BQS 0318 PP2 Assignment - Report

1. SCHOOL OF ARCHITECTURE, BUILDING AND DESIGN
BACHELOR OF QUANTITY SURVEYING (HONOURS)
QSB60904 PROFESSIONAL PRACTICE II
MARCH 2018 SEMESTER
COURSEWORK NO.2
GROUP MEMBERS:
NO. NAME STUDENT ID
1. AMANDA CHIONG PEI SHAN 0320328
2. CHOW KAH YIEN 0320300
3. KH'NG QIAN YING 0326015
4. LEONG YU XUAN 0325102
5. MARCO LEONG WONG KA HENN 0320026
6. PANG KAI YUN 0319802
7. TEH QING DA 0318590
LECTURER : ​MR. EDDIE LIM SEK CHEON
SUBMISSION DATE : ​14 MAY 2018

2. School of Architecture, Building and Design
TABLE OF CONTENTS
No. Content Page Number
1. Question 2 - 4
2. Question 1 Answer 5 - 6
3. Question 2 Answer 7 - 8
4. Question 3 Answer 9 - 10
5. Question 4 Answer 11 - 16
PROFESSIONAL PRACTICE II [QSB 60904] 1

3. SCHOOL OF ARCHITECTURE · BUILDING · DESIGN
Centre for Modern Architecture Studies in Southeast Asia
Bachelor of Quantity Surveying (Honours)
PROFESSIONAL PRACTICE [QSB 3614]
1. This assignment shall make up 15% weightage of the final marks.
2. This is a group assignment and shall be submitted in groups of 7 students.
3. Dateline for submission of this Coursework No. 2 is on or before 14th May 2018.
Coursework No. 2 – Preparation of Final Account.
You are appointed as the consulting Quantity Surveyor for a apartment project based on PAM
Form of Contract 2006 (With Quantities). The summary of the Contract Sum is as follows:
Bill No. 1 – Preliminaries RM 5,250,000.00
Bill No. 2 – Building Works RM 50,450,000.00
Bill No. 3 – Local Infrastructure Works RM 6,500,000.00
Bill No. 4 – P.C. and Provisional Sums RM 9,600,000.00
Contract Sum RM 71,800,000.00
Question 1.
You are required to prepare a report to your director, explaining briefly the adjustments of the
essential elements in your preparation of this project’s final account.
(15 marks)
Question 2.
The tender drawings shows that the apartment has an entrance porch on the layout but no
details were provided sufficiently for measurement of quantities. The Quantity Surveyor then
had suggested that these items be listed as Provisional Sum. However you have forgot about
this item and did not include it in your tender document. The contract was awarded without
it. Your director would also like to know the significance and contractual implications of this
omission.
(10 marks)
Question 3.
In accordance with clause 30.10 of the contract, the contractor duly submitted his Final Accounts
within 6 months after the issuance of the Certificate of Practical Completion. You are then
required to assess this application and prepare the Final Account for the apartment project
based of the following valuations and adjustments made to the Contract Sum:
(35 marks)
1

4. Information provided (For question 3) are as follows:
a. The Architect had granted the Contractor’s first application for extension of time and
approved additional insurance premium amounting to RM 10,000.00 in accordance with
clause 24 of the contract due to the delay in the completion of the works caused by the
Employer’s late decision on the toilet design.
In his second application for extension of time, the Contractor submitted an an
application for extension of time due to exceptionally inclement weather and a loss and
expense claim for RM200,000.00 in his Final Accounts to you. The Architect approved
the extension of time as per Clause 23.8 but not the Contractor’s loss & expense claims.
b. There are four variation orders carried out by the Contractor:
Addition Omission
i. Variation Order No. 1: RM 500,000.00 RM 300,000.00
Changes of entrance lobby from
floor tiles to granite floor
ii. Variation Order No. 2: RM 300,000.00 -
New Guard house.
iii. Variation Order No. 3:
Changes from concrete block RM 400,000.00 RM 200,000.00
drains to precast concrete culverts
iv. Variation Order No. 4:
Omission of hand railings to yard. - RM 86,000.00
c. The following are the nominated sub-contractor’s accounts:
Original P.C. & NSC’s
Provisional Sums final account
i. Lift Services: RM 1,500,000.00 RM 1,700,000.00
Profit @ 2% RM 30,000.00
Attendance as item RM 30,000.00
ii. Air Conditioning Services: RM 2,200,000.00 RM 2,000,000.00
Profit @ 2% RM 44,000.00
Attendance as item RM 44,000.00
iii. Electrical Services: RM 2,600,000.00 RM 2,700,000.00
Profit @ 2% RM 52,000.00
Attendance as item RM 52,000.00
iv. Provisional Sums: Entrance Porch RM 1,000,000.00 RM 1,250,000.00
v. Contingency Sum RM RM 2,048,000.00
RM 9,600,000.00
2

