Professional practice 2

SCHOOL OF ARCHITECTURE, BUILDING AND DESIGN
BACHELOR OF QUANTITY SURVEYING (HONOURS)
PROFESSIONAL PRACTICE 2 QSB 3614
MARCH 2018 SEMESTER
GROUP ASSIGNMENT
GROUP MEMBERS:
NO. NAME STUDENT ID
1. CHIA LY VIER 0320142
2. HOOI ZHAO HONG 0318564
3. LEE SHZE HWA 0320053
4. LING SUE ER 0321683
5. NGIENG TIEN YUNG 0320221
6. TAN MING HOWE 0320199
7. YEO KAI WEN 0319844
Date of Submission : 14th May 2018

TABLE OF CONTENT
Item Description Page
1 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.
1
2 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.
4
3 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:
6
4 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:
10

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.
According to PAM 2006 (With Quantities), Final Account defined as a documents showing the
adjustments of Contract Sum and the final contract value of the project. The statement of Final
Account shows either the balance amount payable to Contractor by Employer or the debt should
pay to Employer by Contractor if over-certification. For this project, the Final Account included
the following essential elements :
I. Variation Works
Clause 11.1 explained that the variation is the alteration or modification of the design, quality or
quantity of Works comprising under clause 11.1 (a) to (d) which including the addition,
omission or substitution of Works, changes of the standard of any materials and goods used in
Works, removal of works executed or goods brought to site and the changes to the provisions in
the Contract regarding the limitation of working hours, working space, access to specific part of
the Site and specific order in the execution and completion of work.
The valuation rules should be follow for valued payments of variation and work executed by
Contractor which included in Provisional Quantity and expenditure of Provisional Sums under
clause 11.6. The valuation of variation works should based on clauses 11.6. Clause 11.6 (a)
stated if the variation work executed under similar character and condition and no significant
change in quantity, the works should valued using the contract rates and prices. Clause 11.6 (b)
stated if the variation work executed under similar character but not similar condition or have
significant changes in quantity, the works should valued using the contract rates with fair
adjustment. Moreover, clause 11.6 (c) stated if the variation work is not under similar character,
fair market rates and prices which determined by Quantity Surveyor shall be used in valuation.
While for the variation work which cannot be properly measured valued, the valuation can either
used the contract daywork rates or actual cost plus 15% if no such daywork rates stated in the
contract documents under clause 11.6 (d). If there is omission of work, the contract rates and
prices shall be used for the valuation item under clause 11.6 (e) and for the omissions which
have significant changes for the condition, the remaining item shall be valued under clause 11.6
(a), (b) or (c).

II. Remeasurement of Provisional Quantities
Provisional quantities is an estimated quantities as the actual quantities for work cannot be
measured at the early stage. Hence, the provisional quantities shall be re-measured by Quantity
Surveyor and valued based on the contract rates and prices under clause 11.6 (f).
III. Omission of P.C and Provisional Sum
Under clause 30.11 (c), the final account shall show the omission of all P.C Sums and the related
profit provided by the Contractor in the contract document as the P.C Sums and provisional sums
are an estimated amount and are subject to change. Moreover, the amount of contingency sum
previously allowed may be added or deducted in final account.
IV. Adding-back of NSC’s and NS’s final accounts
Since the P.C Sums and provisional sum have been omitted, the actual amount for NSC and NS
works shall be added back to final account as the amount allowed previously are an estimated
amount under clause 30.11 (c).
V. Adjustment of profit and attendance
Clause 30.11 (c) stated the profit and attendance will be given to Contractor based on the final
account amount of NSC and NS because Contractor will provide resources such as general
lighting, general power, water and scaffolding to NSC in executing their works. Generally the
profit will be given by percentage basis of the NSC’s or NS’s final amount. While for attendance
is given in a lump sum amount or by percentage basis. Hence, the profit and attendance will be
adjusted in final account based on the actual contract sum of NSC and NS. However, the profit
and attendance will be remain if the works are nominated to Contractor.
VI. Adjustment of Provisional Sum based on actual expended and omitted if not expended
Based on clause 30.11 (d), final account shall show the adjustment of Provisional Sums and
omitted of any provisional Sums if not expended. Provisional Sum is a lump sum amount
allowed due to no design details and specification given during tender stage. Therefore, the
Provisional Sum required to be measured and adjusted based on actual expended of the
Provisional Sums. However, the Provisional Sums will be omitted if not expended.

