Presentation on theme: "HKIS (QSD) CPD Topic : Contractor’s Pricing for Preliminaries"— Presentation transcript:
1 HKIS (QSD) CPD Topic : Contractor’s Pricing for Preliminaries Speaker : Mr. Paul K. L. Wong(Director of Chinney Construction Co. Ltd.)Date : 20th January 2011Time : 7:00pm – 8:30pmVenue : Surveyors Learning Centre
2 Contractor’s Pricing for Preliminaries - Overview 1. There is no hard and fast rules to price preliminaries.2. The purpose of this seminar is to cover the basic principles of building up cost and eventually pricing for preliminaries.3. The speaker will share his experience in pricing preliminaries for submitting tenders of building projects.4. A Sample Case will be discussed for compiling the preliminaries cost (not exhaustive) of a sample building project.
3 Method of Pricing Preliminaries 1. To allow % mark-up (based on similar previous projects) on the estimated cost of the project.2. Build up the cost of preliminaries items (with significant cost implication not covered in BQ/SOR) in detail.
4 Factors to be Considered When Pricing Preliminaries Standard preliminaries items (See Sample Case)Contract requirementsStatutory requirementsPayment method for preliminaries itemsMaximum % of preliminaries stated in the tender documentsType of Contract (Lump sum with or w/o quantities)Contract period (and actual construction period)Amount of LD (and EOT clause)Reputation of the Employer and ConsultantsMode of Sub-contractingLocation of the SiteGround conditionMarket conditionContractor’s resources, financial capability and workloadContractor’s pricing strategy
5 Prices to be Included in Preliminaries or BQ/SOR Prices for some items that may be included or absorbed in BQ/SOR.Examples: -1. Items Included in BQ/SOR● Hoarding● ELS works● Some testing items(e.g. water test for waterproofing and windows & performance test for curtainwalls, etc.)● Safety management● Attendance on NSC works2. Contractor’s Pricing Practice● Mobile crane (included in the rates of structural steel works)● Scaffolding (included in the rates of ceiling works)● Wet cleaning (included in the rates of tiling works)
6 Payment Method for Preliminaries Items Initial cost (e.g. premium for insurances, set up cost for site offices, tower crane, scaffolding, electricity and water, etc.)Work related cost (e.g. setting out & levies, etc.)Time related cost (e.g. watchmen & site management staff, etc.)Removal cost (e.g. removal cost for site offices, tower crane, scaffolding, electricity and water, etc.)Stipulated payment terms for preliminaries itemsExamples :-● Payment for the excess amount priced in those preliminaries items (e.g.insurances) will be effected over the period of the Contract.● Payment for time and work related items will be effected as per theproportion of the total value of the Main Contract Work.● No payment will be included in interim payment for those preliminariesitems with no amounts being inserted.
7 Preliminaries Items Bond Site Management Setting out Insurances Levies Site CleaningPlantSafety ManagementEnvironmental ManagementWatchmenSite Accommodation for ContractorSite Offices for Employer’s RepresentativesTransportation* Entertainment and Other ExpensesHoardingScaffoldingWaterElectricityTesting and SampleOther Items* No such relevant preliminaries items in BQ/SOR
8 1. Performance bond or demand bond Preliminaries ItemsBond1. Performance bond or demand bond2. Bond for Defects Liability Period (for the release of the Bond during theContract period)3. Required in the Contract? (Yes / No)4. 1% / 5% /10% / x% / fixed amount of Contract Sum5. Up to the issuance of Certificate of Practical Completion / SubstantialCompletion or Making Good Defects6. Premium7. Collateral8. Tender Bond
9 Preliminaries ItemsSite Management1. Full time site management staff required in the Contract (e.g. ProjectManager, Construction Manager, Site Agent, Project Co-ordinator,Labour Officer, Graduate Engineer & Apprentice, etc.)2. Other site management and clerical staff3. Direct site labour4. Site management staff during defects liability period5. Quantity surveying staff during contract period and final account period
10 1. To be subletted or done by Contractor’s in-house staff? Preliminaries ItemsSetting out1. To be subletted or done by Contractor’s in-house staff?2. Land surveying (Initial setting out)3. Setting out works (Levellers)4. Surveying tools and equipment
11 Preliminaries Items4. Insurances1. Contractor All Risk (CAR) Insurance and Employee Compensation (EC)Insurance2. To be effected by the Employer or the Contractor?3. EC Insurance for NSC Works (to be effected by MC or NSC?)4. Premium5. Excess6. CAR & EC Insurances during extended Contract period (Reimbursable?)7. EC Insurance after Defects Liability Period8. Professional Indemnity Insurance
12 1. Construction Industry Levy (0.43% (including 0.03% of Construction Preliminaries ItemsLevies1. Construction Industry Levy (0.43% (including 0.03% of ConstructionWorkers Registration Authority Levy) of Contract sum)2. Pneumoconiosis and Mesothelioma Levy (0.25% of Contract sum)3. HKCA levy (*0.03% (Contract sum ≧ $120M＜$1,000M) or *0.06%(Contract sum ≧$1,000M) of Contract sum of relevant Employer –HKSAR, HKHA, HKHS, AA, MTRC, Ocean Park and Science Park)* The indicated rates of levy are for building works contract.
