Based on a selection of articles published in previous Hanscomb/Means Reports.

The Ontario Association of Consulting Quantity Surveyors in conjunction with the "Educational Program Innovations Center" recently presented a very successful Two Day Seminar on Controlling Construction Costs Effectively. The first day addressed different forms of estimating and tendering. Among the participants were representatives of firms involved in international projects, with different procedures. This is a part of the session dealing with Bill of Quantities presented by Robert Myles, Hanscomb Limited. Extracts from other presentations will be included in future issues of the Construction Economist on a random basis - Gordon D. Pattison, PQS(F)

Introduction

When the Mayflower beached at Plymouth Bay in 1620 it is obvious there were no quantity surveyors on board. If any arrived afterwards, they must have all got dumped overboard at Boston along with the tea. Whatever the reason, quantity surveyors and their stock-in-trade, Bills of Quantities, are a bit of a mystery in Canada and USA. This article attempts to explain their origin, history, and purpose, because if you are going to get involved in international construction, you will soon find one of these documents landing on your desk, and normally forming part of the contract documentation.

History

In 19th century Britain, as the Industrial Revolution was producing an ever increasing workload for the building industry, builders came to realize that they were duplicating a lot of effort by each measuring the same quantities from the architect's drawings in order to prepare their bids. The obvious answer was for them to get together and employ one person to measure the work and detail it in a book known as a Bill of Quantities. Then, each builder would price the work. The successful builder would pay the person who measured the quantities (and who became known as a Quantity Surveyor) and include the fee in his bid. Since the building owner or developer ended up paying for the quantity surveyor's services anyway, it finally dawned on them that they might as well employ him directly and get some cost advice as well.

Birth of the SMM

One problem that soon reared its head was that different quantity surveyors would measure work in different ways, and disputes could easily arise when a builder claimed an extra for an item of work that the quantity surveyor had deemed to be included in the measurement of a related item. What was required was an agreed standard set of rules defining what was to be measured. The Surveyor's Institution (which later became the Royal Institution of Chartered Surveyors, or RICS) produced such a set of rules, known as the Standard Method of Measurement (or simply SMM) in 1922. This has been updated over the years as construction techniques and materials have changed. There are also other SMMs published for specialist areas of work, such as civil engineering, road works, etc. The CIQS has their own Method of Construction Works developed in the mid sixties.

Spreading Worldwide

The Quantity Surveyors and the Bill of Quantities were not confined to Britain. As the Empire grew and a lot of building work was required. Naturally, it was British expertise that was involved in designing and procuring those buildings. As these countries started to go their own ways, so did their QSs, and now quantity surveying with attendant Bills of Quantities is not only practised in the commonwealth countries, but also in many other places throughout the world.

As Contract Documents

What began as a logical system used by builders to reduce their bidding costs and provide a fairer basis of competition between them, has converted itself into a powerful and important piece of contract documentation in those countries that have adopted the system.

Generally (but not always), the BQs include the project specifications, general conditions of contract, bidding instructions, etc. They are sent to the bidders by the quantity surveyor after completion. Bidders submit a lump sum price on a tender form at the appointed place and time. In a separate envelope, bidders submit their priced BQs.

The priced BQs of the contractors in competition are reviewed for completeness, accuracy, and correctness by the QS, and a report made. Generally, if there is an error found, the bidding contractor has the choice of holding to his lump sum bid or withdrawing. They cannot, under most circumstances, simply adjust their price.

Thereafter the BQ becomes a full contract document that is used for the financial administration of the contract. The primary function of BQ's may be listed as follows

To serve as a contractual document.
Sets a standard of verbal precision and quantitative reliability.

To provide a basis for tendering.
The Bill is common to all bidders and ensures competitive and comparable tenders.

To provide a basis for interim certificates.
Based on percentage completion of items or sections using contract rates.

To provide a basis for valuing variations.
Quantities are prepared on a plus or minus basis using unit rates in BQ. No difference to rates for extras or credits.

To assist the contractor in the organization of his work.
Scheduling, material ordering, etc.

To facilitate financial control by the client.
Schedules and cash flows.

