DECEMBER 2019 - FEBRUARY 2020
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11 BEYOND QUANTITY SURVEYING
22 HOW TO APPLY VALUE ENGINEERING TO INFRASTRUCTURE DEVELOPMENTS
34 EDUCATING THE NEXT GENERATION 38 BRINGING EMBODIED OF CONSTRUCTION PROFESSIONALS CARBON UPFRONT CONTENTS 2 CEO Letter
34 Educating the Next Generation of Construction
3 Awaking a Giant: The Revitalisation of North Sydney
11 Beyond Quantity Surveying
37 Forecasting Australian Construction
13 NZS 3910: Time for a Review
38 Bringing Embodied Carbon Upfront
18 The Future of the Governance Professional
42 Mellor Laboratories: Trace Metal Free Lab
22 How to Apply Value Engineering to Infrastructure
46 Fundamentals of Prefabrication: Costing and
26 The NCPR: Helping Quantity Surveyors Reduce Risk
51 Managing Contract Risk
28 Automating the Chaos: Intelligent Construction
60 Building Construction Index (available in print edition only)
Contracts About Built Environment Economist is the flagship publication of Australian Institute of Quantity Surveyors (AIQS). Produced quarterly, Built Environment Economist seeks to provide information that is relevant for quantity surveying, cost management and construction professionals. Subscribe Visit www.aiqs.com.au and click on the Shop button. You can purchase a copy of this edition or subscribe for 12 months.
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BUILT ENVIRONMENT ECONOMIST - DECEMBER 2019 - 01
requisite qualifications, experience and skills in construction cost management, sustainable construction as well as construction methodology and processes over the asset’s life.
A NEW NAME We are proud to announce that our flagship quarterly publication is now called ‘Built Environment Economist’. This new name reflects the breadth of projects in which cost professionals play a central role within the built environment – from residential to commercial, industrial to social, infrastructure to civil works. As well as the name change, we have entered into an agreement with New Zealand Institute of Quantity Surveyors which means that we can expand the content to include commentary, articles and case studies from New Zealand as well as the ability to engage new readers.
BUILDINGS AND INFRASTRUCTURE ASSETS ARE FINANCIAL PRODUCTS What is often missed across the construction and built environment sectors is that building and infrastructure assets are essentially financial products. As such, the application of the funds to construct, maintain and operate being invested into building and infrastructure assets should be overseen by professionals with the
It is a Certified Quantity Surveyor who can provide the best advice to clients with respect to managing construction project costs and risks, and whole-of-life project costs. This is best achieved by engaging a Certified Quantity Surveyor as the lead consultant from project inception (i.e. before design concepts) through to project completion (including pre-contract and post-contract evaluations). Given the financial parameters within which building and infrastructure assets are constructed and operated, clients and end users/ occupiers can expect the Certified Quantity Surveyor to deliver optimal outcomes through the time, cost and quality matrix.
CRITICAL REQUIREMENT FOR CERTIFIED QUANTITY SURVEYORS TO UNDERTAKE REPLACEMENT COST ASSESSMENTS The realisation of being underinsured following the partial or total destruction of a building asset is an all too common occurrence across Australia. Recent investigations suggest that up to half of all buildings across Australia are underinsured and that some owners could have their building assets undervalued by as much as 66%. It is essential that companies, governments, financial institutions, investors, house owners (essentially any owners of building or infrastructure assets) engage a Certified Quantity Surveyor to provide a cost estimate to replace a building or asset following a disaster. As disasters such as fire, flooding, cyclones and building impacts typically occur after an insurance policy has been
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established, ensuring the policy will cover all associated reconstruction costs is essential over the insurance period. This requires a comprehensive understanding of the type of insurance being requested by the client, state and territory regulatory requirements, current construction costs, and escalation of those costs in specific environments. Particularly when there are rapid changes in the costs of labour and material. Determining the replacement cost of a building or asset on a rate persquare meter basis will invariably not incorporate costs associated with site access, demolition, changes to land use and zoning, the impact of mass disaster events, as well as changes to the Building Code of Australia. AIQS’s Replacement Cost Assessment Information Paper establishes a common framework for undertaking replacement cost assessments for insurance purposes, which is useful for both the Certified Quantity Surveyor and their clients and is available to download for free at www.aiqs.com.au
TOWARDS NET ZERO Cost professionals are in a position to adapt their skills to assist the built environment become net zero. In this edition, the Green Building Council of Australia looks at the importance of bringing embodied carbon upfront and WoodSolutions delves into the costing and considerations of prefabrication.
CEO Australian Institute of Quantity Surveyors
A GIANT THE REVITALISATION OF NORTH SYDNEY
BUILT ENVIRONMENT ECONOMIST - DECEMBER 2019 - 03
While North Sydney used to be referred to as “Sydney’s weekend ghost town” by the Sydney tabloids, nothing can be further from the truth now. Only three kms north of the Sydney Central Business District, it has undergone a radical transformation on so many levels and boasts a truly spectacular skyline and architecturally inspiring buildings. It is now a commercial and residential hub and destination in its own right. In January 2015, Cromwell Property Group called to ask whether my team at MBM would provide cost planning services on their proposed redevelopment of Northpoint in the heart of North Sydney.
North Shore. Northpoint Tower itself is a landmark building, with 44 levels of mixed office and retail space and the property offers panoramic views across North Sydney, Sydney Harbour and the Sydney CBD.
carpark. It is a B-Grade building with a net lettable area of 35,162 square metres.
The building was North Sydney’s tallest and one of its most recognisable office towers, holding a prime corner position with more than 130 metres of street frontage at the junction of the Pacific Highway and Miller Street.
The Cromwell vision prior to the development was to satisfy the retail, dining and leisure needs of the ever-growing residential and professional population in North Sydney, and to transform the area into a seven-day destination.
The building comprises 35 office levels, retail space and a six-level basement
Our role was an unusually involved one for a modern-day Quantity Surveyor,
Shortly afterwards, MBM were awarded the full cost planning role from design development through ECI (Early Contractor Involvement) to handover. As we worked our way through the costing of the development application documents, Cromwell’s clear vision for Northpoint and its importance to the revitalisation of North Sydney was abundantly clear and informed. It was also perfectly aligned with North Sydney Council’s own visions for the area and the broader community.
NORTHPOINT TOWER – A SHORT HISTORY Originally built in 1977, Northpoint is located at the commercial axis of North Sydney on the corner of Miller Street and the Pacific Highway. Cromwell and Redefine purchased the asset in 2013, with the intention of re-establishing it as the pre-eminent workplace on the
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THE CLIENT VISION
The existing office tower and the car park underneath had to remain operational during the construction period and most worrying of all - from a costing perspective - was the need for significant structural upgrades to a six-storey basement that was undocumented. All the various architectural details led to the need for major diversions of existing shafts, ducts, pipework, cable trays and other services. The costing work therefore not only required detailed measurement, but it also necessitated much forgotten and now ‘old school’ site measurement as well as long discussions and investigations with the design team, engineers and ultimately the Builder and his trusty subcontractors.
which due to the unique characteristics of the building and its substructure was both demanding and ultimately justified. The initial plans involved the construction of a brand-new multi-level retail precinct and eight-storey, 187-room Vibe Hotel with conference facilities, as well as a rooftop pool and gym. The lower level was to incorporate a revitalised retail precinct focused on convenience and include major anchor tenants as well as trendy specialty retailers. The upper level was designed for, and dedicated to, dining and leisure and included a rooftop bar sitting atop a fourstorey glass structure, named 'the shard'.
ISSUES, ISSUES, ISSUES It was clear from the outset there was going to be a multitude of issues to resolve for such a landmark and contemporary building to emerge. The increased density resulted in the need for significant building service additions and upgrades. A new substation was to be installed and the existing substation was to be upgraded with Optic Arc Fault Detection (OAFD). New variable refrigerant volume (VRV) air conditioning systems were supplied to serve the hotel while a new air-cooled chiller was to service the major anchor retail tenants.
The builder appointed in January 2015 under an ECI (Early Contractor Involvement) agreement was FDC and their remit was to provide buildability advice, value engineering, and conduct site investigations of the existing facility.
COLLABORATION MANDATORY! It was Cromwell’s explicit instructions that the client team and the builder were to work closely together and share all knowledge and data. This approach differs from the more traditional adversarial or risk inequality relationships favoured by many modern construction players. This decision was in fact to prove pivotal in the project success as collaboration, and the recognition of differing expertise and a range of perspectives were crucial to
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delivering the necessary outcomes in the required timeframes.
OLD SCHOOL AND NEW SCHOOL COST PLANNING Once the builder was on board we all realised quickly that the existing documents were insufficient to enable accurate costing of structural works (including complex strengthening) so, alongside the builder and engineers we spent six weeks crawling through basements in order to establish an understanding of how the works were to be undertaken and ultimately how
much they would cost. Employing a combination of technology and shared human insight and elbow grease, the cost for the structural works was established and agreed with the builder without any dispute nor pronged negotiations. The cost of the building works was equally complex given that the works had to minimise noise and vibration which would have caused significant disruption to Cromwellâ€™s tenants â€“ who remained onsite throughout the redevelopment. Once the demolition and strengthening were complete, a long process took place as to how to minimise the dead load of the new structure on the existing
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structure and a cost benefit analysis was undertaken. Once again, our involvement throughout the process meant that the ultimate solution of constructing a lightweight steel structure was agreed without dispute nor prolongation.
MORE ISSUES Another issue presented itself via the fact that the site itself exists between two prominent roads (Miller Street and Pacific Highway) and given these access difficulties, MBM and the builder undertook detailed cost/program analysis to decide on a way forward.
The final decision was to place a focus on prefabrication at a time when such methodologies were not common. The use of structural steel also assisted in cost and program savings as it mitigated access difficulties by minimising the amount of materials coming to and from site such as formwork, reinforcing steel, and concrete. The use of a steel structure required early planning and detailed coordination with the service trades, and we assisted in this process by providing measured bills for the contractor’s subcontractors to price. This collaboration meant that once again pricing was agreed early and without conflict.
PREFABRICATION AND MORE VALUE BENEFITS Further prefabrication initiatives were utilised such as a panelised curtainwall system, and modular pod bathrooms. The 187 hotel bathrooms were prefabricated in Melbourne, delivered on the back of a truck, lifted into position by a tower crane, connected to the base building services and construction of the room completed around the installed pods. The savings whilst negligible from a trade perspective produced months of program reduction and therefore preliminaries related cost savings were achieved. Many more cost/time/quality related decisions were made, and it is true that many cost related options were discarded in place of program benefits or at times quality aspirations outweighing other factors. All these decisions were made via
joint research and collaboration and whilst not all decisions were reached easily, it was at least enlightening to see the benefits of such a collaborative approach. Less tangible and sometimes misunderstood costs were also explored and agreed between all parties including the decision to undertake the project in distinct phases to minimise the impact and allow tenants to continue working from the heart of North Sydney. We assisted in helping Cromwell translate the cost impact from FDC against the appeasement of tenants and ultimately revenue protection. A direct result of the client’s desire to consider tenants amenity during construction was that the commercial lobby was completed in several stages to facilitate safe access and egress for the existing tenants. This was once again costed and valued. Further value benefits were achieved from the pod bathrooms which although meaning the design had to be ratified early, minimised wastage and enhanced the quality of the installation by manufacturing in a controlled environment. Due to the nature of the property and the refurbishment design, a complex fire engineered solution was developed to address the interaction between the various fire compartments resulting in a combined mechanical and natural smoke relief system. MBM worked with the fire engineers and FDC to agree on a fair cost and understand the design impact on other trades and the program effect.
A RESOUNDING SUCCESS – A GIANT AWOKEN Despite all the above issues, the project was completed on time and budget and stands as a testament to both the benefit of collaborative partnerships and also the value of a more involved quantity surveying role.
LESSONS LEARNED: There were many lessons learned from this project, but the standouts include; • Sometimes and especially in complex buildings - ECI is the answer. • ‘Reimagined and Reinvented’ means just that from concept, process and delivery - forward thinking and approaching things differently is such an opportunity. • Prefabrication needs more focus. • The modern concept of the diminished QS role needs rethinking on complex or budget pressured projects. • Collaborations should be encouraged as shared goals and a cohesive team mitigate more risks than adversarial or fiercely contractual relationships could even attempt to. In addition, Northpoint ticked all the time, cost quality boxes as a direct result of a close team working in unison.
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CASE STUDY Project details o Client Cromwell Property Group o Location North Sydney – Northpoint Tower o Total cost of construction – $130m o Completion date – January 2018
Project team Architect – HDR / Nettleton Tribe Quantity Surveyor - MBM Main contractor - FDC
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BEYOND QUANTITY SURVEYING
By David Roberts MAIQS, CQS from Peter Evans Partnership
There are two different types of Quantity Surveyors (QS), those that run marathons and those that climb mountains, both are critical to the Quantity Surveying practice business model. A Quantity Surveying business may not exist without both of these types of employees and most prevalent will be the marathon runners, those that have the patience to operate within the same technical bandwidth for decades as the business grows and a solid
foundation is built on their endeavours. For the mountain climbers, the 'QS professional' has expanded over the decades and has escaped its own bandwidth in areas such as contract management, expert witness, superintendency, claims and disputes, adjudication and arbitration. These two polar positions are populated by QS's on the professional path between marathon runner to mountain climber.
QS's at the early stages of their careers are somewhat unaware of the entire scope of opportunities that their degree and experience can provide for them after they become a Certified Quantity Surveyor. Breaking through the professional bandwidth into the mountain climber bandwidth will require a commitment to further education, lifelong learning and continual annual training. Always having matters of professional development on
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'low heat' in the background to slowly and steadily build ones' professional profile year-on-year and continuously is critical to showing a career of unbroken growth, education and self-imposed challenge in addition to the daily demands of employment tasks. Without this strategy, one may unconsciously declare to employers and clients that you are content to remain in a particular bandwidth. That is not an issue if that is your chosen career path and as discussed earlier, the 'marathon runners' are a 'business critical' element of the QS business model from where trusted Managers and Directors are frequently drawn based upon several criteria such as long term company loyalty, brand and market familiarity. If the QS profession were not to offer sufficient self-training opportunities which did not occur continually year after year then the profession would experience a generational shortage of those that possess the experience, training and abilities to conduct business in matters such as expert witness, adjudication and even as arbitrators.
representations of your willingness to act as say, an expert witness. The minimum required competence is, say, that of a 'reasonably competent expert witness,' the training, experience and education one receives as a QS must equip you to meet that standard and the client and legal community at large will be frequently testing and providing opinions on this to you and others. Over time your reputation will be enhanced by positive opinions. Obtaining training in adjudication is highly expensive and not backed by any guarantee that one will obtain any appointments after successfully completing the competency training. Australia has an oversupply of adjudicators and the authorised nominating authorities or state departments that appoint adjudicators to disputes are not offering this training at any frequency. This will see the number of adjudicators increase but will decrease over time until the next construction boom.
Additional skills and training milestones will be required in order to convince the market that you are ready to step into a different bandwidth.
With reference to claims and disputes, there are various types of skills criteria for managing or compiling claims. The international market appears to favour claims professionals that are drawn from the QS profession, with a masterâ€™s degree in construction law and be certified by a QS professional body.