13 1. General site cleaning during progress of the Works Preliminaries Items6. Site Cleaning1. General site cleaning during progress of the Works2. Wet cleaning3. Final cleaning upon completion of the Works4. Temporary refuse chute5. Dumpling trucks6. Trip ticket system
14 1. Tower cranes (setting up, running and removal cost) Preliminaries Items7. Plant1. Tower cranes (setting up, running and removal cost)2. Material hoists (setting up, running and removal cost)3. Passenger hoists (setting up, running and removal cost)4. Concrete pump trucks5. Trucks6. Mobile cranes7. Gondolas8. Fuel9. Small tools10. Maintenance
15 total no. of persons employed on Site = 50-59) Preliminaries Items8. Safety Management1. Safety audit at 6 months interval (* where the total no. of persons employed on Site ≧100 or Contract sum ≧ $100M) or safety review at 6 months interval (* where thetotal no. of persons employed on Site = 50-59)2. Safety Officer (*1 No. full Safety Officer where the total no. of persons employed onSite ≧ 100)3. Safety Supervisor (*1 No. full Safety Supervisor where the total no. of personsemployed on Site ≧ 20)4. General labour for safety duty5. Safety tools (e.g. safety gloves & safety labels, etc.)6. Safety materials (e.g. temporary barriers & temporary lift shaft doors etc.)7. Safety precaution (e.g. fire extinguishers & fire pumps (* 1 fire pump / 30m high) withpipes for high rise buildings, etc.)* Statutory requirements
17 Preliminaries Items 10. Watchmen 1. Watchmen 2. Guard house 3. Handkey access control system4. CCTV system
18 11. Site Accommodation for Contractor Preliminaries Items11. Site Accommodation for Contractor12. Site Offices for Employer’s Representatives1. Site offices and facilities for Employer’s representatives (minimumrequirements in the Contract)2. Site offices and facilities for Contractor (& Sub-contractors)3. Site storage area4. Office furniture and equipment5. Temporary latrines6. Re-location of site offices and site storage area7. Off site bending yard and storage area
19 1. Contract car or Contractor’s car Preliminaries Items13. Transportation1. Contract car or Contractor’s car2. Shuttle bus (for remote site)3. Car insurance and licence fee4. Driver5. Mobile phone (for driver)6. Fuel7. Maintenance cost of car
20 14. Entertainment and Other Expenses Preliminaries Items14. Entertainment and Other Expenses1. Work commencement ceremony, topping out ceremony & Lo Pan,etc.2. Petty cash (for staff messing)3. Progress photos4. Combined services drawings & as-built drawings, etc.5. Others
21 1. New hoarding or take over existing hoarding Preliminaries ItemsHoarding1. New hoarding or take over existing hoarding2. Covered walkway, hoarding, gantry, signboard and lighting, etc.3. Maintenance4. Alter hoarding to suit site operation5. Alter gantry to suit site entrance6. Temporary hoarding for fencing off site works (mainly for A&A works)7. Removal of hoarding8. Reinstate existing paving
22 1. External and internal scaffolding Preliminaries ItemsScaffolding1. External and internal scaffolding2. Safety nylon mesh3. Timber or steel board for working platform4. Safety catch fence5. Safety canopy at hoists and passenger lifts6. Scaffolding in lift shafts7. Ceiling scaffolding8. Temporary working platform9. Special temporary propping (e.g. for transfer plate)
23 Preliminaries Items 17. Water 1. Temporary water meter 2. Temporary pipe works, water tank & pump, etc.3. Maintenance4. Water fee5. Removal cost for temporary water supply
26 Preliminaries ItemsOther ItemsSome other items that may be required in the Contract or to suit the site conditions.Examples :-1. Condition survey2. Temporary steel working platform3. Show flats4. Diversion of existing services5. Temporary works for obtaining Occupation Permit
51 Contractor’s Pricing for Preliminaries – Submitting Tender 1. Cost adjudication.2. Confirming preliminaries items to be priced with amounts.3. Allocating the price to relevant preliminaries items.4. Finalize the price of preliminaries by adjusting the amounts in relevant preliminaries items.
52 The following questions may help you decide. Are you Capable to Price Preliminaries?The following questions may help you decide.Are you able to work out or at least to read method statement?Are you able to work out or at least to read programme?Do you have good sense to find out risk items in Preliminaries?Do you have basic knowledge of building technology?Do you have basic knowledge of statutory requirements?Do you have good relationship with your project team?Do you have good relationship with sub-contractors and suppliers / plant hirers?Have you updated yourself from working experience and learning?Are you able and willing to work overtime or even overnight?
53 Thank you for your attendance! (QUESTIONS & ANSWERS)Thank you for your attendance!