5. Question 4.
On a different project, you were asked to explain the basis on how the following variations may
be finalised and priced during the Final Account stage:
a. The Contractor had priced RM 160,000.00 for the Contractor All Risk Insurance policy in
the Preliminaries Bills. The Contractor failed to purchase this insurance when the works
commence. The Employer, then, bought and paid for the said insurance for RM
180,000.00 on behalf of the Contractor.
(10 marks)
b. Contractor is required to provide a desktop computer in the Preliminaries section for the
Resident Engineer’s use but this item was left unpriced, i.e. BQ item was left blank in the
rate/amount column in the contract document. However the Architect instructed the
Contractor to provide a laptop computer costing RM10,000.00 for the Resident Engineer
instead of the desktop computer as specified in the Preliminaries.
(10 marks)
c. A wash trough as required and priced in the Preliminaries section was not constructed
due to site constraints imposed later by the Employer. However, the vehicles leaving the
site during construction were always kept clean including the public roads using water jet
washing and full-timed workers.
(10 marks)
d. Mistake was made in the price for excavation through rocks at RM 50 per m3. Item was
not rationalised during contract documentation. However, original quantity in BQ is 100
m3 but re-measured as-built quantity was 20,000 m3. The Contractor submitted a claim
for revised rates of RM 150 per m3 for the total quantity of 20,000 m3.
(10 marks)
3

6. School of Architecture, Building and Design
QUESTION 1 ANSWER:
Article 7(ab) in PAM Contract 2006 defines Final Account as the document showing the
adjustments of the contract sum issued under clause 30.10. It is a financial document indicating
the final value of the works executed by the Contractor and his NSCs and NSs.
A complete Final Account should include the following essential elements:
1. Variation works (Clause 11.6)
Under Clause 11.1, the term “Variation” is define as alteration or modification to the
scope of work in terms of design, quality and quantity including addition, omission or
substitution. Under Clause 11.6, it states about the valuation rules. The valuation of
Variations and work executed by the Contractor for which a Provisional Quantity is
included in the Contract and the expenditure of Provisional Sums (other than for work
for which a tender had been accepted under Clause 27.14) shall be made in 11.6(a),
(b), (c), (d), (e) & (f).
2. Remeasurement of Provisional Quantities (Clause 11.6(f))
Under Clause 11.6(f), it states that in respect of Provisional Quantity, the quantities
stated in the Contract Document shall be re-measured by the Quantity Surveyor based
on the actual quantities executed. The rates and prices in the Contract Documents shall
determined their valuations.
3. Omission of P.C. and Provisional Sum (Clause 30.11(c))
Under Clause 30.11(c), it states that the omission of all P.C Sum and the related profit
provided by the Contractor in the Contract Documents and the substitution of the
amounts payable by the Employer to the Nominated Sub-Contractors and Nominated
Suppliers together with the pro-rata amount for profit.
4. Adding-back of NSC’s and NS’s final accounts (Clause 30.11(c))
Clause 30.11(c) explains that the NSC’s and NS’s final accounts need to be submitted
together with the pro-rata amount for profit.
PROFESSIONAL PRACTICE II [QSB 60904] 5

