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    UNDERSTANDING VARIOUS PROCEDURES

    IN PRE-CONTRACT STAGES OF BUILDING

    CONSTRUCTION

    11th MARCH 2009

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    TABLE OF CONTENTS

    1. ABSTRACT...Page 3

    2. INTRODUCTION..Page 4

    3. ABOUT MY TECHNICAL PAPER.Page 5

    4. PRE-CONTRACT STAGE....Page 6

    4.1 Appointing a Consultant....Page 6

    4.2 Basic Services of a Consultant...Page 7

    4.3 Fee Structure..Page 7

    5. PRE-CONTRACT PROCEDURAL STAGES..Page 8

    5.1 Concept Design and Reports..Page 8

    5.2 Scheme Design and Reports...Page 9

    5.3 Detailed Design, Product Information, Bills of Quantities....Page 9

    5.3.1 Detailed Design...Page 9

    5.3.2 Product Information..................................................................Page 10

    5.3.3 Bills of Quantity....Page 10

    5.4 Tender Action...Page 16

    6. CONCLUSION....Page 18

    7. REFERENCES.Page 20

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    1. ABSTRACT

    In Construction, developing a concept into a finished facility involves large scale multi-

    tasking , which are managed by various professionals at various level. The Construction

    process is divided into two steps namely Pre-contract and Post-contract stage. This paper

    deals with the various procedures involved in the Pre-contract stage from developing the

    concept till contract award in the UAE construction industry.

    The Pre-contract stage involves the appointment of a consultant to develop the concept

    expressed by the owner into a finished product. The Consultants scope of works in the

    Pre-contract stage consists of development of concept design & submission of report

    which includes cost estimate, development of scheme design, outline specifications &

    submission of report , development of detailed design, specifications, drawings,

    preparation of bills of quantities and tender action. The preparation of bills of quantities is

    an important function in the Pre-contract stage and is explained in detail. The significance

    of methods of measurement for preparing bills of quantities and commonly used methods

    are in UAE are also explained. A format for the preparation of bills of quantities in a

    typical high rise building including items in each bills are also detailed here. The selection

    process of a contractor through tender invitation are also briefed in detail.

    If a project completes with in the time agreed and within the budget, then it is called a

    successful completion. For achieving such a result, so many factors are involved. A

    systematic and professional approach in developing the concept through various levels in

    the Pre-contract stage is definitely an important factor. A clear understanding and a good

    approach can save both time and money in construction projects.

    2. INTRODUCTION

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    Construction blooms your dreams into a solid reality. In fact it is the translation of all the

    papers or computer based designs into finished product. It consists of buildings or

    assembling of infrastructure. Construction involves a large scale of multi-tasking. These

    tasks are managed by the Project manager and aided by Construction manager, Contracts

    manager, Design engineer, Quantity surveyor, Construction engineer or Project engineer

    at various levels in varying degrees of their expertise.

    Construction is the step in which the plans, specifications, materials and permanent

    equipments are transformed into a finished facility. All the parties involved in a

    construction project owner/client, designer, supplier, contractor and end user strive for

    the same goal : a facility meeting the expectations of the client and end user. The concepts

    expressed by the client are turned into design drawings, specifications and purchase

    orders by the designer or the Consultant. The entire construction process can be divided

    into two stages, the Pre-contract stage and the Post-Contract Stage. The pre-contract stage

    includes developing the concept expressed by the owner followed by approved scheme

    design, outline specification, detailed design specification, product information,

    preparation of bills of quantity, tender action etc. until contract award. Whereas the post-

    contract stage includes the execution of all the contracted documents into the finished

    reality as agreed per the contract by the contracting parties viz. client and contractor. The

    procedures related to the pre-contract and post- contract stages are to an extend similar in

    all jurisdictions.

    3. ABOUT MY TECHNICAL PAPER

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    As known to all, the construction process is very extensive and unique in each project.

    My Technical paper is an endeavor to explain the various procedures involved in the pre-

    contract stage in construction with reference to private building projects. Presently I am

    working in the Project Development department of a company in UAE as a Senior

    Quantity Surveyor, frequently dealing with the pre-contract stages and which alone is the

    rationale for selecting this topic towards my technical paper. I trust this paper would

    provide an effective briefing on the pre-contract stage.

