1. ROLE OF QUANTITY SURVEYOR AS PROFIT CENTER AND COST ESTIMATION METHODS
Er. V.K. Sharma
4/19/2017

2. CIVIL ENGINEERING Civil Engineering
Is considered as the mother of all engineering disciplines
It is also simplest of all engineering disciplines
Because of its simplicity it is also the most complex branch
Requires interaction with a wide range of professions and handling of complex situations in difficult and new environments
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3. RAMIFICATIONS OF CIVIL ENGINEERING
The ramifications of this discipline are far and wide ranging
A well designed and executed project adds to individual and national wealth
Converts cash into kind where possibility of appreciation of investment is high
Is one of single largest contributor to GDP
Is only second to agriculture in generating primary and secondary employment
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4. RAMIFICATIONS OF CIVIL ENGINEERING
HOWEVER a poorly designed and executed project is:
A sure recipe of disaster
Case in point is damage caused in a recent earthquake in Haiti
Cause of wastage of precious resources
Wastage of money
Source of pollution and creator of GHG
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5. ROLES OF CIVIL ENGINEERS
Except for generalist civil engineers, who are involved in each sphere, each specialist engineer is obsessed with one aspect of construction activity
Structural engineer – structural integrity
Services engineer- efficient services designs
Construction supervisor- Speed of execution
Quantity surveyor or Cost Engineer
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6. ROLES OF CIVIL ENGINEERS
Initially a generalist civil engineer performed all or most of the roles
Post some major natural calamities the role of structural designers gained prominence
Now in view of the competitiveness in the industry the role of Quantity Surveyors has gained importance and is considered as a highly specialized role
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7. ROLE OF QUANTITY SURVEYOR
A quantity surveyor, amongst all specialist civil engineers, is the only professional whose sole obsession is “COST”
Cost prediction, monitoring and control is what quantity surveying is all about
They provide independent, objective, reliable and accurate capital and operating cost assessment which are used for investment funding and project control
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8. ECONOMIC ANALYSIS OF PROJECTS
Monetary evaluation of alternatives for meeting a given objective
Somebody has to define the problem, identify feasible alternatives which can achieve the desired objectives, determine whether an economic analysis is necessary and if so how much effort has to be put in, determine the uncertainties, identify the non tangible advantages and present the best solution
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9. QUANTITY SURVEYOR-HELPING IN GENERATING PROFITS
Help in making investments possible on scientifically pre-determined values
The property market plays a key role in the global economy; comprising, in some countries, as much as 20% of the Gross National Product. With a resource this vital, businesses, governments and society need advice they can trust
This advice can be given only by a QS
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10. QUANTITY SURVEYOR-HELPING IN GENERATING PROFITS
How?
By applying principles of Value Engineering 
VE is a systematic evaluation procedure directed at analyzing the function of materials, systems, processes, and building equipment for the purpose of achieving required functions at the lowest total cost of ownership.
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11. QUANTITY SURVEYOR-HELPING IN GENERATING PROFITS
It is a team approach that analyzes a function by systematically developing the answers to such questions as: what is it?; what does it do?; what must it do?; what does it cost?; what other material or method could be used to do the same job without sacrificing required performance or degradation to  safety, reliability, or maintainability?
VE is concerned with elimination or modification of anything that adds costs without contributing to the program functional requirements. Reductions in a project's scope or quality to get it into budget are not considered VE—those decisions are simply "cost cutting".
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12. QUANTITY SURVEYOR-HELPING IN GENERATING PROFITS
Cost V/s benefits- use an Analytic Hierarchy Process
Challenge is identifying benefits because they resist quantification
These typically include 
Aesthetics
Safety
Environmental impact
Historic preservation.
AHP is one of a set of multi-attribute decision analysis (MADA) methods that consider non-monetary attributes (qualitative and quantitative) in addition to common economic evaluation measures when evaluating project alternatives
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13. QUANTITY SURVEYOR-HELPING IN GENERATING PROFITS
How?