7. School of Architecture, Building and Design
QUESTION 1 ANSWER (CONT’D):
5. Adjustment of profit and attendance (Clause 30.11(d))
Clause 30.11(c) shows that the contractor will receive profit and attendance based on
NSC’s and NS’s final account.
6. Adjustment of Provisional Sum based on actual expended and omitted if not
expended
Under Clause 30.11(d), it states that the adjustment of Provisional Sums and omission
of any Provisional Sums if not expended.
7. Additional expenses claims (Clause 11.7)
Clause 11.7 tells that where a Variation has caused or is likely to cause the Contractor
to incur additional expenses for which he would not paid under any provisions in Clause
11.6, the Contractor may make a claim for such additional expenses.
8. Loss and Expense claims (Clause 24.4)
Under Clause 24.4, it says that any amount ascertained by the Architect or Quantity
Surveyor for loss and/or expense shall be added to the Contract Sum.
The following 3 elements are ​excluded ​from the Final Account and are matters to be resolved
separately between the Employer and Contractor:
1. any liquidated damages imposed under Clause 22.1 (Clause 30.11(e))
2. set-off by the Employer under Clause 30.4 (Clause 30.11(f))
3. interest payable by either of the party to the other party under Clause 30.17 (Clause
30.11(g))
PROFESSIONAL PRACTICE II [QSB 60904] 6

8. School of Architecture, Building and Design
QUESTION 2 ANSWER:
Provisional sum are included in the contract for works for which the full extent and
character cannot be determined precisely at the time the bill of quantity is prepared. Example
that can take from the scenario are Quantity Surveyor put the entrance porch item as
provisional sum as there are no sufficient detail provided. However, Quantity Surveyor have
forgot about the item and did not include inside the tender document.
After the Architect and Engineer had issued the detailed drawing of the entrance porch,
the Quantity Surveyor can measure and calculate the total additional quantity for the work. The
entrance porch that forgot to include into the provisional sum is considered as a variation.
Under Clause 11.1 in PAM Contract 2006, the term “Variation” is define as alteration or
modification of the design, quality or quantity of the Works. The entrance porch is now consider
an additional work which falls under Clause 11.1(a), the addition, omission or substitution of
any work.
As the item is treated as a variation work under the original contract is now quantified in
the bill of quantities, the total contract sum of the project is affected. According to Clause 11.6,
the valuation of variations shall be made in accordance with the valuation rules. Since the
entrance porch is a new item and does not have rates in bill of quantities, then it shall follow the
valuation rules under Clause 11.6 (c), where work is not of a similar character to work as set
out in the Contract Documents, the valuation shall be at fair market rates and prices determined
by the Quantity Surveyor. The cost of the entrance porch can be determine either by cost-plus
basis or a fair market rates and prices.
Furthermore, the contractor can claim under Clause 11.7 such that the variation has
caused or is likely to cause him to incur additional expenses for which he would not be paid
under any provisions in Clause 11.6, the Contractor may make a claim for such additional
expenses provided always that he shall follow the rules in Clause 11.7 (a) and Clause 11.7 (b)
in order to claim the additional expense.
PROFESSIONAL PRACTICE II [QSB 60904] 7

9. School of Architecture, Building and Design
QUESTION 2 ANSWER (CONT’D):
On the other hand, the contractor is entitled to claim for EOT if the additional work of the
entrance porch will affect the work programme and causes delay. Under Clause 23.0, the
contractor is entitled to claim for extension of time (EOT) if the cause of delay falls within the
relevant event stated in Clause 23.8. Compliance with Architect’s Instruction issued by the
Architect for variation is one of the relevant event under Clause 23.8(g). Once the regular
progress of the works has disrupted, it will result in the completion date being breached.
PROFESSIONAL PRACTICE II [QSB 60904] 8