    The contents of the entire paper are broken into titles and sub-titles and a brief description

    is given on each. The assignment commences with an introduction on pre-contract stage,

    then the main stages of the pre-contract phase is explained. The role, importance and the

    format of Bill of Quantity is also dealt elaborately. Under the subtitle of Tender Action, I

    have attempted to explain the procedures and documentation involved in it and how it

    would eventually lead into the contract award.

    I hope this paper would enlighten the reader on the basic information required on Pre-

    contract phase of construction, and would serve as a hand-guide to those readers who

    have graduated in the construction field and aspiring to gain practical experience in that

    field.

    4. PRE-CONTRACT STAGE

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    Any construction activities can be subdivided into two stages, the pre-contract stage and

    the post-contract stage. What constitutes the pre-contract stage? The pre-contract stage

    can be simply described as that phase where the concepts of the client are developed into

    design drawings, specifications and purchase orders by the design engineer or consultant.

    The successful completion of a pre-contract phase depends on the appointment of an

    experienced consultant for the design and preparation of product information, bills of

    quantity and tender action. Therefore it is essential to know about a consultant before

    sinking into the core of the pre contract stage.

    4.1 Appointing a Consultant

    The consultants are the team who visualizes in paper or computer designs the concept of

    the owner and strive towards the fulfillment of the same with other bunch of experts. The

    first step in a pre-contract stage of any building project is appointing a consultant .It is

    always recommended to approach an experienced consultants services. The expertise of

    the consultant has a heavy impact on the cost of the work and the time factor, for these to

    be under control, the quality of a consultant team is a matter of concern. The consultant

    should have enough experience and expertise to develop the concepts expressed by the

    client to the utmost satisfaction of the owner/client. Before appointing a consultant, the

    client may gather a panel of consultants available and invite the fee proposal and

    programme and qualifications from various respective consultants and have a comparative

    approach of the fee structure and may select the best one which suit to his needs. Once the

    client selects the consultant, he enters into a service agreement with the respective

    consultant.

    4.2 Basic Services of a Consultant

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    The consultant usually provide professional consultancy services in the disciplines of

    Architecture, Structural , Mechanical, Electrical, Plumbing & Drainage engineering and

    Quantity surveying inclusive of Local Authority submission / approvals and byelaws. In

    addition to this, the owner can request for other services in the field of Interior design,

    Landscape design, Traffic impact study etc. depending upon the nature and necessity of

    the project.

    The basic services also includes supervision, approvals of material samples and working

    drawings involved in the post-contract stages.

    4.3 Fee Structure

    Generally the fees for the basic services are based on a percentage of pre and post contract

    fees of an agreed percentage of the total construction cost .If the client opts to go ahead

    with a project on a figure higher than the budget, the fees shall be adjusted accordingly.

    The general practice is to fix around 70% for pre-contract stage and 30% for post-

    contract stage. The pre-contract fees are invoiced upon completion of each levels of

    designs in the pre-contract stage. Post-contract fees are usually invoiced monthly as per

    the progress of work. For smaller scale of works undertaken like renovation works, the

    fees would be generally a lump sum amount.

    5. PRE-CONTRACT PROCEDURAL STAGES

    1

    Now let us examine the various procedures followed in the pre contract stages. The main

    levels in Pre- Contract are as follows:-

    Concept design and reports on all design disciplines

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    Scheme design and reports

    Detailed design , Product information , Bills of quantity

    Tender action

    5.1 Concept design and reports

    This is the preliminary stage where the client reveals to the consultant all his ideas, plans

    about his project, such as the concept of the project, time scale about the completion and

    about the budget to be expended. The consultant set out to obtain the information

    regarding the plot/site, boundary fences, encroachments, underground services, rights of

    way and other relevant matters. It is based on these information and the plans of the client

    expressed to him, does the consultant with his sub-consultants analyze the clients

    requirements, and prepare outline proposal(s), a report of the project and also an

    approximate construction cost. The said report depicts, the site location, site access, the

    overall design approach adopted, the specified areas, plans, Architectural, Structural,

    Mechanical, Electrical, Plumbing and Drainage engineering requirements. The outline

    proposal, report and the approximate construction cost is submitted to the client for his

    preliminary approval.

    5.2 Scheme design and reports

    After obtaining the approval from the client for the concept report and estimate, the next

    stage is to prepare a scheme design from the outline proposals taking into account

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    amendments suggested by the client and then to prepare a cost estimate. At this stage the

    consultant will be able to indicate the possible start and completion dates for the building

    contract. The scheme design will illustrate the size and character of the project in

    sufficient detail to enable the client to agree the spatial arrangement, materials and

    appearance. Also the consultant can advise the client of the implications of any

    subsequent changes on the cost of the project and on the overall programme. Finally, the

    consultants submit the scheme design detailing the structure, engineering and part

    architectural materials and appearances together with cost estimate for clients approval.

