes any requirement to keep
previous versions.
The information management system should include version control and

superseded versions should be kept for at least as long as the final version.
The Code then makes the point that all changes to procedures and processes
should be implemented in accordance with an approved change control
procedure.
PART 5, SECTION 6
Maintenance of documentation
Procedures and records should be maintained and stored in the same way as
information generally.
5.6.7.5 ENABLING TECHNOLOGIES
General
For a new system, the user should ensure that the system has been designed in
accordance with the requirements of the Code. For systems already in
operation, documents stored on the system prior to the introduction of the
Code cannot be considered as conforming to it unless controls which meet the
requirements of the Code were in place from the time of storing the
documents.
This section of the Code describes technologies and how they should be
utilised and controlled. The following elements need to be addressed to
achieve compliance with the Code.
Systems description manual
A list of hardware and software should be compiled, with information on how

they interact, including system configuration and details of changes to the
system.
Storage media and sub-system considerations
Access to information must be controlled with ‘read only’ access or ‘read

write’ access where appropriate and it should be possible to identify any
changes to the document or data by those with ‘write’ access. It is also
important to prevent modifications being made without detection.
Access levels
The systems description manual must define the levels of access available, as
follows:
• system manager;
• system administrator;
• system maintenance;
• authors or originators;
• information storage and indexing; and
• information retrieval.
PART 5, SECTION 6
Only authorised members of staff may have access and such authority may
only be given after suitable training.
System integrity checks
The system should ensure that the integrity of data files is maintained
throughout the system, including during the transfer of this data to and from
the storage media.
An additional element in the Code deals with digital and electronic signatures
and the ability to verify the true identity of a person prior to their being
enrolled as document signatory.
Compound documents
Where an image such as a CAD (computer-aided design) drawing or a linked

spreadsheet is stored, the parts may be separated electronically. The system
should ensure that they are stored in the same location and can be retrieved as
a complete facsimile of the image.
Image processing
There are a number of ways in which an image may be processed to improve

its appearance. These may include the following:
• deskew;
• despeckle;
• black border removal;
• background clean up;
• noise removal; and
• forms removal.
These should only be used with extreme care and should be fully documented.
It is safer not to allow image processing, as any interference could invalidate
not only that document but any other which may possibly have been adjusted.
Compression techniques
Two type of compression technique are recognised:
(1) lossy; and
(2) lossless.
PART 5, SECTION 6
Lossy should not be used on primarily text files, as the compressed image will
lose certain details which may be replaced by artificially generated data when
it is reproduced.
In general, it is safest not to use lossy compression at all, but the Code sets out
the requirements should this method be used.
Form overlays and form removal
Where the system software removes a fixed overlay from the digitized image,
leaving only the variable data, a record should be automatically generated to
record the removal and a copy of the template should also be stored on the
same medium.
Environmental considerations
The hardware manufacturer may well have its own recommendations for the
operational environment. These should be acknowledged and addressed in the
system manual. Handling and storage procedures should also be described, as
well as the procedure for checking the storage media regularly.
Data file migration
With changes in technology, it is almost inevitable that the hardware and/or

software will cease to be supported. The business should have procedures in
place to handle the transfer of files at the appropriate time.
Information deletion and/or expungement
It is essential that the system is able to delete or expunge documents as

described in the Data Protection Act 1998. This deletion can be accomplished
by the removal of index entries to the relevant documents. It is also essential
to be able to amend or remove incorrect or irrelevant data typically held in
contravention of the Data Protection Act. Such correction may be
accomplished by deleting the original document and substituting the corrected
document or by using masks.
In any event, the procedure for doing this must be documented.
Audit trails
To be able to use the stored information as evidence, it may be necessary to

provide supporting information on the history of the document or data,
including date of creation and/or storage, movements from one medium to
another and evidence of the controlled operation of the system.
This information will be the subject of the audit trails and the records kept
should be sufficient to provide a full historical record of all significant events
associated with the stored information, and the information management
system.
PART 5, SECTION 6
It is important that the audit trail be agreed with all stakeholders who might
need to refer to the information, including the user, audit and legal functions.
The Code recommends that, as far as possible, audit trail data should be
generated automatically and that where this does not occur, there should be
adequate procedures in place and that, in either case, the date and time should
be recorded contemporaneously.
Audit trail data should also be stored as a separate entity on the system. It
should be kept for at least as long as the information to which it refers and
should be accessible. In particular, it may be necessary to make it easily
accessible to third parties who have little or no experience in the use of the
system.
The audit trail information should be treated as having the same level of
security as the information to which it pertains with secure backup copies
being kept. If paper copies are kept then the procedures should define how
frequently they should be removed and stored.
The procedures for data migration should be defined and the audit trail should
include this information.
Part of the audit trail should include the records of information capture, batch
information, indexing, change control, destruction information and workflow.
G 5.6.8 Conclusion
The Code of Practice provides a sound basis for the use of electronic
document and information management systems which, if followed, should
mean that the information can be used as evidence in the civil courts.
Even without this requirement, it defines the best-practice approach for

electronic storage generally.
With the enactment of the Human Rights Act 1998 and the Data Protection
Act 1998, it is expected that the pressure will continue to increase for a formal
documented statement on legal admissibility. In time, this is likely to feature
in the Civil Evidence Act, either by reference to the Code or to some European
wide standard.
The danger, however, is that technology will continue to outpace any attempt
at legislation.
Appendix A: Specimen form for recording scanning information

The following files are authorised for scanning
Project number Project
Confirmation of scanning
The above files have been scanned by
................................................................................ DIP Operator/Archivist
Date
Indexing information
Project number File Folder reference Commentary
Confirmation of acceptance
The above scanned files have been checked, the images are true and complete
representations of the documents scanned.
The batch contains ............... (No) images and consists of ................ (No) documents.
Signed …..............……........... DIP Operator/Archivist Disk refererence…....………...
Optical disk backup confirmed by IT Date
........................................................ …………………...................
Confirmation of destruction
The above original documents may now be destroyed
Signed ……………………………........................................................................ Managing Partner
The Surveyors’ Construction Handbook Part 5, Section 6 Effective from 12/03 Page 1
Appendix A (12/03)
Appendix B: Specimen form for recording retrieval

Request for certified copies
The following files/documents are required as certified copies
Project number Project Documents or drawings
Request authorised by Group Leader
……………………………………...........................................
Authorisation to make certified copies
The DIP Operator/Archivist/CAD Manager is authorised to make certified copies of the

above
Signed …………………………….................................................... Managing Partner
Files/Documents/Drawings retrieved
The above files/documents/drawings have been retrieved from disk/tape reference:
Retrieved by …………………………................................................................ Name
Date
Indexing information
Project number File Folder reference Commentary
Certificate of authenticity
I ……………………............................. being the DIP Operator/Archivist/CAD Manager

employed by …………………….............................., certify that the attached
files/documents are a true reproduction of the originals which were archived in
accordance with the procedures set out in our user manual.
Signed ………………………………………..
Date ………………………………….............
Appendix B (12/03)
Appendix C: References
Further and more detailed information can be obtained from the British Standards
Institution (BSI). Publications include:
BSI-DISC PD 0005 Information Service Management
BSI-DISC PD 0008:1996 A Code of Practice for Legal Admissibility of Information

Stored on Electronic Document Management Systems (Edition 1)
BSI-DISC PD 0008:1999 A Code of Practice for Legal Admissibility and Evidential

Weight of Information Stored Electronically
BSI-DISC PD 0009 Compliance Workbook
BSI-DISC PD 0010 Principles of Good Practice for Information Management
BSI-DISC PD 3000 Information Security Management: An Introduction
BSI-DISC PD 3001 Preparing for BS 7799 Certification
BSI-DISC PD 3002 Guide to BS 7799 Risk Assessment and Risk Management
BSI-DISC PD 3003 Are you ready for a BS 7799 Audit?
BSI-DISC PD 3004 Guide to BS 7799 Auditing
BS 4783 Parts 1 to 8 Storage, Transportation and Maintenance of Media used in Data

Processing and Information Storage
BS 7083:1996 Guide to the Accommodation and Operating Environment for

Information Technology Equipment
BS 7799-1:2000 Information Technology – A Code of Practice for Information

Security Management
BS EN ISO 9000 Quality Management and Quality Assurance Standards
BSI publications are available from Customer Services, Sales Department,

389 Chiswick High Road, London, W4 4AL. Tel: 020 8996 7000 Fax: 020 8996 7001
Web: www.bsi-global.com
The following publications are available from The Stationery Office, 123 Kingsway,
London WC1. Tel: 0870 600 5522 Fax: 0870 600 5533 Web: www.tso.co.uk
• Civil Evidence Act 1995
• Civil Evidence (Scotland) Act 1968
• Police and Criminal Evidence Act 1984
• Criminal Justice Act 1988
Appendix C (12/03)
• Evidence Act (Northern Ireland) 1939
• Civil Evidence Act (Northern Ireland) 1971
• Statute Law Revision Act (Northern Ireland) 1973
• Police and Criminal Evidence (Northern Ireland) Order 1989
• Criminal Justice (Evidence) (Northern Ireland) Order 1988
Data Protection Registrar, Data Protection Guidance for Users of Document Image
Processing Systems, 1995
Available from Information Commissioner, Wycliffe House, Water Lane, Wilmslow,

Cheshire SK9 5AF. Tel: 01625 545700 Fax: 01625 524510
Page 2 Part 5, Section 6 Effective from 12/03 The Surveyors’ Construction Handbook
Appendix C (12/03)
INDEX
Note: references are to paragraphs. Figures and tables are not included
A Australian ruling 4.1.6.4(k)