For QS expert witnesses, adjudicators and arbitrators there is no period of cadetship. You are required to be competent from the moment you declare yourself as an expert. Of course, over time some will be more experienced and competent than others. Once you hold yourself out in the public domain you will require evidence of your training and experience to instil a degree of public confidence that your experience, education and training is sufficient to fulfil the required legal and procedural outcomes expected by the profession which hire you on the basis of your
Certain skills are earned in the claims profession if one restricts their skills to either compiling claims on the contractor side or assessing received claims on the client side. Claims are extremely broad in their depth of criticality. For example, a single claim on a project may well be compiled by QS and a Project Planner in order to reduce the risk exposure to liquidated damages. Whereas on the more critical side, a large contractor or client may require an entire portfolio of claims to be compiled or assessed across multiple international projects that could have a critical effect on whether the
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company will continue to exist based on the outcome of the claims and dispute process. The skills required for the management claims is therefore relative to the seriousness of the matter at hand and is not a one-size-fits-all scenario that can be managed by a QS/Planner. On occasion, the matter will be of such a scale and importance that relevant experiences and further education will be a critical factor in successfully managing multiple critical disputes. A QS may be skilled in the use and reporting utilising planning software and thereby becomes proficient in the management of both time and cost. This is rare yet extremely effective especially in matters of extensions of time with or without damages. Seeking out training and experiences in this area is not impossible but is expensive and not sufficient to establish oneself as a Delay Analyst. That will require potentially a career focus change for a period of years in order to understand the forensic opportunities within the project documents and a self-learned ability to utilise planning software that establishes suitable forensic programmes. In relation to arbitration, its generally the first thought that any matter that is the subject of arbitration is the business only of Lawyers. It isn't, arbitrators of technical construction and engineering matters are frequently Engineers, Architects and Quantity Surveyors. When not acting as appointed arbitrators, they often act as a manager and strategist of the arbitration process and will draw on legal advice only when its needed. Training for arbitration is mostly absent for Quantity Surveyors. Furtherance of this career strategy may well require international travel to grab any experience one can get in arbitration. Its simple building economics.
NZS 3910 TIME FOR A REVIEW
By Peter Degerholm MMgmt (Disp Res), FNZIQS, MRICS, FAMINZ (Arb/Med), Member DRBF, Reg. QS from Calderglen Associates Limited
BUILT ENVIRONMENT ECONOMIST - DECEMBER 2019 - 13
It is widely held that NZS 3910:2013 Conditions of Contract for building and civil engineering construction (NZS 3910) underpins around 75% of nonresidential construction contracts in New Zealand¹. Although not a collaborative model, it is generally accepted that NZS 3910 allocates risk fairly to the party best equipped to manage that risk². The New Zealand construction industry has suffered a battering in recent years, and it seems counter-intuitive that insolvencies and contract losses have mounted at peak levels of industry activity. The industry has been described as a ‘basket case’ by some commentators and criticised for unfair or inappropriate risk allocation and for the prevalence of special conditions that are unreasonable and/or more extensive than the underlying NZS 3910 document.
IS NZS 3910 IS OUT OF STEP? As NZS 3910 has had only five limitedscope revisions in 55 years³, it may be out of step with current industry needs. Its revision process is governed by statute, and appears cumbersome and inflexible: Standards New Zealand must be convinced an update is necessary, and that no Australian or other international standards could be adopted⁴; Standards New Zealand consults within the industry to scope the revisions, and form an industry-wide representative committee; Industry engages with Standards New Zealand to facilitate a revision through a consensus process. If the revision process is indeed as convoluted as it appears in the following flow chart, it will take three to four years, and NZS 3910 will never keep pace with
the changing needs of the industry. The industry needs greater control of the process, scope and frequency of revisions to ensure the conditions of the contract remain fit for purpose⁵.
INDUSTRY SURVEY Results from a March 2019 online survey consisting of Society of Construction Law NZ (SCL) members. These members represent a broad cross section of the construction industry⁶.
IS NZS 3910 RISK ALLOCATION APPROPRIATE? Respondents were asked whether risk allocation under NZS 3910 is appropriate,
An observer's view of the NZS 3910 revision process
Industry lobby Standards NZ
Establish N2S 3910 committee
Industry & SNZ scope review
Review feedback, drafting
SNZ develop fee proposal
Industry obtain/ commit to funding
Publish revised Standard
¹ An informal survey of Society of Construction Law members in March, corresponding to 80% as reported by Russell McVeagh in Getting it right from the ground up, August 2018 www.russellmcveagh.com ² Outcome Statement in foreword to NZS 3910:2013 states: This Standard enables Principals, Engineers and Contractors to quickly establish contractual arrangements that deliver a wide variety of building and civil engineering projects. Contracts based on this Standard will reflect fair risk allocation between the parties. ³ NZS 3910 has had 5 limited-scope reviews in the 55 years since first published (as NZS 623) in 1964 (1984, 1987, 1998, 2003 and 2013) ⁴ New Zealand cannot look to Australia. A 2014 research report entitled Standard Forms of Contract in the Australian Construction industry by Professor John Sharkey et al found that Australian Standard forms, last updated in 2002, are used on 68% of contracts and 90% with special conditions. ⁵ The NZ Institute of Architects, despite limited resources, updates its construction contracts every two years. ⁶ Following a presentation to SCL members by Peter Degerholm and Paul O’Brien in Auckland, Wellington and Christchurch 4-6 March 2019
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in the context of the NZS 3910 outcome statement that it aims to “[reflect] fair risk allocation between the parties”. Overall 60% agreed or strongly agreed (‘Yes’), compared with around 25% who disagreed or strongly disagreed (‘No’).
emphatic: although 61% agreed there is a risk allocation problem, there was a marked divergence between participants: 94% of contractors agreed, compared with around 70% of lawyers and consultants, but only 47% of principals.
Refer to chart title "Does NZ 3910 allocate risk appropriately?".
Refer to chart title “Is risk transfer through special conditions a problem?” on the next page.
Interestingly, principals and contractors (the contracting parties) were generally satisfied, but lawyers and consultants were not.
Some observed that principals understandably seek to transfer risk to contractors to obtain price certainty and that taking on unmanageable risk was considered a significant factor in recent contractor failures.
Refer to chart title "Fairness of NZS 3910 risk allocation".
Examples of risk transfer that respondents considered inappropriate included:
IS THERE A RISK ALLOCATION PROBLEM? Respondents were asked whether they perceived a trend towards the inappropriate transfer of risk through special conditions of the contract. A member survey conducted by the New Zealand Institute of Quantity Surveyors in December 2018 had revealed that 92% of respondents considered risk allocation an issue. SCL responses were not so
• special conditions extending to hundreds of pages, making contracts “bespoke” and sometimes incomprehensible • strict time limits and condition precedent provisions that apply only to the contractor • guaranteed maximum price arrangements based on the incomplete scope
Does NZ 3910 allocate risk appropriately?
• fit for purpose obligations imposed where the contractor is not the designer. There was a common theme that risk transfer may not be transparent or understandable.
WOULD A COMPREHENSIVE UPDATE OF NZS 3910 ASSIST? Respondents were asked to indicate whether a comprehensive update of NZS 3910 would reduce the need for extensive special conditions. The response was less emphatic, with around 50% agreeing, and 35% disagreeing. Lawyers were more polarised, with 59% for and 32% against. Some respondents warned that a wholesale revision of NZS 3910 might risk ‘throwing the baby out with the bathwater’. Refer to chart title "Would updating NZS 3910 assist?" on the next page.
Some suggested that special conditions are necessary for clarity, to align with health and safety and other legislation and that the document could be made far more flexible by including industry-
Fairness of NZS 3910 risk allocation
(by respondent type) 70%
Strongly agree Agree
Neither agree nor disagree
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accepted special conditions as optional clauses⁷ and even a risk allocation table. Suggested improvement opportunities included: • aligning with health and safety legislation • revisiting the ‘dual role’ of the Engineer and Engineer’s Representative • capping contractor liabilities and indemnities • plainer language • incorporating amendments into an online document • revisiting insurance • variations • extensions of time • a risk allocation table • incorporating current best practice procurement in conditions of tendering • optional clauses to reduce the need for common special conditions.
OBSERVATIONS There is a general acceptance that NZS 3910 is a critical reference point for fairness in risk allocation on construction contracts. Most respondents identified opportunities for improving or updating NZS 3910 for clarity, alignment with legislation, process discipline, addressing project-specific risk transparently, and fostering collaboration. NZS 3910 clearly needs updating – one contractor respondent suggested it should be a rolling maul, not a let’s fix it once approach – followed by a review of the companion standards (3915, 3916 and 3917) and an extension to the suite of contracts. We cannot look to Australia for an ‘offthe-shelf’ solution. Aside from obvious differences in industry culture, it appears that progress on updates of the outdated Australian Standards stalled some time ago and that there is no immediate prospect of a revision.
Risk is inherent in construction contracts. Some respondents suggested that, like any model contract, NZS 3910 will always need special conditions to address specific risks – one described NZS 3910 as a blunt instrument in complex risk situations. However, with industry commitment, our NZS 3910 ‘blunt instrument’ could be ‘sharpened’ to include options to minimise the need for extensive special conditions.
INDUSTRY IS PRIMED FOR CHANGE The industry is already grappling with the issue. The Construction Sector Accord launched in April 2019 has a shared goal of better risk management, fairer risk allocation and better government procurement practices, aimed at overcoming systemic problems such as a focus on lowest cost over quality, and a culture of shifting rather than managing risk⁸. Key initiatives include revising government Construction Procurement Guidelines on risk
Is risk transfer through special conditions a problem?
Would updating NZS 3910 assist?
⁷ A simple example given is where contractor issues the GST invoice, not addressed in NZS 3910 clause 12.13.
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management which currently stop short on a commitment to updating the underlying industry-standard construction contract that would provide the risk allocation framework. Both the Ministry of Education⁹ and Housing New Zealand have developed extensive special conditions for NZS 3910, for consistency and to address specific risks associated with their projects. It is questionable whether the development of bespoke versions for each department merely proliferates the use of extensive special conditions, effectively bypassing industry consultation. A damning Treasury report published in August 2019¹⁰ entitled "An examination of issues associated with the use of NZS Conditions of Contract" revealed a culture of mistrust in the industry in relation to government contracts, often leading to poor outcomes, and a lack of understanding that the lowest price does not equate
to value for money. The 4th edition of the Government Procurement Rules, in effect from 1 October 2019, signals a move from a focus on price to best possible procurement. Other issues associated with the use of NZS 3910 included extensive and unfair special conditions, often not well understood by either party, which creates a false sense of security; unsustainable and aggressive transfer of risk, often by stealth; and a lack of impartiality in the engineer to contract. The report recommended a comprehensive review of NZS contracts in two stages: 1. an interim review to address immediate issues, provide supplementary schedules, and align with legislation 2. a medium-term revision with the ability to track changes in special conditions.
Other recommendations included guidance to public sector agencies for best practices in special conditions and risk management in tender documents for contractors and consultants.
IT’S TIME TO UPDATE NZS 3910 There is government and industry acknowledgement of the issue, and commitment to improving risk transfer and procurement and more collaborative contracts. It’s time to cut through the red tape and urgently update our industry-standards contract, to be acceptable to the wider industry and suitable for use by all departments with minimal amendment. Updating NZS 3910 won’t solve the industry’s problems, but it’s a critical step.
⁸ Refer www.constructionaccord.nz ⁹ For example, refer http://www.education.govt.nz/school/property-and-transport/projects-and-design/procurement/contracts ¹⁰ An examination of issues associated with the use of NZS Conditions of Contract, Treasury, 14 August 2019 www.treasury.govt.nz ¹¹ www.procurement.govt.nz
About the author Peter Degerholm MMgmt (Disp Res), FNZIQS, MRICS, FAMINZ (Arb/Med), Member DRBF, Reg. QS, Director, Calderglen Associates Limited, dispute resolution consultant. Peter served on committees for NZS 3915:2005 and the 2013 editions of NZS 3910, 3916 and 3917 and delivers NZS 3910 training workshops nationally. Disclaimer This article is an adaptation of a paper published through the Society of Construction Law New Zealand in June 2019. It is for general information only, and not intended as advice. The opinions expressed reflect responses received from the industry and do not necessarily represent the personal views of the author or his organisation.
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THE FUTURE OF THE
PROFESSIONAL By Governance Institute Of Australia
New report from Governance Institute of Australia predicts changes to the role of the governance professional by 2025 Artificial intelligence and machine learning in business will change the role of the company secretary by making the role more interesting. Governance professionals will still need to have a solid understanding of financial, legal and IT issues, but will also require a greater range of soft skills. INTRODUCTION Governance is a critical success factor for all organisations and should be at the forefront of minds. Considering that a large portion of AIQSâ€™s member base are Directors and Senior Managers, Governance Institute of Australia has provided these insights.
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A new study on the future of the governance professionals paints a picture where boards will increasingly face more complexity, regulatory oversight, technology disruption and reporting demands from stakeholders. The study, conducted by Governance Institute of Australia in May, consisted of three parts: eleven initial interviews with leading governance professionals, an online survey which drew 285 responses and a roundtable attended by ten governance experts. First, some good news. Although just over a third of study’s online respondents believed technology will disrupt their role by 2025, most participants across all parts of the research agreed that there will still be a need for humans to oversee machines and to make qualitative judgments. Many said the growing use of artificial intelligence and machine learning in business will change the role of the company secretary by making the role more interesting. Roundtable attendees believed that machines are likely to be better than humans at taking minutes, gathering information, highlighting what is relevant and packaging it all up for directors. But they pointed out that machines don’t have the same emotional intelligence and creativity as humans: at this early stage of their development, machines also lack the ability of humans to see nuances, read facial expressions or grasp boardroom dynamics. Overall, there was agreement that machines would take over a lot of the menial tasks of governance professionals, freeing them up to take on more valueadded tasks.
This meant the role of the governance professional would shift from being a ‘secretary’ to becoming more of a ‘trusted adviser’ to the board, or from minutetaker to thought leader. The bad news is that governance professionals are likely to face a more challenging landscape. Nearly 80 per cent of those responding to the online survey believed increasing complexity would play a vital or important part in changing the governance professional’s role by 2025. Technology, they said, is helping organisations of all sizes to scale up faster and move into new jurisdictions. Boards are also increasingly under the microscope from the regulators, investors, proxy advisers, staff, customers and activists. This scrutiny has been sharpened following the banking royal commission and appears to be broadening to all Australian organisations, not only banks and insurers. Implementing regulatory reform was top of mind among governance professionals across all parts of our study, with 80 per cent of online respondents describing it as the most important challenge they face today or as very important. Many participants expect the customer to also be a growing focus — after all, the key message from the banking royal commission was that organisations need to foster a culture that prioritises customers over profits. Some noted that investors and proxy advisers are likely to boost their scrutiny of director appointments from now on. Others saw shareholder activism growing and large industry super funds continuing to flex their muscles on issues they viewed as important.