    5.3 Detailed design , Product information , Bills of quantity

    5.3.1 Detailed Design

    This is the crucial stage in the pre-Contract phase.The consultant with all his sub-

    consultants develop the scheme design after incorporating all the suggestion by the client

    to his satisfaction. Though a client can make any changes during the post -contract phase,

    it is always advisable to minimise variations during the post-contract period and make

    whatever changes to be made at the detailed design stage itself ,so as to save the cost and

    time. At this stage the clients approval for type of construction, quality of materials and

    standard of workmanship are taken. Hereafter the consultant will liase with the authorities

    and statutory undertakings like the water, electricity, telephone, drainage etc. for

    statutory approvals and no objection certificate. It is during this level the consultants

    applies for building permit from the appropriate statutory authority,co-ordinate with any

    design work done by sub-consultants, contractors and suppliers for specialist work and

    obtain quotations and other information in connection with the same for the production of

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    a complete detailed design. Finally, submits the detailed design together with cost

    estimate for the clients approval.

    5.3.2 Product Information

    The consultant along with sub-consultants prepare the production information including

    drawings, schedules and specification of materials and workmanship, provide information

    for the preparation of bill of quantities etc. All the information to be complete in sufficient

    detail to enable a Quantity surveyor to prepare the bill of quantities and the tenderer to

    submit a competitive price.

    5.3.3 Bills of Quantity ( BoQ )

    The preparation of Bill of Quantities is another important function in a Pre-Contract stage.

    The Bill of quantities means a list of items providing brief identifying description and

    estimated quantities of the scope of work comprised in the tender documents. Normally

    this is prepared by the consultant with the help of in house Quantity surveyors or any

    other professional Quantity survey organization. The bill of quantity should be very

    detailed and precise so that it will enable all parties concerned to understand all the items

    and requirements of the project. This will help all the tenderers to participate in a

    competitive manner in the tendering process.

    The bill of quantities are generally prepared in accordance with the methods of

    measurement2,3 followed by various institutions. The object of the method of measurement

    is to set forth the procedure according to which the Bills of Quantities shall be prepared

    and priced and the quantities of work expressed and measured.

    Objects of the Bills of Quantity

    The objects of the Bills of Quantities are

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    To provide information of the quantities of work so as to enable tenders to be

    prepared efficiently and accurately

    To provide for use of the priced Bill of Quantities in the valuation of work

    executed, after entered into the Contract

    To attain the objects, works should be itemized in the Bill of Quantities for it to be

    possible to distinguish between the different classes of work, and between work of the

    same nature carried out in different locations or in any other circumstances which may

    give rise to different considerations of cost. All work which is expressly required should

    be covered in the Bill of Quantities. Principally, the above objects can be attained by the

    use of Work Classification as mentioned in the Standard method of measurement book.

    After understanding the objects of the bills of quantity, a small briefing of the preparation

    of bills of quantities are also essential , and are described below.

    Different Sections of Bills of Quantity

    The Bill of Quantities consists of different sections such as Preamble, Work items,

    Daywork Schedule and Grand summary. A small briefing of these sections are given

    below.

    Preambles

    This is a preliminary statement which explains the measurement rules used other than the

    method of measurement, if any, adopted in the preparation of the Bills of quantities and

    are to be used for the measurement of any part of the works. The Preamble also should

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    indicates the inclusiveness of the unit prices quoted in the bills of quantities under various

    sections.

    Work Items

    The items in the Bills of Quantities should be grouped into different bills to distinguish

    between those parts of works that by nature, location, access, timing, or any other special

    characteristics may arise to different methods of construction, phasing of works, or

    considerations of cost.

    General items common to all parts of the work may be grouped as a separate bill in the

    bills of quantities and this general items are recorded as Bill No.1 under the work items.

    The various bills recorded under the work items in the bills of quantity for a Building

    project are listed below. A brief statement of the works undertaken under each section is

    also provided for a better understanding of the same.

    Bill No. 1 General Items or Preliminaries - includes items like Site administration,

    Supervision, Security, Safety, Contractors & Employers facilities like site office,

    toilets, water, electricity, telephone, fax, office furnitures, Transportation,

    Construction plant, Sign board, Bonds & Insurances, Temporary works. Cleaning

    etc

    Bill No. 2 Site works - includes Site preparation, Shoring, Excavation, backfill,

    Disposal, Dewatering, Anti-termite treatment etc.

