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Update 15 published December 2003 Update 14 published September 2003 Update 13 published May 2003 Update 12 published January 2003 Update 11 published October 2002 Update 10 published August 2002 Update 9 published December 2001 Update 8 published October 2001 Update 7 published July 2001 Update 6 published December 2000 Update 5 published October 2000 Update 4 published May 2000 Update 3 published December 1999 Update 2 published October 1999 Update 1 published April 1999

Please note: References to the masculine include, where appropriate, the feminine. Extracts from Parrys Valuation and Conversion Tables, A W Davidson (1989), (Estates Gazette) reproduced by permission of the College of Estate Management which owns the copyright. Appendix A, Section 2.3 is reproduced from the Building Cost Information Service publication, Standard Form of Cost Analysis: Principles, Instructions and Definitions (1969). Published by RICS Business Services Limited a wholly owned subsidiary of The Royal Institution of Chartered Surveyors under the RICS Books imprint Surveyor Court Westwood Business Park Coventry CV4 8JE UK No responsibility for loss occasioned to any person acting or refraining from action as a result of the material included in this publication can be accepted by the author or publisher. ISBN 0 85406 865 1 RICS Business Services Limited (RBS) December 2003. Copyright in all or part of this publication rests with RBS, and save by prior consent of RBS, no part or parts shall be reproduced by any means electronic, mechanical, photocopying, recording or otherwise, now known or to be devised. Typeset and printed by Q3 Print Project Management Ltd, Loughborough.

1998 FOREWORDKnowledge is of two kinds: we know a subject ourselves, or we know where we can find information upon it.Samuel Johnson (17091784)

The fact that our profession serves a changing world increases the need for it to rely on well thought-out and reliable practices and procedures. Events move at an ever-increasing pace, imposing a requirement for quicker response times. Modern communication methods such as facsimile and now e-mail result in the need for information to be available almost instantly. This is made more difficult by an industry growing in complexity and which is subject to increasing customer expectations in terms of service and quality. The RICS has published this Surveyors Construction Handbook to help surveyors meet these needs. It is intended to become an important source of reliable information and guidance to all Chartered Surveyors who practise in construction. Much of the excellent information produced by the divisions in the past has now been updated for inclusion. Other material not yet revised will be added. The whole will be regularly reviewed and updated as necessary. RICS practice panels are continuing to produce information for inclusion to make it a useful construction reference document. We hope that this Handbook will become an invaluable aid to your day-to-day activities.



ACKNOWLEDGEMENTSProfessor Roy Morledge, Professor of Construction Procurement at The Nottingham Trent University, for contributing the text of Part 3, Section 1. Major D.R. Bassett, Royal Engineers, for his contribution to the research underpinning the construction time charts in Part 3, Section 1; Central Unit for Procurement, HM Treasury (now Office for Government Commerce), for permission to use CUP guides extensively in the drafting of Part 1, Section 1 and Part 3, Section 1. Alan Turner, JP FRICS ACIArb, author of Building Procurement, for permission to use a number of the diagrams from his text in Part 3, Section 1.

CONTENTSForeword Acknowledgements List of Abbreviations IntroductionA B C D E F Aim and Scope of this Handbook Arrangement of Content Status of Content Currency of References Invitation Subscription Service 1 1 1 2 3 3 3

Part 1: The ClientSection 1.1: The Clients Requirements and Roles1.1.1 Establishing the Clients Objectives 1.1.2 The Role for Independent Advice 1.1.3 Project Brief 1.1.4 The Clients Role 1.1.5 The Clients Responsibilities 1.1.6 Appointment of Project Manager (where appropriate) 1.1.7 Appointment of Consultants 1.1.8 Appointment of Constructors Appendix A: Further Reading 1 1 3 3 4 6 8 8 9 1

Section 1.2: Value Engineering

1 Introduction 1 1.2.1 Why Value Engineering? 2 1.2.2 Applicability 2 1.2.3 At What Stage Should Value Engineering be Carried Out? 3 1.2.4 Who Should Carry Out Value Engineering? 4 1.2.5 How Long Should It Last? 5 1.2.6 Preparing for a Value Engineering Workshop 5 1.2.7 Functional Analysis of Design Relative to the Clients Requirements 5 1.2.8 Pricing the FAST Diagram 8 1.2.9 Presenting a Design Solution to a Value Engineering Workshop 8 1.2.10 The Workshop 8 1.2.11 Assessing the Value of the Workshop 9 1.2.12 Implementing the Results 10 1.2.13 Feedback from Post-Occupancy Evaluation 10 Appendix A: Health Centre Value Tree 1 Appendix B: Typical Example of a Value Engineering Process 1 Appendix C: Further Reading 1