As a result of these developments, stakeholders were expected to demand more information and transparency on policies related to areas such as climate change, remuneration, diversity, conduct, and culture. Because directors will have so much access to data by 2025, governance professionals are predicted to become the filters or ‘curators’ of information rather than being the ‘givers’ of information. Participants generally agreed that they won’t be giving directors more information, just better-quality information. A common feeling was that boards are pushing back now on how much information they receive and can absorb. In turn, the company secretary will need to push back harder on management to provide shorter, more relevant information to the board. According to the study’s report, which was released at Governance Institute’s national conference in Sydney in September, governance professionals will still need to have a solid understanding of financial, legal and IT issues, but will also require a greater range of soft skills. These would include: • Great judgment. • Curiosity and a drive to get to the bottom of a problem and think outside the square. • The ability to zone in on the core information required by the organisation and prioritise different information streams • The capacity to see the world in a broader and more nuanced way than management and then to work
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out how all the disparate pieces of information fit together. • Good communication, collaboration and negotiation skills as well as the emotional intelligence to understand human behaviour and boardroom dynamics. • The ability to liaise at all levels of the organisation, with all types of stakeholders. And, to be ‘Switzerland’ — that is, to be fair and stay neutral in disputes. • The capability to run ‘common sense’ checks over sophisticated datasets and ensure they are correct — not just relying on machines, or assistants, to do so. • An understanding of systems and processes across the organisation. • A grasp of the mechanisms needed to reshape the organisation’s culture. • Project management skills, including strong time management and multitasking skills.
embarking on other forms of life-long learning. Having a broader network and/or a mentor was also seen as very valuable, especially in being able to learn from other people’s mistakes.
OTHER GOVERNANCE PREDICTIONS • Directors may need to look at limiting their number of board appointments as their role becomes more complex and demanding of their time. • There will be a stronger focus on board renewal and the maximum tenure of board members. That could open up boardroom seats and make room for increased levels of boardroom diversity, especially for non-traditional candidates from outside the C-suite. • The growing complexity and rising number of issues that boards will have to deal with may result in more deliberations being pushed out into sub-committees.
In addition to these skills, participants across all parts of the study believed that in order to keep pace with rapid changes and the broader set of issues affecting their organisations by 2025, governance professionals will have to continually maintain and improve their knowledge base and skills set.
• There won’t be more board subcommittees, but some traditional committees will be beefed up in order to better align culture and risk — for example, remuneration in the context of culture. Sub-committee meetings may become longer or be held more frequently.
This would mean completing a mix of short and long courses from various educational bodies, lots of reading, conferences and seminars, and
• There will be more millennials on boards and they are likely to place greater emphasis on ethics and social
good than on ensuring risk systems and structures are in place. They will also potentially be less rigid in their understanding and style and keener to push the envelope. • The governance world will grow. Super funds are already having to lift the bar on their governance, but by 2025, more not-for-profits and organisations managing large pools of money will be required to do the same. More small to medium-sized entities will also embrace governance as they become aware of its many benefits and as they grow. • Scrutiny of both director and executive pay will rise. Governance professionals may have to lend their legal expertise to help simplify longterm and short-term incentive plans which are becoming more complex and may not be achieving what they are meant to. • The role of the company secretary will increasingly be separated from other roles such as CFO and general counsel. • In addition to the CEO and CFO, company secretaries will also have stronger relationships with the Chief Risk officer, Chief Technology Officer and Chief Human Resources Officer. • Company secretaries may also be asked to sit on the boards of other organisations to gain different perspectives to support their own internal roles.
This article previously featured in Governance Directions – A Governance Institute of Australia publication. The full report is available for download at www.governanceinstitute.com.au
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HOW TO APPLY VALUE ENGINEERING TO INFRASTRUCTURE DEVELOPMENTS By Andrew Loh AAIQS from Donald Cant Watts Corke
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INFRASTRUCTURE DEVELOPMENTS IN AUSTRALIA Australia is currently witnessing an unprecedented amount of work in the infrastructure sector. This has been stimulated by the Australian Government’s pledge to spend $100 billion on infrastructure for road and rail projects across the nation over the next 10 years. This is crucial as the existing infrastructure networks in the nation’s largest cities are currently operating over capacity and are in sore need of revitalisation and augmentation. In addition, infrastructure projects are the driving factors of achieving sustainable socio-economic, environmental development, and a key indicator to the progress of a country. Due to the nature of infrastructure projects, which are considered high risk with very high project values and long construction periods, Public Private Partnerships (PPPs) have emerged as the preferred method of procurement. In a PPP arrangement, the state (public sector) is legally bound to a private consortium and the partners agree to share some portion of the associated risks and rewards inherent in these infrastructure projects. Under this procurement model, the infrastructure project will form part of a partnership between the state and the private sector in a long-term agreement, normally through the implementation of a Design, Build, Operate and Transfer’ (DBOT) system. In PPP projects, the private sector provides the design, construction, financing and operation of the infrastructure, in return for payments from the users of the infrastructure or the state.
The use of PPPs for infrastructure projects has its advantages and they are as follows: • Private sector funding of infrastructure project • Enhanced efficiencies in operations and maintenance of a built asset • Sharing of project related risks and rewards between the State and private sector • Stimulate local economy / increase employment opportunities • Transfer of up-to-date construction methodology and technologies • Asset ownership remains with the government (at the end of the agreed operation stage).
VALUE ENGINEERING Value engineering (VE) is an approach to system design and infrastructure development focused on continual enhancement to obtain the essential functions at the lowest total cost. This should be carried out using best practice ‘value for money’ initiatives and not just on cost savings alone. This implies that VE initiatives should be made by giving proper consideration to the owner’s own value for money definition. For example, a simple definition might be ‘Achieving best-practice outcomes economically, efficiently and effectively.’ In other words, when the cost of a VE initiative is relatively low, when productivity is high and when best possible project outcomes have been considered, then value for money is the result. Adopting this principle in
infrastructure development leads to powerful, valuable change that can greatly streamline the management structure of the project with no risk to quality. VE can be differentiated from cost reduction methodologies from its ability to produce the following results: • Improvement in quality of project • Mitigating risks to enable efficient investments • Omission of costly / unessential elements and improve revenue capture. VE is generally governed by the factors stated below: • Client’s needs – communicate with the client to ascertain what they truly need. Separate the client’s ‘needs’ and ‘wants’ and manage them in accordance with cost and requirement • Material and labour costs – maintain the overall efficiency of labour force by improving productivity through the careful selection of the most appropriate construction methodologies. Procure materials early and consolidate orders to lock in better rates from suppliers • Maintain quality of products – selection of the most suitable material to ensure a quality product is achieved • Systemic process approach – critical analysis of all processes needs to be carried out to identify any issues and to enhance the overall functionality of these processes • Continual improvement – regular monitoring of processes to analyse where there are problems. Mitigation of these problems must be implemented immediately to ensure cost savings.
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STEPS TO IMPLEMENT VALUE ENGINEERING Theoretically, VE is simply about identifying a project’s main elements in the context of value for money and then analysing each individual function in isolation. From there, it is possible to develop alternative infrastructure development options and to test to see if these better options support the end objectives. Ultimately the aim of VE is to attain added value from a project base on this equation: Value = Performance Cost VE is also generally applied through these five key steps: • Research - assessing the primary objectives in a project; this includes reviewing the initial design (and constraints) and technical specifications, before application of the VE approach (economy and efficiency) • Speculation - brainstorming different methods for achieving the same outcome, such as alternative designs which potentially may be more cost efficient (effectiveness)
idea to key stakeholders with evidence of its success (value for money)! Notice how each of these key steps relate back to the ‘Value for Money’ definition and achieve the desired outcomes.
HOW VALUE ENGINEERING IS IMPLEMENTED ON INFRASTRUCTURE PROJECTS Currently, in Australian, there are a number of large infrastructure projects. Examples are WestConnex (New South Wales), Melbourne Metro Tunnel (Victoria), Westgate Tunnel (Victoria), Suburban Roads Upgrade (Victoria), and North East Link (Victoria) which are either in the planning or construction phase. The commonality between these projects is the utilisation of the PPP model as the chosen form of procurement. As stated previously, infrastructure projects are generally
• Evaluation - determining criteria for success, such as value for money, increased productivity in construction, cost efficient designs, etc. (economy and efficiency) • Development - firming up this alternative solution by considering the processes required in implementation, like changing the proposed construction methodology to achieve increased productivity (effectiveness) • Presentation - delivering your final
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much larger in value and longer in project duration in comparison to other construction projects. In addition, with the PPP procurement structure, there are a number of stages within the project starting from the initiation stage through to the transfer stage (refer to Image 1 for all stages). The impact and effectiveness of VE to an infrastructure project is dependent on the project stage it is applied to. While VE can be applied in all stages of PPP infrastructure projects, it is the most effective and has the greatest benefits when used in the earlier stages of the project. As illustrated in the following diagram, the earlier in the project VE is applied the higher the potential of achieving substantial cost savings and effective outcomes. In this regard, it is apparent that conducting VE workshops to establish alternative design solutions during the design stage usually results in larger cost savings.
VALUE ENGINEERING AT VARIOUS PROJECT STAGES In PPP infrastructure projects, the state (public sector) will prepare the initial design through its consultant/design team. The project is then announced and the private sector, be it local or international, establishes the project company (consortium) that will usually develop the design, build, operate and then transfer (DBOT scheme) the project to the state when the concession period ends. The application of VE to the various project stages varies in accordance to the project stage and the following are the steps of implementation and potential benefits at each project stage: 1. Initiation Stage VE at the initiation stage of the project is carried out by the state (public sector) and should be implemented as follows: I. Establish actual stakeholder needs for the project (‘needs’ rather than ‘wants) II. Investigate the availability of resources for the project (labour, plants and materials) III. Analyse how the proposed infrastructure project will affect its surrounding context (positively or negatively) IV. Identify project risk and establish mitigation or prevention methods V. Determine the projects accepted level of quality and project duration VI. Commence initial concept design. The potential cost savings arising from VE at this stage is relatively high. 2. Design Stage The consortium (private sector) will be able to implement VE during the design
stage. It is widely recognised that the use of VE is most effective at this stage of the project and should be implemented by: I. Establishing design constraints II. Exploring alternative design solutions III. Analysing which alternative design solution achieves the required project quality in the most cost efficient and productive manner
complete and has the longest duration. To ensure the successful transfer of the project to the state (public sector) at the end of the operations and maintenance stage, the consortium must focus on: I. Maintaining user satisfaction for the product/service II. Enhancing the performance of the operation
IV. Selecting the most adequate design solution based on its performance with regards to quality, cost and time.
III. Keeping operation and maintenance equipment up to date (technology used to be renewed and kept current)
The application of VE at this project stage is the most beneficial in terms of attaining a quality product, substantial cost savings and meeting the required project program.
IV. Maintaining a regular maintenance and safety regime (in accordance with specifications and standards)
3. Construction Stage VE at the construction stage is carried out by the consortium (private sector) and it encompasses more of a ‘follow through’ role to the previous stage, where the consortium’s construction team is required to: I. Limit and/or minimise defects in the built asset II. Keep track of the cost of resources (labour, plants and materials) III. Assess and mitigate project risks IV. Maintain regular communication with the various stakeholders V. Identify and transfer functional problems to the VE team for evaluation and mitigation. The effectiveness of VE at this stage is moderate to low. 4. Operations and Maintenance Stage The operations and maintenance stage commences after construction is
V. Assessing and mitigating project risks VI. Providing training to the State’s team (which the project will be transferred to). VE at the operations and maintenance stage although important has a relatively low impact. 5. Transfer Stage This is the final stage of the project and only if VE has been applied and carried through correctly through all the previous stages, can optimal project value capture be attained for both the state (public sector) and consortium (private sector). In conclusion, VE is crucial for any infrastructure project as it enables the project to achieve enhanced services at a reasonable cost (value for money) by reducing unnecessary project costs across the various stages of the project. Furthermore, the successful application of VE will also lead to an increase in value, quality of built asset and reduction in construction duration. Thus, allowing both Public and Private sectors to benefit from infrastructure development.
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THE NCPR: HELPING QUANTITY SURVEYORS REDUCE RISK By Emma Green, NATSPEC Communications
Quantity surveying is a profession built on accuracy. Clients and companies make significant monetary decisions based on quantity surveyors' estimations, and, though there is always a level of risk involved, quantity surveyors have an important role in the construction industry due to their focus on risk reduction. The quality of each design component, major and minor, is important as it affects the overall quality of the construction project. Design components work together to deliver a high standard structure, as building professionals from different domains collaborate to produce high quality projects. One design element cannot rely on the quality of another; it must be of high quality in itself. When quantity surveyors do not have a full
understanding of the project's quality, they cannot perform their role appropriately. An important part of quality is conformity. Products must conform to the relevant Australian and international standards applicable to their usage. Non-conforming building products pose significant problems for building professionals across the construction sector, including quantity surveyors. Non-conforming building products are products that claim to be something they are not, they do not meet the required standards for their intended use, or are marketed or supplied with the intent to deceive those who will use them. They are often discussed alongside non-compliant building products, which are products used in a manner that does not comply with the National Construction Code.
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A quantity surveyor's assessment of costs will no longer be accurate if postcompletion â€“ six months, one year, ten years later â€“ residents and owners discover faults due to non-conforming products. These products can have significant financial consequences for all parties involved, and significant safety consequences for those living in or using the building. Non-conforming building products cause unexpected high costs for repair and replacement, and possibly litigation. The value of affected properties is likely to decline. Most significantly, nonconforming building products put people's lives in danger. NATSPEC has developed the National Construction Product Register (NCPR) to help the building and construction
industry mitigate these risks. The NCPR is a free online database of building products with verified evidence of conformity. Manufacturers apply to the NCPR to have their products included on the register. NATSPEC, a not-for-profit organisation, then verifies the evidence of the suitability of each product before including it on the NCPR. Designed to be used in all stages of the design and construction process, quantity surveyors and other building professionals can search the NCPR for the products they plan to use to check that those products conform. This is especially useful for substitution. Verifying the suitability and conformance of building products with the NCPR allows quantity surveyors to make informed choices and provide more reliable information to their clients. The NCPR is an invaluable tool for the building industry and is very much needed. The high rate of imported products makes regulating non-conformity far more difficult. One prominent example is Infinity cables, recalled by the ACCC in 2015. Some 5,000 kilometres of the imported electrical cables, marketed as safe to use, were installed in houses, residential buildings and commercial buildings around the country between 2010 and 2013. However, it was found that they do not meet the required safety standards. The cables become prematurely brittle and present an electric shock and fire risk. Despite the nationwide recall, many owners have not removed and replaced the Infinity cables in their homes. Much of the cabling remains unidentified. Now, as the cables are nearing the end of their expected lifespan, the safety risk is more serious. The cables are more likely to deteriorate and spark a fire, making them more dangerous to inspect and replace. This is an issue that quantity surveyors and other construction industry
professionals could have foreseen, had they known that the cables were non-conforming. The NCPR, therefore, performs a risk reduction role to complement the decision-making processes of all building professionals involved in a construction project. Non-conforming building products are used in different ways and for different reasons, often in ignorance of their full potential for problems. Information about a product's conformity is often spread over different locations, involving various organisations, Government departments and certifications. This makes the appropriate information difficult to find, keep track of and verify. To facilitate construction professionals' research and decision making, the NCPR groups all this information together in one easily accessible place. Building products used to be easier to control, but with the expansion of Australia's construction industry and the prevalence of imported products due to globalisation, regulating the quality and conformity of building products is far more difficult. Since 2014, when Melbourne's Lacrosse tower caught fire, combustible cladding has been in and out of the news. There was another fire in February this year at the Neo200 building. As yet, no one has been hurt by cladding fires in Australia, but similar fires overseas, particularly the Grenfell Tower fire in London in June 2017, have shown the disasters that can occur due to noncompliant cladding. Combustible cladding panels do meet certain standards; they are permitted for usages such as signage and onestorey buildings. However, when used in a non-compliant manner, cladding panels can significantly increase the risk of fire. Like non-conforming building products, this causes problems for quantity surveyors and other building
professionals. Since the Lacrosse tower fire in 2014, non-conforming and noncompliant building products have been the subject of multiple reports. The 2018 report Building Confidence, authored by Peter Shergold and Bronwyn Weir, offers 24 recommendations to improve enforcement and regulation in the Australian construction industry. As the issue is so wide-reaching, clear direction is needed to ensure the protection of homes, buildings and lives. The NCPR helps the industry fill this gap. Building industry professionals can encourage the manufacturers of their preferred products to apply for a listing in the database. A product's absence from the NCPR does not necessarily indicate that it has invalid evidence of conformity, and a product's inclusion in the register does not represent an endorsement by NATSPEC. The NCPR is in its infancy, with about 1000 product listings. The database will continue to grow, improving Australian construction quality as it does so. The NCPR is a reliable tool for the industry. The database has been developed by NATSPEC, an impartial organisation that is owned by the Australian Institute of Quantity Surveyors along with other industry associations and Government property groups. It helps quantity surveyors perform their work and fulfil their responsibility to reduce risk. The NCPR is one part of the effort to rebuild confidence in the construction industry. We seek your ongoing support to help educate all industry participants.