    Bill No. 3 Concrete works - includes Sub- structure & Super-structure concrete

    works, Shuttering works, Reinforcement works, Sub-structure waterproofing

    works etc.

    Bill No. 4 Masonry works - include internal and external block works

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    Bill No. 5 Non-structural metal works - includes Glass window, Glass doors,

    Aluminum doors, louvers, Handrails, Access platform etc.

    Bill No. 6 Wood works - includes Wooden cladding, Wooden ceiling, Timber

    Handrail, Vanity counters, Wardrobes, Cupboards etc.

    Bill No. 7 Thermal and Moisture Protection - includes Waterproofing to wet areas,

    balcony, roof etc.

    Bill No. 8 Doors and Windows - includes all types of doors, windows etc.

    Bill No. 9 Finishes - includes all internal finishes and external finishes to floor,

    wall, ceilings etc.

    Bill No. 10 Specialties - includes Signage, Bathroom accessories etc.

    Bill No. 11 Equipment - includes Garbage chute, Window cleaning, Swimming

    pool equipment etc.

    Bill No. 12 Conveying System - includes Lift, Escalators etc.

    Bill No. 13 MEP works - includes Mechanical , Electrical, Fire Protection, Fire

    Fighting, Plumbing & Drainage works etc.

    Bill No. 14 External works - includes External services, Kerb, Paving works etc.

    Bill No. 15 Provisional Sums - Provisional sums4 means sum included in the

    contract and so designated in the bill of quantities for the execution of any part of

    the work, or for the supply of goods, materials, plants or services, or for

    contingencies, which sum may be used, in whole or part, or not at all, on the

    instruction of client or his representative in construction stage.

    The usual format followed in recording the items in a bills of quantities includes a

    Description of items column, followed by Units of measurement, Quantities, Unit Rates

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    and Amount.(The unit rates and amounts are filled by the tenderer(s) while returning the

    priced tender). Each page of the BOQ will carry the page total which will carry forward to

    the summary of each sections and in-turn merge into the grand summary.

    Daywork Schedule

    Another section which finds space in the bill of quantities is Daywork schedule. Daywork

    means the method of valuing work on the basis of time spent by the workmen or labour,

    the materials used and the plant employed. The daywork schedule shall comprise

    a) a list of the various classes of labour, materials and contractors equipment for

    which basic daywork rates or prices are to be inserted by the tenderer, together

    with a statement of the conditions under which the contractor will be paid for

    work executed on a daywork basis ; and

    b) a percentage to be entered by the tenderer against each basic daywork subtotal

    amount for labour, materials, and plant representing the Contractors profit,

    overheads, supervision, and other charges

    Grand Summary

    The grand summary shall contain a tabulation of the parts of the bill of quantities with

    provision for insertion of the total of the amounts brought forward from the part

    summaries such as General items, Work items, Provisional Sum items and Dayworks. The

    value against each part are inserted here and will form the Grand Total.

    Generally in UAE, any one of the following three methods of measurements are used for

    the preparation of bills of quantity.

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    i) POM(I) - Principles of measurement ( International ) for works of construction

    dated June 1979 issued by the Royal Institution of Chartered Surveyors,

    London, UK.

    ii) SMM7 - Standard method of measurement for building works dated January

    1998 issued by Royal Institute of Chartered Surveyors, London, UK.

    iii) CESMM3 - Civil engineering standard method of measurement, 3rd edition,

    1991, issued by Institution of Civil Engineers, London, UK

    All the above are amended to suit local practices and intended to be used in conjunction

    with the Conditions of Contract4. The decision to proceed with which type of

    measurement rule to be used lies with the client and the consultant depending upon the

    type of the project and should be spelled out precisely in the Preamble to the Bill of

    quantities.

    Following the preparation of BOQ, the consultant will price the BOQ and submits this for

    clients review as Pre-tender estimate.

