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According to Ashworth & Hogg (2000) the profession of quantity surveying is a peculiarly British occupation that has influenced other nations through the links of the Commonwealth. Countries such as Australia, Canada, New Zealand and South Africa have institutions for Quantity Surveying that can trace their links back to the Commonwealth influence (Ashworth & Hogg, 2007). However outside the countries where the British have had any past influence there is little mention of the profession of Quantity Surveying, so this chapter will be evaluating what aspects of managing construction costs are different in other countries.
Advancements in travel and information technology have made the construction industry, as well as many others, one that is much more easily manageable from overseas. According to Clark (2004), over the last decade many QS companies that originated in the UK have began to globalise their business. Davis Langdon, Turner & Townsend and EC Harris are among the many companies that have moved into markets such as North America, China, and Europe. However the term Quantity Surveying is not one used in many of these countries so firms have been establishing links under the guise of cost management, project control or procurement advisors (Clark, 2004). According to Michael Brown, CEO of the CIOB (2007) traditional QS are not needed in the UK let alone anywhere else, stating:
"Japan doesn't use them (QS's); neither do most of Europe, the USA and Canada. Isn't it time to rethink quantity surveying? Of course there are vital commercial, financial, management and accounting roles in the industry, but these can be offered up in the spirit of partnering, supply chain management, integrated teams and trust. With the shift to new forms of forms of procurement, do we still need so many traditional QS's in the UK"
The United States market is one of the biggest in the world, according to the U.S Census Bureau the construction spending the USA is approximately £846 billion a year. With so much money involved in its industry there is a definite need for a cost expert in the design and construction teams. Although as mentioned earlier the QS profession is not seen in all countries and the USA is one of those countries. Instead term cost engineer is one that is more widely used. The Association for the Advancement of Cost Engineering (AACE) is the professional body which represents cost engineers in the US, much like the RICS for QS's. According to them cost engineering can be defined as:
"Cost engineers are dedicated to the tenets of furthering the concepts of total cost management (TCM). TCM is the effective application of professional and technical expertise to plan and control resources, costs, profitability and risk. TCM is that area of engineering practice where engineering judgment and experience are used in the application of scientific principles and techniques to problems of business and program planning; cost estimating; economic and financial analysis; cost engineering; program and project management; planning and scheduling; cost and schedule performance measurement, change control and also managing cost throughout the life cycle of any enterprise, program, facility, project, product, or service"
From the list of services listed in the above definition it can be seen that some apply to what QS's would do in the UK such as cost estimation and change control (variations). However a lot of the other services are not currently provided by many QS's in the UK. Services like program and project management, planning and scheduling, cost and schedule performance measurement, and business and program planning. According to the AACE (2006) cost engineers tend to be specialised in their functions (whether they specialise in cost estimating, planning, project management) or focussed on a particular industry (civil engineering, M & E, manufacturing, general building). However the AACE (2006) also indicates that cost engineers are found throughout the US with many different titles including cost estimator, parametric analyst, strategic planner, planner/scheduler, value engineer and even quantity surveyors. Nonetheless the terms cost engineer or cost estimator dominates in the US construction industry, so what do these roles entail?
According to the US Department of Energy Office of Engineering and Construction Management (2003), cost estimation is the determination of the quantity and the predicting, or forecasting, within a defined scope of the costs required to construct and equip a facility. According to them the characteristics of cost estimation are:
Representation of a specific Scope of Work
Representation of a specific schedule
Specific basis of the estimate, and representation of the best available information at a point in time
Formation based around a Work Breakdown Structure, to be consistent with the Scope of Work, the schedule, and any other relevant aspects of a project
Specific definitions of cost / price, which usually include direct costs (material, labour, equipment, subcontract, and any other impacting cost components), indirect costs, overhead costs, profit / fee, contingency, and escalation. These costs may be represented in a Detailed or Summary form.
From this list of duties we can see that a many of them correspond to the traditional QS in the UK. A specific definition of cost / price including material and labour details etc. is very reminiscent of the BOQ, and the Work Breakdown Schedule is another duty that could be expected from the traditional QS.
The characteristics of cost engineering are described as:
Clarifying "point in time" cost estimates
Schedule, used for the determination of escalation (rises in construction costs, i.e. inflation)
Technical and programme risks to the project, for the determination of contingency percentages
Incorporating value engineering principles, for the pursuit of a project's best course of value
Incorporating business management principles, for appropriate return on investment and whole life costing analysis.
This list of duties represents many of the roles and jobs that QS's have been encouraged to diversify into. In particular the value engineering principles (an aspect that was highlighted by Latham 1994 and Egan 1998 & 2002) is something which is been highly recommended to UK QS's. in the US it is common to find one individual carries out both duties of a cost estimator and cost engineer (US Department of Energy, 2003).
According to Simon Taylor FRICS (2009) and Ashworth & Hogg (2007) the typical US large project starts with a client appointing an architect who then appoints an estimating company to develop early and detailed estimates of the developing design. The construction management and management contracting procurement types are used much more heavily in the US than in the UK. If a client appoints a construction manager then they would take over the estimating function and produce bid documents. In this instance the construction manager is also taking on the role of cost engineer, and it is he who will approve payments to the contractor much like a QS would in the UK. Taylor (2009) does however believe that the BOQ would be beneficial to US construction as contractors in their system simply supply a much summarised schedule of values of his bid for payment. The problem is that the contractor has developed much more bidding information as to claim extras later in the project. Taylor (2009) notes that he in fact has implemented BOQ into industrial projects on behalf of the city of New York who were a fan of the cost transparency and certainty that came with it, however the construction managers were not fans of the extra work involved for them.
One problem noted in many texts such as 'Project and Cost Engineers Handbook' (Humphreys, 2005) is the issue of variations or "change orders" in the US. According to Humphreys (2005) and Taylor (2009) the US uses high contingency fee's to cover change costs (10% is standard at bid time) and mechanisms for settling such disputes are much less roadworthy.
Another large market worth evaluating is the European market. Rashid et al (2006) tells that the BOQ are used in many European countries for bidding purposes, but their format and development are independent of the British model. In Germany, France, Spain, Russia, Bulgaria, Hungary and Romania, BOQ are prepared by the architect or engineer and they are mostly used only for evaluating bid or tenders. It was pointed out that about 10 percent of the German Architects and Engineers' fee is for the preparation of the BOQ. In Norway, BOQ are prepared by the architect and priced by the contractor. Finland is also using BOQ for bidding and bidding evaluation purposes. It has a published set of rules of measurement for building works.
According to the RICS research into French procurement (2007) in parts Europe, and in particular in France, cost is not as much of a priority as design and quality. According to the RICS "engineers are significantly more influential in French construction and the industry has a much stronger engineering ethos". The study tells that architects do not have as much a prominent role in France as engineering companies or the engineering expertise of large contractors (2007). Another comparative study carried out by Winch and Edkins in 1995 concluded that traditional French procurement performed much better than the British in terms out turn costs and completion times. This was thought to because of contractor involvement in re-engineering the project and simplifying the design and taking out unnecessary costs (Cartlidge, 2006). The RICS (2007) notes that traditionally there is less emphasis on cost control in the French system. They suggest that the French emphasise cost reduction rather than cost control and that the former is achieved by giving responsibility for detailed designs to contractor, who can then propose variations in the design in order to reduce cost for the client. Both studies highlight the fact that the role of quantity surveyors is considerably decreased due to the engineering ethos involved, the RICS states that frequently consultant economists are employed by the client, but the range of services that they offer is significantly narrower than their UK counterparts and they are far less significant actors in the design and construction process.