Help Look at whole lifecycle costs (LCC)
Lifecycle cost analysis takes into account all costs of acquiring, owning and disposal of a building or a building system
This is useful when project alternatives, which fulfill same objectives but differ in initial and operating costs have to be compared
Aim is to obtain lowest overall cost of ownership consistent with quality and functionality
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14. QUANTITY SURVEYOR-HELPING IN GENERATING PROFITS
LCC
Issues being factored in while determining life cycle costs are:
Initial cost of acquisition
Finance charges
Sustainability
Ease of maintenance
Long term cost of operation including energy and fuel costs
Cost of disposal
Social responsibility
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15. QUANTITY SURVEYOR-HELPING IN GENERATING PROFITS
LCC is usually split into 4 phases:
concept + proposal,
design + development,
build + install and
finally, the most significant phase, operation + support
Since the majority of life of most assets is spent in the operate and maintain cycle and it is in this phase, that the asset creates the value contribution to the organization and also absorbs costs of maintenance we have to be careful in planning stage to ensure that this component remains low. In systems where outright sale of a product is involved this phase does not impact the developer excepting as a good business policy but in case the asset is being leased out this will be very important. In a lifecycle of 30 years cost of salaries required for maintenance purposes in itself could be very high!
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16. QUANTITY SURVEYOR-HELPING IN GENERATING PROFITS
Central to LCC analysis is a system of breaking down cost into different components.
Cost Breakdown System (CBS) varies in complexity depending on projects and the manner in which they are being planned, executed and marketed. Its aim is to identify all the relevant cost elements and it must have well defined boundaries to avoid omission or duplication.
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17. QUANTITY SURVEYOR-HELPING IN GENERATING PROFITS
Whatever the complexity any CBS it must include all cost elements that are relevant to the option under consideration including internal costs
Each cost element must be well defined so that all involved have a clear understanding of what is to be included in that element.
It would be necessary that each cost element should be identifiable with a significant level of activity or major item of equipment or operation.
CBS also clearly defines ‘cost spend profile’ which helps in evaluating the options and coming to a rational conclusion.
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18. QUANTITY SURVEYOR-HELPING IN GENERATING PROFITS
How?
Manage costs
Management of cost throughout the Planning, Design, and Development Process is most essential
Cost Management is employed as a means of balancing a project's scope and expectations of quality and budget.
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19. Cost Management
How?
Define the scope, the level of quality desired, and the budget
Ensure that the scope, quality, and budget are aligned
Monitor and manage the balance of these three components throughout the life of the project
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20. QUANTITY SURVEYOR-HELPING IN GENERATING PROFITS
Advice to owners
Costs can be managed
Get a specialized company to do this job
Ideally the firm charged with managing the costs of the project should be hired directly by the owner, early in the process, and should be independent of both the architect/engineer and the construction contractor
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21. QUANTITY SURVEYOR-HELPING IN GENERATING PROFITS
How?
Management of variations/changes
During construction the focus shifts from predictive cost estimating to reactive cost management of any changes in the work.
Changes arise from a number of different sources—unforeseen conditions, owner-generated changes, drawing errors and omissions, code issues or contractual claims.
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22. QUANTITY SURVEYOR-HELPING IN GENERATING PROFITS
Changes can arise from on-going proactive cost management also, either generated by the design team or even the vendor, where one of the parties proposes a better-value substitution (known as Value Engineering Change Proposals or VECPs).