10. School of Architecture, Building and Design
QUESTION 3 ANSWER:
Project : Construction and Completion of Apartment, Sunway.
Employer : Taylors Homes Sdn Bhd
Contractor : Best Builder Construction
______________________________________________________________________________________________________
FINAL ACCOUNT
______________________________________________________________________________________________________
RM RM
1.0 Original Contract Sum 71,800,000.00
2.0 Less​ : P.C. & Provisional Sums
Total Builder’s works
9,600,000.00
---------------------
62,200,000.00
3.0 Add​ : Variation works (V.O. Nos. 1 – 4)
Total Additions 1,200,000.00
Total Omissions
Nett Additions
586,000.00
-------------------
614,000.00
614,000.00
---------------------
62,814,000.00
4.0 Add back​: NSCs’ final account
4.1 Lift Services 1,700,000.00
4.2 Air-Conditioning Services 2,000,000.00
4.3 Electrical Services 2,700,000.00
4.4 Provisional Sums: Entrances Porch 1,250,000.00
-------------------
7,650,000.00 7,650,000.00
4.6 Profit and Attendance:
a. Profit @ 2% of RM 7,650,000.00 153,000.00
b. Attendance @ lump sum 151,000.00
-------------------
304,000.00 304,000.00
5.0 Contractual Claims:
5.1 Additional Expenses 10,000.00
-------------------
10,000.00 10,000.00
FINAL CONTRACT VALUE
---------------------
70,778,000.00
============
PROFESSIONAL PRACTICE II [QSB 60904] 9

11. School of Architecture, Building and Design
QUESTION 3 ANSWER (CONT’D):
SUMMARY OF VARIATION ORDER
Item Description Omission (RM) Addition (RM)
Nett Omission /
Addition (RM)
VO/1 Changes of entrance lobby
from floor tiles to granite floor
(300,000.00) 500,000.00 200,000.00
VO/2 New Guard house - 300,000.00 300,000.00
VO/3 Changes from concrete block
drains to precast concrete
culverts
(200,000.00) 400,000.00 200,000.00
VO/4 Omission of hand railings to
yard
(86,000.00) - (86,000.00)
TOTAL: (586,000.00) 1,200,000.00 614,000.00
SUMMARY OF NSC FINAL ACCOUNT
Item Description
Original Sum
(RM)
NSC’s Final
Account (RM)
Total Profit
(RM)
Total
Attendance
(RM)
NSC/1 Lift Services
Profit @ 2%
Attendance as item
1,500,000.00
30,000.00
30,000.00
1,700,000.00
34,000.00
30,000.00
NSC/2 Air Conditioning
Services
Profit @ 2%
Attendance as item
2,200,000.00
44,000.00
44,000.00
2,000,000.00
40,000.00
44,000.00
NSC/3 Electrical Services
Profit @ 2%
Attendance as item
2,600,000.00
52,000.00
52,000.00
2,700,000.00
54,000.00
52,000.00
NSC/4 Entrance Porch
Profit @ 2%
Attendance as item
(Allow 2%)
1,000,000.00 1,250,000.00
25,000.00
25,000.00
TOTAL: 7,552,000.00 7,650,000.00 153,000.00 151,000.00
PROFESSIONAL PRACTICE II [QSB 60904] 10

12. School of Architecture, Building and Design
QUESTION 4(a) ANSWER:
In this case, the employer has paid for the insurance on behalf of the contractor. The
client can do so as Clause 20.A.3 in PAM Contract 2006 mentioned that when contractor
makes default in insuring, Employer may insure against any risk of which the default has
occurred and the amount incurred or paid by the Employer shall be set-off by the Employer
under Clause 30.4.
According to Clause 30.4 , Set-off by employer, the employer shall give his written
notice to contractor stating that he intents to set-off the sum of insurance that he has paid,
which is RM180,000.00. When the contractor agree with the set-off amount, there are a few
ways to finalise the set-off, it can be recover as a debt through the issue of a cheque, deducting
the set-off from any monies due, become a due under interim certificate or calling the sum of
set-off from the performance bond. The contractor shall accept this amount of set-off within 28
Days upon receiving such written notice from employer. However, if the contractor unable to
agree the amount, he shall within 21 Days of receipt the written notice of set-off, stating the
reasons of disagreement and supporting documents or refer this dispute to adjudication.
To conclude, the employer is not entitled to this set-off unless contractor agreed to the
amount or set-off the amount decided by the adjudicator. The contractor might not agree the
amount of set-off as the amount of insurance that employer purchased is higher than the priced
amount of contractor by RM20,000.00. As per Clause 30.11 (f) stated, the Final Account shall
not be included the set-off by employer, it has to be resolved separately between the employer
and the contractor. Thus, to not delay the time to conclude the Final Account, this set-off can be
resolved after final account if the contractor do not agree with the amount of set-off and so the
remaining items can be concluded without any undue problem to prepare the Final Account.
PROFESSIONAL PRACTICE II [QSB 60904] 11

