A QS in the US

“What is a Quantity Surveyor, anyway?” 

My family and friends have been asking me what I do since about 1984, so I suppose I have yet to properly satisfy their curiosity. Since I started working in the USA in 2003, those questions have only increased, coming from my employers and American colleagues alike.

According to Wikipedia:

“A Quantity Surveyor (QS) is a professional, working within the construction industry, concerned with construction costs and contracts.”

That sounds reasonable enough, albeit vague, but exactly what does it mean? Nope, we’re not engineers; not lawyers and not accountants either. The Engineers on my building studies course called us ‘brick counters’, wrongly thinking that we’d be insulted. Perhaps a more dependable source for a definition is “The Royal Institution of Chartered Surveyors” (RICS), one of the leading professional bodies for the Quantity Surveyor, which defines the role of the QS as:

“…an expert in the art of costing a building at all its stages.

…highly trained professionals offering expert advice on construction costs. They are essential for life cycle costing, cost planning, procurement and tendering, contract administration and commercial management.”

The Quantity Surveying profession developed in the United Kingdom in the 19th century and was primarily concerned with producing a “Bill of Quantities” (BoQ) which specified the material, labor and work costs required to implement a construction design. In many construction markets, the BoQ is still used today in conjunction with drawings and specifications to price and manage construction work. This standardized approach allows for an easy like-for-like comparison of competing bids. After contract award, it is used by the parties as a tool for such tasks as procurement, progress and final account payment valuation and change management. Many countries, including most of the commonwealth nations, incorporate a BoQ into their contracts. Many highway projects in the U.S. also rely on a set of Unit Prices for bidding and payment, much like a BoQ.

The QS today is expected to have a broad range of abilities and expertise, mostly focused on the commercial, cost, and financial aspects of a construction project. QS’s provide expert advice on cost and contractual arrangements, managing and controlling project costs and preparing and administering contract documents. Due to a thorough knowledge of construction costs, the QS also provides owners and developers with front end design cost planning, which helps frame the subsequently commissioned design within a total budget. The QS also plays a key role in claims management and dispute resolution procedures – the primary focus of my career for the last 20 years.

When I started my QS career as a trainee, working for a local contractor on the south coast of England, my boss told me that “A good QS will pay for himself.” Once I realized he didn’t mean I wouldn’t be getting a salary, I started to understand that I would be expected to generate enough revenue through procurement savings, effective cost planning, change management, claims, accurate progress payment applications/certifications and persuasive final account negotiations, to more than cover my cost to the project.

As a 16-year-old, fresh out of secondary school, (high school) with the princely gross annual salary of ￡2,980, (about US$4,700) I wondered where I was going to find that kind of money to cover my cost - Every year!

As it turned out, I didn’t need to worry for the first year because I was assigned to the estimating team and spent most of my time in a damp, dark, basement photocopy room, preparing subcontract bid packages from Bills of Quantities. Hard as it may to be for some to believe now, there were no multiple sheet feeders or ‘collate’ functions on photocopiers back then, and no laptops from which to send the documents to a smart printer. A reasonably sized project would keep me in that dungeon for several days at a time printing multiple copies of page 1, then page 2, 3, 4 etc. of the groundwork specification and bills of quantities, followed by brickwork, carpentry, roofing ad-nauseum. Once done, I would take the stacks of paper into the conference room to manually collate them into (hopefully) identical packages, each of several hundred pages. Opening a window during this phase was strictly forbidden, on pain of death as a gust of wind could result in disaster and years of therapy. So, while the engineering trainees were working outside, battling the elements and enjoying their Ford Fiesta company cars, I was inside, battling anemia and paper cuts.

The next phase of my job was to compare the returned bids side by side, item by item, page by page, to make sure we were able to evaluate them on a like-for-like basis. This subcontractor is cheaper at hanging doors, but this one has priced roof trusses much cheaper. This one is half the rate per m3 for concrete but hasn’t priced the polished flooring at all.