ACA Standard Form of Contract for Project Partnering PPC authority, delegated 3.1.4.7(c); Part 2 Section 4:
2000 4.1.2.10A Appendix A (Intro)
acceleration 4.2.6.1(a); 4.2.6.2; 4.2.6.3 automatic practical completion 4.1.6.4(f)
acceptance certificates 4.1.2.18(c) average risk premium discount rate 2.2.2.3(c)
accidents 5.2.1
ACE see Association of Consulting Engineers B
activity schedules 2.3.3.2; 4.4.10.5; balancing adjustment 2.2.3.4(e); 2.2.3.6
Part 4 Section 4: Appendix C balancing allowance 2.2.3.4(f); Part 2 Section 2:
addendums 3.2.4.6 Appendix A6, D8
adjudication 4.1(Intro); 4.4.1 balancing charge Part 2 Section 2: Appendix C6, D8
administration cost Part 4 Section 2: Appendix A1 BCIS (Building Cost Information Service) 2.3; 5.4
admissible items 4.2.4.2; 4.2.5; Part 4 Section 2: BCIS Bulletin Service 5.4.2; 5.4.3; 5.4.4.2
Appendix C3, D BCIS Elements for Design and Build 2.4.4.9; Part 2
advance payments 4.4.7.10(d) Section 4: Appendix A (Intro)
agent see employer’s agent BCIS Five Year Forecast 5.4.3.4
all–risks insurance 4.1.3; Part 4 Section 2: Appendix A10 BCIS Online 5.4.2; 5.4.3
all risks yield 2.2.2.3(d) BCIS Online Briefing 5.4.3.4
allowances see tax allowances BCIS Quarterly Review 5.4.4.1
alteration costs Part 2 Section 2: Appendix C4 BCIS standard elements 2.3.2.2; 2.3.3.2; Part 2 Section 3:
alternative design solutions Part 2 Section 1: Appendix C Appendix A
amounts previously certified 4.4.7.10(c) BCIS Standard Form of Cost Analysis 1.2.7.6; 2.3 (Intro);
analyses 2.1.7.2(b); 5.4.6 2.3.2.4; Part 2 Section 4: Appendix B2.5
analysis 1.2.7; 3.1.2.11; 5.4.3.1 benchmarking 2.6.3.2; 2.6.3.4; 5.5.1; 5.5.4
see also risk analysis best-fit solution 3.1
analysis checklist 3.1.3.4 bills of quantities see quantities
Appendix to the Form of Tender 4.1.2.11(b) Blue Form 4.1.2.15
application for reimbursement, written 4.2.3.1(c); 4.2.3.3 BMI (Building Maintenance Information) 5.5
appointment documents 2.5(Intro) BMI Building Maintenance Price Book 5.5.3
approval processes 3.1.4.14(c) BMI News 5.5.5
arbitration 4.1.2.5(c); 4.2.1.6 BMI Quarterly Cost Briefing 5.5.2
arbitrator 4.1.2.11(c); 4.2.1.5 bond/parent company guarantee 3.2.4.3
architect as certifier 4.4(Intro); 4.4.2; 4.4.8.1; 4.4.8.2 briefing 1.1.2.2; 2.5.4.4; 5.4.3.4
architect as contract administrator 4.2(Intro); 4.4.2.3; Brundtland definition 2.6 (Intro)
4.4.5.2 BS 7799: 1995 5.6.7.1
architect’s information 2.1.3.3(c); 2.1.7.3(b) BS 7799-1: 2000 5.6.6; 5.6.7.1; 5.6.7.3
architect’s instruction 4.4.7.3(iii)(iv) BS EN ISO 9001 5.6 (Intro)
Architect’s List 4.1.2.10(c) BSRIA Allocation of Design Responsibilities for Building
ascertained damages 4.1.4.3(e) Engineering Services 3.2.1.4; 3.2.1.5(b)
ascertainment 4.2 budget 2.1; 2.1.1.1–2.1.1.3; 2.1.2.1; 2.1.3; 2.1.6.2
application 4.2.4.10 see also time budget
costs versus prices 4.2.4.8 budget format Part 2 Section 1: Appendix B
definition of 4.2(Intro); 4.2.2.3 budget preparation methods 2.1.3.4; 2.3.1.2
documentation for 4.2.3.4 budgeting 5.5.1
global or individual 4.2.4.9 build insurance 4.1.4.2(b)
judgement in 4.2.2.3; 4.2.4.5 buildability 3.1.2.16
responsibility for 4.2.4.1–4.2.4.2 builder’s work 2.1.5.4(b); Part 2 Section 3: Appendix A5N,
Association of Consulting Engineers 3.2(Intro) A5O
conditions of engagement 3.2.1.5; 3.2.2.6(a); 3.2.2.7(a) Building Cost Information Service see BCIS
assumptions Part 2 Section 1: Appendix C building life 2.2.1.8; 2.2.2(Intro); 2.2.2.1; 2.2.5.1; 2.2.5.6(c);
attendances 3.2.4.3 Part 2 Section 2: Appendix B1, B4
audit trail 4.3.2.4; 5.6.7.4; 5.6.7.5 Building Occupancy Information see BMI
The Surveyors’ Construction Handbook Index (12/03) Page 1

building options, life cycle costing 2.2.2(Intro); submissions, steps when considering Part 4 Section 2:
2.2.5.6 Appendix E
building project Part 2 Section 4: time 3.1.3.3
Appendix B2.2, B2.4; 3.1.1.2–3.1.1.3; 4.2 choice (design) 3.2.1.2
Building Research Establishment 2.2.1.6; 2.6.3.2 CITB Levy 5.4.7
building services installations 3.2.2.6 civil engineering 2.1
building services procurement 3.2 Civil Evidence Act 1995 5.6.1; 5.6.6; 5.6.8
conditions of engagement 3.2.1.5 cladding Part 4 Section 1: Appendix A6
contractor 3.2.3 clerk of works 2.4.3.4; 3.1.4.18(b); 4.2.5.4(b); Part 4
design coordination 3.2.2 Section 2: Appendix B2.1; 4.4.5.4; 5.2.1
design-only engineer 3.2.1.5 client 1.1; 2.4(Intro); 2.4.4.2; 2.4.4.4; 2.4.4.5; 3.2(Intro); 5.2.1
design responsiblities 3.2.1.4; 3.2.1.5 client and consultants 2.5(Intro); 2.5.1; 2.5.4.2
designer 3.2.1 client and property costs 2.2.1.1
options, procurement routes 3.2.3.3 client changes 3.1.4.19(b)
tender documents 3.2.4 client context, life cycle costing 2.2.1
tendering 3.2.3.4 client needs 3.1
Building Services Research Information Association see client reserve 3.1.4.13(m)
BSRIA client resources 3.1.2.14(b)
building standards and requirements 2.4.4.4 client satisfaction 3.1; 3.1.2.7
building surveyor’s information 2.1.3.3(c); 2.1.4.3(c); client systems 3.1.4.11
2.1.5.3(c); 2.1.7.3(b) client uniqueness 3.1; 3.1.2.7
building sustainability 2.2.1.8; 2.6.5 client’s brief 1.2(Intro); 2.1.1.2; 2.4.4.7; 2.5.4.3(a)
built environment group 5.3 client’s information 2.1.3.3(b)(f); 2.1.4.3(a)(f); 2.1.5.3(a)(g);
business rates 2.2.3.7 2.1.7.3(a)(d)
client’s input 2.4.4.6
C client’s involvement 3.1; 3.1.1
cables 2.1.5.4(b) client’s objectives 1.1.1; 1.2(Intro); 1.2.1; 2.4.4.4; 2.4.4.6;
capital allowances 2.2.3(Intro); 2.2.3.2; 2.2.3.3; 2.2.3.4; 3.1
2.2.5.5(f); Part 2 Section 2: Appendix D4 clients requirements 1.2.1.2; 1.2.6.2; 1.2.7; 2.5.4.2
worked example 2.2.3.7; 2.2.5.6(h) client’s responsibilities 1.1.5; 2.4.4.5; 2.4.4.6; 3.1.1.4; 3.1.1.7
capital costs 2.2.(Intro); 2.2.2.4(a); 2.2.3(Intro); 2.2.3.2; client’s role 1.1.4; 1.1.6; 3.1.1
2.2.3.3; 2.2.5.1; 2.2.5.3; 2.2.5.5(b)(f); 2.2.5.6; Part 2 Code of Practice (DISC PD 0008:1999) 5.6.1; 5.6.5; 5.6.6;
Section 2: Appendix C1 5.6.7; 5.6.8
capital expenditure 2.2.3.1; 2.2.3.3; 2.2.5.5(f); Part 2 duty of care 5.6.7.3
Section 2: Appendix D1, D3, D6 enabling technologies 5.6.7.5
capital income 2.2.5.5(d) format 5.6.7
CDM (construction (design and management)) procedures and processes 5.6.7.4
information 5.2 procedures manual 5.6.7.4
regulations 2.2.1.4; Part 2 Section 4: Appendix A1; scope and purpose 5.6.7.1
2.5.3.1; 3.2.2.7(d); Part 4 Section 1: Appendix A10 Code of Practice for the Selection of Sub-Contractors
certificates see final certificates; interim certificates; 3.2.3.3(i); 3.2.3.4(f)
practical completion Codes of Practice 3.1.4.9(c); Part 3 Section 1: Appendix A;
certification of completion 4.1.1 4.1.4
change, avoidance of 3.1.4.13(g); 3.1.4.19(a) Codes of Procedure 2.4.4.9; Part 2 Section 4:
change control overview 3.1.4.19 Appendix A (Intro)
changes 3.1.2.14(d) collateral contracts 3.1.1.16(b)
after contract let 3.1.4.19(h) commissioning 3.1.1.17
late 3.1.4.13 common inheritance 2.6 (Intro)
prior to construction 3.1.4.19(g) competitive tenders 3.1.4.8(e)
see also client changes; cost plan; tender documents completed part of the works 4.1.2.17(d)
checklists completion
analysis 3.1.2.13 date see completion date
contractor’s proposal Part 2 Section 4: Appendix B2 sectional 4.1.6.5(c)
cost 3.1.4.3 staged 4.1.6.4(l)
employer’s requirement Part 2 Section 4: Appendix B2 see also perfect completion; two-stage completion
items for which loss and/or expense allowed Part 4 completion date 2.1.4.6; 4.1.2.16(c); 4.2.3.2; 4.2.5.13; 4.5.3;
Section 2: Appendix D 4.5.5; 4.5.6
procurement selection 3.1.3.2–3.1.3.4 completion distinct from practical completion 4.1.5
risk 4.3.3.3(b)(iii) completion for all practical purposes 4.1.5
Page 2 Index (12/03) The Surveyors’ Construction Handbook