    5.4 Tender Action

    Tender action is the next stage in the Pre-contract phase. Here the complete tender

    documents are prepared and send to all the approved contractor for tender invitation. The

    tender documents include :-

    the letter of Invitation which informs the tenderer of when and where tenders

    should be submitted and any other information

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    the Instruction to tenderers which consists of important guidance and information

    for completing the tender including type of contract, submission of bonds /

    guarantees etc. Generally in our projects we follow three types of contracts namely

    Fixed price Lumpsum contract, Item rate contract or Re-measurable contract and

    Cost plus percentage contract. Based on the type of project, the consultant / owner

    will take a decision on the type of contract to be implemented and included in the

    Instructions to Tenderers.

    the form of tender in which the tenderer mention about the Price for the execution

    and completion of the works and remedying of any defects therein in accordance

    with the provisions of the contract, and acknowledging by listing the tender

    documents he has received in the appropriate part of the form of tender and

    confirming that he has understood all the interpretations correctly and pledges

    towards fulfillment of his contractual obligation.

    the Conditions of contract for works although there are lot of conditions of

    contract available , mostly we follow FIDIC Conditions of contract ( Fourth

    Edition 1987 ) reprinted in 1992 .

    the drawings ( such as Structural drawings, Architectural drawings, Mechanical

    drawings, Electrical drawings, Plumbing and Drainage drawings, External

    drawings, Interior design drawings etc. )

    the specifications ( such as Structural, Architectural, Mechanical, Electrical,

    Plumbing & Drainage, Interior design specifications etc. )

    the Bills of quantities where the prices should be entered by the tenderer so as to

    form the Final contract Price.

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    Usually the tender form contains the standard clause stating that the client is not bound to

    accept the lowest or any tender he may receive. In the form of tender, the tenderer and a

    witness has to sign and stamp as acknowledgement / confirmation. Also there is an

    Appendix to the form of tender which clearly gives information as well as tendereres

    obligation in terms of bonds, insurances, Notice to commence the work, time for

    completion of works, penalty for delays, payment terms etc

    All the above documents are sent to the respective contractors for pricing mentioning the

    tender return date and submission of Tender bond along with the return of the tender

    documents by the contractors..Tender bond is an unconditional bank guarantee from a

    bank approved by the Client. Normally the contractors has to tender a bond amount

    which shall be in the sum not less than 5% of the Contract Price as surety against the

    withdrawal of the tender before the expiry of the period of validity of tender.

    After obtaining the completed sealed tender from the tenderers along with the tender

    bond, all the tender will be opened on specified date and time. All the tenders are

    evaluated against the pre-determined criteria which are specific in the the tender

    document. The evaluation will balance the proposal of the tenderer in delivering the

    contract against the quality of outputs required by the specification and balanced against

    the price. After the thorough evaluation, the client or his representative will issue the

    Letter of Acceptance4 to the successful tenderer. Subsequently both the client and the

    successful tenderer or known as contractor will enter in to an agreement for the execution

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    of the project in the same format of Form of Agreement which forms the part of tender

    documentation whereby contract award is done with.

    6. CONCLUSION

    The Successful completion of a project depends on factors which help to complete the

    project in time and within the budget. Every delay in completion will have an impact on

    cost also, which will adversely affect both owner and end user. There are various reasons

    for a project to get delayed. This includes the activities in both Pre-contract and Post-

    contract stages. Since this paper deals with Pre-contract stage, the delays caused due to

    the changes in drawings and specifications are to be avoided. The recommendations are

    a) The consultant and his sub-consultants should co-ordinate well while developing

    the drawings of different disciplines

    b) The consultant who have enough knowledge about the regulations and

    requirement of the statutory bodies are to be appointed

    c) The consultant and the owner should liaise with each other to understand / convey

    the ideas effectively in developing concepts, spatial arrangements, selecting

    materials etc. which in-turn will expedite the approval process in post-contract

    stage

    d) The complete scope of works are to be determined well in advance.

    If all the above recommendations are implemented systematically in a professional

    manner, then most of the delays in Pre-contract stages can be avoided and save both

    money and time. So a clear understanding of the procedures in Pre-contract stage is very

    essential for the successful completion of the project.

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    7. REFERENCES

    1) Standard Agreement for the Appointment of a Consultant - by RIBA ( RoyalInstitute of British Architects ) , January 2008

    2) CESMM3 - Civil Engineering Standard Method of Measurement, 3rd Edition, 1991

    issued by Institution of Civil Engineers, London, UK

    3) SMM7 - Standard method of measurement for Building Works dated January 1998

    issued by Royal Institute of Chartered Surveyors, London, UK

    4) FIDIC Conditions of Contract, 4th Edition, 1987 reprinted in 1992 - by Federation

    Internationale des Ingenieurs-Conseils

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