For more information, and to check the conformity of products, visit: www.ncpr.com.au
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TECHNOLOGY AND INNOVATION
AUTOMATING THE INTELLIGENT CHAOS: CONSTRUCTION CONTRACTS By Alan McNamara, Ph.D candidate at the University of New South Wales, Sydney, Australia, and Founder of iContract Technologies
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TECHNOLOGY AND INNOVATION
FROM PAPER TO SMART TO INTELLIGENT CONTRACTS Smart contracts are considered a key influential development that will support Britain’s achievement to becoming a digital economy as set out in the government report - Digital Built Britain . Smart contracts have the potential to remove the need for a trusted third party to administer a contract in a truly autonomous state by integrating Building Information Modelling and the Internet of Things, to inform the smart contract of actual progress and performance. The general objectives of smart contract design are to satisfy common contractual conditions, minimise exceptions both malicious and accidental, and minimise the need for trusted intermediaries (Li et al., 2018). Smart contracts translate the legal terms and processes into software code, therefore any contractual response is the outcome of the programmed code. Once initiated, it typically cannot be stopped or reversed once commenced without built in protocols allowing for alterations. Artificial Intelligence (AI) also has the opportunity to be included in smart contracts to assist with decision making as the technology develops . There are several levels of smart contract models, ranging from a fully autonomous contract where the conditions are entirely in code, to a semi-automated natural language contract where only the payment mechanisms are encoded.
Intelligent Contract (iContract) is the term used when a contract's purpose is to manage itself . An iContract will set out the requirements and decision inputs (hold points) in order to start a series of if/then that will execute the terms of the contract between the client and different members of the project team; main contractor, subcontractors and any consultants or specialists involved. The iContract clauses are executed when the coded contractual conditions are met allowing digital transaction information such as performance criteria, physical existence of materials on-site and works completely to verify a payment amount to be embedded and automatically transfer among the contracted parties once the agreed parameters are met . The ‘black and white’ or ‘1 or 0’ execution of an iContract is a huge obstacle to overcome in adopting the potential technology due to the complexities of the construction process requiring judgment and discretion which would normally be handled through subtlety and refinement in the language of traditional contracts.
BENEFITS AND APPLICATIONS Optimised contract formulation and negotiation An evolution towards the automation of the contract formation and negotiation
process could not only reduce the expenditure of resources, but it would also alleviate the ambiguous nature of current contract drafting as the iContract would be more logical in nature. The possibility for a digital database of clauses and terms to be automatically recommended by the technology, based on criteria set by the user, would offer the opportunity to greatly reduce the drafting and negotiation period. Contract administration efficiency An iContract solution would alleviate the onerous contract administrative tasks currently handled manually allowing greater speed and accuracy of the process while diverting the effort of management to project delivery. Improved communication, collaboration and trust Through automation, processes are clearer and more transparent by their nature allowing the trust between the contracting parties to improve. The idea that collaboration is part and parcel of the automated process and that, far from being a casualty, is part of the DNA of a potential iContract is something that could finally demand what has been sought for decades. The construction industry may well have exhausted its ability to collaborate through traditional mechanisms due to the human-based factor which will allow for digitalisation to disrupt.
 HMG, Digital Built Britain: Level 3 Building Information Modelling - Strategic Plan, in, HM Government, London, 2015.  C.D. Clack, V.A. Bakshi, L. Braine, Smart contract templates: foundations, design landscape and research directions, arXiv preprint arXiv:1608.00771, (2016).  J. Mason, Intelligent Contracts and the Construction Industry, Journal of Legal Affairs and Dispute Resolution in Engineering and Construction, 9 (2017) 04517012.  A. McNamara, S.M. Sepasgozar, Barriers and drivers of Intelligent Contract implementation in construction, in: 42nd AUBEA Conference, Singapore, 2018, pp. 281-293.
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TECHNOLOGY AND INNOVATION
Contractor/Service Provider/ Vendor Principal Contractor (PC) Sub Contractor A
PHYSICAL ASSET AND/OR SERVICE
Sub Contractor B
Agreement between parties
Real Time scenario analysis
Sub Contractor C Consultant A Vendor A
LEGEND TASK DATA FLOW PAYMENT FLOW
DATA BIM Scope/WBS Specifications Budget Schedule
i CONTRACT (PC Head Contract)
Plug in iContracts
Sub Con A Sub Con B Sub Con C Consultant A Vendor A
Project Bank Account
DATA Warranty info Schedule Communications record Budget/WBS
British construction industry is shown to be dominated by main contractors who are essentially intermediaries between the owner and the lower supply chain relying solely on cash flow for profit.
$ Principal Contractor Sub Con A Sub Con B Sub Con C Consultant A
Image 1: Work is carried out and/or service provided and/or product supplied by the Contractor/ Consultant/Vendor (CCV). The CCV then makes their claim through the iContract platform. Inspection of the work is verified via a number of possible mechanisms that assess the claim against the contract requirements, scope/schedule/budget etc. The main iContract will then assess all data against the agreed contract clause and executes the terms accordingly. As all CCVâ€™s would have seamless back to back iContracts plugging into the main Client/Principal iContract, an immediate waterfall of payment can be made from the client's project bank account to all parties upon execution of the iContract terms.
Supply chain efficiency The digital integration of real time analysis along with efficiency of the process through the digital procurement process that an iContract would drive could achieve an optimisation of the
supply chain in an industry that is seen to be heavily fragmented. The possibility of actually removing intermediaries from the construction project supply chain has also been proposed by some commentators as the structure of the
An iContract could run scenarios for any scenario, be it legislative changes in requirements impacting on construction methodology or materials, to any number of events that arise on a construction site daily. By having an intuitive and sophisticated digital contract engine, a user could run a scenario, either as a simulated possibility or based on a real event. The iContract could then inform the user what the contract consequence on all parties will be with the iContract then acting in either an advisory or automatic fashion in the execution of the workflow to remedy the situation. Optimising change management through the speed and accuracy of a digital solution would be extremely benefitable to the decision-making process in any construction management team. Performance analysis and forecasting The capture and analysis of performance data could capture upward or downward trends in contract performance immediately, or even before, the fact allowing the project team to address the situation. Increased traceability and accountability Traceability of every contractual transaction would be far more accurate and easily found due to the digital
 J. Li, M. Kassem, A. Ciribini, M. Bolpagni, A Proposed Approach Integrating DLT, BIM, IoT and Smart Contracts: Demonstration Using a Simulated Installation Task, in: International Conference on Smart Infrastructure and Construction 2019 (ICSIC) Driving data-informed decision-making, ICE Publishing, 2019, pp. 275-282.
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TECHNOLOGY AND INNOVATION
nature of the iContract. Not only would data of any project be searchable, but the prospect of missing or incomplete data due to manual input would also be minimised due to the automated nature of the administration process. Through blockchain technology, an iContract could create an immutable record adding more transparency to every transaction of a construction project.
Stability of Payment Process Through a central iContract system payment could automatically flow, not only to the head contractor, but also to subcontractors, consultants and suppliers, where cashflow is critical to the survival of construction businesses. An iContract would dictate when, where and how a party is being paid and what for based on a more accurate digital process. The capability for the iContract to be central to automated
payments is something that will be a huge benefit to the industry as the capability for ‘pay for work’ becomes an instant process resulting in ‘inch-stone’ payments as oppose to the traditional longer milestone payment terms that are extremely onerous to many players in the industry. Reduced Dispute The immutable nature of an iContract system would present a contract environment where facts are harder to dispute due to the optimised and efficient data management leading to less disputes. The onerous nature of human administration in any construction contract dispute is something that could be potentially alleviated through automation of the process.
CHALLENGES AND BARRIERS Innovation Adoption in the Industry
Image 2: iContract conceptual process - The iContract will access data from a Blockchain protected Database (or Data Lake) where all project data is transferred to and from. This enables an immutable source of truth of the project Data. This Data will be provided by current technologies in use, such as BIM, Budgeting software, Scheduling software, Logistics software, Communications software, and any other future source of relevant digital Data which can benefit the construction process.
The construction industry is seen to be typically slow at adopting new technologies and historically resistant to change. Some commentators offer the opinion the sector is not yet ready for the level of collaboration and information exchange required for a digital automated contract to be successful. Some believe that due to the technological state of the industry being insufficient, the implementation of blockchain and other digital solutions is likely to be costly. Generally, digital technologies are presumed to increase productivity, but this is not always the case as, if it is not
 J. Mason, BIM Fork: Are Smart Contracts in Construction More Likely to Prosper with or without BIM?, Journal of Legal Affairs and Dispute Resolution in Engineering and Construction, 11 (2019) 02519002.  J. Mason, H. Escott, Smart contracts in construction: Views and perceptions of stakeholders, in: Proceedings of FIG Conference, Istanbul May 2018, 2018.
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TECHNOLOGY AND INNOVATION
combined with efficient and streamlined processes or when organisations lack a collaborative environment, it can struggle to make an impact. Handing Decision Making to an automated process An element of surrender to an automated system has been identified as a limitation to the industry. Traditional construction contracts require judgment and discretion which is extremely different to code. The benefits of iContracts are diluted by the logical ‘1 or 0’ process it must rely on. The alternative is that computers are a tool and can perform a good deal of the repeatable aspects of construction whilst allowing for human input on the more sophisticated tasks or act as a hold point for any critical decision. This is the semi-automated position advocated as likely to be the work around in the short to medium term. A phased based approach, much like the BIM levels, appears to be the likely roadmap with a semi-automated process being developed using existing contractual procedures. Identification of the processes that would achieve the greatest cost/quality/time saving, while achieving confidence in the process by giving an element of human control, should make the concept more appetising for the industry. Technological and Data Requirements BIM’s establishment in recent years has laid the foundation for iContracts to operate. The counterargument that iContracts would not need to align so closely with the BIM agenda due to basing themselves as not one multiparty contract but a collective of possibly thousands of contracts is also something to be considered. Given the embryonic stage of the iContract concept and the lifecycle of
new technology in general, it is expected that many of the challenges highlighted will be solved as existing technologies evolve. Through cloud computing, it is possible to access and combine data from various emerging construction software applications through data virtualisation and an Application Programming Interface (API) that allows data from one application to be used by another. Perceived legal Inflexibility of a digital contract Manual construction contracts deals with the uncertainty by containing wording allowing a flexible approach to be taken when situations arise. One of the main perceptions of automated contracts is that they will be incapable of dealing with the ‘wriggle room’ that exist in traditional contracts. A computer programme is made up of algorithms that are essentially ‘if x = y then z’ and the ability for iContracts to deal with change and uncertainty will be a major barrier preventing their adoption. The difficulty in replacing subjective ‘loose’ wording with computer code is a huge challenge in order to cover the multitude of variables encountered on any construction project but this is again where a semi-automated human-interaction hybrid model may ease sceptics of the technology.
CONCLUSION Technological innovation is occurring at a growing pace as society has entered the digital age, and the construction industry is in a race to catch up with the digital capabilities of other sectors. Unfortunately, the construction industry has a historically short-sighted view on innovation with investment relying on immediate value. Knowing the antecedents of usefulness for any technology gives organisations the
tools to present the case for adoption more effectively and convincingly. The iContract must present value to its users through the identification of the repeatable processes that it could be applied to. By the careful targeting of the technology to address the ‘low-hanging fruit’ problems of current contractual practices, the iContract can gain acceptance and begin to push the boundaries of digital automation into the contract process. The notion that iContracts will be autonomously controlling construction projects based on data from advanced sensors acting as a certifying authority will not be achieved overnight. The advances in BIM, in multi-party contracts, in project insurance can all be seen as a pre-cursor for the type of paradigm shift required to achieve autonomous construction. Ultimately, addressing the current technological barriers is a waiting game for the iContract concept to reach the stage of maturity where it is indisputable from a legal perspective. The iContract concept would bring enough disruption to reform contract practices within the construction industry and support its advancement into the digital revolution. This would allow the industry to better manage resources, reduce costs, reduce project durations and reduce disputes. As the iContract concept evolves, many of the challenges identified would be addressed and further opportunities will become apparent as trust in digitalisation increases. The author is currently carrying out the next phase of his research to develop the iContract concept and invites any professionals with experience or knowledge of construction contracts to participate in an online survey found at: https://unsw.au1.qualtrics.com/jfe/ form/SV_6WGXSk9ITe8rfEN. For more information on the iContract concept, please visit www.icontract.ai
 J. Li, D. Greenwood, M. Kassem, Blockchain in the built environment: analysing current applications and developing an emergent framework, in, Diamond Congress Ltd., 2018.
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TACKLING THE RISING COST OF PI INSURANCE About the PI insurance market & rate increases: The professional indemnity market has come under pressure of late with premiums increasing, and insurers reducing capacity. This has particularly affected any professionals involved in the construction space. Given the myriad of issues surrounding cladding, non-compliant building products, the Opal Tower, and Mascot Towers insurers have been reducing their capacity and seeking to increase premiums between 20%-40%.
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EDUCATING THE NEXT
GENERATION OF CONSTRUCTION PROFESSIONALS By David Cartwright from Buildsoft
Thereâ€™s no doubt technology has changed - and continues to change our lives and the lives of those around us. From mobile phones to the internet to self-driving cars, the changes experienced and now demanded by
society have been immense and show no signs of slowing down. But what has that meant for the construction industry? Traditionally our industry has been slower than others to adopt new technologies, whether due to lack of
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time to implement new processes or simply an inertia to change; and in so doing has been lagging behind in reaping the immense benefits on offer. Some parts of the industry have already progressed rapidly into the digital age.