completion process 2.5.4.13; 4.1.2.18(c) 4.2.5.13; 4.2.5.15; Part 4 Section 2: Appendix C4;
completion time 3.1.4.14(c) 4.4.4.1; 4.4.7.3(i)
see also extension of time see also contracts
completion to time 4.1.5.2 contractor 4.4.2.3; 5.2
computer aided design (CAD) 3.1.4.12(f); 3.2.2.4(f) application 4.2.4.10
computer software, risk analysis 4.3.3.4(b) building services 3.2(Intro); 3.2.3
computerised documentation coordination 3.2.2.4(h)
authenticity 5.6.3; 5.6.5; 5.6.6 delay, notification of 4.5.4
photocopies, microfilm and image processing 5.6.4 determination of employment 4.4.9.1
scanning 5.6.3(3); 5.6.7.4 interim payments to 4.4(intro); 4.4.3
concurrent engineering 3.2.3.3(d) loss and/or expense 4.2(Intro); 4.2.1.4; 4.2.1.11; 4.2.1.12;
conflict, dealing with 1.1.5.4; 2.4.4.1; 3.1.1.7(d) 4.2.1.15; 4.2.2.1; 4.2.3.1; 4.2.3.2; 4.2.3.3; 4.2.3.4;
4.2.3.6; 4.2.4.5; 4.2.4.8; 4.2.6.4; Part 4 Section 2:
Constructing the Team see Latham Report
Appendix C1
construction 3.1.2.8(a)
performance monitoring 2.4.3.5
construction administration see construction management
responsibilities of 2.4.4.8
construction completion report 4.1.2.18(c)
selection of 3.1.4.5(d)
construction costs 2.2.1.3
submissions 4.2.4.3; Part 4 Section 2: Appendix E;
construction (design and management) see CDM 4.4.6.2; 4.4.6.3(iv)
construction industry 2.6 (Intro); 2.6.3; 2.6.3.4; 2.6.6 contractor’s initiative 4.1.4
construction management 3.1.1.14; 3.1.1.16; 3.1.2.5; Part 3 Contractor’s List 4.1.2.10(c)
Section 1: Appendix A3; 3.2.3.3(c) contractor’s price statement 4.4.7.3(iii)
see also extension of time contractor’s proposals 2.3.3.1(b); 2.4.3.2; 2.4.4; Part 2
Construction Task Force 1.2(Intro) Section 4: Appendix B
construction time 3.1.2.14(g) contracts
constructors, appointment of 3.1.4.9 breach of 4.2.1.1; 4.2.1.3
consultants 2.4.4.8; 3.1.1.16; 3.1.4.9; 4.4.5.2 building services 3.2.2.4(b-d); 3.2.2.7
appointment of 1.1.7; 3.1.4.8 clause 13A 4.4.7.3(iii)(iv)
lead see lead consultant range of 3.1.2.7
responsibilities of 2.4.4.8; 2.5.4.3(b) risk allocation 3.1.2.2
consultants’ information 2.1.3.3(h); 2.1.4.3(e)(h); standard 3.1; 3.1.2.7; 3.1.4.10; 4.1(Intro); 4.1.1
2.1.5.3(e)(h); 2.1.7.3(b)(f) see also design and build contract; extension of time; and
consultation papers 5.3.1 individually, by title
consulting engineers 2.1.5.4(b) contractual arrangements 3.1.4.10
contingency Part 2 Section 3: Appendix A8; 3.1.4.13(d); control document 2.1.5.2
3.1.4.9(f); 4.3.2.3 Control in Trade of Endangered Species (CITES) 2.6.3
see also time contingency controls 3.1.4.11
contingency allowance 1.1.5.3(e) conversion 2.1
contingency funds 3.1.4.13(m) coordination
contract administration 5.5.1 contractor 3.2.2.4(h)
design 3.2.2; 3.2.3.5(c)
contract administrator 2.4(Intro); 4.1.4; 4.2(Intro);
installations 3.2.2.1
4.2.1.9; 4.2.3.1(c); 4.2.3.2; 4.2.3.3; 4.2.3.4; 4.2.4.1;
Corporation Tax 2.2.3.4(a)(b)(c)(f)
4.2.4.2; 4.2.4.3; 4.2.4.10; Part 4 Section 2:
cost categories Part 2 Section 2: Appendix C
Appendix B2; 4.4.2; 4.5
cost checking 2.1.6; 3.1.4.13(h)
contract documents 2.4.2; Part 2 Section 4: Appendix B1;
cost checklist 3.1.3.3
3.1.1.4; Part 3 Section 1: Appendix A; Part 4
cost comparison (worked example) 2.2.5.5(h)
Section 1: Appendix A1
cost consultant 1.1.7
contract duration
cost control 2.5.2.1; 3.1.4.11(d)
role of employer’s agent Part 2 Section 4: Appendix A3 cost control overview 3.1.4.13
contract implementation and administration 3.1.1.16 cost criterion 3.1.2.8(b)
contract stages (design and build) cost estimates 1.1.5.3(d)
duration Part 2 Section 4: Appendix A3 cost index 5.4.12; 5.5.2
post-contract Part 2 Section 4: Appendix A4 cost information Part 2 Section 1: Appendix A;
pre-contract Part 2 Section 4: Appendix A2 5.5.1–5.5.2; 5.4
contract sum 2.1.7.2(a); 4.1.3 cost issues 3.1.2.14(e)
analysis 2.3.3.1(c)(d)(e); 2.4.4 cost limit 2.1.1.3(a)
contract switch Part 3 Section 1: Appendix A6(b) cost management, pre-contract 2.1; 2.1.1
contract terms and conditions 3.1.2.7; 4.2(Intro); 3.2.4.3, cost models 2.1.4.4
4.2.1.11; 4.2.1.12; 4.2.3.1(c)(d); 4.2.3.3; 4.2.4.2; life cycle (worked examples) 2.2.5

cost plan 3.1.4.13(h) density of vertical division Part 2 Section 1: Appendix C
changes to 2.1.4.7; 2.1.5.6 Department of Environment, Trade and the Regions
format Part 2 Section 1: Appendix B (DETR) 2.6.6; Part 2 Section 6: Appendix B
modification of 2.1.6.4 depreciation 2.2.3(Intro); 2.2.3.2; 2.2.3.5(a); Part 2
outline proposals stage 2.1.4 Section 2: Appendix D3, D6, D7, D8
scheme design stage 2.1.5 design 1.1.4.4; 2.3.1.2; 2.6.3.4; 2.6.5; 2.6.6; 2.6.7; 3.1.4.18
cost planning, pre-contract 2.1; 2.1.1 amendments 2.5.4.3(e)
cost reports 2.1.3.7; 3.1.4.13(j) client-led 2.3.3.1(d)
cost risk 3.1.2.9–3.1.2.11 contractor-led 2.3.3.1(d)
cost studies, preliminary 2.1.2 functional analysis of 1.2.7; Part 1 Section 2:
cost targets 2.1.4.2; 2.1.5.1–2.1.5.2 Appendix A
costs-in-use 2.1.1.2(d); 2.2.1.8; 3.1.4.13(e) process 3.2.1.2
costing setting of 3.1.1.7
calculation 2.2.2; Part 2 Section 2: Appendix A3 Design and Build 2.1; 2.3.3.1; 2.4; 3.1.1.14; 3.1.1.16; 3.1.2.5;
see also life cycle costing 3.1.2.11; Part 3 Section 1: Appendix A6
costs background 2.4.1
categories of 2.2.2.4 Code of Procedure for Selective Tendering 2.4.4.10
excess 2.1.6.4 contract documentation 2.4.2; Part 2 Section 4:
indirect 4.2.3.1(b) Appendix B1
costs versus prices 4.2.4.8 design and build contract
criteria contractor’s proposals 2.4.3.2; 2.4.4; Part 2 Section 4:
identification of 3.1 Appendix B
primary 3.1.2.8 employer’s requirements 2.4.3.2; 2.4.4
services, additional 2.4.3; Part 2 Section 4: Appendix A5
D services, building 3.2.3.3(c)
damage to works 4.1.2.17(d) surveyors as employer’s agent 2.4(Intro)
damages 4.2.1.1; 4.2.1.2; 4.2.1.3; 4.2.1.5; 4.4.9.2 variants 2.4.5
data see also contract stages (design and build)
electronic 4.4.10.6; 5.6 design and construction period 2.1.4.6; 2.4.4.4
presentation 2.2.5.4 design and manage 3.1.1.14; 3.1.2.5; Part 3 Section 1:
risk 4.3.3.3(b)(vi) Appendix A5
sources for costing 2.2.2.4; 2.2.4 design brief 1.2.12.3; 3.1.4.12
types of 2.2.4 design build fund and operate (DBFO) 2.4.5.6
Data Protection Act 1998 5.6.7.5; 5.6.8 design coordination 3.2.2; 3.2.3.5(c)
dayworks 4.4.5.1(ii); 4.4.5.2(ii); 4.4.7.4; 5.4.3.6; 5.4.4.3 design failure 3.1.2.10(b)
dayworks preliminaries 5.4.7; 5.4.10 design (frozen) 3.1.4.14(f); 3.1.4.19(d)
de minimus rule 4.1.5; 4.1.5.1 design input, initial Part 2: Section 4: Appendix A1
decision-making process 1.1.5.5; 1.2.3.1; 3.1.1.7(e); 4.3.2.4 design-only engineer 3.2.1.5
decoration works Part 4 Section 1: Appendix A7 design options, life cycle costing (worked examples)
deductions 4.4.7.10 2.2.5.1; 2.2.5.2
defects 4.1(Intro) design overview 3.1.4.12
outstanding 4.1.1; 4.1.2.11(c); 4.1.2.14(c); 4.1.4.1(c); design performance checklist 3.1.3.3
4.1.4.2(a) design process 2.1.1.2; 2.5.2.4; 2.5.3.3
remedying 4.1.5.3 design programme 1.2.3.3
see also latent defects; patent defects; schedule of design proposals 2.1.6; 2.4.3.7
defects; work not properly executed design re-evaluation 3.2.2.6(a)
defects correction 4.1.2.18(c) design requirements 3.2.2.6(a)
defects correction period 4.1.2.11(d); 4.1.5 design responsibilities 3.2.1.4; 3.2.1.5; 3.2.3.3(d); 3.2.3.5(f);
defects liability 4.1.2; 4.1.2.6(c) 3.2.4.2
defects liability period 4.1.2.18(c); 4.1.3; 4.1.4.3(e); design risk 3.1.2.11(b)
4.1.5.1 design solutions 1.2(Intro); 1.2.2.1; 1.2.2.3; 1.2.3.1; 1.2.6.3;
definition of the project 1.1.1.7 1.2.8.1; 1.2.9; 1.2.10.1(b)
delay 3.1.1.9(f); 4.1.5.2; 4.1.6.2(b); 4.2.1.4; 4.2.1.7(b); design stages 1.2.3.1; 2.1.1.4; 2.1.5; 2.5.4.6; 2.5.4.7;
4.2.2.2; 4.2.3.1(f); 4.2.3.3(c); 4.2.3.5; 4.2.4.3; 3.2.3.2(b)(c)
4.2.4.5; 4.2.5.4(c)(e); 4.2.5.7; 4.2.5.11; 4.2.5.13; design team 1.1.2.2; 1.1.7; 1.2(Intro); 1.2.12.2; 3.1.4.8;
Part 4 Section 2: Appendix B, C4; 4.5.4; 4.8.8 3.1.4.5(c)
see also disruption design times 3.1.2.14(h)
demolish and rebuild, costing 2.2.5.6 designer 2.4.6.2; 2.6.4.1; 5.2
demolition costs Part 2 Section 2: Appendix A4 building services 3.2.1.3