I admit it all felt a bit mundane and repetitive at the time – particularly the days in the dungeon - but when I eventually moved on from the estimating department, and started my assistant site QS role with enthusiasm, I suddenly felt like Daniel-san from ‘The Karate Kid’ - subliminally educated on the various stages and trades involved in the construction process, with a grounding in the current market cost of materials, labour (or labor), plant (equipment) and various types of overhead.

EDUCATION

In addition to on-the-job training and experience, the QS is required to obtain formal qualification. There are a few routes available, including full time study, a sandwich course and the ‘day release’ approach.

My own journey started with a day release course at the local Institute of Higher Education, studying for a diploma in Building Studies. This meant I worked full time for 4 days of the week and attended classes for one full day and one evening per week. Looking back, I am glad I chose this route as it ensured I had a good balance of both practical on-the-job training and classroom education. At the time, I made the decision purely on the basis that I would be earning a salary and my college tuition would be paid for me by my employer. The Building Studies classes were comprised of aspiring QSs, engineers, architects, planners (schedulers) and trade foremen. Together we studied a broad spectrum of subjects including:

·        Construction technology basics;

·        Materials science;

·        Site surveying;

·        Measurement and estimating;

·        Planning & scheduling; and

·        Health and safety.

With a grounding in the generalities of ‘Building Studies’ the would-be QS will often follow up with a more specialized education such as a BSc in Quantity Surveying. Course content and structure vary between institutions, but areas of study include:

·        Construction technology;

·        Measurement rules and quantity taking off;

·        Business and construction economics;

·        Construction law and contracts;

·        Arbitration;

·        Building technology and services;

·        People and information management;

·        Value engineering;

·        Feasibility studies;

·        Risk analysis;

·        Estimating and valuation; and

·        Commercial management.

Through training, Continued Professional Development, education and experience, the core competencies of the QS will eventually encompass:

·        Principles and Procedures of Construction Accounting;

·        Construction Business Planning;

·        Procurement and bidding;

·        Construction project financial controls and reports;

·        Contract and Commercial Management

·        Quantification and costing of construction work;

·        Claims avoidance and dispute resolution.

What stands out for me, working in the U.S., is that this career and educational path is just not readily available here, even though each of these skills are required on a construction project. The Tasks of the QS are often distributed among various other disciplines within the industry and many of those that find themselves in such a position, see it as a stepping stone rather than a career path.

Common Tasks of the Quantity Surveyor

The QS can find themselves employed in a number of different organizations: professional QS practice, claims consultancy firms, owner/developer/operator firms, government agencies, project management organizations, contractors, subcontractors, and material/equipment vendors. Tasks may vary to certain degrees between these types of employers, but some of the key and more common tasks expected of me during my career are described below.

Assess Work Done and Efficiency

Apart from being sent to the store for: “a bucket of sparks for the angle grinder”; “a sky hook”; or “a long weight (wait)”, one of my first tasks as a junior QS was the measurement of work done and materials delivered and stored on site (or other agreed locations). Measurement was carried out on site or taken off from drawings and allowed for both certification of Subcontractor interim payments and formulation of the contractor’s interim payment requests, valued at the agreed contract rates. 

Site measurement of work done and materials on site also allowed for comparison with material quantities ordered and delivered, assessment of losses due to waste, theft, short delivery, over-order, osmosis etc.

The regular materials wastage items I was required to monitor as a junior QS were sand, cement, aggregate, bricks (yes, I counted bricks every week!), tiles, binding wire for reinforcement, welding rods, nails, Fuel Oil and Grease (FOG) and myriad other consumables. Essentially, the QS can be required to monitor the usage, loss and waste of any component from the construction process. Unfortunately, as the bearer of bad news, the doctrine of ‘kill the messenger’ was often in play and many of my wastage reports were met with anger, disbelief and demands for a recount before losses were accepted as real and measures put in place to improve the numbers.

Apart from identifying short deliveries and inadequate security measures, the final wastage report would also be shared with the estimating department to update their databases for estimating future work.

Another task derived from the measurement of work done was assessment of actual labor efficiency and productivity levels. This information was used in estimating future work, assessing the impact of change and also establishing the effect of delay and disruption on project costs or the formation of a ‘measured mile’, facilitating the negotiated settlement of disputes at project level or providing supporting evidence in formal dispute resolution proceedings.