Drones and 3D scanners are now used to record huge quantities of data to help analyse construction sites, on-site workers are using wearable technology so employers can manage their health and safety in real time, and construction companies are using estimating software to ensure the profitability and longevity of their business. It is time to come together as an industry to not only embrace technology but to take an active and leading role in shaping its development into the future. But how can we encourage this adoption to come about? One of the ways this is taking place is through educational institutions like the University of Newcastle, where lecturer Dr Trevor Hilaire introduces emerging construction professionals to innovative technology; inspiring a new generation that embraces software as a fundamental part of the industry’s success. Dr Hilaire teaches a number of courses as part of the Bachelor of Construction Management (Building), an AIQS accredited degree; and with decades as a Quantity Surveyor and ten years of educating under his belt, he’s perfectly poised to usher in the next generation of construction professionals. “In my view, technology is the most significant change in the industry, and the impact on construction management has been great'', says Dr Hilaire. “I see technology as being ingrained in construction as we look forward to the future, and look for ways to make further improvements on our existing technology.”
Education is critical to the continued introduction of a skilled workforce into the industry, especially in the areas of construction management, cost management, and cost planning. Teaching them the value of construction technology at an early stage of their career plays a big part in that. “Education should provide a grounding in advancement, in both technology and processes”, Dr Hilaire says, “and expose students to areas of the industry where they had no previous knowledge”. By providing this kind of exposure, educators like Dr Hilaire enable students to see the potential of a career in estimating, which he identifies as something many students previously never knew existed. One of the courses Dr Hilaire teaches within the degree is Cost Planning and Estimating, which introduces students to estimating principles, and then the basics of cost planning and familiarity with building elements. Along with two courses in measurement, this is the way the next generation is getting their first taste of life as a Quantity Surveyor. “The construction industry is bounded by what is known as the ‘Iron Triangle’ of time, cost, and quality'' says Dr Hilaire. “As it is difficult to manage something without understanding the extent of it, quantity impacts time. In addition, cost is also based on the quantity or extent of work an organisation needs to meet costs to survive. Therefore, being able to use technology that can identify the extent of work has to be very important for both time and cost - two essential ingredients of the Iron Triangle.”
This is how students are introduced to and realise the value of estimating software. “My students come to understand that estimating is expensive but crucial to a construction organisation’s survival,'' says Dr Hilaire. “If an estimate is too low the organisation will have to dip into other funds to complete the project, depleting resources. If the estimate is too high, the bid will be unsuccessful and the organisation’s resources will be depleted by funding unsuccessful estimates”. As a Quantity Surveyor knows, this is the crux of what it means to work as a professional estimator. For the very survival of your company, you need to know how to prepare and use accurate data. The challenge of accuracy, among others, is one of the most prominent in the life of a Quantity Surveyor, and it is through using software as a solution to that challenge that a Quantity Surveyor can find lessens the burden. “I introduce my students to the measurement of trades using sophisticated software that can expedite the estimating process and improve the accuracy of an estimate,'' says Dr Hilaire. “Students learn that such software is very beneficial to construction organisations, as it could reduce the cost and time to produce accurate estimates, enabling a greater number of more accurate bids. I think it’s crucial that our next generation of professionals are adept at working with construction technologies that help solve the challenges they will face.” Industry innovators like Buildsoft have been championing technological changes to provide solutions to the everyday challenges faced by Quantity Surveyors
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and Commercial Builders to drive more accuracy and greater efficiencies. And it’s this technology that the University of Newcastle and many other educational institutions all around the world use to train and develop the skills of emerging construction professionals.
change lives,” says Cameron. “More and more information is being created and distributed electronically. As more interoperability occurs, if you do not familiarise yourself with these systems and take advantage of the efficiencies they bring, then you will be left behind”.
“Working with Buildsoft to introduce our students to advanced estimating software like Cubit, for me is essential,” says Dr Hilaire. “Many of the students who start with me want to learn and are passionate about the industry. By graduation, they are aware of the responsibility they have, take pride in quality, timely completion, and being problem solvers, so they are the very best for their employer. And being adept at using technology like Cubit is a part of that”.
Along with many other experienced Quantity Surveyors, Cameron has seen the introduction of technology during his career, and experienced first-hand how it has impacted his work.
James Cunningham, Director of Software Operations at Buildsoft, understands the need to offer exposure to critical industry technology such as Cubit, and is passionate about equipping them with the tools they need for a successful career. “We definitely recognise the importance of educating students in estimating software,” says James. “It gives them a solid grounding before commencing employment, and offers them skills to take with them so they can do their best work. That’s why we’re driven to partner with universities to provide access to our software”. Cameron Beard AAIQS, CQS, Quantity Surveyor and former Director at Muller Partnership, has been working in the field for more than 17 years and also sees software as an important part of the education of emerging construction professionals. “A career in construction is diverse, and you get the see things built that
“As a Quantity Surveyor, I believe I am part Architect, part Engineer, part Builder, part Project Manager, and part Accountant. The level of IT is also growing, so part Computer Scientist is possibly the way of the future,” says Cameron. Cameron’s views reiterate Dr Hilaire’s comments on the Iron Triangle, and he sees the impacts software can have on cost and time. “There seems to be more and more information to include when completing an estimate, with project deadlines seeming to get shorter and shorter. Technology in construction can bring efficiencies that offer clients potential time and cost savings, as well as allowing for more sustainable developments.” This technology will have an important part to play in the future of the construction industry, and the next generation of estimators will be equipped to make the most of the possibilities of the future. But like any technology, construction software will need to continue to evolve with the industry, as new challenges arise, new solutions and better ways of working will need to be created.
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More than 30 years ago Buildsoft pioneered estimating software in Australia, bringing digitisation to the industry, to many for the first time. Dr Hilaire fondly remembers his first exposure to estimating software in 1986. “I bought my first copy of Buildsoft Global and I could not believe how easy it made things; at that time, it was so advanced that I could not envisage any improvement. Then the digitiser module was released and I was awestruck by the immense leap in technology. I was unable to ever envision technology like Cubit. However, the technology moved to become mainstream and is continuing to evolve.” As we continue into an age of increasing use of software solutions throughout the construction industry, organisations like Buildsoft will continue to innovate solutions to common problems. However, both Dr Hilaire and Cameron Beard acknowledge that education isn’t solely for the younger generation. “With almost 18 years within the industry to date and probably another 25 years to go, if you are not educating yourself as an existing construction professional, then you will get left behind,” says Cameron. “With the changes I have seen in the past 18 years, I can only imagine what changes will occur in the next 25.” As the adoption of this technology continues to grow through the education of the next generation as well as through use by existing professionals, the industry will be in a better position to take an active role in leading the development of software and shaping their own future.
FORECASTING AUSTRALIAN CONSTRUCTION Australian Construction Industry Forum (ACIF) has released the November 2019 Australian Construction Market Report.
Bob Richardson FAIQS, CQS, Chair, ACIF’s Construction Forecasting Council cites the following key points in the Report:
pipeline with its long lead times and stimulate a return to growth in Residential Building.
The Report covers the following sectors:
• There are serious challenges ahead, with the sharpest decreases in Residential Building still to come. The real consequences can already be seen in a rising number of insolvencies amongst builders and suppliers of building materials. It’s not yet clear when the recent adjustments in interest rates, pushing rates to under 1% and to a new record low point, will make their way through the non-residential construction
• Engineering Construction companies report that the much anticipated surge in infrastructure projects is proving to be hard to come to fruition. Our tracking of major projects shows a substantial volume of new projects entering into the construction pipeline in roads, rail and electricity, but the construction industry and the wider economy needs Government and business to get on with turning plans into reality.
• Residential Building (houses, apartments, townhouses) • Non-Residential Building (offices, retail, industrial, hotels, health, education and entertainment facilities) • Engineering Construction (major economic infrastructure including roads, rail and ports, and mining resource-based projects).
BUILDING AND CONSTRUCTION WORK DONE ($ BILLION) 120
Residential - Actual Residential - Forecast
Infrastructure Construction - Actual
Infrastructure Construction - Forecast
Non-residential - Actual Non-residential - Forecast
Heavy Industry incl Mining - Forecast 2008-09
Heavy Industry incl Mining - Actual
Source: Australian Bureau of Statistics and ACIF Construction Forecasting Council
AIQS members have free access to the Australian Construction Market Report and the ACIF Dashboard. Login to the AIQS website and follow the links. www.aiqs.com.au
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BRINGING EMBODIED CARBON UPFRONT By Jorge Chapa from Green Building Council of Australia
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HOW QUANTITY SURVEYORS WILL LEAD SUSTAINABILITY The future of the built environment will be zero carbon. Quantity Surveyors have the opportunity to take a leading role. As we move from an era of net zero carbon operations into net zero embodied carbon, Quantity Surveyors have the potential to bring their skills in assessment, costing and budgeting to the critical realm of emissions. This is a rapidly changing field where action and advanced skills are needed now. Changes we make today can ensure contemporary buildings do not leave a high-carbon-emission legacy for future generations. The World Green Building Council recently released the Bringing Embodied Carbon Upfront report, a plan to dramatically cut the carbon used across the building’s lifetime from the manufacture of its construction materials to their transport, the construction, operations, and eventual demolition. Over the next twenty years, the total area in buildings across the world will jump more than 50 per cent. By 2060, that gross floor area will be double what it is today. With the built environment responsible for 39 per cent of global carbon emissions, it means our building and development community can, and must, play a significant role in international decarbonisation. This is critical to avoid the forecast climate change catastrophe laid out by the UN Intergovernmental Panel on Climate Change. Every aspect of the industry has a critical and integral role – notably Quantity Surveyors – to bring the vision of net zero embodied carbon to reality.
WHAT IS THE BRINGING EMBODIED CARBON UPFRONT REPORT? In September, the World Green Building Council outlined its coordinated action for the building and construction sector to reduce carbon. Its vision is strong. It is for all new buildings, infrastructure and renovations to be net zero operational carbon, and at least 40 per cent less embodied carbon with significant upfront reductions, by 2030. By 2050, the goal is for all new buildings, infrastructure and renovations to have zero net carbon embodied carbon and all structures be net zero emissions in operations. World Green Building Council proposes a plan to achieve this across years and decades. The report highlights the need for collaborations and commitments from all stakeholders in the built environment, from non-government organisations, networks and researchers, to policymakers, investors, developers, designers, and materials manufacturers. As such, the report outlines the coordinated steps needed to decarbonise across the entire lifecycle of a building. Amongst the actions that are needed, the report calls for all stakeholders in the property sector within each country to set a strategy to address upfront carbon emissions. It also calls for targets to be introduced across standards and building codes. Over the decade, it calls for commitments to only finance compliant projects, and for tenants to push to occupy buildings with lower upfront carbon emissions. “The urgent need to go further and faster requires a new response and a new vision for our sector,” the report says.
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“This vision sees a highlight connected value chain radically reducing both embodied and operational carbon, improving wider lifecycle environmental impacts, and contributing as effectively as possible to the UN Sustainable Development Goals.” “To achieve our vision, we must take urgent action to tackle upfront carbon while designing with whole life carbon in mind.”
WHAT ROLE CAN QUANTITY SURVEYORS PLAY IN NET ZERO EMBODIED CARBON? Quantity Surveys have the opportunity to play a critical role in the sustainability of the built environment. As important decision-makers on a construction site, they can influence and design lowcarbon options within a project. Under the World Green Building Council proposal, Quantity Surveyors must commit to industry roadmaps – such as the Green Building Council of Australia’s A Carbon Positive Roadmap for the Built Environment – to integrate low embodied carbon at the concept design stage by next year (2020). From 2025, design companies must share publicly their lifecycle assessment data and determine best-practice embodied carbon reduction targets. A decade on, design companies should propose requirements for all projects to be 100 per cent net zero embodied carbon. We know this is ambitious. We know it breaks the current standard operating procedure that commercial data is guarded closely. But we know transparency is needed to create and enact a rigorous and accountable system of embodied carbon.
HOW WILL QUANTITY SURVEYORS MEASURE AND MANAGE EMBODIED CARBON? Quantity Surveyors are well placed to deliver this critical change to the approach to carbon in the built environment. Carbon will be a new economy. The skills used to cost and plan projects today are transferable to the methods to quantify and measure carbon dioxide emissions used and embodied in projects of the future. We believe Quantity Surveyors have the capacity to offer embodied carbon services as additional services, offering costing and quantifying carbon directly. While Quantity Surveys will need to upskill, we believe there will be efficiencies between merging these two areas of expertise. In general, we believe the early designstage opportunities to save costs are also opportunities to save carbon and Quantity Surveyors would be well placed to set the right foundations at the outset. Likewise, the digital techniques and tools employed to improve efficiency and cost reductions can also be engaged in carbon.
MATERIALS WILL PLAY A CRITICAL ROLE IN ACHIEVING NET ZERO EMBODIED CARBON A significant part of the transformation will depend on materials manufacturing and choice. The World Green Building Council report points out cement and steel are two of the most important sources of materialrelated emissions in construction. The International Energy Agency finds cement
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manufacture produces about seven per cent of the world’s emissions, while steelmaking also generates between seven per cent and nine per cent. So it is critical to drive changes for these crucial products. The global ResponsibleSteel standard – a partnership between steel producers and users – is pushing for increased sustainability measures across the value chain, from sourcing raw materials to final sales. Commitments include agreement to the goals of the Paris Agreement and site-level greenhouse gas reporting, targets and planning. Likewise, members of the worldwide Concrete Sustainability Council monitor and report publicly their CO2 targets and outputs and promote the use of secondary materials to reduce carbon. HeidelbergCement is committed to developing carbon neutral products by 2050 and India’s cement manufacturer, Dalmia Bharat Cement, is planning to become a carbon negative group by 2040.
AUSTRALIA’S ROLE IN A NET ZERO CARBON FUTURE When the World Green Building Council released its report, 20 members of the GBCA endorsed it immediately. This was almost a quarter of the companies, governments, and institutions worldwide, creating an impressive groundswell of support for change in Australia. These were the Australian Sustainable Built Environment Council (ASBEC), the Infrastructure Sustainability Council of Australia (ISCA), product certification systems Global Green Tag International Pty Ltd, Good
Environmental Choice Australia (GECA), leading local governments like the City of Melbourne and City of Sydney, and companies AECOM, Atelier 10, Cundall, Edge Environment, Frasers Property Australia, Integral Group, Interface, JLL, LafargeHolcim, Multiplex Global, RDT Pacific, Shaw Contract, thinkstep Australasia and WSP. As members of the GBCA, they are among more than 600 diverse companies across the country that believe in our commitment to develop buildings, cities and communities that are healthy, liveable, productive, resilient and sustainable. The World Green Building Council points to developers and developments in Australia leading the way on sustainability at the highest contemporary levels. They cite Lendlease’s 25 King Street commercial tower in Brisbane, the world’s tallest engineered-timber office building. This 10-storey building was prefabricated with cross-laminated timber to cut construction time to half, and offered a high-quality, more sustainable solution for community development. In Victoria, the government’s Level Crossing Removal Project at Bayswater replaced a dangerous crossing with a new train station, embedding sustainability in the project. Recycled waste products were used in the concrete mix and the station was designed to require fewer materials. Carbon emissions during construction were cut 30 per cent, and a forecast 43 per cent for the 50-year operations.