designer’s information 2.1.3.3(c)(g); 2.1.4.3(b)(g); elements for buildings 2.3(Intro); 2.3.1
2.1.5.3(b)(h); 2.1.7.3(b)(e) elements for design and build 2.4.4.9; Part 2 Section 4:
develop and construct 2.4.5.3; 3.1.2.5; Part 3 Section 1: Appendix A(Intro)
Appendix A6 employer 2.4(Intro); 4.4.2.3
developers 1.1.1.3 employer’s agent 2.4(Intro); 2.4.3; Part 2 Section 4:
developing the business case 3.1.1.9 Appendix A
development 2.6 (Intro); 2.6.1 Employer’s Representative 4.1.2.13(a)
economic 2.6 (Intro); 2.6.2 employer’s requirements 2.3.3.1(a); 2.4.3.2; 2.4.4; Part 2
digests 5.4.4.2; 5.5.5 Section 4: Appendix B; 4.4.4.2
direct, definition of 4.2.2.2 employer’s responsibilities 2.4.4.8; Part 2 Section 4:
DISC PD 0008 see Code of Practice (DISC PD 0008) Appendix B
discount rate 2.2.2(Intro); 2.2.2.2; 2.2.2.3; 2.2.2.4; 2.2.5.1; energy
2.2.5.2; 2.2.5.4; 2.2.5.5(e); 2.2.5.6(b) consumption 2.6.6
average risk premium 2.2.2.3(c) efficiency 2.2.1.6
no risk return 2.2.2.3(b)(d) embodied 2.6.3.3; 2.6.3.4; 2.6.6; Part 2 Section 6:
selection 2.2.2.3(e) Appendix A
test 2.2.2.3(a) taxation 2.6.3.4
discounting 2.2.2.2; 2.2.5(Intro); 2.2.5.1; 2.2.5.2 engineer 2.4.3.4; 4.1.2.11(b)(c); 4.1.2.14(b)
disposal costs 2.2.2.4(g) engineering services 2.1.5.4(b); 2.2.5.6(e)
disputes 4.1.2.5(c); 4.1.4; 4.1.4.1(b) entitlement 4.2.1.4; 4.2.1.5; 4.2.1.7; 4.2.1.10; 4.2.1.12;
disruption 4.1.5.3; 4.2.1.4; 4.2.1.7(b); 4.2.3.1(c); 4.2.3.5; 4.2.3; 4.2.4.5; 4.2.4.7; 4.2.4.8; 4.2.4.10; 4.2.5.11;
4.2.4.5; 4.2.5.4; Part 4 Section 2: Appendix B 4.2.5.13; 4.2.6.4
see also delay entrances Part 4 Section 1: Appendix A4
distribution Part 4 Section 2: Appendix A6 Envest 2.6.3.2; 2.6.3.3
document destruction/deletion 5.6.2; 5.6.7.5 environmental 2.6.2
document storage 5.6.5 damage 2.6.2
access procedures 5.6.6 impact 2.6.3.3; 3.1.4.12(a)
control set 5.6.3(2) estimating and estimates 3.1.4.13
duty of care 5.6.7.3 European Union legislation 3.1.4.9(k)
electronic 5.6 evaluation 1.2.13; 2.1.4.4; 4.2.1.11
enabling technologies 5.6.7.5 event 4.2.1.15; 4.2.3.2; 4.2.4.10; Part 4 Section 2
guidance Part 5 Section 6: Appendix C Appendix C3, C4
maintenance record 5.6.3(1) extension of time 4.5.3; 4.5.5; 4.5.7.1; 4.5.7.2
paper 5.6 (Intro) evidence see legal admissibility of documents
procedures 5.6.5; 5.6.6; 5.6.7.4 existing building 2.2.5.6(c)(d)(f)
retrieval 5.6.5; Part 5 Section 6: Appendix B expenditure
see also Code of Practice (DISC PD 0008); computerised excess 2.1.6.4
documentation see also capital expenditure; revenue expenditure
documents see appointment documents; expense in building projects 4.2
contract documents; document storage; information; extension of time 4.1.3; 4.1.6.2(b); 4.1.6.5(c); 4.2.3.2
reimbursement documents; tender documents administration 4.5.10
domestic rebuild 5.4.4.5 award, timing of 4.5.5; 4.5.6
Domestic Sub-contract 2002 Edition 4.1.2.3 concurrent delays 4.5.8
Domestic Sub-contract IN/SC 4.1.2.3(e) consequential entitlement 4.5.9
drawings 2.1.4.2; 2.1.5.4; 2.5.4.3(d); 3.1.4.12(f); 3.2.3.5(d); contract administrator’s role 4.5(Intro)
5.4.3.1 contract clauses 4.5.1
contractor’s obligations 4.5.4
E further reading Part 4 Section 5: Appendix A
early completion 4.1(Intro) GC Works Contract 4.5.12
early possession 4.1.2.17(c) ICE contract 4.5.11
effective management 3.1.1.4 JCT contract 4.5.2 – 4.5.4.10
electrical services see mechanical and electrical services Neutral Event 4.5.3; 4.5.5; 4.5.7.2
electronic data interchange 4.4.10.6 Relevant Event 4.5.3; 4.5.5; 4.5.7.1
electronic management system 5.6.7.1; 5.6.8 external works Part 2 Section 3: Appendix A6; Part 2
electronic document storage 5.6 Section 4: Appendix B2.5.6; Part 4 Section 1:
see also document storage Appendix A7
element unit quantities Part 2 Section 1: Appendix C
elemental cost analysis Part 2 Section 1: Appendix A2.1; F
2.3.2; 5.4.4.2 facilities management 5.5.5
elemental unit rate basis 2.1.5.4(a) factors beyond control 3.1.2.14(a)

