Construction Handbook[1]

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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 2000Update 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 fromParrys 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.

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    1998 FOREWORD

    Knowledge 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 yourday-to-day activities.

    Christopher Powell,FRICS

    P RES IDENT, QUANTITY S URVEYORS DIVIS ION, 1 9 9 7 98

    Trevor Mole, FRICS

    P RES IDENT, BUILDING S URVEYORS DIVIS ION, 1 9 9 7 98

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    ACKNOWLEDGEMENTS

    Professor 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.

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    Page 2 Contents (12/03) The Surveyors Construction Handbook

    1Introduction 1

    2.1.1 Pre-contract Cost Planning and Cost Management 2

    2.1.2 Preliminary Cost Studies and Feasibility Studies 4

    2.1.3 Budget 4

    2.1.4 The Cost Plan at Outline Proposals Stage 8

    2.1.5 The Cost Plan at Scheme Design Stage 11

    2.1.6 Cost Checking 13

    2.1.7 Action after Receipt of Tenders 14

    Appendix A: Sources of Cost Information 1

    Appendix B: Format of Budget and Cost Plans 1

    Appendix C: Element Unit Quantities Generation for Hypothetical

    Buildings 1

    Appendix D: Further Reading 1

    1Introduction 1

    2.2.1 The Client Context 1

    2.2.2 The Life Cycle Costing Calculation 5

    2.2.3 Tax Allowances, Incentives and Business Rates 10

    2.2.4 Data Sources 14

    2.2.5 Worked Examples 15

    Appendix A: Residual Values 1

    Appendix B: Obsolescence 1

    Appendix C: Costs And Values 1

    Appendix D: Glossary of Terms for Taxation 1

    Appendix E: Examples of Items of Expenditure Likely to Attract

    Taxation Allowances 1

    Appendix F: Further Reading 1

    1Introduction 1

    2.3.1 Elements 1

    2.3.2 Elemental Cost Analysis 1

    2.3.3 Other Uses 2

    Appendix A: BCIS Standard Elements 1

    1Introduction 1

    2.4.1 Background 2

    2.4.2 Contract Documentation 3

    2.4.3 Additional Services 3

    2.4.4 Employers Requirements and Contractors Proposals

    (including contract sum analysis) 5

    2.4.5 Design and Build Variants 6

    2.4.6 Novation 8

    Appendix A: Potential Services Associated with the Role

    of Employers Agent 1

    Appendix B: Employers Requirements/Contractors Proposal Checklist 1

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    The Surveyors Construction Handbook Contents (12/03) Page 3

    1Introduction 1

    2.5.1 Definitions: The Difference Between a Project Manager and

    Lead Consultant 1

    2.5.2 Benefits of Appointing a Chartered Surveyor as Lead Consultant 22.5.3 Issues to Consider before Undertaking the Role 3

    2.5.4 Schedule of Lead Consultant Duties 3

    1Introduction 1

    2.6.1 Technology Swaps 2

    2.6.2 How Can the Environment and Sustainability be Valued? 3

    2.6.3 How Does This Effect the Construction Industry? 4

    2.6.4 Green Building Materials 7

    2.6.5 Whole Building Sustainability 8

    2.6.6 The Government Line 9

    2.6.7 What Might the Future Hold 11Appendix A: Embodied Energy Content of Building Material 1

    Appendix B: Useful Addresses 1

    1Introduction 1

    3.1.1 The Clients Role 2

    3.1.2 Procurement Strategy 12

    3.1.3 Selection of Most Appropriate Procurement Strategy 25

    3.1.4 Implementation 29

    Appendix A: Procurement Options 1

    1Introduction 1

    3.2.1 Appointing the Building Services Designer 3

    3.2.2 Design Coordination 11

    3.2.3 Appointing a Building Services Contractor 19

    3.2.4 Tender Documents 34

    Appendix A: Typical Example 1

    1Introduction 1

    4.1.1 What Happens in Practice 1

    4.1.2 Standard Form Approaches 3

    4.1.3 Effects of Practical Completion 13

    4.1.4 Methods for Dealing with Practical Completion 14

    4.1.5 Definitions 16

    4.1.6 Subsidiary Issues 20

    Appendix A: General Objectives to be Achieved at Practical

    Completion for Small to Medium-sized Building Projects 1

    Appendix B: Table of Cases 1

    Appendix C: Further Reading 1

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    Page 4 Contents (12/03) The Surveyors Construction Handbook

    1Introduction 1

    4.2.1 General Principles 1

    4.2.2 Definitions 44.2.3 Entitlement 4

    4.2.4 Ascertainment 7

    4.2.5 Admissible Items 9

    4.2.6 Inadmissible Items 13

    Appendix A: Ascertaining the Cost of Running a Site 1

    Appendix B: Disruption 1

    Appendix C: Ascertaining the Cost of Head Office Overheads 1

    Appendix D: Checklist of Items for which Loss and/or Expense are

    Allowed 1

    Appendix E: Checklist of Steps Required when Considering

    Submissions by Contractor 1

    Appendix F: Further Reading 1

    1Introduction 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

    1Introduction 1

    4.4.1 Valuations 1

    4.4.2 Assumptions 2

    4.4.3 Valuation Under a JCT Contract: Background 3

    4.4.4 Recommended Action at the Start of a Contract 4

    4.4.5 Communications 5

    4.4.6 Approach 6

    4.4.7 Content of a Valuation 8

    4.4.8 Administration 15

    4.4.9 Special Situations 16

    4.4.10 Other Contract Terms (relative to valuations) 17

    4.4.11 Valuations Under Other Forms of Contract 18

    Appendix A: Further Reading 1

    Appendix B: JCT Definition of Reasonable Proof 1Appendix C: Example of Priced Activity Schedule 1

    1Introduction 1

    4.5.1 Extension of Time Clauses 2

    4.5.2