WHAT IS THE GBCA DOING TO BRING EMBODIED CARBON UPFRONT? At the GBCA we have partnered with Dexus, Frasers Property, The GPT Group and Interface, to build momentum to recognise the importance of upfront and embodied carbon. Our Carbon Positive Roadmap – a plan to decarbonise the built environment – was cited by the World Green Building Council for its leadership. And at a practical level, from next year new buildings seeking a Green Star rating will be required to reduce their upfront embodied carbon 10 per cent with additional incentives to reduce more. But we need everyone – all industry players, investors, manufacturers, governments and consumers – to play their part in making sure we achieve these changes. Taking a whole-of-life approach requires more collaboration than we have aimed for in the past, across the entire supply chain. This is the key to success. Together, as an industry and as a society we must demand additional renewable energy, carbon capture and storage, and carbon neutral products and services. Australia’s companies and institutions have taken the lead to demonstrate how net zero operating emissions are not only possible, but achievable. Our next step – together, as professionals and industries, is to commit to net zero embodied carbon by 2050.
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MELLOR LABORATORIES TRACE METAL FREE LAB 42 - DECEMBER 2019 - BUILT ENVIRONMENT ECONOMIST
MELLOR LABORATORIES In 2015, Leighs Construction was tasked with redeveloping the University of Otago’s 6500m2 ‘Science 1’ building, with a linked walkway to ‘Science 2’. The 1970’s Dunedin building was gutted and refurbished to make way for new, state of the art facilities with the newest technology to help support and grow the sciences, including PC2 labs and Class 7 clean rooms. The existing facilities were outdated, and no longer supported the scope of work that was going on within the Science faculty at the University, posing safety risks due to overcrowding with student numbers increasing, and impractical workspaces that hadn’t evolved with technology. The upgrade was a welcome addition – sending the new facilities into the 21st century that will serve pupils and staff for years to come. The upgrade saw previously closed off areas opened up into functional teaching spaces to bring the facilities into a modern teaching setting, championing collaboration and flexible teaching environments. This also meant the new space allowed room for more students than it had in the past, and also incorporated break out spaces, as well as large scale labs that were able to be split off into smaller rooms depending on class size and demand. The brief also saw the creation of fully accessible spaces, introducing adjustable benching and fume cupboards in the general teaching areas, ensuring those with disabilities were able to work comfortably in an environment that catered for their needs.
TRACE METAL CLEAN ROOMS As part of the Sciences redevelopment, Leighs built brand new Trace Metal Clean Rooms that were a Class 5, and with that came a unique brief. These clean room facilities were required for the Centre for Trace Element Analysis and were a particularly challenging yet rewarding stage of the build. The brief was complex to begin with, requiring a metal-free room, so as not to interfere with the critical works that would be taking place within them. The facility was specifically developed to analyse metallic elements and their isotopes for wide-ranging applications in the earth, environmental, planetary, archaeological, climate and bio-medical sciences. The Trace Metal Clean Rooms include the extensive use of Polypropylene and PVC in design and construction. Items such as screw fixings used throughout the lab are nylon or polypropylene, and the doors are acrylic with high-density laminate, which was used to construct the hinges and door hardware. Fibre-reinforced plastic (FRP) was used for the duct hanger channel and supports. Sourcing all these materials meant the team spent a large portion of their time problem solving and coming up with ways to address the no metal brief, whilst making sure they weren’t compromising on the quality of materials used in the process. This took the team to different corners of the globe, sourcing high-end materials that would have longevity and practicality.
One of the key requirements in the labs was to have pressurised spaces to maintain a clean environment, which is crucial to the lab works that would be carried out within the four walls. The team sourced a porous fabric ceiling from America that would create a laminar flow of HEPA filtered air. The team was also lucky enough to visit a similar facility in Germany, where they saw a lab like the one Leighs built, whilst sourcing the high-density laminate that was used to construct the hinges and door hardware. Another feature within the lab is the ducted laminar flow cabinets, which the team sourced from Melbourne. The team were able to see first-hand exactly what they were sourcing, enabling them to view the product in action at a finished lab. The team then sourced a special silicone sealant from the Netherlands that was used to close off any gaps between joinery, wall and floor vinyl to make it airtight. Because of the amount of specialised work that goes on within the labs, the team also had to create fume cupboards that would safely and effectively disperse the materials that were used within the labs. 67 of these fume cupboards were installed throughout the facility. Traditionally, these would be ducted to an individual conventional centrifugal exhaust fan, which is more commonly associated with tall, unsightly stacks on the roof of the building. However, in the case of the Mellor Labs, the design engineer opted to use an American sourced Strobic Air Tri-Stack laboratory fume exhaust, the first project in New Zealand to use this particular manifold system.
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One of the many attractive features of the low-profile Tri-Stack system is they are barely visible from the property line, making them more visually appealing for the overall aesthetic of the building. A common issue associated with the more common, tall unsightly stacks is the perception of exhausting polluted air for the surrounding areas. This issue is eliminated with the Tri-Stack system. The dilution capabilities of this system meant that up to 170 per cent of free outside air is introduced into the airstream above the roof, effectively eliminating odours, preventing them from entering the facility and neighbouring buildings. The Tri-Stack fume exhaust sends a vertical ‘jet plume’ of diluted exhaust gas upwards of 350 feet high, providing atmospheric disbursement and preventing exhaust from re-entering the facility through fresh air supply ventilation systems, doors, and windows. An obstacle the team faced with the TriStack system was the Dunedin Hospital helicopter landing pad being in close proximity to the system, and as the system can send gas several hundred feet in the air, the team had to notify the civil aviation authority to ensure the system would not affect the helicopter approach flight path.
PROJECT CHALLENGES Working in the live campus environment posed challenges for the project team, including both operational and environmental impacts. The Leighs team worked in conjunction with the
University and stakeholders to maintain a safe environment for both workers, as well as students and staff. By working collaboratively and efficiently, the team was able to schedule noisy works outside of examinations and other critical term times, as well as eliminating the risk of campus users coming in to contact with hazardous moving parts and other environmental impacts such as dust, vibrations, etc. The project team also faced challenges when tapping into the local subcontractor market. This redevelopment was considered ‘significant’ in terms of the local trades market, which is considerably smaller when compared to Christchurch and Auckland - making sourcing sub-contractors difficult. However, despite these challenges, Leighs ensured the quality and timely delivery of the project through clear, early communication with sub-contractors, as well as being as flexible as possible to accommodate resources.
COST PLANNING After completion of numerous comprehensive cost planning options over a number of years, the decision was made to repurpose the existing structure, for the science precinct redevelopment. The budget for the Trace Metal Free Lab was a provisional sum for the supply and installation of the specific plug and play pieces of specialist equipment, whilst the shell was priced within a schedule of quantities and competitively tendered.
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With the complexity and interface requirements of Fire Rating, Acoustic Treatment, connecting into Existing Building Services and working with bespoke items, it soon became apparent that the process wasn’t as simple as first thought. The supplier of the specialist lab equipment was engaged directly by the client as their terms and conditions were at variance to the Head Contract Conditions and required specific focus around performance criteria, design requirements and payment terms. It was decided to keep a full set of contemporary records, use these as a basis for valuation, and to record and quantify all the variances from the original design, and ultimately agree on a final value. This process led to a more engaged and solution-focused team of key subcontracts, and ultimately the superb product that was handed over exceeded the client's expectations.
LEIGHS TEAM Leighs put together a team of project professionals to deliver the technically complex job. The job was led by Project Director Jeff MacDonald, who worked closely with Building Services Manager James Dennis, Services Coordinator Lee Fobbester, Senior Quantity Surveyor Craig Masters FNZIQS, and Health and Safety Manager Rob Abraas. It was a large-scale effort, with several others from Leighs and across the industry working to pull this project together.
The Science Precinct was a foundation project in Dunedin for Leighs and meant that Jeff had to build a team from scratch. The project gave Leighs an opportunity to tap into the Dunedin market to add local capability and expertise, and key staff relocated from Christchurch to Dunedin for the project. The result was a fully integrated team of industry experts and local practitioners, who delivered what is now considered to be a science facility of national importance.
RECOGNITION The Mellor Laboratories have been recognised for the level of complexity and precision that went into the build, and this has paid off in the form of several awards. The Mellor Laboratories won two awards at the New Zealand Institute of Architects Awards for 2019. First winning the Southern Award, where it was coined a ‘technically sophisticated solution within the envelope of a 1970’s chemistry building’, and then winning the Resene Colour Award. The Mellor Laboratories were also recognised with a Merit award at the Property Industry Awards. The Property Industry Awards are a prestigious event, where people from around New Zealand come together to celebrate the best projects. Having their hard efforts recognised on a national platform is a testament to the hard work and dedication everyone involved put into the labs.
This case study was supplied by the New Zealand Institute of Quantity Surveyors.
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FUNDAMENTALS OF PREFABRICATION COSTING AND CONSIDERATIONS By Laurence Ritchie, WoodSolutions
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INTRODUCTION Recent years have seen the successful introduction of prefabrication concepts into the Australian construction market. An umbrella term, the word ‘prefabrication’ refers to the completion of work activities off-site, eliminating those tasks from the on-site program. Common examples of this range from the familiar unitised façade panels and bathroom pods, through to the less common off-site construction of entire dwellings as volumetric units, only requiring placement and ‘stitching’ on-site. A movement in Australia fuelled by the increasing scarcity of resources and labour, prefabrication systems have been established and common place in other regions for decades. While one often jumps to the prefabrication friendly Scandinavian region as a first reference when discussing this topic, it could be argued that one of the most sophisticated prefabrication economies is closer to Australian shores than expected. With a long history of prefabrication, Japan now hosts the largest prefabricated housing market in the world (by volume), with 12-16% of homes (that’s between 107,000 and 143,000 units) being delivered through off-site processes in 2014. Through the application of efficient manufacturing principles, the Japanese construction industry is able to supply the market with a high quality, custom designed products in a fraction of the time it takes to build on-site. While Japan, Finland, Norway, and Sweden are leading the world in the field, English speaking economies are beginning to catch up. Last year saw the launch of Katerra,
a billion-dollar prefabrication company in the USA (now also operating in the Middle East and India), and one of Japan’s largest prefabricators has recently invested heavily in the UK market in response to an incredibly high demand for affordable housing. While each of these economies has approached prefabrication in a slightly different manner, a uniting trait lies in their ongoing interest in and use of wood.
LOCAL CONTEXT When compared to these developed overseas industries, it appears that Australia has some catching up to do. Having said this, our industry has already punched well about its weight, with some of the world's leading prefabricated projects taking place on Australian soil. Still, prefabrication is only now starting to enter the mainstream in specialised areas such as façades, bathroom pods and services shafts – there is still a way to go before we see market penetration anywhere near that of Japan or the Scandinavian nations. As clients demand higher quality and builders continue to seek higher levels of safety with minimal impact to the construction program, the introduction of prefabricated elements is becoming more and more common. This movement has been noted by many, including the Federal Government who recently announced new funding for research in the area while noting that the prefabrication could reach a market share of 15% by 2025.
TYPES OF PREFABRICATION When considering the suitability of a project to off-site construction it is important to understand the most common typologies of prefabrication, and how these may be collectively utilised to deliver the best possible outcome. The market offering of ‘prefabrication’ can be broken into three distinct groups: elemental prefabrication, panelised prefabrication, and volumetric (also known as modular) prefabrication. In this section, we will briefly introduce each of these typologies before looking at their use in construction, and their impact on costs, risk, and the project as a whole. Elemental prefabrication refers to the off-site manufacture and fabrication of individual elements such as columns or beams, which can then be assembled to take their final form. This assembly typically occurs on-site, however details that are particularly complex or commonly repeated can be preassembled using a jig in the factory, truly optimising the use of time on-site. This system is widely used in mass timber post and beam designs which utilise elements of Glue Laminated Timber (Glulam) or Laminated Veneer Lumber (LVL), manufactured to order, cut exactly to size, and then machined with a Computer Numerically Controlled (CNC) cutting machine to pre-drill any holes, cut penetrations, and generally prepare the element for easy installation on-site. In this case, the pre-assembly may involve the pre-installation of brackets, drilling of reinforcing screws, or even assembly with other elements to create bracing elements (as completed by Lendlease
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for their 10- storey timber office tower in Brisbane in 2019). Note that elemental prefabrication is typically the most automated form of off-site construction, with all work tasks typically taking place on a technology assisted production line. The term ‘panelised prefabrication’ refers to the off-site construction of panels which can then be installed on-site as loadbearing walls, floors, roofs, partitions, and façade elements. This concept is well understood in the industry, with precast concrete panels and unitised façades already common. Also quickly gaining traction in this category are timber panels, both lightweight (stud frame) and massive (CLT, LVL, and Glulam). These panelised elements are produced off-site in highly automated, climate-controlled facilities, with millimetre perfect CNC processing ensuring a perfect fit on-site. While panels can be shipped to site as soon as they have been fabricated, this factorybased stage lends itself well to extending the production line to add further value via the installation of membranes, insulation, sheet bracing, plaster linings, battens, and in some cases even façade claddings. Every step completed in this safe, well lit and supervised setting removes a work task from site, ultimately resulting in higher productivity levels and shorter on-site programs. Volumetric, or modular prefabrication refers to the construction of threedimensional sections of a structure, which can then be shipped to site for installation and ‘stitching’ together. This style of prefabrication has gained popularity within the Australian construction industry in the form of
bathroom pods, moving an area which typically sees several trades working within very close proximity of each other to a controlled, well lit, safe environment within a factory. This setting allows for higher quality to be achieved, with minimal coordination issues and a positive impact to project program. Volumetric prefabrication has seen major success in specific markets, however arguably remains the least common form of off-site construction. While it is possible for structures to be completed using just one of these three typologies, it is much more common to see them combined in an optimised form. For example, a project may feature a post and beam (elemental) load bearing structure, panelised mass timber floors and glazed facade, and volumetric bathroom pods and/or services risers.