faculty working groups and committees 5.3 holidays-with-pay 5.4.7
FAST see functional analysis systems technique (FAST) Hong Kong decision 4.1.5
fault free works 4.1.4; 4.1.4.2(b); 4.1.5 house rebuilding costs 5.4.4.5
FCEC Blue Form of Sub-contract 4.1.2.15 Housing Grants and Reconstruction Act 1996 4.4.2.4
feasibility studies 2.1.2; 2.5.4.4 housing sinking fund 2.2.5.4
fees 1.2.8.2; 3.1.4.8(f) Hudson’s approach 4.1.5.2
additional activities 2.5.3.2 human resources 3.1.4.4
lump sum 3.1.4.8(h) Human Rights Act 1998 5.6.8
percentage 3.1.4.8(g)
professional 2.4.6.1 I
time charge 3.1.4.8(i) ICE 6th Edition: Substantial Completion 4.1.2.12;
fencing and security Part 4 Section 2: Appendix A5 ICE 7th Edition: Substantial Completion 4.1.2.11; 4.1.5;
final account 4.4.1 4.1.6.4 (c)
final certificates 4.1(Intro); 4.1.2.18(c) ICE contracts, extension of time 4.5.11
Finance Acts 2.2.3.2; Part 2 Section 2: Appendix D3, D6 ICE Design and Construct Clause 48(3) 4.1.2.11(d);
4.1.2.13
finance charges 4.2.5.1; 4.2.5.14; 4.2.5.15
ICE Design and Construct Forms 4.1.2.13
financial resources 3.1.4.3
ICE Minor Works 4.1.2.14; 4.1.4.1(a); 4.1.5
financing charges 4.1.6.1
image processing of documents 5.6.4; 5.6.5; 5.6.7.4; 5.6.7.5
financing costs 2.2.2.4(b); Part 2 Section 2: Appendix C2
implementation 1.1.2.2; 3.1.2.7; 3.1.2.13; 3.1.4
finishes 4.1.4; Part 4 Section 1: Appendix A7
implementation of contract 3.1.1.16
internal Part 2 Section 3: Appendix A3; Part 2 Section 4:
implementation process 3.1; 3.1.1.13; 3.1.4
Appendix B2.5.3
inadmissible items 4.2.6
first year allowances 2.2.3.2; Part 2 Section 2: Appendix D6
incentives 2.2.3; Part 2 Section 2 Appendix D5, D6
fitting-out 3.1.1.18; 3.1.2.6; 4.1.1; 4.1.6.4(k)(l); 4.1.6.5(a)
independent client advice 1.1.2; 3.1.1.6
fittings and furnishings Part 2 Section 3: Appendix A4;
indices Part 2 Section 1: Appendix A2.3; 5.4.3.2
Part 2 Section 4: Appendix B2.5.4
Indices and Forecasts 5.4.4.2
fluctuation bonds 4.1(Intro)
industrial building Part 2 Section 2: Appendix D4
fluctuations 4.4.7.7; 4.4.7.10(a); 4.4.7.10(e); 4.4.9.3
inflation 2.1.3.6; 2.1.4.8; 2.1.5.7; 2.2.2.2; 3.1.4.13(k); 4.2.5.7
forecasting 5.5.1 information
Forest Stewardship Council 2.6.4.1; Part 2 Section 6: general, design and build contract Part 2 Section 4:
Appendix B Appendix B2.1
frost damage 4.1.3 preparation of 2.1.4.4; 2.1.5.5
function elements 1.2.7.5; 1.2.7.6; Part 1 Section 2: production of 2.5.4.8
Appendix B requirements 2.1.3.3; 2.1.4.3; 2.1.5.3; 2.1.7.3; Part 2
functional analysis systems technique (FAST) 1.2.7 Section 4: Appendix B2
FAST diagram 1.2.7; 1.2.8; 1.2.10.1(a) see also cost information; data; documents; records of costs
functional decomposition 1.2.7.5 information management policy 5.6.7.2
future generation 2.6 (Intro); 2.6.1; 2.6.2; 2.6.5 information security 5.6.7.1; 5.6.7.4
information services 5.2–5.5
G initial control document 1.1.3.2
Government Contracts GC/Works/1/Edition 2 4.1.2.18 initial design input
Government Contracts GC/Works/1/Edition 3 4.1.2.19 role of employer’s agent Part 2 Section 4: Appendix A1
Government Contracts GC/Works contracts, extension initial/first year allowances Part 2 Section 2: Appendix D6
of time 4.5.12 inspection 2.4.3.4; 3.1.4.18; 4.4.7.9
government works 4.1.2.17 installations Part 4 Section 1: Appendix A2.2
grants, regional development 2.2.3.2 specialist 3.2.2.6(b)
Green Book 4.1.2.18(a)(c) Institute of Chemical Engineers Forms (I Chem E) 4.1.2.18
gross floor area 2.1.6.3 instructions
Gross National Product (GNP) 2.6.2 late 4.2.1.7(b); 4.2.4.10(c); 4.2.5.4(e)
ground conditions 3.1.2.9(c) post-completion 4.1.6.2
insurance 3.1.2.9(f); Part 3 Section 1: Appendix A6(n);
H 3.2.4.3; 4.1.6.5(b); Part 4 Section 2: Appendix A10;
Handbook Introduction; 5.3.2 4.3.3.5(b); 4.4.7.9
handover 3.1.1.18; 4.1.2.16(a) insurance risks 4.1.4.3(d)
head office 4.2.5.1; 4.2.5.8; 4.2.5.9; 4.2.5.11; Part 4 interest rates 2.2.2.2; 2.2.2.3; 2.2.5.1; 2.2.5.3; 5.2.5.6
Section 2: Appendix A11, C interested parties 1.1.5.4
health and safety 2.2.1.4; 4.3.1; 5.2 inter-generational equality 2.6 (Intro); 2.6.1; 2.6.5; 2.6.7
see also safety interim certificates 4.2.4.6
hire charges 4.2.5.3(c) see also valuations for interim certificates

interim payments 2.3.3.1(e); 2.3.3.2; 4.4(Intro); 4.4.2.4; Latham Report 2.2.1.3
4.4.3 Latham Review Part 3 Section 1: Appendix A3(d)
interim valuations 2.3.3.1(e) lead consultant
see also valuations for interim certificates competency level 2.5.3.1; 2.5.3.3
Intermediate Form 4.1.2.3(e); 4.1.2.4; 4.1.2.7–4.1.2.8 fees and duties 2.5.3.2
investment appraisal 1.1.1.6 role of 2.5.1.2
investment tables (Parry’s) 2.2.5.7 schedule of duties 2.5.4
ISO 9000 3.1.4.18(c) surveyor as 2.5(Intro); 2.5.2
ISO 9001 5.6(Intro) legal admissibility of documents
items see admissable items; inadmissable items authenticity 5.6.3; 5.6.5; 5.6.6
Code of Practice 5.6.1
J electronic documentation 5.6(Intro); 5.6.1; 5.6.7.1;
JCT Forms of Building Contracts 5.6.8
Intermediate Form of Building Contract 1998 (IFC 99) photocopies, microfilm, image processing 5.6.4; 5.6.5;
4.1.2.4 5.6.7.4
NAM/SC Sub-Contract Conditions: for Sub–Contractors legal contracts 3.2.2.7
named under the IFC 84 4.1.2.3(e) liability
JCT 80 Standard Form of Building Contract at practical completion 4.1.3
4.2.1.9; 4.2.1.13; 4.2.3.1; 4.2.3.2; 4.2.3.4; design 3.1.2.10(c)
4.2.4.1; 4.2.4.6; 4.2.6.2; Part 4 Section 2: determination of 4.2(Intro)
Appendix D, E; 4.4.7.6 see also limited liability
JCT 98 Standard Form of Building Contract 4.1.2; life cycle cost
4.1.6.4 (f) appraisal 2.2.5.6(a)
JCT Agreement for Minor Building Works 1998 (MW98) payments 2.2.2.4
4.1.2.6 techniques 2.2(Intro)
Management Contract 1987 4.2.1.13
life cycle costing 1.2.10.1(c)(d); 2.1.1.2(d); 2.1.4.2; 2.2; 5.5.1
Management Contract 1998 4.1.2.8
building life 2.2.2.1
Works Contract/2 4.1.2.9; 4.2.1.13
client context 2.2.1
NSC/C Nominated Sub-contract Conditions 4.1.2.2
costing calculation 2.2.2
Standard Form of Building Contract 1998 (JCT 98)
costs and values Part 2 Section 2: Appendix C
2.3.3.2
data sources 2.2.4
Standard Form of Building Contract With Contractor’s
obsolescence 2.2.1.8; 2.2.2.1; Part 2 Section 2: Appendix B
Design 2.4.2
residual values 2.2.2.1; 2.2.2.4(g); Part 2 Section 2:
Appendix A, C6
Design (CD 81); 4.2.1.13
tax allowances
examples Part 2 Section 2: Appendix E
Design (CD 98) 2.3.3.1(e); 2.4(Intro); 2.4.2.1;
incentives and business rates 2.2.3
2.4.2.2; 2.4.2.3; 4.1.2.5
tax relief, impact on 2.2.3
Standard Form of Building Contract With Quantities 1998
terms for taxation Part 2 Section 2: Appendix D
(JCT98 With Quantities) 4.4.2.1; 4.4.3; 4.4.6.2;
worked examples 2.2.5
4.5.2 – 4.5.10
life cycle information 2.1.5.5(c)
Standard Form of Prime Cost Contract 1998 4.1.2.7
life cycle period, mechanical and electrical 2.2.1.7
JCT practice note CD1A 2.3.3.1(a)
limited liability 3.1.2.10(c)
JCT Standard Form: wording 4.2.1.14
liquidated damages 3.1.2.12; 4.1.4.3(e);
JCT variant forms of contract 4.1(Intro); 4.4.11.1
4.1.5.2; 4.1.6.5(b)(c); 4.4.9.2; 4.5.6; 4.5.7.2
joint venture/negotiated project 2.4.5.5
litigation and evidence see legal admissibility of documents
local authority requirements Part 4 Section 1:
K Appendix A2.3
Keating’s analysis 4.1.5.1 loss and expense 4.4.7.8; 4.4.7.10(a)
key decisions 1.1.5.5(a); 3.1 loss in building projects 4.2
key elements 2.1.4.4 lump sum contracts 2.4.2.1; 4.1.2.18(a)
lump sum price 2.3.3.1(c); 3.1.2.5; 3.1.2.9(d); 3.1.2.11(b)
L
labour, disruption of 4.2.5.4; Part 4 Section 2: Appendix B1.1 M
labour record 4.4.5.4(iii) machinery see plant and machinery
land 2.6 (Intro) maintenance and repairs 5.5.3; 5.5.4; 5.5.5
late completion 3.1.2.12 maintenance, costed planned 2.2.5.4
late finish 3.1.4.14(e) maintenance costs 2.2.1.4; 2.2.2.4; 2.2.3(Intro); 2.2.3.2;
latent defects 4.1(Intro); 4.1.4.2(b) 2.2.5.5(b)(c); Part 2 Section 2: Appendix C4, D2

