JULY 2017/QSM 556/QSB566

QUESTION 2
a) i) Differentiate Tender Price Index and Building Cost Index
TPI
- Indicates tender price of building works.
- Compiled by comparing tender rates from acceptable tenders with Base Schedule
Rates
- An output index that measures the changes in tender price
- It measures he difference in the sum paid by the client
- The index is calculated in consideration of building and/or construction cost,
changes in market conditions, types of contract, inflation, profit and overhead
- The best index which should be used by QS because the client is more interested in
how much he has to pay to the contractor
- Currently prepared and published by JKR – twice a year
- Source of TPI is from the tender document itself, priced tenders by contractors
BCI
- Index for resources like plant, material and labour.
- The average index can only be prepared if cost of each resource of typical building is
monitored over time
- Cost index is an input index that measures changes over time in resource cost such
as labour, plant and material.
- Cost index is usually used by contracts to measure the changes in cost which is spent
by the contractor
- Cost index can be prepared for the total cost of building or type of building to reflect
general increase in cost.
- Difficult to apply cost index to reflect total cost of building due to numerous
methods of construction, variety of materials used and types building
- Sources of cost index – department of statistics, Malaysia produced monthly (Special
release 1 and Special release 2)

ii) How BQ items are selected during the construction of TPI

- Items are selected based on priced BQ of successful tender
- The items in each section or sub-section of the chosen BQ represent 25% of the
value of the stated section or sub-section
- BQ consists of thousands measured works – consider only a small number of items,
only those financially significant items
- Items should be taken or selected in descending order of value for every section or
element
- Priority given to most expensive items, followed by less expensive items
 - The items chosen are priced again using the schedule of basic price rates.
iii) limitations using indices. Explain.
Based on past data
- Indices are constructed based on past data. They are projected in the future with the
assumption that the past trends will largely continue in the future.
- The projection can be wrong in the trends of price movement changes drastically
- (provide example)
Composition
- The composition of the index is based upon a representative samples or
combination of component
- If the composition do not reflect the location, or becomes outdated, or very unique
project, then it will not reflect the price movement accurately.
Components outside the index
- Where certain important materials and components which are not included in the
index, but used in the project which give significant impact in price and this will
affect the overall accuracy of using the index
- (provide example)
Substitutes and obsolescence
- Ideally, to make accurate and realistic assessments for the various components in
the index the same item, the same quantity and common source should be used
- However, problem can arise where an original significant component ceases to be
used or cannot be used any longer. Example, asbestos.
- There will be a need to substitute an alternative in its place, but this may give rise to
inaccuracies as we are no longer comparing the same components
Taste and fashion
- Indices that remain unchanged in content over a long period of time are likely to be
subject to inaccuracy due to changes in taste and fashion that alter the mix and
extent of items in the index
- The content of the index should be reviewed at reasonable intervals to judge
whether the balance of items as originally established remains valid at a later date.

b) Location index. Explains its uses.

- Location index is used to adjust building cost according to its location
- This index is gathered from the tender price index
-
QUESTION 3
a) Describe ECA and explain the following uses of ECA
- A systematic breakdown of cost of a building to the client to determine the cost of
each element
- The analysis was done by elements or functional parts of a building, with the aim of
providing data for the establishment of cost targets for designing buildings
i) Appreciation
- Enable clients and designers to appreciate how cost is distributed among the
functional components of a building
ii) Judgement
- Enable clients and designers to develop ideas as to how costs could have been
allocated to obtain a more balance design. This judgement is important to gauge the
effectiveness of cost and quality of a building.
iii) Belated remedial action
- Allow remedial action to be taken on receipt of high tenders by revealing the
sources of over-expenditure that is by making comparisons between estimated costs
and tender price. This will enable belated remedial action to be taken.
iv) Planning
- The cost analysis could be used as a source of cost information to help with the cost
planning of future building projects.

b) 3 major documents for preparation of ECA. Describe information extracted from the
documents.

Contract documents
- BQ
- List of prime cost sums
-
-
Working drawings and the specifications
- Calculate the quantity factor and others
-
-
Tender report
- the market,
- number of tenderers etc
-
QUESTION 4
a) Approximate estimating
i) 4 nos panel door size 900mm x 2100mm
Information
Door leaf 900mm x 2100mm – rm 320/no
Door frame – rm10/m
Painting to door leaf – rm15/m2
Painting to frame – rm7/m

description unit qty rate amount

900mm x 2100mm panel no 4 435.05 1740.20
door including framing,
ironmongery and painting
Build-up rate
Panel door 320.00

Door frame
0.90
2/2.10
5.10 @ 10.00 51.00

Painting
Door leaf
0.90 x 2.10
1.89 @ 15.00 28.35
Door frame
5.10 @ 7.00 35.70
4/435.05
1740.20

To collection 1740.20

ii) 4.50mm x 6.00mm internal clg finishes – asbestos free cement sheet
Information (idk how to do this one)
Clg panel size 1200mm x 2100mm – rm320/no
Clg joist 100mm x 50mm @ 600mm span – rm 7/m
Spacer 50mm x 50mm @ 1200mm across clg joist and 6—mm along clg joist
– rm/5
Painting -rm 12/m2
Beading (all around the clg area) 15mm x 25mm – rm 2/m
 b) Unit method is used by QS at preliminary stage. Explain the situation when this
method is suitable, how it is applied and give reasons why QS seldom use this
method
- This method is used to estimate the cost of building whose sizes depend upon the
units of accommodation e.g. number of pupils in schools, number of beds in
hospital, number of seats in cinemas, number of car spaces in carpark
- Unit method is also referred as cost to building function
Application
- The number of units of accommodation may be given by the building owner or
otherwise determined.
- This number of units is then multiplied by the unit rate per unit accommodation to
arrive at the approximate cost of the building
- For example, if from historical data, i.e. cost information of past projects, the cost
per pupil of schools is rm1000 and proposed school to accommodate 500 pupils is to
be erected, then the approximate cost of the proposed school will be rm1000 x 500
= rm500000, if the proposed buildings is identical to the building whose unit rate has
been used
Why QS uses this method
- It is a simple method of comparison
- It is a suitable form of long term estimating for large programmes of similar buildings
where variations in individual buildings will cancel each other out
- Provides a convenient form of stating a cost limit or budget.

QUESTION 5
a) Factors affecting price level
1. Difference in general market price
2. Variation between the contractor’s price level and general market price level at
tender date
3. Difference in site conditions and locations
4. Difference in contract condition, weather conditions and the like

b) Explain the rules of controlling variation works during post-contract stage adopted by
public sectors
- Variation must be kept to a minimum. Efforts must be made to resist variation.
Request for variation must be in writing
- Variation works must be scrutinized to see if it is really required. If variation cannot
be avoided, possibility of having it executed by other means must be considered
- Only works if executed by other means which will cause disturbance to the regular
progress and completion of work by contractor to be executed on variation
- The scope and extent of extra work ordered must be within the contract. Work
omitted must be really not required. Work included cannot be omitted to be
executed by others.
- No variation work ordered after date of completion or after extended date
- No variation shall be ordered until the effects on contract sum and the regular
progress of work by contractor has been evaluated, necessary prior approval by
treasury, necessary funds have been approved.