IMPACTS TO A PROJECT So, what does this all mean for the costing of a construction project? Prefabrication can have significant impacts to every stage of the design and construction process, so it is important to understand these if they are to be costed correctly. This section will explore these impacts in order of their occurrence, from the design stage through to fabrication, delivery, and ultimately end of life. Design Prefabricated projects typically see the condensation of normal sequential work tasks into a short period of parallel delivery. For example, while traditional projects require the footings
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to be complete before commencing construction of the superstructure, these can occur in conjunction when the superstructure is built off-site. This shortened period of off-site works allows less time for design changes during construction, and therefore requires the design of a project to be largely complete prior to the commencement of construction works. While some consider design costs to be higher in prefab designs, it could be argued that they are not higher, but instead are shifted to the period before construction works occur. What’s more, if utilising a prefabricated timber design, any increase in program during the documentation stage may be recouped during the efficient fabrication stage. Particularly when the designers prepare their drawings in CAD-CAM software (e.g. Autodesk HSB CAD), from which drawings can be exported directly to machining robots. Fabrication While the fabrication process typically takes place in a well lit, clean, safe indoor facility for all prefabricated systems, the typology of the system generally determines its exact fabrication process. For example, elemental prefabrication often deals with components that are produced in a largely autonomous production line with minimal human interaction, but also limited opportunity to add value prior to installation on-site. Panelised sections are also produced as part of a semi-autonomous production line, however their larger scale offers more opportunity to add value in the factory, and therefore these sections typically see more human interaction. Volumetric sections typically offer the
most opportunity to add value, and therefore require the most human labour off-site (with minimal work on-site). It is important to note here that the very concept of prefabrication requires some departure from traditional ‘payment on delivery’ procedures. As is already experienced when considering unitised glazing or precast panels, significant expenditure is require to manufacture prefabricated elements and maintain cashflow, and therefore many prefabricators request the payment of deposits and progress claims prior to installation on-site. Construction With much of the traditionally off-site work completed in off site facilities, the full benefit of prefabrication can be felt on the job site. With many of the most complex, difficult, and risky tasks already safely completed, the on-site program is truly expedited with projects reporting anywhere from 20-80% reductions when compared to a standard onsite build. What’s more, prefabricated timber projects stand to benefit from the unique nature of the material, with lighter elements, safer and faster fixing, and none of the loud noises common on traditional sites. Beyond these benefits, the prefabricated nature of timber systems leads to reduced exposure to falls from heights (via pre-installed edge protection), and of course a reduced on-site workforce in general; in fact as identified in WoodSolutions Technical Design Guide #51 – Cost Engineering (now available for free from the WoodSolutions website), the average mid-rise timber project is assembled on-site by just 7 workers, plus a crane driver and rigger.
As seen on many significant projects around Australia, these impacts not only lead to a comparable (if not cheaper) project cost but also lead to earlier access for settlements, minimising holding costs and maximising returns. End of life With prefabricated buildings effectively designed as a ‘kit of parts’, their removal can follow the order of their on-site construction. Not only does this mean safer, faster, and less disruptive demolition processes, but it also allows for the maximum amount of material recovery for re-use and recycling. This benefit is particularly relevant to timber construction, where connections (screws or brackets) are typically straightforward to remove or cut through, with ‘demolition waste’ then able to be reused, or even recycled (e.g. some products may be chipped for landscaping purposes).
CONCLUSION Prefabrication systems have been tested around the world, proving to be not only faster and safer, but also producing higher quality builds than traditional onsite construction can deliver. While this industry has slowly been gaining traction in the Australian market, the rapid growth of prefabricated timber systems offers potential for a significant increase in the speed of uptake. With official forecasts projecting a potential market share of 15% in the year 2025, one cannot understate the value of understanding this space, and what it means for our industry.
Images supplied for this article have been provided by XLam Australia.
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MANAGING CONTRACT RISK A significant driver for the management of contracts is the need to actively, systematically, and efficiently mitigate a company’s exposure to financial, operational, reputational and legal risks. In essence, a contract risk is the likelihood of incurring a loss arising from, or in the course of performing, a contract from inception to completion. The goal of any contract management approach is, of course, to maximize financial and operational performance whilst minimising risk. This could be done by ensuring that all contract risks are identified and allocated at the formation of the contract, actively managed during the performance of the contract, and analysed to facilitate and inform future risk management initiatives.
INTERNAL MANAGEMENT A good starting point in respect of managing contract risks would be to ensure that one is at the outset ready in all respects to carry out the contract. For professionals such as Quantity Surveyors (QS), this usually involves confirming that they have in place robust company resources, systems, processes and policies to adequately support the performance of a contract in a timely and cost-effective manner. Certain preliminary items to check would include whether: • the relevant licensing requirements are met
• the project risks to the company match the expected reward • the client has the stability and financial viability to pay for the QS’ services • the QS is able to work harmoniously with the client’s representatives • the consultancy contract as presented has been reviewed and confirmed as consistent with the company’s policies • any necessary management approvals as well as external technical, financial and/or legal advice have been obtained, and adequate insurance cover is in place to mitigate and manage identified risks.
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In addition to sorting out these core assurances, it is crucial to have a contract management system which covers all stages of the contract lifecycle – from contract negotiation and formation, management of amendments to the same following execution, post-award performance of the contract, and analysis of the company’s performance following completion of the project.
CONTRACT FORMATION In terms of formalising a consultancy contract, it appears that the QS’ usual practice is to commence works once the fee proposal has been accepted by the client. It would be best, however, if a separate standard consultancy contract is developed to ensure that the parties’ agreements and respective commitments are clearly articulated, and that operational terms are included to facilitate the level of communication and coordination required for the proper performance of the contract. In this regard, the QS may wish to ensure that the consultancy contract contains unambiguous terms that the parties’ agreements in respect of essential contract features, such as: • the work scope • fee basis • required staff qualifications and experience • work methodology
• programming (including the ability to suspend or accelerate) • measurable deliverables and/or KPIs • stages of certification • nature and timing of any information/ review/approval inputs from the client • point persons for either party • reporting or notification requirements • insurance • variations procedures • confidentiality and intellectual property protection • liquidated and/or delay damages • termination of the contract and resolution of disputes. More importantly, the consultancy contract should ideally reflect a reasonable allocation of risks between the QS and the client in respect of each of these key aspects. The contract must be carefully reviewed to enable the QS to form its own view as to whether the clauses relate fairly to the QS’ own circumstances. A good rule of thumb to follow would be to allocate a specific risk to the party best able to deal with that risk. The QS could obtain reasonable commercial protection under a consultancy contract by negotiating at the contract formation stage, those clauses in the contract which represent high risks to the QS (including those posed by changes to work scope,
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erroneous or delayed information or instructions from the client, any liabilities accepted or indemnities provided by the QS, time bars to the QS’ entitlement to payments or make claims, the client’s entitlement to liquidated damages for delayed performance of the services, recourse against the QS’ security, acceptance of obligations under a head contract which could impact the QS’ work, authority delays, etc.). Creating a risk register at this stage would be of great benefit to the QS. Additionally, it is prudent practice to estimate and include in the QS’ budget, some provision for a contingency sum both to cover overruns and to reflect the degree to which the cost is always subject to factors occurring in the future. Accordingly, along with confirming the scope of the brief, the prudent QS would have proactively clarified with the client the context for the services (progress payment certifications, costing variations, cost impact of design changes, costing other works under the construction contract, etc.), the client’s role in the project (i.e., as principal, superintendent, contractor, subcontractor), and how the QS’ performance will be monitored and measured throughout the life of the contract. It is also important to ensure that a single point of contact with the client is appointed to manage the flow of information to and from the client, and that all the information/approvals/ documents required by the QS to carry
out the services have been, or are soon to be, obtained from the client.
Checklists at important stages often save embarrassing mistakes.
Throughout the contract formation process (as well as during the performance of the contract), the QS should ensure that clear and consistent records are kept of any correspondence or representations made by the client.
All efforts must be exerted to ensure that all notices and claims are prepared in compliance with the contract, given on time, and receipted routinely and regularly.
CONTRACT PERFORMANCE Following the execution of the consultancy contract, but prior to commencing the works, the QS will want to ensure that all the steps required to effectively manage the contract have been correctly identified and that a system for implementing those steps has been developed. The system should operate as a comprehensive and integrated platform in which the QS can record and monitor key risks and requirements under the contract and should include (and document) such essential preliminaries as: • preparation of procedures and associated protocols for briefing relevant staff and engagement of any sub-consultants • creation of the necessary templates to meet the contract’s notice and reporting requirements • various other means to ensure the QS’ meticulous and timely compliance with all administration procedures under the contract.
As an important risk management tool, the QS’ risk register should also be viewed as a live document to be updated, monitored and continuously analysed as the works progress. An issues log will be a useful supplement to the risk register and should also be maintained.
DISPUTES RISK It is imperative that the dispute resolution mechanism under the QS’ consultancy contract represents a speedy and relatively inexpensive means of resolving all disputes that could arise between the QS and the client. Defining when an issue has progressed to a dispute is a threshold question and it is recommended that an unambiguous definition of what a ‘dispute’ is should be included in the contract. In any event, elevating a dispute for resolution by executive negotiation at the first instance and thereafter referring the dispute to arbitration (in lieu of litigation) is preferred. Whilst likely to cost as much as court proceedings, arbitration nevertheless represents a speedier (and more private) means of resolving disputes.
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LEGAL RISKS In addition to contract law, major legal aspects which can impact the QS’ contract management include the QS’ potential liability for negligence, consumer and competition law violations, misleading or deceptive conduct, unfair practices, intellectual property infringement, and/or offences under environmental, workplace and OH&S legislation. It is therefore also important that the legal and regulatory framework which governs the QS’ business is factored into and appropriately reflected in the QS’ contract management system.
SAFETY RISK Regardless of whether the QS’ brief includes attendance on-site, the sensible approach would be to ensure that any contract management system incorporates mechanisms to ensure verifiable compliance by the QS with relevant obligations under prevailing safety legislation. In this regard, some aspects that should be considered are whether the system identifies the steps that a QS is required to take in respect of industrial safety, if it mandates that before commencing the services, relevant staff undergo site induction/training, are provided with (and wear) personal protective
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equipment required for attendance on-site, remain alert and vigilant at all times, behave in a responsible and appropriate manner and comply with any safety directions from the client, are not impaired by alcohol or other substances that may compromise their own safety or the safety of others, do not interfere with, move, modify or ignore safety signage, are supported by safety protection arrangements or safety equipment, including emergency equipment, do not adversely affect or otherwise interfere with the client or the client’s other contractors’ operations, and do not give advice or direction to any person other than the client’s authorised representative.
SUMMARY Given the ever-increasing complexity of the services that the QS is required to perform, improving contractual controls and having an enhanced contract management system to monitor and enforce these controls should be a major focus for the QS. By proactively assessing their contract risks and implementing routine evaluations of the protocols, procedures and activities underlying the management of their contracts, Quantity Surveyors will be well placed to mitigate their contractual risks and accordingly improve their bottom line.
CHECKLIST We have developed a checklist to assist you to start or continue your risk management. 1. INTERNAL 1.1. Are you licensed to carry out the services required? 1.2. Have you ensured that the project is consistent with your company policies? 1.3. Does the risk match the reward? 1.4. Have you sought technical and legal advice where you feel it was necessary? 1.5. Have you obtained any required management approvals for the contract? 1.6. Do you have the relevant insurance cover in place (e.g., public liability, professional indemnity, worker's compensation, contractorâ€™s risk insurance)? 1.7. Have you allocated the required resources (e.g., qualified and experienced staff, time and budget)? 1.8. Have you executed a formal consultancy agreement that is consistent with your proposal and includes the following? 1.9. Have you identified the steps required to manage your contract (e.g., notice and reporting requirements, preparation of risk register)? 1.10. Have you developed a system for implementing the steps in 1.9? 1.11. Have you briefed and provided instructions to the relevant staff who will be carrying out the services? 1.12. Have you engaged the sub-consultants required? 2. CONTRACT 2.1. Have you ensured that your contract includes agreements in respect of: 2.1.1 Work scope? 2.1.2 Qualifications and experience of staff? 2.1.3 Methodology? 2.1.4 Certification stages? 2.1.5 Supervision by your client?
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2.1.6 Services by your client - nature and timing to be resolved? 2.1.7 Contact persons? 2.1.8 Program of work (including suspension, acceleration)? 2.1.9 Fees basis (including pricing elements, surcharges and/or taxes)? 2.1.10 Reporting requirements? 2.1.11 Nature of deliverables? 2.1.12 Insurance? 2.1.13 Variations procedures? 2.1.14 Confidentiality provisions? 2.1.15 Copyright requirements? 2.1.16 Liquidated damages? 2.1.17 Delay damages? 2.1.18 Notification requirements? 2.1.19 Disputes provisions? 2.1.20 Termination (including for convenience?) 2.2. Have you ensured that your contract includes a schedule of the documents comprising the contract? 2.3. Have you ensured that under your contract you do not indemnify your client against its own default or negligence? 2.4. Have you ensured that your liability under your contract is capped? 2.5. Have you ensured that your liability under your contract excludes consequential loss? 2.6. Have you ensured that you have not agreed to comply with a head contract (or any other contract to which you are not a party)? 2.7. Have you identified and marked any time bars under your contract?
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3. CLIENT 3.1. Have you confirmed the scope of your brief (e.g., defined the deliverables, stages, standards, methodology and programming for the services, protocol for instructing/directing additional work)? 3.2. Have you clarified the context for the services (progress payment certifications, costing variations, cost impact of design changes, costing other works under your client’s contract)? 3.3. Have you confirmed your client’s role in the project (i.e., as principal, superintendent, contractor, subcontractor)? 3.4. Have you agreed on the fee basis for the services (hourly/lump sum rate, method for calculating your fee, payment terms/ invoicing, any security for your fees)? 3.5. Have you agreed on how your performance of the contract will be monitored and measured? 3.6. Have you obtained all the information/approvals/documents from your client that are required by you to carry out the services? 3.7. Have you appointed a single point of contact with the client to manage the flow of information to and from your client? 4. SAFETY 4.1. Have you identified what steps you are required to take in respect of industrial safety? 4.2. Have your site staff undergone/attended site induction/training before commencing the services? 4.3. Have you provided your staff with (and ensured they wear) personal protective equipment required for attendance on site? 4.4. Do you have the safe work method statements and/or project safety plan relevant to your works? 4.5. Have you ensured that your staff attending the site: 4.5.1. wear appropriate personal protective equipment including eye protection? 4.5.2. remain alert and vigilant at all times? 4.5.3. behave responsibly and appropriately and comply with any safety directions you’re your client? 4.5.4. are not impaired by alcohol or drugs (prescribed and non-prescribed) or other substances that may compromise their own safety or the safety of others? 4.5.5. do not interfere with, move, modify or ignore safety signage, safety protection arrangements or safety equipment, including emergency equipment? 4.5.6. not adversely affect or otherwise interfere with your client’s or other contractors’ operations? 4.5.7. do not give advice or direction to any person other than your client’s authorised representative?