VII. Additional Expenses Claims
Contractor may incurred extra cost in executing the variation work but the Contractor would not
be paid under clause 11.6. However, the Contractor is entitled to claim additional expenses
which caused by Variation in clause 11.7. Contractor needed to comply to clause 11.7 (a) and (b)
in his application of claim.
VIII. Loss and Expenses claim
Clause 24.4 stated the loss and expenses ascertain by Architect or Quantity Surveyor shall be
added to the contract sum providing the Works have been affected by matters expressly referred
in Clause 24.3. The final account will include the total loss and expenses incurred by the
Contractor.
Final account should not include any outstanding item as stated below as it required to resolve
separately between Employer and Contractor:
1. Any liquidated damages imposed by Employer under Clause 22.1.
2. Any set-offs by Employer under Clause 30.4
3. Any interest payable by either of the party to another party under Clause 30.17.

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.
The architect and engineer will have to give detailed drawings of the entrance porch layout
before making any variation order. This will give the Quantity Surveyor ample information to be
able to measure and calculate the proper quantity for the additional works. Based on clause 11.1
from PAM Form 2006, the term variation concludes the alteration or modification of the design,
quality or quantity of the works including the omission of any works in accordance to Clause
11.1(a). Because there is no logical way to go back in time and rewrite a contract that has already
been signed the only option available is to include it under a variation clause.
Doing so, these items are to be regarded as a variation under the original contract, now that it is a
quantifiable amount and can be prices, this will alter the total contract sum of the project. Any
and all variations are subjected to the rules of valuation of variation under clause 11.6, and as
such in clause 11.6(C) clearly states that the valuation of variation is to heed the fair market
value which is determined by the QS. The pre-condition for the mentioned is that the work must
not be of similar character. This means that the items do not exist on the Bills Of Quantities. The
two available method of pricing of such items are either to be on a cost plus basis or basing them
at a fair market price. How a cost plus basis works is that the contractor will submit the cost of
the entrance porch and the QS shall add profit for the contractor based on a certain percentage.
While the latter method is based on fair market price which is based off of current market price
for materials, then only shall be added into the total contract sum.
An additional clause that the contractor is applicable to claim from is clause 11.7, it is based on
the additional expense caused by variation. If the contractor acquires the knowledge that he is to
incur additional cost that is not covered under any provisions of clause 11.6, the contractor then
may make a claim under the conditions that he give a written notice within 28 days from the date
of Architect’s Instructions to be submitted to the Architect of his intention to claim for such
additional expenses along with the initial estimate coupled with necessary supporting documents
as accordance to clause 11.7(a). Another condition would constitute of clause 11.7(b) whereby
the contractor is obliged to submit his complete particulars to the Architect and Quantity
Surveyor within 28 days of completing such variation. In the event that the contractor fails to
comply and submit the necessary information within the stipulated time frame it is deemed that
the contractor has waived his rights to claim for any additional expenses.

To categorise these additional works as a variation of work, non-value adding activity and costs
should be anticipated to increase due to unforeseen circumstances such as site meetings and extra
time taken for construction drawings to be finalised. This enables the contractor to claim for
Extension of Time (EOT) as it falls under the relevant events from clause 23.8 (g) compliance of
Architect’s Instructions.
Another available option is to seek a third party contractor that will have no ties to the original
contract. Therefore the rates and prices may possibly be more competitive from the original
contract, but as such will have a different completion date and work progress should not affect
the main building work programme. As such, there will be no basis for the employer to deduct
liquidated damages unless a delay is seen to have occurred under the new contract.

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:
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: RM 400,000.00 RM 200,000.00
Changes from concrete block
drains to precast concrete culverts
iv. Variation Order No. 4: - RM 86,000.00
Omission of hand railings to yard.

Question 3 (Cont’d)
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
iii. Electrical Services: RM 2,600,000.00 RM 2,700,000.00
Profit @ 2% RM 52,000.00
iv. Provisional Sums: Entrance Porch RM 1,000,000.00 RM 1,250,000.00
v. Contingency Sum RM 2,048,000.00
RM 9,600,000.00

ANSWER:
FINAL ACCOUNT
RM RM
1.0 Original Contract Sum 71,800,000.00
2.0 Less : P.C. & Provisional Sums 9,600,000.00
Total Builder’s works 62,200,000.00
3.0 Add : Variation works (V.O. Nos. 1 - 4 )
Total Additions 1,200,000.00
Total Omissions 586,000.00
Nett Additions 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 :
Entrance Porch 1,250,000.00
7,650,000.00 7,650,000.00
4.5 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

