Procurement with Bills of Quantities and Approximate Bills of Quantities

Procurement with Bills of Quantities and Approximate Bills of Quantities

Bills of Quantities

Bills of Quantities are used to obtain an equal basis to obtain a price in competition normally a lump sum tender price based upon the priced Bills of Quantities is normally tendered in competition by a pre-selected or pre-qualified list of contractors. Selection of a Contractor is made on the basis of the Tenderer pricing the measured Bills of Quantities which are prepared in accordance with the specified standard method on measurement. In Malaysia the two main standard forms of measurement are:

SMM2 – Standard Method of Measurement of Building works (Second Edition) produced by the Institution of Surveyors Malaysia.

CESMM3 – Civil Engineering Method of Measurement (Third Edition) produced by the Institution of Civil Engineers.

In addition there are specialised methods of measurement for speciality works such as dredging, golf courses, landscaping works and pipelines which are sometimes adopted for specific projects.

The Bills of Quantities include definitive measurements of the major elements of the building according to the standard method of measurement adopted. In addition where design is not complete, ‘provisional’ and/or ‘approximate’ quantities can be included to obtain rates in competition. Even with provisional or approximate quantities it is good practice to estimate the quantities as near as possible to those anticipated so that the rates are not subject to revision due to quantity changes and to prevent Tenderers manipulating these rates on the basis of the anticipated quantities.

Additionally Provisional Sum allowances for undefined and defined works can also be included, together with provisional sum allowances for works to be carried out by named or nominated specialist sub-contractors; which, if required, can be tendered separately – although this is relatively uncommon today some Employer still consider it preferable to retain this control. It is more likely that such work will be part of the Contractor’s tender by means of selection from list of ‘preferred Sub-Contractors’, to then be employed as Domestic Sub-Contractors.

This method of procurement is the oldest construction procurement methodology in Malaysia adopted from the British and is probably the most common procurement method used in the Malaysian Building and Construction industry today. It still remains the preferred method of procurement by the Malaysian Government Departments.

Bill of Quantities are appropriate for projects where time is available for design work to largely be completed so that detailed measurements can be made before the tenders are sought. Bills of Quantities can be used on any size project but can be suitable for those which are extremely large and complex and where the design time required would mean a very long lead-in period.

The advantages of procurement with the use of Bills of Quantities are:

Cost certainty is generally high but depends on the degree of completeness of design at the time when the Bills of Quantity are prepared and the accuracy of the Bills of Quantities.

Gives excellent comparison of tender bids because all tenders are based on the same measured information.

Gives a good basis for measurement and valuation of variations and for the calculation of interim valuations and the eventual final account.

Needs the design team to have prepared and developed the building design before the Bills of Quantity can be prepared and so through reduction of design risk often leads to a much greater level of programme and cost.

Creates a low risk and low-cost tendering environment allowing Tenderers to give their most competitive price because the risk for the contractor is well understood and defined.

This is a procurement process which is widely understood in Malaysia.

Can incorporate Design and Build and Performance Specified works if required.

The disadvantages of using Bills of Quantities for procurement are:

The Cost in preparation of Tender Documentation.

For the level of cost certainty promised by this procurement methodology to be delivered, the design must have evolved before preparation of the Bills of Quantity is started.

Errors in the tender documents are normally required to be corrected at the client’s cost.

Pre-contract phase of procurement is lengthy compared to other procurement methods and so often leads to a later start on site.

Risk is generally dependent upon status of design at time of document preparation and can therefore mean that the Client can bear more risk if Design is not largely completed and therefore do not fully represent the final design or constructed solution.

Bills of Approximate Quantities

Bills of Approximate Quantities are an alternative form of Bills of Quantities and are prepared early in the design process before a firm design is available.

The contractor is selected, normally by competition from a pre-selected or pre-qualified list.

Contractors prepare their tender bid based on pricing a Bill of Approximate Quantities. This is essentially a traditional Bill of Quantities but with the quantities assessed from professional experience by the Quantity Surveyor or Engineer rather than firmly measured, as would be the case with Bills of Quantities.

Appropriate for projects for which an early start on site is required or where the design is reasonably well-defined or alternatively where the work is of a repetitive nature following on from other similar projects (allowing assessments to be made of the quantity of works from previous experience), but where time is not available for traditional Bills of Quantities to be prepared.

The advantages with the use of Bills of Approximate Quantities are:

Enables an earlier start on site to be made than with Traditional Bills of Quantities.

Allows early appointment of a contractor and access to experience in terms of his programming and buildability skills

Can incorporate Design and Build and Performance Specified works if required

The disadvantages with the use of Bills of Approximate Quantities are:

Approximate Bills of Quantities do not establish a firm cost for the work at the time the contractor is appointed, thus there is less price certainty. This is because the actual cost of the works is calculated only when the design is available and detailed re-measurements have been made.

The client proceeds to the construction stage at greater risk, despite a check being made at the tender stage by means of bids being submitted by the tendering contractors.