13. School of Architecture, Building and Design
QUESTION 4(b) ANSWER:
According to Clause 11.1 in PAM Contract 2006, the term “Variation” means the
alteration or modification of the design, quality or quantity of the Works. In this case, it is
considered as a variation under Clause 11.1(a) the addition, omission or substitution of any
work because the Architect instructed the Contractor to provide a laptop computer instead of
the desktop computer as specified in the Preliminaries.
According to Clause 11.6(e), the rates and prices in the Contract Documents shall
determine the valuation of items omitted. If omissions substantially vary the conditions under
which any remaining items or work are carried out, the price of such remaining items shall be
valued by under Clause 11.6(a), (b) or (c). In this case, since the desktop computer in the
preliminaries section was left unpriced, the Quantity Surveyor can determine the price of the
desktop computer based on Clause 11.6(a), (b) or (c).
Under Clause 11.6 (c), where work is not of a similar character to as set out in the
Contract Documents, the valuation shall be at fair market rates and prices determined by the
Quantity Surveyor. In this case, the desktop computer is not priced in the Contract Documents,
the Quantity Surveyor should determine the price of the desktop computer based on fair market
rates and prices.
In conclusion, the Quantity Surveyor should omit the price of the desktop computer
based on fair market rates and prices and add the price of the laptop computer which is
RM10,000.00. The price difference between the desktop computer and laptop computer will be
the variation.
Lastly, these omission and addition of items shall later be included in the Final Account.
In accordance to Clause 30.11(a), any adjustment made to the Contract Sum shall be included
in the Final Account.
PROFESSIONAL PRACTICE II [QSB 60904] 12

14. School of Architecture, Building and Design
QUESTION 4(c) ANSWER:
According to Clause 11.1 in PAM Contract 2006, the term “Variation” means the
alteration or modification of the design, quality or quantity of the Works. In this case, the wash
trough which has been priced in the Preliminaries section was not constructed due to site
constraints was replaced by using water jet washing and full-timed workers. It falls under
Clause 11.1(d), any changes to the provisions in the Contract with regards to: (i) any limitation
of working hours; (ii) working space; (iii) access to or utilisation of any specific part of the Site;
and (iv) the execution and completion of the work in any specific order.
According to Clause 11.6(e), the rates and prices in the Contract Documents shall
determine the valuation of items omitted. Since the wash trough is already priced in the
Preliminaries section, the Quantity Surveyor should omit the price of the water trough stated in
the Contract Documents.
Moreover, the price for the additional work can be determine in accordance to the
valuation rules stated in Clause 11.6(d), where work cannot be properly measured and valued
in accordance with Clause 11.6(a), (b) or (c). With the support from Clause 11.6(d) (ii), where
there are no such daywork rates in the Contract Documents, the price of water jet washing
machine can be determined by the receipt or tax invoice of purchasing the machine, plus fifteen
(15) percent, which the percentage shall include overheads and profit. Meanwhile, the labour
cost shall be evaluated using the daywork rates in the Contract Documents in accordance to
Clause 11.6(d) (i). Clause 11.6(d) also further states that the Contractor shall record the time
spent daily upon the work and the workers’ names and the machine used. All of the record shall
be signed by the Site Agent and verified by the Site Staff and shall be delivered to the Architect
and Quantity Surveyor at weekly intervals with the final records delivered not later than fourteen
(14) Days after the work has been completed. As a Quantity Surveyor, we should avoid
payment on dayworks because it is difficult to control the cost.
PROFESSIONAL PRACTICE II [QSB 60904] 13

