Construction Cost Management: Learning from case studies

1 Construction CostManagementIn the last decade, following the Latham and Egan reports, there have been many significantchanges in the role of the Construction cost manager. Keith Potts examines the key issues andbest practice in the cost management of Construction projects under traditional contracts andnew methodologies. All stages within the life cycle of a project are considered from pre-contractto tendering and examples, legal cases and over 65 project case studies are used to illustrate thepractical application of the theory, where appropriate.

2 Extensive references are captured,including the UK government s Constructing Excellence programme and the National AuditReports, in order to further develop an understanding of the subject. Reference is made to majorprojects such as the Scottish Parliament Building, Wembley Stadium and BAA s HeathrowTerminal at students of Surveying and Construction management programmes, this bookuniquely embraces cost management in both the building and civil engineering sectors in theUK and overseas and should thus prove useful to practitioners.

3 Seminar questions are includedat the end of each chapter with additional links to over 100 project case studies in order toreinforce the Learning Pottsis Senior Lecturer in the School of Engineering and the Built Environment at theUniversity of Wolverhampton. He is a RICS external examiner in Quantity Surveying, and AwardLeader of the RICS-accredited MSc in Construction Project available from Taylor & FrancisConstruction EconomicsDanny MyersHb: ISBN 9780415286138Pb: ISBN 9780415286398 Principles of Project and Infrastructure FinanceWillie TanHb: ISBN 9780415415767Pb: ISBN 9780415415774 Construction Project ManagementPeter FewingsHb: ISBN 9780415359054Pb: ISBN 9780415359061 New Generation Whole-Life CostingIan Ellingham and William FawcettHb: ISBN 9780415346573Pb.

4 ISBN 9780415346580 Information and ordering detailsFor price availability and ordering visit our website our books are available from all good CostManagementLearning from case studiesKeith PottsFirst published 2008by Taylor & Francis2 Park Square, Milton Park, Abingdon, Oxon OX14 4 RNSimultaneously published in the USA and Canadaby Taylor & Francis270 Madison Ave, New York, NY 10016 Taylor & Francis is an imprint of the Taylor & Francis Group, an informa business 2008 Keith PottsAll rights reserved. No part of this book may be reprinted orreproduced or utilised in any form or by any electronic,mechanical, or other means, now known or hereafterinvented, including photocopying and recording, or in anyinformation storage or retrieval system, without permission inwriting from the publisher makes no representation, express or implied.

5 With regardto the accuracy of the information contained in this book and cannotaccept any legal responsibility or liability for any efforts or omissionsthat may be Library Cataloguing in Publication DataA catalogue record for this book is available from the British LibraryLibrary of Congress Cataloging in Publication DataPotts, Keith cost management : Learning from case studies / Keith bibliographical references and Construction industry Construction industry cost control. I. 1 dc222007032917 ISBN10: 0 415 44286 9 (hbk)ISBN10: 0 415 44287 7 (pbk)ISBN10: 0 203 93301 X (ebk)ISBN13: 978 0 415 44286 2 (hbk)ISBN13: 978 0 415 44287 9 (pbk)ISBN13.

6 978 0 203 93301 5 (ebk) To purchase your own copy of this or any of Taylor & Francis or Routledge scollection of thousands of eBooks please go to This edition published in the Taylor & Francis e-Library, 0-203-93301-X Master e-book ISBNThis book is dedicated to the memory of Francis Leon Potts,who first encouraged me to go into quantity surveying, and tothe love and friendship of Lesley, Ian, Gemma and I Introduction11 Introduction and the scene overview reports from professional bodies from case studies from project failures observation 12 Bibliography 122 Reports and Latham report, Constructing the Team(1994) Efficiency Scrutiny (1995) Procurement Guidance, HM Treasury (1996) Industry Board (CIB) working groups (1996 1997) Egan report Rethinking Construction (1998) Construction , National Audit Office (2001)

7 Second Egan report, Accelerating Change(2002) Excellence in Construction Procurement Guides, Office ofGovernment Commerce (2003) Public Services through Better Construction , NationalAudit Office (2005) 25 Bibliography 26 Part II management of the pre-contract stage273 Selecting the consultants and consultants contractors by value Industry Research and Information Association (CIRIA) Guide Selecting Contractors by tendering tendering procedures 44 Bibliography 454 Pre-contract cost estimating on engineering, manufacturing and process industries estimating on civil engineering projects estimating on building projects comments after receipt of tenders 58 Bibliography 585 cost management on PFI of BOT projects study: Nottingham Express Transit (NET) Light Rail leading to success on BOT projects and securities study.

8 Sydney SuperDome, Australia Private Finance Initiative (PFI) role of the cost consultant in PFI/PPP projects study: Stoke-on-Trent Schools, UK 72 Bibliography 736 Contractor s estimating and 1 decision to tender 2 determining the basis of the tender 3 preparation of cost estimate 4 commercial appreciation 5 conversion of estimate to tender 6 submission of tender 86 Bibliography 87 Part III Key tools and techniques897 Value is value management ? planning (VP) United s new football stadium engineering (VE) reviewing (VR) studies 103 Bibliography 1038 Risk management (RM) identification analysis techniques register response risk management studies 120 Bibliography 1209 Whole-life the relevance of whole-life costing (WLC) basic steps in whole-life costing (WLC) , time and investment with assessing whole-life costs value (WLV)

9 130 Bibliography 131 Part IV Procurement strategies13310 Organizational methods (part A) method and build ventures 155 Bibliography 15511 Organizational methods (part B) : management methods contracting management contracting or Construction management ? on the Scottish Parliament building and manage procurement rules Excellence in Construction NHS Procure 21 guidelines Highways Agency overlying principles for future procurement The 2012 London Olympics Selecting the procurement route Achieving Excellence in Construction methodology Conclusion Questions 176 Bibliography 17612 Payment systems and contract , lump-sum plan and specification , bills of quantities (BofQ)

10 Bills , method-related bills bills of quantities (BofQ) with milestone payments activity schedules , cost -reimbursement contracts , target- cost contracts Conclusion Questions 193 Bibliography 193 Part V management of the post-contract stage19513 Contractors cost -control and monitoring a cost -control system 1: cost -value reconciliation (CVR) 2: contract variance unit costing 3: earned value analysis 209 Bibliography 20914 Change management valuing requirements ICE Conditions of Contract, 7th edition,January 2003 requirements JCT Standard Building Contract with Quantities(SBC/Q 2005 edition) requirements The NEC Engineering and ConstructionContract.