annual 2.2.2.4(d); Part 2 Section 2: Appendix C4 operation of the building 3.1.1.18
cyclical 2.2.5.5 operation costs 2.2.2.4(c); Part 2 Section 2: Appendix C3
example 2.2.5.1(c) operatives 5.4.3.6; 5.4.4.3
future 2.2.1.4 options
intermittent 2.2.2.4(e); Part 2 Section 2: Appendix C4 appraisal criteria 1.2.3.1(a); 2.2.1.2; 2.2.2
tax relief 2.2.3 building 2.2.5.2; 2.2.5.6
maintenance of the building 2.2.1.4; 3.1.1.16 choice of 3.1.2.13; 3.1.2.15–3.1.2.17; Part 3 Section 1:
maintenance option, life cycle costing (worked example) Appendix A
2.2.5.3; 2.2.5.6(h) design 2.2.5.1; 2.2.5.2
making good 4.1.1 maintenance 2.2.5.3
management see facilities management; project management. organisational structure 3.1.4.6
Management Contract 3.1.1.14; 4.1.2.8–4.1.2.9 organisations 5.2
management contracting 3.1.2.5; 3.1.2.11(c); Part 3 outline proposals stage 2.1.4; 2.5.4.5
Section 1: Appendix A4; 3.2.3.3(c) overheads 2.2.1.6; 4.2.5.8; Part 4 Section 2: Appendix C
management systems 5.6(Intro) overlap 3.1.2.8(b)
audits of systems 5.6.6 overrun 3.1.2.8(a); 3.1.2.9(c)
see also Code of Practice (DISC PD 0008) cost 3.1
managing risk 3.1.2.9; 3.1.2.12 time 3.1
manuals Part 4 Section 1: Appendix A10 over-specification 3.1.2.14(i)
market conditions 3.1.4.13(l) overspending 3.1.4.13(j)(k)
markets and marketing 5.3.1 overview see change control overview; cost control overview;
materials 2.2.1.4; 2.2.2.4; 4.2.5.6; Part 4 Section 2: design overview; quality control overview; time control
Appendix A4, B1.3 overview
off site 4.4.7.6; 4.4.7.10(a); Part 4 Section 4: Appendix B owner occupiers 1.1.1.3–1.1.1.4
on site 4.4.7.5 ownership ‘reasonable proof’ 4.4.7.6;
ownership of 4.4.7.6; Part 4 Section 4: Appendix B Part 4 Section 4: Appendix B
matter 4.2.1.15
measurement see quantities P
measurement contracts Part 3 Section 1: Appendix A2 pace 3.1.4.11(e)
mechanical and electrical (M & E) services 2.2.1.7; package deal 2.4.5.2
3.2.3.3(a); Part 4 Section 1: Appendix A9 parameters, quantity and quality 2.1.3.5; 2.1.4.15;
schedule of Rates Part 3 Section 2: Appendix A 2.1.5.1–2.1.5.3; 2.1.5.5; 2.1.6.3
minor works 4.1.2.6; 4.1.2.14 Parry’s Valuation and Investment Tables 2.2.5.7
mitigation 4.2.3.1(e) partial possession 4.1.2.4(c); 4.1.2.17(a)(d); 4.1.6.4(j);
4.1.6.5(b)
N partnering 3.1.1.15; 3.2.1.4; 3.2.3.3(d)
Named Sub-contract NAM/SC 4.1.2.3(e) patent defects 4.1.5.1; 4.1.5.2
National Insurance 5.4.7 payments see advance payments; fees; interim payments;
negligence 2.4.3.1; 2.4.3.7; 3.2.2.7(d) life cycle cost payments; special payments
new building 3.1.2.1 perfect completion 4.1.4.2; 4.1.4.3(e)
New Engineering Contract (NEC) 4.1.2.16; 4.1.6.4(d) Europe 4.1.4.2(b)
new-build 2.1 France 4.1.4.2(b)
NJCC 2.4.4.9; Part 2 Section 4: Appendix A(Intro); Part 3 see also fault free works
Section 1: Appendix A
perfection, impossibility of 4.1.5
no risk return discount rate 2.2.2.3(b)(d)
performance 2.4.4.3; 2.4.4.4; 3.1.2.14(j)
Nominated Sub-contract NSC/C 4.1.2.2; 4.4.3
performance bonds 4.1(Intro)
nomination 3.2.3.3(a)
performance criterion 3.1.2.8(b)(c)
novation 2.4.6; Part 3 Section 1: Appendix A6(b)
performance failure 3.1
O performance requirements Part 2 Section 4: Appendix B2.4
obsolescence 2.2.2.1; Part 2 Section 2: Appendix B performance risk 3.1.2.9
obsolescent properties 2.2.1.8 performance specified work 4.4.10.3
occupancy 1.2.13; 5.5.4; 5.5.5 performance tests 4.1.2.18(c)
occupancy costs 2.2.2.4(f); Part 2 Section 2: Appendix C5 periodic payments 2.3.3.1(e)
occupation 3.1.1.18 PFI see Private Finance Initiative (PFI)
beneficial 4.1.4.1; 4.1.4.3(c) physical resources 3.1.4.5
prior to completion 4.1.6.4 pipework 2.1.5.4(b)
readiness for 4.1.4.1 planned maintenance, costed 2.2.5.4
offering up 4.1.1; 4.1.2.16(a) planned maintenance programme 2.2.5.4
offices, centralisation of 2.2.5.5 Planning Supervisors 5.2.1

plant and machinery 2.2.3.7; Part 4 Section 2: Appendix A3, professional adviser 3.1.4.16(c)
A4, A6, B1.2, D5 professional judgement 4.2.1.9; 4.2.4.5
plant charges 5.4.4.4 professional liabilities 2.5(Intro)
plant projects 4.1.2.18(b) professional services 5.3.1
planting Part 4 Section 1: Appendix A8 profit, loss of 4.2.5.12; 4.2.5.13
possession 4.1.2.16(c); 4.1.3.1(b); Part 4 Section 1: profit margins 3.1.4.13(l)
Appendix A3 profit target 4.2.3.1(f)
fitness for 4.1.5 programme 3.1.4.14(a); 3.1.4.11(e); 3.2.2.4(g); 3.2.3.5(g);
see also early possession; partial possession 3.2.4.3
post-contract progress see stages of a project; updating
role of employer’s agent Part 2 Section 4: Appendix A4 project brief 1.1.3; 1.1.5.3(a); 3.1.4.16(c); 3.1.4.18(a)
practical completion project characteristics 3.1; 3.1.1.2; 3.1.1.3; 3.1.2.14(c)
case decisions Part 4 Section 1: Appendix B project cycle 3.1.2.13; 4.3.3.2
definitions of 4.1.4.1(a); 4.1.5 project definition 3.1.1.10–3.1.1.11
effects of 4.1.3 project evaluation 1.2.13
methods 4.1.4 project funder(s) 1.1.5.3(b)
objectives Part 4 Section 1: Appendix A project management 1.1.4.3; 1.1.5.2; 1.1.5.3(g); 2.5.4.3(c);
problems of 4.1 4.3.3.2; 4.3.3.5
standard forms and certification 4.1.2 see also building services procurement
subsidiary issues, determination of 4.1.6 Project Manager 1.1.4.2; 1.1.4.5; 1.1.6; 2.4(Intro); 2.5.1.1;
see also early completion; substantial completion 2.5.1.2; 3.1.1.1; 3.1.2.8; 3.1.2.10(b); 3.1.4.7;
Practice notes 2.3.3.1; Part 3 Section 1: Appendix A 4.1.2.16(c); 4.1.2.17
Practice Statements 5.3.1 project monitoring 2.4.3.3
pre-contract project objectives 1.1.5.1(a); 3.1.2.8; 3.1.2.14; 3.1.4.16
role of employer’s agent Part 2 Section 4: Appendix A2 project planning 2.5.4.11
preliminaries Part 2 Section 3: Appendix A7; Part 3 Section 2: project stages 2.5.4.4–2.5.4.13
Appendix A; 4.2.5.2; 4.2.5.3; Part 4 Section 2: project structure 2.5.1.1; 2.5.1.2
Appendix A; 4.4.4.3; 4.4.5.1(iii); 4.4.7.2(c); 5.4.5 project testing 3.1.1.3
prescriptive requirements 2.4.4.3; Part 2 Section 4: project type 1.1.2.2
Appendix B2.5 project uniqueness 3.1.1.2; 3.1.1.3
price premiums 3.1.2.9(c) protection and safe practice 5.1
prices 4.2.4.8; 5.4.11; 5.5.3 provisional certificate 4.1.4.3(c)
average 5.4.3.3 provisional sums 4.4.10.2
construction 3.1.4.13(l) public health installation Part 3 Section 2: Appendix A
tender 3.1.4.13(l) public sector see procurement, public sector
pricing 1.2.8; 2.1.5.4(a); 3.2.4.2; 3.2.4.4; 3.2.4.5 publications Part 2 Section 1: Appendix D; Part 4 Section 1:
pricing and risk 3.1.2.10(d) Appendix C; 5.1
pricing options 3.2.4.5
pricing schedules 3.2.4.4(a) Q
Prime Cost Contract 4.1.2.7 quality see parameters, quantity and quality
prime cost sums 4.4.10.1 quality assurance 3.1.4.18(c); 4.4.2
principal adviser 3.1.2.10(b) quality control 2.4.3.4; 3.1.4.11(f); 5.6.7.4
role of 1.1.4.5; 1.1.7; 3.1.1.16 quality control overview 3.1.4.18
Principals of Good Practice for Information quality/price mechanism 1.1.7.4
Management 5.6.1 quantities 2.1.4.4; 2.5.4.9; 3.2.4.4(b); 3.2.4.5
Private Finance Initiative (PFI) 2.2.1.5 approximate 2.1.5.4(a); 2.1.6.3
probability/impact matrix 4.3.3.4(a)(i) see also element unit quantities; work executed
proceedings, right to bring 4.1.3 quantity see parameters, quantity and quality
procurement quantity surveyor 2.1.4.6; 2.1.6.4
options 2.4(Intro); 3.1; 3.1.2.15–3.1.2.17; Part 3 Section 1: ascertainment by 4.2.4.2; 4.2.4.3; 4.2.4.4
Appendix A role of 2.1; 2.1.1.3; 2.1.1.4; 3.2(Intro); 3.2.4.2; 3.2.4.5;
primary activities 3.1.1.5 4.2(Intro)
process 2.5.3.3 see also valuations for interim certificates
routes 2.1 quantity surveyor’s considerations Part 4 Section 2:
strategy 1.1.7; 2.4(Intro); 3.1.1.14; 3.1.2; 3.1.2.9; Appendix B3, C3.2, C4
3.1.2.11; 3.1.2.13 quantity surveyor’s information 2.1.3.3; 2.1.4.3; 2.1.5.3;
development of 3.1; 3.1.1.13; 3.1.2 2.1.7.3; 4.2.6.5; Part 4 Section 2: Appendix B2
selection of 3.1.3
see also building services procurement R
professional advice 3.1; 3.1.4.9(c) raw materials 2.6 (Intro); 2.6.1; 2.6.2; 2.6.3.3; 2.6.5; 2.6.7;