15. School of Architecture, Building and Design
QUESTION 4(c) ANSWER (CONT’D):
The contractor can claim under Clause 11.7 such that the variation has caused or is
likely to cause him to incur additional expenses for which he would not be paid under any
provisions in Clause 11.6, the Contractor may make a claim for such additional expenses. In
order to claim the additional expense, Clause 11.7(a) states that the contractor shall give a
written notice to the Architect of his intention to claim with an initial estimate of his claim duly
supported will all necessary calculations within 28 Days from the date of AI or CAI giving rise to
his claim. The written notice should shall be a condition precedent to any entitlement to
additional expenses that the contractor may have under the contract. Besides that, the
contractor must also comply with Clause 11.7(b) which the contractor shall send to the Architect
and Quantity Surveyor complete particulars of his claim for additional expenses together will all
necessary calculations to substantiate his claims within 28 Days of completing such variation. If
the contractor fails to submit the required particulars within the stated time, it shall be deemed
that the contractor has waived his rights to any such additional expenses.
Lastly, these omission and addition of items shall later be included in the Final Account.
In accordance to Clause 30.11(a), any adjustment made to the Contract Sum shall be included
in the Final Account.
PROFESSIONAL PRACTICE II [QSB 60904] 14

16. School of Architecture, Building and Design
QUESTION 4(d) ANSWER:
According to PAM Contract 2006 Clause 11.6, variations rule, there are six rules to be
applied under different situations for Variations. These rules are mandatory to be used for
Variations that fulfill the terms of Variation under Clause 11.1, which defines variation as the
alteration or modification of the design, quality or quantity of the Works. In this case, it is
considered as a variation under Clause 11.1(a) due to the addition quantity of 19,900 m3 in BQ
for the similar work which is the excavation through rocks.
In accordance to Clause 13.1, the contract sum is not allowed to be corrected after
signing of the contract. The rates in contract can only be rationalized or corrected by the
Quantity Surveyor before the signing of contract in the events of arithmetical errors or errors in
the prices or rates. Therefore, despite the errors in pricing for the works of excavation through
rocks, the submission of claim for revised rates from the Contractor shall be declined as these
errors are not allowed to be revised after signing of the contract under Clause 13.1.
In Henry Boot Construction Ltd v Alstom Combined Cycles (No. 1) (2000), the court held
that the rates and prices in the contract should be given full effect despite that the contractor
has made a mistake in his tender. However, the court still allowed the adjustment of price which
fall under Clause 11.6(b) amd 11.6(c). In this case, a change of quantity to 20,000 m3 from the
original quantity of 100 m3 in the contract BQ for the excavation through rocks is considered as
a significant change in quantity with similar character of work. Although the Contractor has
submitted a false rate for the works, however, by reference to the original contract rates and
price as stated in the contract BQ, the Quantity Surveyor shall make a fair adjustment to the
rates for the differences due to the significant change in the quantity of varied work under
Clause 11.6(b).
Hence, the original quantity of 100 m3 stated in the contract BQ shall be paid based on
the contract rates, which is RM 50 per m3. The Quantity Surveyor should take into
consideration whether the rate of RM 150 per m3 submitted in the Contractor’s claim is under
reasonable circumstances by reference to the nature of the original as stated in the contract
BQ. The price for the remaining quantity of 19,900 m3 can be adjusted either based on fair
market price or based on the rates submitted by the Contractor if the rates submitted is
considered to be a reasonable rates.
PROFESSIONAL PRACTICE II [QSB 60904] 15

17. School of Architecture, Building and Design
QUESTION 4(d) ANSWER (CONT’D):
According to Clause 11.7, the Contractor is allowed to claim for the additional expense
caused by the variation of works due to the significant change in the quantity of works which
may resulting in reschedule of the work programme, for example, additional on-site labour force
is required and the addition in bigger scale of machinery and equipments for the variation of
works.
Lastly, these omission and addition of items shall later be included in the Final Account.
In accordance to Clause 30.11(a), any adjustment made to the Contract Sum shall be included
in the Final Account.
PROFESSIONAL PRACTICE II [QSB 60904] 16