Summary of Variation Order
Item Description Omission (RM) Addition (RM) Nett Addition (RM)
VO/1
VO/2
VO/3
VO/4
Changes of entrance lobby
from floor tiles to granite
floor
New Guard House
Changes from concrete
block drains to precast
concrete culverts
Omission of hand railings
to yard
(RM 300,000.00)
-
(RM 200,000.00)
( RM 86,000.00)
RM 500,000.00
RM 300,000.00
RM 400,000.00
-
RM 200,000.00
RM 300,000.00
RM 200,000.00
(RM 86,000.00)
Total (RM 586,000.00) RM1,200,000.00 RM 614,000.00
Summary of Nominated sub- contractor’s account
Item Description Original P.C. & Provisional
Sums
NSC’s final account
NSC/1
NSC/2
NSC/3
NSC/4
Lift Services
Profit @ 2%
Attendance as item
Air Conditioning Services
Profit @ 2%
Attendance as item
Electrical Services
Profit @ 2%
Attendance as item
Entrance Porch
Profit @ 2%
Attendance as item @2%
RM 1,500,000.00
RM 30,000.00
RM 30,000.00
RM 2,200,000.00
RM 44,000.00
RM 44,000.00
RM 2,600,000.00
RM 52,000.00
RM 52,000.00
RM 1,000,000.00
RM 1,700,000.00
RM 34,000.00
RM 30,000.00
RM 2,000,000.00
RM 40,000.00
RM 44,000.00
RM 2,700,000.00
RM 54,000.00
RM 52,000.00
RM 1,250,000.00
RM 25,000.00
RM 25,000.00
Total for NSC’s final account RM 7,650,000.00
Total for Profit @ 2% RM
153,000.00
Total for attendance as item RM 151,000.00

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)
In this scenario , if the contractor failed to purchase the insurance when the work commence, the
employer can pay the insurance on behalf of the contractor which falls under Clauses 20.A.3.
In Clause 20.A.3, it stated that the insurance referred to in Clause 20.A shall be placed with
licensed insurance companies approved by the employer and the contractor shall deposit with the
employer the policy and the receipt of premiums paid. If the contractor makes default in insuring
or continuing to insure as aforesaid, the employer may insure against any risks in respect of
which the default has occurred and the amount of premiums and any other cost incurred or paid
by the employer shall be set off by the employer under Clause 30.4. In this matter, the Employer
had bought and paid for the said insurance on behalf of the Contractor in the amount of
RM180,000.00 where it is more expensive than the price as agreed by both parties in the
contract.
In Clause 30.4, states that the employer is entitled to set-off the amount of premiums and any
other cost incurred or paid by the employer which is RM180, 000.00 is the total sum paid by the
employer. For the set-off to be made, the Quantity Surveyor or Architect should submit the
complete details of their assessment of the set-off to the contractor on behalf of the Employer,
then the Employer or the Architect on his behalf has given the contractor a written notice
delivered by hand or registered post, specifying the intention to set-off the amount and the
grounds on which such set-off is made. Such written notice shall be given not later than twenty
eight (28) Days before any set-off is deducted from any payment by the employer.
Any set-off by the Employer shall be recoverable from the Contractor’s as a debt or from any
monies due or become due to the Contractor under the Contract and/or from the Performance
Bond. If the Contractor after receipt of the written noticed from the Employer or the Architect on
his behalf, disputes the amount of set-off, the Contractor shall within twenty one (21) Days of
receipt of such written notice, send to the Employer delivered by hand or registered post a
statement setting out the reasons and particulars for such disagreement. If the parties are unable
to agree on the amount of set-off within a further twenty one (21) Days after the receipt of the
Contractor’s response, either party may refer the dispute to adjudication under Clause 34.1. The
Employer shall not be entitled to exercise any set-off unless the amount has been agreed by the
Contractor or the adjudicator has issued his decision.

Question 4 ( Cont’d)
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)
In this scenario, several factors are determined, to decide the clause to be use, as the followings:-
I. The item was left unpriced in the BQ.
II. There is a variation from desktop computer to a laptop computer, which are in a different
characteristic.
III. The Architect requested for a laptop computer costing RM 10,000.00.
According to PAM Form 2006 (With Quantities) 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 Contractor did not price for this item initially and causing no price has been agreed by both
Client and Contractor. Moreover, the laptop and desktop computer are not in the similar
character and the Architect’s requirement of RM 10,000.00 computer does not consist of any
supporting quotation. Moreover, the price is said to be determined by the Quantity Surveyor
according to PAM 2006 (With Quantities). Hence, the rate of this variation order may be priced
on a cost plus basis or may be determine using the fair market rate where the lower price will be
adopted and decided by the Quantity Surveyor.
The Quantity Surveyor must first, identify what computer specifications is needed by the
Resident Engineer, where the specifications contribute the most to cost difference, to establish a
baseline to be price for. The reasonable price should be construed with reference to the
surrounding circumstances at that time for the appropriate items of work. Cost plus basis is a
lump sum calculation by giving a certain percentage to the contractor for profit and attendance
on top of the expenses incurred or value of the work done. By obtaining both prices, the Quantity
Surveyor shall determine which is the lower ones and that shall be the finalised rate for the
laptop computer.