This article has been written for Built Environment Economist by Doyles Construction Lawyers. www.doylesconstructionlawyers.com
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Stanley Fernando FAIQS, CQS Douglas Fletcher FAIQS, CQS Simon Foley MAIQS, CQS Peter Fong FAIQS, CQS James Ford FAIQS, CQS James Ford AAIQS, CQS Thomas Ford FAIQS, CQS William Fowler FAIQS, CQS Prassanna Francis MAIQS, CQS Mark Freestone FAIQS, CQS Yi Wen Fung MAIQS, CQS David Gallagher AAIQS, CQS Dhammika Gamage FAIQS, CQS Dishan Gamage MAIQS, CQS Hwa Fern Gan MAIQS, CQS Peter Gavin AAIQS, CQS Kirsten Gilbert AAIQS, CQS Peter Gill AAIQS, CQS Stuart Gillies AAIQS, CQS Michael Gilligan AAIQS, CQS Imasha Gnanathilake MAIQS, CQS Judy Goh MAIQS, CQS Kartika Gondoboentoro MAIQS, CQS Paul Gondwe AAIQS, CQS Barry Green MAIQS, CQS David Grennan MAIQS, CQS Benjamin Griffiths AAIQS, CQS Stephen Grimes FAIQS, CQS Charith Gunasekera MAIQS, CQS S. Gunawardena MAIQS, CQS Sachith Gunawardhana MAIQS, CQS Don Halahakoon MAIQS, CQS Atham Hameem AAIQS, CQS Peter Hammond AAIQS, CQS Mark Hampson FAIQS, CQS Simon Hanau AAIQS, CQS Patrick Hanlon FAIQS, CQS Uddeepa Harankahawa MAIQS, CQS Steven Harrison AAIQS, CQS Linda Hau MAIQS, CQS Christopher Hawkins AAIQS, CQS Thomas Heinonen AAIQS, CQS Matthew Hemming FAIQS, CQS H. M. Praneeth Herath MAIQS, CQS Dahanaka Herath MAIQS, CQS Lucas Hinton AAIQS, CQS Sameera Hiththetiyage MAIQS, CQS Kalana Hitihamillage MAIQS, CQS Mark Hocking FAIQS, CQS Gregory Holland AAIQS, CQS Wong Hong AAIQS, CQS Sen Swee Hoo AAIQS, CQS Helder Horta AAIQS, CQS Rachael Houston MAIQS, CQS Christian Hughes MAIQS, CQS Elaine Human MAIQS, CQS Tsz Tung Hung FAIQS, CQS Riaz Jafar Hussain MAIQS, CQS James Hyslop FAIQS, CQS Candy Inch AAIQS, CQS Timothy Isaac AAIQS, CQS
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Ian Jamieson AAIQS, CQS Graeme Jamieson MAIQS, CQS Wijesinghe Wijesinghe MAIQS, CQS Kalvis Jaunalksnis FAIQS, CQS Ishara Jayakody MAIQS, CQS Rajitha Jayapadma MAIQS, CQS Hwa Jeon MAIQS, CQS Franklin Joseph FAIQS, CQS Nuwan Kadawathge MAIQS, CQS Kandasamy Kajanthan MAIQS, CQS Sivakaran Kanagaratnam MAIQS, CQS Nile Kannangarage MAIQS, CQS Vidanalage Karavita MAIQS, CQS Pantelis Karos AAIQS, CQS Channa Kasthurirathna MAIQS, CQS Don Katugampola MAIQS, CQS Richard Kemp MAIQS, CQS Kipling Kirkland MAIQS, CQS Andrew Knowles FAIQS, CQS Wasitha Kodithuwakku MAIQS, CQS Kenneth Koh MAIQS, CQS Cherng En Kong MAIQS, CQS Chandana Kumara MAIQS, CQS Supun Kurunayakage MAIQS, CQS Irena Kuzman FAIQS, CQS Roger Lai AAIQS, CQS Mohamed Lafir MAIQS, CQS Ka Man Lam MAIQS, CQS Paul Lassemillante FAIQS, CQS Andrea Lau MAIQS, CQS Andy Lau MAIQS, CQS Arline Lau AAIQS, CQS Vincent Lau FAIQS, CQS Wai Ming Lau AAIQS, CQS Thuy Le MAIQS, CQS Christopher Leach FAIQS, CQS Anthony Lee AAIQS, CQS Peter Lee AAIQS, CQS Shu Yan Lee MAIQS, CQS David Lee AAIQS, CQS Fook Pui Lee FAIQS, CQS Yvion Lee AAIQS, CQS Don Leelarathne FAIQS, CQS Seth Leong MAIQS, CQS Agatha Leung AAIQS, CQS Pui Yi Li MAIQS, CQS Boon Yee Liew MAIQS, CQS Seng Hong Lim AAIQS, CQS Kok Lim Lim AAIQS, CQS Grace Lipardo MAIQS, CQS Amila Liyanage MAIQS, CQS Prasanka Liyanage MAIQS, CQS Lai Yeng Loh MAIQS, CQS Matthew Long AAIQS, CQS Shanice Loong AAIQS, CQS Thamindu Hewa MAIQS, CQS Chris Luu AAIQS, CQS Stefan Luus MAIQS, CQS Sophie Ly MAIQS, CQS Andrew Ma FAIQS, CQS Teddy Ma AAIQS, CQS
Hugh Mackie MAIQS, CQS Steven MacLaren FAIQS, CQS Dinusha Mahagodage MAIQS, CQS Janadeepan Mahendran MAIQS, CQS Fraser Main FAIQS, CQS Daniel Malacchini AAIQS, CQS Mark Mammarella AAIQS, CQS Gary Man FAIQS, CQS Michael Manikas FAIQS, CQS Christiaan Marais AAIQS, CQS Bradley Marino MAIQS, CQS Ryan Marschke MAIQS, CQS Deborah Marsh MAIQS, CQS Gareth Martin MAIQS, CQS Pradeep Hewa MAIQS, CQS L. Mayakaduwage MAIQS, CQS Helga Maynier MAIQS, CQS Paul McArd MAIQS, CQS Simon McCoy AAIQS, CQS David McCulloch AAIQS, CQS Gary McDonald FAIQS, CQS Craig McHardy FAIQS, CQS Mathew McNair AAIQS, CQS Ian Menzies FAIQS, CQS Charles Mihatsch FAIQS, CQS Anthony Mills FAIQS, CQS Mohamed Mafahir MAIQS, CQS Linda Mok AAIQS, CQS Kim Monks MAIQS, CQS Megeshen Moodley MAIQS, CQS Graham Moore AAIQS, CQS Sharron Morrice MAIQS, CQS N. Mudiyanselage MAIQS, CQS Manju Mudiyanselage FAIQS, CQS Sameera Mudiyanselage MAIQS, CQS Tharaka Mudiyanselage MAIQS, CQS Man Yee Mui MAIQS, CQS Sathiyaseelan Murugesu FAIQS, CQS Machelle Myburgh MAIQS, CQS Nay Soe Naing MAIQS, CQS Jody Nash AAIQS, CQS Amila Hewage MAIQS, CQS N. Nerooshan MAIQS, CQS Amanda Ng MAIQS, CQS Peter Ng FAIQS, CQS David Ngo AAIQS, CQS Paul Nguyen MAIQS, CQS Benjamin Nicholson MAIQS, CQS B. Appuhamillage MAIQS, CQS Andrew Nolan FAIQS, CQS Jane Northey MAIQS, CQS Johannes Oberholster AAIQS, CQS Justin O’Brien AAIQS, CQS Kerry O’Connor AAIQS, CQS Tina O’Connor MAIQS, CQS Patrick O’Donnell FAIQS, CQS Peter O’Donoghue AAIQS, CQS Travis O’Neill MAIQS, CQS Choon-Beng Ong AAIQS, CQS Andrew Opperman AAIQS, CQS Peter Osborne FAIQS, CQS Michael O’Shea FAIQS, CQS Rexyen Outschorn MAIQS, CQS Kim Owen MAIQS, CQS Sam Paddick AAIQS, CQS Ramesh Palikila FAIQS, CQS Sugadesh Parameswaran MAIQS, CQS
Geoffrey Parlane FAIQS, CQS Kamleshkumar Patel MAIQS, CQS C. Pathirannahelage MAIQS, CQS Pradeep Pathmaperuma MAIQS, CQS Leong Peng FAIQS, CQS Kumburage Perera MAIQS, CQS Rajika Perera MAIQS, CQS Owen Perrin MAIQS, CQS Jodi Pieterse MAIQS, CQS Vinod Pillai MAIQS, CQS Rajenthira Piratheepan MAIQS, CQS Michael Pound AAIQS, CQS Saravanamuttu Prasanna AAIQS, CQS Ajantha Premarathna FAIQS, CQS Stamatia Priskas AAIQS, CQS Anthony Prowse FAIQS, CQS Mary Prowse MAIQS, CQS A. Pushpakumar AAIQS, CQS Clarence Quismundo MAIQS, CQS Reymond Rabino MAIQS, CQS James Rains AAIQS, CQS Rajakaruna Rajakaruna AAIQS, CQS Lalith Rajapakse FAIQS, CQS Chamil Rajapakse MAIQS, CQS Asanka Rajaweera MAIQS, CQS Pallewatte Ranatunga MAIQS, CQS Ranaweera Ranaweera MAIQS, CQS Thilina Rathnayake AAIQS, CQS Chaminda Ratnayake MAIQS, CQS Matthew Richard FAIQS, CQS Robert Richardson FAIQS, CQS Neil Richardson AAIQS, CQS Cameron Ridley AAIQS, CQS Mohamed Riza FAIQS, CQS Mason Robb AAIQS, CQS David Roberts MAIQS, CQS Paul Roberts MAIQS, CQS Paul Roberts AAIQS, CQS Timothy Roberts FAIQS, CQS Adam Robinson MAIQS, CQS Lyndal Rofe FAIQS, CQS Michael Ross AAIQS, CQS Stephen Rowe AAIQS, CQS James Rubira FAIQS, CQS Maoibh Russell AAIQS, CQS Paul Ryan MAIQS, CQS Martin Sadlier AAIQS, CQS Sulman Saeed MAIQS, CQS Christopher Sale FAIQS, CQS Chung Hoong Sam MAIQS, CQS S. Samarathunga MAIQS, CQS Richard Samuels MAIQS, CQS Jake Sanders MAIQS, CQS Michael Sanig FAIQS, CQS B.V. Prasath Sanjeewa AAIQS, CQS Aaron Satchell AAIQS, CQS P. Satchithanantharajah MAIQS, CQS Juan Carlo Savellano MAIQS, CQS Thomas Scanlan MAIQS, CQS Charles Schmidt MAIQS, CQS Cyrrus Schmidt MAIQS, CQS Christiaan Schoeman MAIQS, CQS Choo Lip See AAIQS, CQS Greg Seib AIQS, CQS Krishanthi Senarath MAIQS, CQS Hiran Senevirathna MAIQS, CQS Jubeir Shamte FAIQS, CQS
Paul Shanley MAIQS, CQS A. Shanmugathas MAIQS, CQS Max Shea AAIQS, CQS Mee Ming Sii AAIQS, CQS Binduhewa Silva FAIQS, CQS Indralal Silva MAIQS, CQS Ian Silver AAIQS, CQS Derrick Sim AAIQS, CQS Brad Simpson MAIQS, CQS Nireshni Sirithunga MAIQS, CQS Kirushanth Sivagnanam MAIQS, CQS M. Sivapirunthan MAIQS, CQS Ian Smart AAIQS, CQS Craig Smith AAIQS, CQS Cameron Smith AAIQS, CQS Devlyn Song FAIQS, CQS Glenda Sorrell-Saunders AAIQS, CQS Stanley Southwood MAIQS, CQS Ivan Sparks AAIQS, CQS Peter Spaven FAIQS, CQS Simon Squire FAIQS, CQS Adam Stanton AAIQS, CQS Iwan Stecher MAIQS, CQS Andrew Steel MAIQS, CQS David Stewart FAIQS, CQS Bagavade Subramoniam MAIQS, CQS A. Sukanthan MAIQS, CQS Paul Sullivan AAIQS, CQS Yogendra Sumithiran MAIQS, CQS Peter Sun AAIQS, CQS Kasi Sundaram MAIQS, CQS Jewoo Sung MAIQS, CQS K. Suthanthirapalan MAIQS, CQS Andrew Suttie FAIQS, CQS Eric Swart AAIQS, CQS Travis Swigart MAIQS, CQS Denise Tan MAIQS, CQS Peter Tan FAIQS, CQS Daniel Tang AAIQS, CQS William Tang FAIQS, CQS Angeline Teng MAIQS, CQS Abbath Ahsan Thaseen MAIQS, CQS David Thomas AAIQS, CQS Jason Thornley FAIQS, CQS Dao Ping Ting AAIQS, CQS Guangheng Tong MAIQS, CQS Graham Topp MAIQS, CQS Jin Totman AAIQS, CQS Nathan Towill AAIQS, CQS Nicole Trumbull MAIQS, CQS Yip Kwong Tsang MAIQS, CQS Ho Tse MAIQS, CQS Hung-Yan Tse MAIQS, CQS Peter Tulla FAIQS, CQS W. Udayangani MAIQS, CQS Nuwantha Uduwage MAIQS, CQS Gary Uys AAIQS, CQS Prakash Varsani AAIQS, CQS Hari Veeraraghavan MAIQS, CQS Nonilo Vergara MAIQS, CQS Kavinda Vidhanalage MAIQS, CQS Carl Villari FAIQS, CQS N. Vimalanathan MAIQS, CQS Kalaiarasan Vinasithamby AAIQS, CQS Luke Viney MAIQS, CQS Michael Viscariello FAIQS, CQS Louise Vlatko FAIQS, CQS
Angela Vong AAIQS, CQS Benjamin Wakeling AAIQS, CQS Scott Walker MAIQS, CQS Yeru Wang MAIQS, CQS Menu Wanigasekara MAIQS, CQS Stephen Warne FAIQS, CQS David Warren AAIQS, CQS Peter Watt FAIQS, CQS Daya Wattage FAIQS, CQS Lance Weatherell AAIQS, CQS Alec Webster AAIQS, CQS Russell Welsh FAIQS, CQS Robin Wheelwright FAIQS, CQS Paul Whittaker AAIQS, CQS B. Wickramasinghe AAIQS, CQS Charith Wijethunga MAIQS, CQS Chalith Wijethunge MAIQS, CQS Robert Wildermuth FAIQS, CQS Lorna Wilkinson MAIQS, CQS Grant Williams MAIQS, CQS Lee Williams FAIQS, CQS Robert Williamson MAIQS, CQS Bensiger Wilson FAIQS, CQS R. Wimalanathan MAIQS, CQS Kevin Windross FAIQS, CQS Stephen Wing AAIQS, CQS Tina Wittber MAIQS, CQS Bobby Wong MAIQS, CQS Tsz Tat Wong MAIQS, CQS Damian Wood AAIQS, CQS Charles Wright FAIQS, CQS Terence Wu MAIQS, CQS K. Yasodaran FAIQS, CQS Joe Yeh MAIQS, CQS Edna Yeo AAIQS, CQS R. Yogeswaran AAIQS, CQS Michael Zhang MAIQS, CQS Ping Zhang AAIQS, CQS Justin Zumpe FAIQS, CQS The members listed have CQS designation as at 12/11/2019. If you would like to become a Certified Quantity Surveyor, email an expression of interest to firstname.lastname@example.org and we will advise the suitable pathway.
BUILDING COST INDEX THE BUILDING COST INDEX IS PUBLISHED IN THE PRINT VERSION OF THE BUILDING ECONOMIST. IT CONTAINS DATA THAT CAN BE USED AS A PREDICTOR FOR THE ESTIMATED TIMES FOR DESIGN AND CONSTRUCTION AND INCLUDES A SUMMARY OF THE PAST, PRESENT AND ESTIMATED FUTURE CONSTRUCTION COSTS. 60 - SEPTEMBER 2019 - BUILT ENVIRONMENT ECONOMIST
BUILDING COST I N DEX DECEMBER 2019 BUILT ENVIRONMENT ECONOMIST - DECEMBER 2019 - 61
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