Contracts and Procurement

As my skills developed and experience grew, I became involved in assessing the most appropriate procurement routes for projects or elements of a project, and for drafting and negotiating agreements. Good negotiation skills were critical, but so was relationship building and the development of inter-personal skills. 

I was required to ensure that each of my projects or sub-projects were executed in the most appropriate and economic way. An understanding of inter-relationships between various agreements became paramount in order to avoid overlaps or gaps in the contractual obligations of parties and to ensure compatibility. 

”Paying for myself” often came from procuring work or material at lower rates than the budget, thereby improving project margins or countering losses experienced elsewhere. Good relationships with subcontractors and suppliers, coupled with knowledge of labor, material and equipment pricing, makes for an easier negotiation! After award of subcontracts I became responsible for contract administration – ensuring that the financial provisions of the contracts and subcontracts were properly interpreted and applied. This began with responsibility for a few Subcontractors on a smaller project through to agreement of the final accounts. The number and significance of subcontracts I was responsible for increased over the years as I gained experience and grew more grey hair.

Cost and Value Analysis

During my 15+ years working as a Contractor’s QS, a key function (and one of the most daunting) was to monitor, interpret and regularly report on the profit and loss of projects. For me, this took the form of a monthly report, prepared on a spreadsheet, which provided a summarized snapshot of the financial performance of the project, grouped by materials, labor, subcontracts, equipment, site overheads and home office overheads. Back-up sheets and additional files allowed the reader to drill deeper into the report as required. As computers and software have developed, so have the available tools, in house programs, spreadsheets, Apps and other means of carrying out this task.

The Cost/Value Analysis (CVA) that I was required to submit (and defend) to senior management used all available data to correct coding errors, identify or predict trends, manage uncertainty and achieve or improve on bid margins. The document collected actual costs incurred, provided via a ‘project cost report’ and compared these with actual values earned, taken from the current payment application. A narrative section of the CVA provided information in as much detail necessary to explain the reasons for variances or to expand upon other key aspects of the report.

The CVA allowed for identification and correction of any miscoded costs, any missing or un-invoiced costs, miscoded values and items of under or over valuation. Cost accruals and value reserves were then listed in a back-up sheet with narrative and applied to the CVA to provide an ‘apples to apples’ comparison of cost and value.

The final draft CVA compared cost incurred plus accruals with value earned less reserves and the associated variances in terms of both money and percentage. This comparison was provided for the period (usually a calendar month), to date and forecast to completion. The CVA was then interrogated by senior management, variances explained and measures agreed to halt or reverse losses or to preserve gains.

The CVA was also an early warning system, highlighting potential unclaimed changes/variations, reduced productivity and under-recovered overheads.

Changes, Variations and Disputed Items

Projects experience change. I’ve been involved with a number of project teams that started the campaign with the mantra – “No Change Orders on this Project”, but I’ve never known a project to achieve that lofty goal. Particularly now, in the era of the Mega-project, change is inevitable.

Effective change management includes the timely identification of change, the accurate assessment of all impacts of said change and the allocation of responsibility. In order to fully understand the cause and effect of change, I have been required to develop a firm understanding of project schedules and to work closely with schedulers to identify and demonstrate the time impacts of changes. The QSs detailed knowledge of the pricing and schedule for the base works, understanding of current market prices and rights and obligations of the parties under the contract combine to allow for the accurate valuation of changes.

The goal of the QS in undertaking change management is to achieve a timely, fair and equitable settlement for all increases or decreases in project cost and time, in accordance with the contract provisions. Without a proper understanding of the impacts of change, and the ability to adequately demonstrate those impacts, the risk that entitlements go unrealized is greatly increased. 

Record Keeping and Communication

The key to good communication and even relationship management between the parties is ‘avoid surprises’. Record Keeping and timely, clear communication is the cornerstone of a well-managed project. Detailed and accurate records can reduced the number of disputes and claims or provide the necessary support to requests for additional time and money.