Part 2 Section 6 Appendix A risk analysis 3.1.4.13(c); 4.3(Intro); 4.3.1.4; 4.3.3.1;
fossil fuels 2.6.1 4.3.3.3(a)(ii); 4.3.3.4
mahogany 2.6.3 risk and extension of time 4.5.7
masonary 2.6.3; 2.6.4; 2.6.4.2 risk assessment 5.2.1
timber 2.6 (Intro); 2.6.3; 2.6.4; 2.6.4.1 risk averse 3.1.2.11(a)
rebuild, costing 2.2.5.6; 5.4.4.5 risk distribution 3.1; 3.1.2.12
records of costs 4.2.1.9; 4.2.1.11; 4.2.5.4(b); Part 4 risk identification 4.3(Intro); 4.3.1.3; 4.3.3.1; 4.3.3.3
Section 2: Appendix C2 risk management 3.1.2.9–3.1.2.12; 4.3(Intro); 4.3.1.2; 4.3.4
rectification of works 4.1.3 assessment 4.3.2.2–5
recycling 2.6.4; 2.6.5; 2.6.6 benefits 4.3.2.1; 4.3.2.5
Red Book 4.1.2.18(a)(c) in construction process 4.3.2
redevelopment 2.2.5.6(g) definitions 4.3.1
refurbishment 2.1; 2.2.1.6; 2.2.3; 2.2.5.5; 2.2.5.6; Part 2 key components 4.3.4
Section 2: Appendix B5; 3.1.2.8(a) plan 4.3.1.6; 4.3.3.2
regional development grants 2.2.3.2 probability/impact matrix 4.3.3.4
regulations 2.6.3.4; 5.2.1 workshops 4.3.2.5; 4.3.3.3(a)(i) and (b)(iv); 4.3.3.4(b)
rehabilitation 5.5.4 principles 4.3.2.9
reimbursable contracts 4.1.2.18(a) process 4.3.3
reimbursement 4.2(Intro); 4.2.15; 4.2.4.5; 4.2.6.1 see also uncertainty
contractural entitlement 4.2.1.2; 4.2.1.5; 4.2.3.1 risk profile 4.3.3.4
documents 4.2.3.4 risk register 4.3.1.7; 4.3.3.3(b)(v) and (vi)
entitlement to 4.2.3 risk response 4.3(Intro); 4.3.1.5; 4.3.3.1; 4.3.3.5
extensions of time 4.2.3.2 risk taker 3.1.2.11(a)
of subcontractors 4.2.3.6 risk transfer 3.1.2.10
submission cost 4.2.6.1(b); 4.2.6.4; 4.2.6.5 roles
written application 4.2.3.3 built environment groups 5.3
relationships (time, quality, cost) 3.1.4.14(h) royalties 4.4.7.9
running charges 4.2.5.3(d)
removal costs 4.2.5.3(b)
running costs 2.2.5.1(b)
renewal costs 2.2.5.5(g)
replacement costs 2.2.1.7; 2.2.2.4; 2.2.3.4; 2.2.5.1(d); Part 2
S
Section 2: Appendix C4
Safety File Part 4 Section 1: Appendix A10
research 4.3.3.3(b)(i)(ii)
saving 2.1.6.4; 3.1.1.8(j); 3.1.4.19(g)
resequencing 3.1.4.14(h)
scaffolding Part 4 Section 2: Appendix A7
residual values 2.2.2.1; 2.2.2.4(g); Part 2 Section 2: scanning of documents 5.6.3(3); 5.6.7.4; Part 5 Section 6:
Appendix A, C6 Appendix A
resources 3.1.4.3–3.1.4.5 schedule of defects 4.1.2.6(d)
responsibility Schedule of Rates Part 3 Section 2: Appendix A; 5.5.3
additional Part 2 Section 4: Appendix B2.6 scheme design stage 1.2.3; 2.5.4.6
allocation of 3.1.2.5; 3.1.2.9; 3.1.2.10 security Part 4 Section 2: Appendix A5
delegated 3.1.4.7 security
see also consultant; contractor; employer’s see also information security
responsibilities selection process 3.1.1.13; 3.1.2; 3.2.3.4
retail buildings Part 2 Section 2: Appendix B5 sensitivity analysis 1.1.5.3(f); 2.2.5.5(i); 3.1.4.13(c)
retention 4.1.3; 4.1.4.3(e); 4.1.6.5(b); 4.4.7.10 sequential see traditional strategy
Rethinking Construction 1.2(Intro); 1.2.2.2; 3.2(Intro) service engineer’s information 2.1.3.3(e); 2.1.4.3(d);
re-usable materials Part 2 Section 2: Appendix A4 2.1.5.3(d)
revenue allowances 2.2.3.4; 2.2.3.7 services
revenue costs 2.2.5.5(c) mechanical and electrical (M & E) 2.2.1.7; 3.2.3.3(a);
revenue expenditure Part 2 Section 2: Appendix D2 Part 3 Section 2: Appendix A; Part 4 Section 1:
RIBA Notification of Extension of Time form 4.5.10 Appendix A9
RIBA Plan of Work 2.1.1.4 provision costs Part 4 Section 2: Appendix A8, A9
RICS Building Cost Information Service (BCIS) 2.1.3.4(b) standard elements Part 2 Section 3: Appendix A5; Part 2
RICS Notification of Extension of Time form 4.5.10 Section 4: Appendix B2.5.5
RICS publications 2.5.4.1 see also building services procurement
RICS standard forms for interim valuations 4.4.8.1 setting-up costs 4.2.5.3(a)
risk 2.4.3.7; 3.1.4.13(m); 3.1.2.9–3.1.2.11; 4.3.1.1; 4.3.2.9 setting out, errors in 4.4.7.10(f)
residual 3.1.2.11(c) shell and core contract 3.1.2.6
secondary 4.3.3.5(a)(i) sinking fund 2.2.2(Intro) 2.2.5.4
risk allocation 2.4.3.8; 3.1.2.5; 3.1.2.9; 3.1.2.10 valuation and investment table 2.2.5.7

site cost Part 4 Section 2: Appendix A professional judgement 4.2.1.9; 4.2.4.5
site meetings 4.2.3.3(c) see also lead consultant
site operations 2.5.4.12 sustainability 2.6 (Intro); 2.6.1; 2.6.2; 2.6.6; 2.6.7
site visits 4.4.6.3; 5.1 see also building sustainability
snagging 4.1.1 systems and controls 3.1.4.11
snagging list 4.1.1; 4.1.5.3
special payments 4.4.7.9; 4.4.7.10(a) T
specialised activity 2.5.2.4 take-over 3.1.1.18
specialist installers 3.2.2.6(b) taking over 4.1(Intro); 4.1.2.10; 4.1.2.16(b); 4.1.2.18(b)
specialist services 2.1.5.4(b); 3.2(Intro); 4.4.5.3 taking over certificate 4.1.2.18(c)
specification 2.3.3.1(b); 2.4.4.4; Part 2 Section 4: Appendix tax allowances 2.2.3
B2.3, B2.5; 2.5.4.3(d); 3.1.4.18; Part 3 Section 1: applications 2.2.3.6
Appendix A6 categories defined Part 2 Section 2: Appendix D3
square index Part 2 Section 1: Appendix C expenditure, examples of Part 2 Section 2: Appendix E
staff cost Part 4 Section 2: Appendix A1, A11, C3 glossary of terms Part 2 Section 2: Appendix D
stage payments 2.3.3.1(e); 4.4.10.4 types 2.2.3.2
standard contracts see contracts variables 2.2.3.5
standard elements see BCIS standard elements worked examples 2.2.3.7; 2.2.5.5(f); 2.2.5.6(h)
standard rules and practices 3.1.1.3 tax relief see tax allowances
standards and requirements 2.4.4.4 taxation
standards and tests 4.1.4 glossary of terms Part 2 Section 2: Appendix D
statutory controls 3.1.2.9(c) issues and adjustments Part 2 Section 2: Appendix A5,
statutory duty 3.2.2.7(d) A6, A7
statutory fees and charges 4.4.7.9 see also Corporation Tax; VAT (Value Added Tax)
statutory requirements Part 4 Section 1: Appendix A2 team 3.1.1.3
step-down provisions 4.4.3 team development 4.3.2.8
storage 4.1.6.5(a); 4.4.7.6 technology 2.6.1; 2.6.2; 2.6.5
storage alternative 2.6.1
see also document storage temporary accommodation Part 4 Section 2: Appendix A2
straight line allowances 2.2.3.2 temporary disconformity 4.1(Intro)
Structural Engineer’s information 2.1.3.3.(e); 2.1.4.3(d); temporary services Part 4 Section 2: Appendix A8, A9
2.1.5.3(d) temporary works/access Part 4 Section 2: Appendix A4
structure Part 4 Section 1: Appendix A5 tender
subcontract completion 4.1.2.15 acceptance of 2.1
Subcontract DOM/2 4.1.2.3(e) action 2.5.4.10
subcontract work 4.1.2.2–4.1.2.3; 5.4.5 building services 3.2.3.4
subcontractors 3.1.2.10(c); 4.1.3 cost 2.3.2.2
building services 3.2.3.3(a) design and build 2.4.4.9
domestic 4.1.2.3; 4.4.7.2(e) evaluation 3.2.4.9
named 4.1.2.3(e) time of 3.1.4.13(l)
nominated 4.1.2.2; 4.2.3.6; Part 4 Section 2: two-stage 2.4.5.4; 3.2.3.3(a)
Appendix B3.1; 4.4.3; 4.4.5.3; 4.4.7.2(d); tender documents 3.1.4.9(c); 3.2.3.5(b); 3.2.4
4.4.7.10(g); 4.4.9.1; 4.5.7.1; 4.5.7.2 addendums 3.2.4.6
submission cost 4.2.6.1(b); 4.2.6.4; 4.2.6.5 changes from initial 2.1.7.1
submissions 4.2(Intro); 4.2.4.3; 4.2.6.1; 4.2.6.4; Part 4 clarification 3.2.4.7
Section 2: Appendix D sub-contract Part 3 Section 2: Appendix A
checklist Part 4 Section 2: Appendix E tender price index 5.4.3.2; 5.4.4.2
substantial completion 4.1(Intro); 4.1.1; 4.1.2.11; 4.1.2.12; tender proposals, evaluation of 2.3.3.1(d)
4.1.2.15; 4.1.5 tender stage 2.1.7
substantial performance 4.1.5; 4.1.6.4(g) tenderers, information from 3.2.4.8
substructure Part 2 Section 3: Appendix A1; Part 2 Section 4: termination 4.1.2.16(b)
Appendix B2.5.1 test discount rate 2.2.2.3(a)
superstructure Part 2 Section 3: Appendix A2; Part 2 tests 4.4.7.9
Section 4: Appendix B2.5.2 at completion 4.1.4
suppliers 4.4.7.2(f) of plant 4.1.4
supply-chain management 3.2.3.3(d) see also standards and tests
Surveying Safely 5.1 third party insurance 4.3.3.5(b)
Surveyor 1.1.1.1 timber see raw materials
advisory role 2.5.2.3 Timber Trade Federation 2.6.4.1