Changes should be reviewed by the design team for entitlement—is it really a change to the scope and are there any credits due? Then the cost consultant should review the pricing against the contract and industry norms, leading to an independent estimate for presentation to owner
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23. COST
Is a function of
Quantity
Unit rate
While computing quantities accurately is easy, especially with use of IT tools, assessing rates is difficult and calls for experience and in-depth knowledge of market and engineering processes
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24. RATES Rate is a function of:
Availability of resources at time of execution
Manpower – technical, skilled, unskilled
Materials
Machinery
Management competencies
Government policies
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25. RATES Market situation Time/season when an item is to be executed
Volume of work available and number of agencies available to execute the same –demand & supply
Time/season when an item is to be executed
Duration in which it is to be executed
Geographical location of the project
Social conditions prevailing
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26. RATES
Assessment of requirement of resources is easy and will vary within a small band
Assessment of impact of other factors is difficult and will be determined by the experience and knowledge of the QS
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27. COST ESTIMATION METHODS
Guess Estimate
Initial or preliminary estimation
Detailed estimation
Tendered rates
Final costing
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28. COST ESTIMATION METHODS
Guess estimate- based on past experience of similar projects
Good for projects where making profit is not the main purpose
OK for personal works or very small projects
That some use it even for complex business proposals is another issue
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29. INITIAL OR PRELIMINARY ESTIMATION
This is grossest form of estimation
Basically it involves assessing total or gross quantities and using historical data to assess costs
Is used to make initial assessments of likely costs and/or time
Accuracy at this stage can be compromised if initial planning is sketchy or data about site conditions is not reliable
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30. INITIAL OR PRELIMINARY ESTIMATION
In case of buildings it involves calculating plinth area or total built up area multiplied with assessed/historic rate per unit area
Can be accurate if sufficient historical data is available and all elements are similar and accounted for
Can be used for taking a call on areas to be built or developed
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31. DETAILED ESTIMATION
Is taken up when most project details have been firmed up
Presents a fairly reliable estimate of the project and likely total cost
This involves computing accurately quantities of different elements such as:
Sub head
Element
Civil
Earth work
Electrical
Low side
PCC
High side
RCC
HVAC
Brick work
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32. DETAILED ESTIMATION
Rates for each building element is also assessed from first principles or using standard schedules, updated for local site conditions
Correct computation of quantities and accurate assessment of rates is the key to accuracy
Though this is primarily a mechanical exercise yet it is very important
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33. TENDERED RATES
Based on detailed estimates tenders are invited for execution of project
Tendered rates are influenced by:
Market conditions
Govt. policies
Financial position of owner and executing agency
Location
Timing of execution
Time permitted for execution
Type of structure
Expertise and experience of executing agency
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34. TENDERED RATES Tenders could be of following types:
Lump sum
Percentage rate
Item rate
Design build
Competitiveness of the tender and expertise of person assessing these will ultimately determine likely final costs
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35. TENDER EVALUATION
If the QS has factored all the factors which affect the rates then variation in estimated and tendered rates will be marginal
Items having high difference can be identified and rates negotiated for these. This, however, will be possible only in item rate tenders
A good QS will always examine the quantities for items where rates quoted are low or high to ensure that that there is no chance of variation in these. As variation in these could throw the tender evaluation haywire.
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36. FINAL COSTING Proof of the pudding is in its eating
All the stages of estimation were just estimation of likely cost
Final cost of project is known only at time of completion or can be predicted during execution after work has started and reached beyond foundation stage
If due diligence was not done at initial stages it can lead to a disastrous situation
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37. FINAL COSTING If initial cost is ‘X’ It may become ‘X1’ at DE stage.
( arrived at by multiplying total built up area with historical unit rates for the type of projects)
It may become ‘X1’ at DE stage.
(This will be a aggregation of costs of different elements derived as a function of quantity ‘q’ and assessed rate ‘r’)
It may become ‘X2’ at tendering stage.
(This will be a function of quantities ‘q’ calculated in DE & tendered rates ‘r2’)
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38. FINAL COSTING Final cost will be ‘X3’.
(This will be a product of actual quantity ‘q3’ and tendered rate ‘r2’)
Good estimation will ensure that ‘X3’ is equal to or very near ‘X’
Variations could arise if quantities were computed wrongly or if initial rates were not assessed correctly
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39. VALUE FOR MONEY Value for Money (VFM)
Ultimate aim of all professionals
It is essential that while proceeding with any project each decision is taken after assessing whether we get VFM
Professional QS have a major role to play in this
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40. conclusion
Adopting an approach, where reliability in estimation and costing is designed into the asset, using the methods of whole life cycle costing, ensuring accuracy in assessment of quantities, accuracy in prediction of rates can make significant savings over the life of the asset and making correct decisions, should be adopted by all Quantity Surveyors
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41. THANK YOU FOR YOUR ATTENTION
Er. V.K. Sharma
4/19/2017