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Budgeting for a quantity surveyor's poor estimates

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A property development officer who rang me up last week claims that, with increasing regularity, his quantity surveyors are reporting tender returns substantially above their estimates. His organisation maintains, alters and extends a vast range of education buildings - some 220 in all - and it also frequently builds new facilities with construction budgets of between £1 million and £5 million.

This client is understandably deeply irritated by appointment terms which entitle a QS to fees as a pre-agreed percentage of the lowest accepted tender - not the QS's estimated tender figure. It does not see why it should pay a QS on this basis for poor estimating. I suggested it should get its estimate from the architect, instead!

The client is now considering modifying its future appointment terms so that all consultants' fees will be calculated for work up to tender stage on the basis of the approved budget or lowest tender, whichever is the lowest. Thereafter, only fees earnable for the remainder of the appointment would be paid as a percentage of the agreed final contract sum, with no further adjustment being made for the fees earned up to tender stage.

This will, of course, cause uproar, and QS firms in particular will go through the roof.

But they should take this client's criticisms very seriously - it has much to be upset about because the steady increase in project costs that are so common to pre-construction phases are too often a consequence of shoddy professional work. Such poor estimating not only interrupts and delays progress, it also frequently leads to extensive abortive work, damaging the profitability and reputation of the other consultants.

And architects should be sure that they are not blamed, a tactic common among so many QSfirms, when they are not the cause of estimating errors. They should carefully scrutinise the QS consultant's work at all stages, and never be afraid to get stuck in and identify the cause of poor estimating when it occurs. It is all too easy, when estimating goes wrong, for the QS to be vague and blame others in terms of the quantity or quality of information that has been provided to them.

Such buck passing infuriates clients!

QSfirms should also act more professionally by ensuring adequate time for pre-tender information preparation by the design team instead of encouraging impossibly tight programmes and issuing inadequately prepared tender packages as they so often do. Furthermore, they should come clean when they are responsible for the under-estimation - something most QS firms are loathe to do.

I learned recently of a case where a QS had issued tender information containing work from the services consultant, much of which that was already out of date. When tenders for this renovation project were returned heavily over budget the QS slyly advised the client that increased costs had arisen because the project team had modified its design and specification work. That was true, but what they did not say was that the modifications were necessitated by the results of site investigation work and that they, as QS, had been informed of all the changes well before tender packages were sent out. They also omitted to report that they had failed to adjust their tender forecasts, even though the changes had been incorporated into the tender documents. In short, the QS had neglected to keep the client appraised of issues requiring budget review, while constantly providing outdated and misleading information to the other consultants.

So make sure the QS does their work properly and, above all, ensure that their estimates are based on up-to-date information, that they make sensible provisions for design development by each member of the team, and that adequate contingency is provided, relative to the stage of project development.

Most QS firms will welcome such concern and involvement - those that reject it are to be watched all the more carefully! And those QSfirms which pursue exclusive and discrete access to clients should be recognised for what they are - mischievous and dangerous charlatans.

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