About activity schedules and bills of quantities and NEC

At the meeting of the “Forum of QS practices” of the Association of South African Quantity Surveyors (ASAQS) held on 18 May 2010, a note from a quantity surveyor was tabled: “Concerns with NEC suite of contracts” (was made available on www.asaqs.co.za). It is mainly concerned with the strong point of view from NEC presenters that activity based contracts should become the norm, taking the place of bills of quantities; the viewpoint of the author of the note is that this pose a threat to quantity surveying as a profession.

I had the opportunity of listening to mr Andrew Baird of the NEC in 1992 even before the NEC was actually launched and its early days when he was associated with ESKOM where I was employed, and have taken an interest in the NEC developments since. Feedback from one of our staff that attended a two day NEC training session with him last week, confirmed that he is still propagating certain viewpoints very strongly, the gist of which is that the NEC is punted as the only really successful modern contract suite. In this I disagree, as I have some reservations about the NEC’s over-emphasis on teamwork and equals as opposed to a stronger leadership approach of other contracts (e g “the Engineer” of FIDIC and “principal agent” of JBCC). The NEC suite however has a place in industry, and it cannot be denied that the teamwork approach is in line with modern day thinking towards co-operation and even alliancing being favoured over instructing and directing from one party to the other.

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The tools of our time together with the increasing understanding of knowledge and information, has enabled ways of information management some of which was known, but used to be unpractical due to lack of technology, and some ways which the technology itself has opened up. Essentially, the work of the quantity surveyor is applied information management related to the specialist domain of construction costs.

The quantity surveyor has a core capability of keeping the vast multitude of little bits of data of quantities together for a construction project, and manage it to become useful information. The bill of quantities is a core tool that in essence is very simple, but was developed by quantity surveyors into a sharp and exceedingly successful method of controlling construction costs. It is however not the only method of dealing with construction costs.

The viewpoint from NEC pundits about pricing scheduling other than the bill of quantities is too strong, but since the NEC suite itself actively provides for the bill of quantities option, it is evident that the bill of quantities need not disappear. It is perhaps in need of re-thinking the methodologies behind it, including the measurement and collation processes, but most importantly, the structuring of the underlying data.

If the underlying data is suitably structured (and the reasons for the structures understood), the difference between bills of quantities and activity schedules becomes relatively small. It is just different views of the same data.

On the day that I browsed the ASAQS website and read the latest minutes of the QS practices meeting, it so happened that one of our personnel came to me with a final account draft document to discuss whether the detailed pages following the final account statement should be the bill of quantities format or the activity sheets. We discussed for half a minute which format is best suited for the situation and decided to go for the activity sheets, in this case being so-called “task forms” for the odd works of a diamond mine plant’s remedial works and additions. These alternative formats are printed from the same data. It is long and technical to explain, but we would gladly provide more information if required.

This is possibly not quite the activity schedules meant by NEC, but in principle is the same, and use the same data approach that leads to price calculations for activities. Where they appear to promote the idea of each tenderer making up his own schedule, is has indeed – and here I join with mr Fred van der Lith’s note – distinct disadvantages for the equitable tender process and adjudication, and that it is wasteful for each contractor to have to set up his own measurements and write each his own activity list is a strong argument for the very existence of the consultant QS employed by the client.

In VDDB we have several examples of pricing schedules of our own design for EPCM, EPC and design-build contracts which are forms akin to prescribed activity schedules that makes a significant portion of tenders comparable and hold the tenderers to the same cost layout in presenting their tenders. We have successfully dealt with the tendering, contract administration and final accounts for large scale dismantling, demolition and re-erection of large primary crusher installations with pricing schedules that used bill of quantities layouts and some of the principles, but were actually activity schedules.

We do not see activity schedules as a threat to applying our skills, expertise and specialist understanding of costing and cost control of construction, installation and related works. (It comes to mind that we have handled quite a few tenders and managed contracts for engineering design and management contracts as well using activity based pricing).

Globalisation brings more pressure to be able to operate from different angles: the pricing with labour norms and materials costs separately that is inter alia prevalent in the USA, and apparently adopted in engineering projects under Australian influences, is somewhat foreign to the building industry Commonwealth originated quantity surveyor, but can be learnt and is a valuable addition to the array of tools. This method is another angle but once again related to the activity based pricing schedule; and related to bills of quantities; and all comes back to the same basic data.

NEC has taken a place in the market. Whether it would eventually displace the FIDIC suite, and whether it would displace the JBCC for building works in South Africa and its sphere of influence, remains to be seen. Fact is that a professional quantity surveyor should be capable and knowledgeable on all of this which exist and are in use.

The quantity surveying profession can not afford to be seen as simply holding on to the bill of quantities for the sake that the profession is limiting itself to be bill-of-quantities-suppliers. The profession should be cost controllers for construction and installation (at least). Mr Van der Lith takes a view that “activity based contracts … eliminates the QS service”. This need not be the case. If quantity surveyors see this as a challenge that can be met with the information management tooling that is available to simultaneously go into lower level data and have stronger collation and grouping opportunities than ever before, and does not start defending the bill of quantities for the sake of the bill of quantities (and actually demonstrating a unscientific self-preservation attitude) and take a more scientific approach to it, opportunities can increase and the value added by the construction industry’s cost specialist can be stronger than ever.

The problems raised about poor design information as a limiting factor to apply activity schedules, the superiority of the provisional bill of quantities over activity schedules to fast-track construction tendering and implementation, and the lack of costing skills within the contractors’ community in South Africa, are valid points. Even these issues can however also be addressed and overcome with the tooling that can link data and formats for different purposes at different stages and produce excellent results.

The mining plant maintenance and repair works contracts to which were referred earlier, are quantified (the provisional measure) from task lists and an activity description note (generated by the quantity surveyor’s office in our case) for each. It it then collated to bills of quantities and tendered as bill of quantities, which obviously reduces tendering time and provides comparable and equitable tenders. This establishes a controllable and predictable contractual costing framework and contract administration is then done by task (activity) – the format in which the site operates; we report monthly and in close-out report in various formats: bill of quantities, quantitive trends (e g how many tonnes of the estimated total platework has been instructed in the actual execution of the works); and by tasks, comparing original estimates of costs with the actual costs task by task (activity by activity).

We hold that the quantity surveyor should be capable of setting up whatever pricing framework is required for the works and client-selected contract at hand: if it is NEC and it is wished to be dealt with on activity list basis, the quantity surveyors should become the originators of this, and not be stuck to bills of quantities as a sole skill.

Each of the contract suites currently available to us should be seen as an additional available tool in our workshop and quantity surveyors must embrace this and use it and not be fearful of it. It provides more options and increased opportunity to strengthen the value of our services.

The point raised as minuted in 7.18 of the minutes of the meeting no 10 of the “Forum of QS practices” (23 February 2010) has practical application in this topic of activity schedules and bills of quantities. The invitation for knowledge sharing is repeated.

Leonard van der Dussen

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