RICS professional standards and guidance, Australia RICS ...

1 RICS guidance note RICS professional standards and guidance , Australia RICS and global cost and commercial management of construction 1st edition, September 2018. RICS and global cost and commercial management of construction Australia RICS guidance note 1st edition, September 2018. Published by the Royal Institution of Chartered Surveyors (RICS). Parliament Square London SW1P 3AD. No responsibility for loss or damage caused to any person acting or refraining from action as a result of the material included in this publication can be accepted by the authors or RICS. Produced by the Commercial Property professional Group. ISBN 978 1 78321 323 8. Royal Institution of Chartered Surveyors (RICS) September 2018. Copyright in all or part of this publication rests with RICS.

2 Save where and to the extent expressly permitted within this document, no part of this work may be reproduced or used in any form or by any means including graphic, electronic, or mechanical, including photocopying, recording, taping or web distribution, without the written permission of RICS or in line with the rules of an existing licence. Every effort has been made to contact the copyright holders of the material contained herein. Any copyright queries, please get in touch via the contact details above. Typeset using Typefi. RICS and global cost and commercial management of construction Australia Acknowledgments RICS would like to thank the following for their contribution to this guidance note: Technical author . James Funge FRICS (Aston Consult Pty Ltd).

3 Working group Chris Lock Michael Manikas (Green Building Council of Australia ). Alan Muse FRICS (RICS). Stephen Williams FRICS (RICS). RICS publishing Head of Publishing and Content: Sarah Crouch standards Publishing Manager: Antonella Adamus standards Publishing Project Manager: Laura Glover Editor: Jill Haldon Special thanks also go to Nick Inatey for his contribution in the initial stages of this guidance note. ii RICS guidance note Effective from 1 October 2018. Contents Acknowledgments ii RICS professional standards and guidance 1. Glossary of terms 2. 1 Introduction 4. What is a commercial manager? 4. What defines a successful construction project? 5. RICS Quantity surveying and construction pathway 5. Taking an overview 6. Alternative forms of construction procurement and payment mechanisms 7.

4 2 General principles (Level 1: knowing) 8. Understanding estimates 8. Value engineering 11. Supply chain management 12. Valuing work 13. Understanding cost 14. Cost/value analysis 15. Cash and cost flow analysis 15. Commercial decision making 16. 3 Practical application (Level 2: doing) 17. Using a detailed estimate 17. Value engineering: implications of a design change 18. Supply chain management: further considerations 19. Valuing work: further considerations 23. Understanding cost: further considerations 24. Cost/value analysis: further considerations 25. Cash and cost flow analysis: dealing with cash flow 28. Commercial decision making: further considerations 29. 4 Practical considerations (Level 3: doing/advising) 31. Understanding estimates 31. Value engineering 32.

5 Supply chain management 33. Valuing work: further techniques 35. Understanding cost: capture and allocation 36. Cost/value analysis 36. Cost and cash flow analysis 38. Commercial decision making 39. Appendix A: Practical guide to contract administration for a cost/value reconciliation (CVR) and forecast model 42. A1 Main CVR contract review workbook 42. A2 Project forecast workbook 50. Appendix B: Example list of common analysis levels for construction works 54. Appendix C: Template risks and opportunities register 55. Effective from 1 October 2018 RICS guidance note iii RICS and global cost and commercial management of construction Australia iv RICS guidance note Effective from 1 October 2018. RICS professional standards and guidance RICS guidance notes Definition and scope RICS guidance notes set out good practice for RICS members and for firms that are regulated by RICS.

6 An RICS guidance note is a professional or personal standard for the purposes of RICS Rules of Conduct. guidance notes constitute areas of professional , behavioural competence and/or good practice. RICS recognises that there may be exceptional circumstances in which it is appropriate for a member to depart from these provisions in such situations RICS may require the member to justify their decisions and actions. Application of these provisions in legal or disciplinary proceedings In regulatory or disciplinary proceedings, RICS will take account of relevant guidance notes in deciding whether a member acted professionally, appropriately and with reasonable competence. It is also likely that during any legal proceedings a judge, adjudicator or equivalent will take RICS guidance notes into account.

7 RICS recognises that there may be legislative requirements or regional, national or international standards that take precedence over an RICS guidance note. Document status defined The following table shows the categories of RICS professional content and their definitions. Publications status Type of document Definition RICS Rules of Conduct for Members and RICS Rules of These Rules set out the standards of professional conduct Conduct for Firms and practice expected of members and firms registered for regulation by RICS. International standard High-level standard developed in collaboration with other relevant bodies. RICS professional statement (PS) Mandatory requirements for RICS members and regulated firms. RICS guidance note (GN) A document that provides users with recommendations or an approach for accepted good practice as followed by competent and conscientious practitioners.

8 RICS code of practice (CoP) A document developed in collaboration with other professional bodies and stakeholders that will have the status of a professional statement or guidance note. RICS jurisdiction guide This provides relevant local market information associated with an RICS international standard or RICS professional statement. This will include local legislation, associations and professional bodies as well as any other useful information that will help a user understand the local requirements connected with the standard or statement. This is not guidance or best practice material, but rather information to support adoption and implementation of the standard or statement locally. Effective from 1 October 2018 RICS guidance note 1. RICS and global cost and commercial management of construction Australia Glossary of terms This guidance note will consider the commercial management process in terms as generic as possible.

9 For the sake of clarity, certain standard terms will be adopted, as defined here. Activity An item of work within a project or contract (see also WBS). Budget (also budget to build' and post-tender budget') An evolution of the estimate, updated to reflect information not available when the estimate was first produced; an estimated plan of the cost to complete the project following the contract award, based on actual costs incurred, plus the project team's planned procurement and delivery methods. The budget should be continually updated until project completion. BoQ bill of quantities , or an equivalent detailed measurement schedule, including schedule of paid items' or builders'. bill ' measured in accordance to a standard method of measurement. Common analysis levels Consistent use of cost elements and activity elements through estimate, budgets, forecasts, valuations, cost reports, cost/value reconciliations, cash flow and risk and opportunity registers.

10 Consultancies Organisations acting as consultants for clients, such as architects, quantity surveyors, designers, cost consultants and project managers. Contracting organisations Main contractor, subcontractor, specialist contractors, trade contractors. CTC Cost to complete: the forecast of the cost required to complete the project from a specified point in time, in accordance with the contractor's obligations, as set out in the contract document. CVC Cost/value comparison: see CVR. CVR Cost/value reconciliation: also known as cost/value comparison (CVC). The project's profit and loss statement, comparing the internal valuation with the costs incurred, including liabilities and accruals for goods and services consumed in the works that have not yet been paid for.