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Part 2: Construction Design and EconomicsSection 2.1: Pre-contract Cost Planning and Cost ManagementIntroduction 2.1.1 Pre-contract Cost Planning and Cost Management 2.1.2 Preliminary Cost Studies and Feasibility Studies 2.1.3 Budget 2.1.4 The Cost Plan at Outline Proposals Stage 2.1.5 The Cost Plan at Scheme Design Stage 2.1.6 Cost Checking 2.1.7 Action after Receipt of Tenders Appendix A: Sources of Cost Information Appendix B: Format of Budget and Cost Plans Appendix C: Element Unit Quantities Generation for Hypothetical Buildings Appendix D: Further Reading 1 1 2 4 4 8 11 13 14 1 1 1 1 1 1 1 5 10 14 15 1 1 1 1 1 1 1 1 1 1 2 1 1 1 2 3 3 5 6 8 1 1

Section 2.2: Life Cycle CostingIntroduction 2.2.1 The Client Context 2.2.2 The Life Cycle Costing Calculation 2.2.3 Tax Allowances, Incentives and Business Rates 2.2.4 Data Sources 2.2.5 Worked Examples Appendix A: Residual Values Appendix B: Obsolescence Appendix C: Costs And Values Appendix D: Glossary of Terms for Taxation Appendix E: Examples of Items of Expenditure Likely to Attract Taxation Allowances Appendix F: Further Reading

Section 2.3: Elements for BuildingsIntroduction 2.3.1 Elements 2.3.2 Elemental Cost Analysis 2.3.3 Other Uses Appendix A: BCIS Standard Elements

Section 2.4: Design and Build - Guidance for Employers AgentsIntroduction 2.4.1 Background 2.4.2 Contract Documentation 2.4.3 Additional Services 2.4.4 Employers Requirements and Contractors Proposals (including contract sum analysis) 2.4.5 Design and Build Variants 2.4.6 Novation Appendix A: Potential Services Associated with the Role of Employers Agent Appendix B: Employers Requirements/Contractors Proposal Checklist

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The Surveyors Construction Handbook

Section 2.5: The Chartered Surveyor as Lead Consultant2.5.1 2.5.2 2.5.3 2.5.4 Introduction Definitions: The Difference Between a Project Manager and Lead Consultant Benefits of Appointing a Chartered Surveyor as Lead Consultant Issues to Consider before Undertaking the Role Schedule of Lead Consultant Duties

1 1 1 2 3 3 1 1 2 3 4 7 8 9 11 1 1

Section 2.6 Defining Sustainable ConstructionIntroduction 2.6.1 Technology Swaps 2.6.2 How Can the Environment and Sustainability be Valued? 2.6.3 How Does This Effect the Construction Industry? 2.6.4 Green Building Materials 2.6.5 Whole Building Sustainability 2.6.6 The Government Line 2.6.7 What Might the Future Hold Appendix A: Embodied Energy Content of Building Material Appendix B: Useful Addresses

Part 3: Construction Planning and ProcurementSection 3.1: Developing an Appropriate Building Procurement StrategyIntroduction 3.1.1 The Clients Role 3.1.2 Procurement Strategy 3.1.3 Selection of Most Appropriate Procurement Strategy 3.1.4 Implementation Appendix A: Procurement Options 1 1 2 12 25 29 1 1 1 3 11 19 34 1

Section 3.2: Building Services ProcurementIntroduction 3.2.1 Appointing the Building Services Designer 3.2.2 Design Coordination 3.2.3 Appointing a Building Services Contractor 3.2.4 Tender Documents Appendix A: Typical Example

Part 4: Construction Administration and ManagementSection 4.1: The Problems of Practical CompletionIntroduction 4.1.1 What Happens in Practice 4.1.2 Standard Form Approaches 4.1.3 Effects of Practical Completion 4.1.4 Methods for Dealing with Practical Completion 4.1.5 Definitions 4.1.6 Subsidiary Issues Appendix A: General Objectives to be Achieved at Practical Completion for Small to Medium-sized Building Projects Appendix B: Table of Cases Appendix C: Further Reading 1 1 1 3 13 14 16 20 1 1 1

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Section 4.2: Ascertaining the Amount of Loss and Expense Incurred in Building ProjectsIntroduction 4.2.1 General Principles 4.2.2 Definitions 4.2.3 Entitlement 4.2.4 Ascertainment 4.2.5 Admissible Items 4.2.6 Inadmissible Items Appendix A: Ascertaining the Cost of Running a Site Appendix B: Disruption Appendix C: Ascertaining the Cost of Head Office Overheads Appendix D: Checklist of Items for which Loss and/or Expense are Allowed Appendix E: Checklist of Steps Required when Considering Submissions by Contractor Appendix F: Further Reading

1 1 1 4 4 7 9 13 1 1 1 1 1 1

Section 4.3: The Management of Risk

1 Introduction 1 4.3.1 Definitions 2 4.3.2 The Rationale for Risk Management in the Construction Process 2 4.3.3 The Risk Management Process 5 4.3.4 Summary 14 Appendix A: Further Reading 1 Introduction 4.4.1 Valuations 4.4.2 Assumptions 4.4.3 Valuation Under a JCT Contract: Background 4.4.4 Recommended Action at the