time value categories Part 2 Section 2: Appendix C
‘at large’ 4.1.6.2(b) value engineering 1.2(Intro); 2.1.1.5; 2.2.1.2; 3.1.4.17
budget 3.1.4.14(d) applicability 1.2.2
checking 3.1.4.14(d) implementation of the exercise 1.2.4; 1.2.5; 1.2.12
checklist 3.1.3.14 process Part 1 Section 2: Appendix B
constraints 3.1.4.14(g) timing 1.2.3
contingency 3.1.4.14(g) use and function 1.2.1
control overview 3.1.4.14 workshop 1.2(Intro); 1.2.3.1; 1.2.4.4; 1.2.5; 1.2.6;
criterion 3.1.2.8(b) 1.2.9–11
extension of see extension of time value engineering panel 1.2.4; 1.2.11.3; 1.2.12.1
framework 3.1.4.14(a) value engineering participants 1.2.4; 1.2.6.2
plan 3.1.4.11(e); 3.1.4.14(d) value management 1.2(Intro); 1.2.1.2; 1.2.3.1; 3.1.4.16
risk 3.1.2.9; 3.1.2.10 value management facilitator 1.2(Intro); 1.2.4.1; 1.2.4.3;
timescale 3.1.2.2 1.2.4.4; 1.2.6.2; 1.2.10.1(b)(c)(d)
timing 3.1.2.14(f) value for money 1.2(Intro); 1.2.1.3; 3.1.4.8(d); 3.1.4.9(e);
tort 3.2.2.7(c) 3.1.4.19(g)
traditional strategy 3.1.1.14; 3.1.2.5; 3.1.2.11; Part 3 values, monetary see discount rate; discounting
Section 1: Appendix A1 Value Tree 1.2.7.6; 1.2.7.7
transfer of building 4.1.1 variation works 4.1.3.1(f); 4.2.4.10(c); 4.2.5.4(e)
Treasury Bonds 2.2.2.3(b)(c)(d) interim valuation 4.4.7.3
turnkey 2.4.5.2 VAT (Value Added Tax) 1.2.8.2; 2.1.3.2(a); 2.2.3.3;
two-stage completion 4.1.4 2.2.5.5(f); 2.4.6.1
two-stage tender 2.4.5.4 vesting 4.1.2.17(d)
U W
ultimate cost 3.1.2.2
wage rates 5.4.4.2
uncertainty 4.3.2.6
wall to floor ratio Part 2 Section 1: Appendix C
see also risk
warranty 3.1.2.10(c); 3.2.4.3
underpricing 4.2.3.1(a)
warranty contracts 3.1.1.16(b)
uniqueness 3.1; 3.1.1.2; 3.1.1.3
waste 4.2.5.6
unit quantities see element unit quantities
water testing Part 4 Section 1: Appendix A6
unit rates Part 2 Section 1: Appendix A2.1; A2.2
whole-life costs 3.1.4.15
updating 3.1.4.12(e)
With Contractor’s Design Form 4.1.2.3(e); 4.1.2.5
user functions 1.2.7.5; 1.2.7.6; Part 1 Section 2: Appendix A
user requirements 3.1.4.13 work executed 4.4.7.1; 4.4.7.2
work not properly executed 4.4.7.10(b); 4.4.7.10(g)
V worked examples
valuation and investment tables (Parry’s) 2.2.5.7 life cycle costing 2.2.5
valuations for interim certificates tax allowances 2.2.3.7
administration 4.4.8 works
checklist 4.4.2.1–4.4.2.4 outstanding 4.1.1; 4.1.2.10(b); 4.1.2.11(c); 4.1.2.13;
communications 4.4.5 4.1.2.14(c); 4.1.4.1(c); 4.1.4.2(a); 4.1.5
content 4.4.7 packages 2.4.5.2; 3.1.2.5
covering letter 4.4.8.2 workshops
further reading Part 4 Section 4: Appendix A risk management 4.3.2.8; 4.3.3.3(a)(i)(b)(iv); 4.3.3.4(b)
other Forms of Contract 4.4.11 value engineering 1.2(Intro); 1.2.3.1; 1.2.4.4; 1.2.5; 1.2.6;
other relevant Contract Terms 4.4.10 1.2.9–11
preparation method 4.4.6 World Commission on the Environment and Development
purpose of 4.4(Intro); 4.4.1 2.6 (Intro)
special situations 4.4.9 ‘writing down’ allowance Part 2 Section 2: Appendix D7
start of contract 4.4.4 written application for reimbursement 4.2.3.3; 4.2.6.1;
under JCT Contract 4.4.3 4.2.6.4
value added tax see VAT (Value Added Tax) written down value Part 2 Section 2: Appendix A6

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Update 15 published December 2003

Update 14 published September 2003

Extracts from Parry’s Valuation and Conversion Tables, A W Davidson (1989),

Published by RICS Business Services Limited

No responsibility for loss occasioned to any person acting or refraining from

ISBN 0 85406 865 1

Typeset and printed by Q3 Print Project Management Ltd, Loughborough.

The RICS has published this Surveyors’ Construction Handbook to help

We hope that this Handbook will become an invaluable aid to your

Christopher Powell, FRICS

Trevor Mole, FRICS

Alan Turner, JP FRICS ACIArb, author of Building Procurement, for

Part 1: The Client

The Surveyors’ Construction Handbook Contents (12/03) Page 1

Section 2.2: Life Cycle Costing 1

Section 2.3: Elements for Buildings 1

Section 2.4: Design and Build - Guidance for Employer’s Agents 1

Page 2 Contents (12/03) The Surveyors’ Construction Handbook

Section 2.6 Defining Sustainable Construction 1

Part 3: Construction Planning and Procurement

Section 3.2: Building Services Procurement 1

Part 4: Construction Administration and Management

The Surveyors’ Construction Handbook Contents (12/03) Page 3

Page 4 Contents (12/03) The Surveyors’ Construction Handbook

Part 5: Additional Guidance and Information

The Surveyors’ Construction Handbook Contents (12/03) Page 5

The Surveyors’ Construction Handbook Abbreviations (10/02) Page 1

Page 2 Abbreviations (10/02) The Surveyors’ Construction Handbook

A Aim and Scope of this Handbook

A2 ‘Construction’ in this Handbook means new construction, conversion,

A3 ‘Client’ in this Handbook is used to include companies and their Directors or

A4 Throughout the Handbook, it is assumed that possession and necessary access

B2 The first four Parts are as follows:

development of construction briefs. It defines the client’s roles during the

Part 2: Construction Design and Economics covers development of the design

Part 4 covers Construction Administration and Management, i.e. all

Any Appendices are situated at the end of each Part.

B3 An Index follows Part 5.

C2 ‘Guidance’, as the word implies advice to Members of the RICS on aspects of

Members are not required to follow the advice and recommendations

Should an allegation of professional negligence be made against a surveyor,

In the opinion of the RICS, a Member conforming to the practices

In addition, Guidance Notes are relevant to professional competence in that

C3 Material classified as ‘information’ is intended to provide information and

Members should note that if an allegation of professional negligence is made

The Surveyors’ Construction Handbook Subscription Service

PART ONE: THE CLIENT

SECTION 1: THE CLIENT’S REQUIREMENTS AND

1.1.1 Establishing the Client’s Objectives

I 1.1.1.3 Owner occupiers are usually primarily concerned with building

I 1.1.1.5 However, the client’s purpose in initiating a building project is usually

1.1.2 The Role for Independent Advice

• Assistance in preparing the business case (the business case)

1.1.3 Project Brief

The project brief may include:

(a) project description;

(d) schedule of accommodation and quality of internal environment;

(f) equipment and special services/requirements;

(g) when the building needs to be available for use;

(h) quality and cost limitations;

(i) life span;

(j) site; and

(k) statutory controls.