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-time workers. (10 marks)
I. Wash Trough as required and priced in the Preliminaries .
II. Wash Trough was not constructed due to site constraints
III. Water Jet washing and full-time workers was used during construction
The Contractor shall comply with Architect Instruction (AI) on omitting wash trough due to site
constraints in accordance to PAM Contract (With Quantities) Clause 2.1 & 2.2. According to
PAM Contract 2006 (With Quantities), Clause 11.1 (d) (iii) states that a variation can be any
changes to the provisions in the Contract with regards to access to or utilisation of any part of the
site. In this scenario, there is a change to provision in the contract due to the wash trough as
required and priced in the preliminaries was not constructed due to the site constraints and was
replaced by water jet washing.
Due to the replacement of wash trough, the total amount of wash through in the preliminaries
shall be determined and omitted as stated in PAM Contract 2006 (With Quantities) Clause
11.6(e).
Regarding the additional water jet washing and full-time workers which has been used during
construction , contractor can claim as Variation order based on PAM Contract 2006 (With
Quantities) Clause 11.6(d) which stated valuation rule of work that cannot be properly
measured.According to Clause 11.6 (d) (i), labour cost of full-time workers can be valued based
on the daywork rates in the Contract Document. Besides that, Clause 11.6 (d) (ii) state that where
there is no such daywork rates in the contract, the Contractors are allowed to determined by
actual cost of water jet washing plus 15% which included overheads and profits. In additions, the
contractors shall specify the total hours spent by the labors, labor’s name and construction
machinery. All this records must be signed by the Site Agent and verified by the Site Staff and
shall delivered to Architect and Quantity Surveyor at weekly intervals with the final records not
later than 14 Days after the work has been completed.
Lastly, Quantity Surveyor shall include omission and additions of these item in Final Account.
Clause 30.11 (a) states that any adjustment made to the Contract Sum shall included in Final
Account.

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)
I. Contractor has made a mistake in the price for excavation.
II. Item was not rationalised during contract documentation.
III. Original quantity 100m3 at RM 50 per m3
IV. Revised rates at RM 150 per m3 for 20,000m3
Related Clauses:
Clause 11.1
- The term ‘Variation’ means the alteration or modification of the design, quality or
quantity of the Works including:
Clause 11.1(a)
- The addition, omission or substitution of any work;
Clause 11.6(b)
- Where work is of a similar character to work as set out in the Contract Documents but is
not executed under similar conditions or is executed under similar conditions but there is
a significant change in the quantity of work carried out, the rates and prices in the
Contract Document shall be the basis for determining the valuation which shall include a
fair adjustment in the rates to take into account such difference;
Clause 11.7
- Where a Variation has caused or is likely to cause the Contractor 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 that:
Clause 13.1
- The Contract Sum shall not be adjusted or altered in any way whatsoever, other than in
accordance with the express provisions of the Contract. Any arithmetical errors or any
errors in the prices and rates shall be corrected and/or rationalised by the Architect or
Consultant without any change to the Contract Sum before the signing of the Contract.

Justification:
According to PAM Form 2006 (With Quantities) Clause 13.1 defines that any arithmetical errors
or any errors in the prices and rates shall be corrected and/or rationalised by the Architect or
Consultant without any change to the Contract Sum before the signing of the Contract. However
the item was not rationalised by either Architect or the Consultant during the contract
documentation and caused the contractor price the rate at RM50 per m3 for 100m3 of excavation
through rocks.
Besides, the quantity of the work after re-measured is increased from 100m3 to 20,000m3. This
consider as a variation which under clauses 11.1 and 11.1(a). Based on clause 11.6(b), the work
is of a similar character to work as set out in the Contract Documents and is executed under
similar conditions but there is a significant change in the quantity of work carried out which is
from 100 m3 to 20,000 m3, a difference of 19,900m3 to be excavated.
Even though excavation through rocks is a provisional item but the quantity change significantly
that requires the contractor to use more labours and plants for the excavation in order to complete
the task. Under clause 11.7, the contractor is entitled to claim for the additional expenses such as
labours, transportation, heavy machinery and etc.
Besides that, based on case law Henry Boot Construction v Alstom Combined Cycles (2000), the
court held that errors in contract rate, whether it is unrealistic high or low, it should be applied to
the variation and will not be altered merely because of a substantial change in the quantity. In
summary, the Contractor is paid RM50/m3 for 100m3 and at the new adjusted rate for additional
19,900m3 of blinding concrete. By applying the case law, the contractor is paid for the
RM50/m3 for the first 100m3, and the remaining quantity has to be paid based on a fair market
price.

Professional practice 2

More Related Content

What's hot

Similar to Professional practice 2

More from Shze Hwa Lee

Recently uploaded

Professional practice 2