 

As project QS and later Regional QS, I was often appointed by the Project Manager as the scribe of the project team, with responsibility to draft letters, reports, responses to letters, meeting minutes, and contractual notices etc. with an emphasis on rights and obligations under the various agreements. In addition, I would be required to ensure that daily, weekly and monthly reports, timesheets and other key project records were being kept and to an adequate and appropriate standard. The Owner or developer’s QS would frequently fulfill the same role on the other side, which meant we were both speaking the same language.

Summary

The QS is concerned with the management of costs and budgets from cradle to grave of a construction project, and should be involved in a contractual, technical and financial capacity – acting as a bridge between engineering, legal and corporate functions. The training and experience of the QS provides a solid ability to accurately allocate or identify costs with specific work items and remain current with the market prices of construction activities.

In the U.S. the role of the QS is fulfilled by a combination of construction economists, cost engineers, business risk managers, claims managers, project managers, contract/subcontract managers and administrators, project accountants and commercial managers. From my experience, many of the people who found themselves in what I would call a traditional Commercial Manager role on a project - the project manager’s right hand - were there as a means to an end. They were from an engineering background - aspiring project managers and project directors, with no training, desire (and sometimes no aptitude) for the commercial role they’d been given. They seldom lasted the duration of the project, which meant there was no continuity in that critical commercial role, either. 

In addition, the lack of options in the U.S. for people to choose this career path and obtain formal training, means that the commercial team – estimating, project controls, subcontracts and procurement – will be highly dependent on well-defined company policy, procedures and in-house training if they are to succeed. Circle back to the problem of the Commercial Manager role as a stepping stone, and you see the likelihood of such a company policy greatly diminishing.

The chances of a project succeeding financially are increased exponentially when QS teams are employed and given adequate levels of authority. Alternatively, those fulfilling any of the roles of the QS should have access to some formal training and mentoring and be given opportunities to pursue a defined commercial career path within the organization.

Returning to the statement that ‘A good QS pays for himself’, that philosophy unfortunately developed during the leaner economic times into ‘There’s no need to price the QS into the bid as she or he will generate a net gain for the project anyway’. However, once a project is won, Project Managers become reluctant to expend contingency funds on QS services as they don’t have any allowance in the budget and no tangible or immediately obvious problems to address! From experience, this can result in less than adequate contemporary records, bid analyses that focus mainly on technical compliance, reduced cash flow, increased risk or lost opportunities, under-recovered change impacts and correspondence that does not properly protect contractual positions. 

I’ll admit to some bias but I feel that the failure to employ enough QS personnel from the start of a project has contributed significantly to an increase in dedicated claims personnel in the industry over the last 20 years. Many QSs now find themselves brought on to a project when it is already in financial difficulty, and are tasked with bringing the job back on budget – a fire-fighting role, as opposed to income protection. 

As I believe Ben Franklin once said – “An Ounce of prevention worth a pound of cure.” That’s a 1:16 ratio! I’m not saying a good QS engaged at the beginning of a project can save the appointment of 16 lawyers and experts at the end… but then again. 

Finally, I think this story from my university days sums up the QS pretty well:

“Three QSs and three Engineers take a train to a conference. Each Engineer holds a ticket; the QSs only buy one ticket between them. The Engineers just shake their heads, secretly pleased that the smart-ass QSs will finally get what they deserve. As the conductor approaches, the three QSs jump up and squeeze into one of the toilets. The Conductor checks the tickets of the Engineers. When he notices that the toilet is occupied he knocks on the door and says: "Ticket please!" The QSs slide the ticket under the door and the Conductor continues merrily on his round.

For the return journey the Engineers decide to use the same trick. They buy only one ticket for the entire group but notice that the QSs don't buy any tickets at all. After a while the Conductor starts his rounds. Immediately all three Engineers race to a toilet and lock themselves in. The QSs leisurely walk to the other toilet. Before the last QS enters, he knocks on the toilet occupied by the Engineers and says "Ticket please!"

The moral of the story is, although Engineers sometimes like to use the methods of the QS, they don't really understand them.

@RICS @QSintheUS