To provide a basis for feedback of information.
Similarity of items from one job to another.

To provide a source of cost data for quantity surveyors'
estimating requirements.

To provide the framework for analyses of contractors' claims.
Based on conditions of contract, rules of measurement, and preambles to contract.
International Usage

General

Procurement methods vary from project to project within a country. For instance in the U.K. where Bills of Quantities originated many buildings large and small have never had a BQ produced for them. We say that Canada and America do not use BQ's, but in reality it is the preferred method of procurement for civil engineering works. In this form of contract, quantities of items are subject to remeasurement and paid for according to in-place formulae based on unit prices in the Contract Bills.

Looking around the world at procurement methods used for medium sized buildings provides some interesting results. In a survey of 50 countries, 41 used some form of BQ.

Europe

United Kingdom, Gibraltar and Cyprus - The BQ is still the normal method of bidding in some areas of Europe BQ's have developed independently of the British model. In these cases, which include Germany, France, Spain, Russia, Bulgaria, Hungary and Rumania, BQ's are prepared by the architect or engineer. They are often used only for evaluating bids, not for valuing interim payments or change orders.

If parts of the design are the responsibility of the contractor, the quantities for related work items are left for the contractor to complete.

In Germany the architect is the contractual agent of the building owner, and is responsible for managing and obtaining bids from the trade contractors. To do this, he normally prepares a type of Bill of Quantities because bids are usually obtained before construction documents are complete. About 10 percent of the German A/E fee is for preparation of the BQ.

Similar procedures are used elsewhere in Europe. In Norway, the BQ is prepared by the architect and priced by the contractor. There is a period of negotiation when the general contractor remeasures the work and that becomes the basis for the agreed bid. Finland has a published set of rules of measurement for building works.

Middle East

Bills of Quantities are used throughout the Middle East, except in Iran and Iraq, although they have been used there on internationally sponsored projects. In countries such as Bahrain, Egypt, Jordan, UAE, Qatar, Oman and Saudi Arabia the BQ is generally used as part of the contract documentation. Measurements are based on the Principles of Measurement (International) or POM (I) which is an abbreviated version published by the RICS. The significant difference is that whilst quantities are provided, the bidder is responsible for checking their accuracy. Thus, the client not only has the benefit of a lump sum bid, but he also has a document for his own financial control.

Africa

African nations that are (or were) influenced by Britain or Europe have generally adopted the use of Bills of Quantities.

Asia and Australia

Hong Kong, Indonesia, Australia, New Zealand, Singapore, India, Brunei and Malaysia all use Bills of Quantities in the same manner as in the U.K. The quantity surveyor (or sometimes the architect) prepares the BQ according to the rules of measurement set out in a locally produced Standard Method of Measurement (SMM).

In some areas of Asia, such as Thailand and Taiwan, BQ's are sometimes required to be prepared by the contractor and submitted with the bid. In this situation, where the contractor develops the quantities, errors in the quantities are not adjustable after the bid is accepted.

In both situations (QS and contractor-produced BQ's), the unit rates are used for assessing the value of interim payments and change orders.

The Americas and West Indies

The United States, despite its size and enormous construction programs, stubbornly refuse to consider the use of Bills of Quantities. Canada, although historically attached to Britain seems to have been influenced by its southern neighbour, because it also does not use BQ's.

South America and Central America have largely a Spanish heritage, so again BQ's are found in one form or another. However, Guyana and in most islands in the Caribbean, BQ's prepared by Quantity Surveyors are the recognized method of obtaining bids and maintaining cost control during the contract.

Summary

To summarize, we can say that with exception of Canada, wherever British influence has been strong, the Bill of Quantities is to be found, and a few other areas of the world have independently adopted the system. The rest of the world gets by without them and proponents of each system continue to extol their relative benefits. Interestingly enough, in the mid fifties Canadian QS firms were providing Bills of Quantities to general contractors and major sub trades. In an ever increasing global economy, should we Canadian QS's revisit this subject? Letters to the Editor on this subject would be welcome.

Bob Myles is a Senior Vice President of Hanscomb Limited and Director of International projects.