Discussion
Hi all,
We have started looking to get the CA/QS(Cost consultant?) appointed for a new project.
The fee estimates we have had seem to be percentages of our estimated build cost. This is not yet finalised, but broadly should come in at just under £3.5m (part of the build was fully costed out, but then there was some planning gain so more units added).
We are having a highly detailed design put together by the architect, M&E, and Structural Engineer and then going to tender on traditional route (everything down to the door handles specified). None of our consultants to date have gone for percentage fee quotes.
Is this still normal in the industry, or have we been a bit unlucky? There would seem to be all sorts of conflicts of interest if the person/team supposed to be saving costs is paid a percentage of them?
Finally, if the project is say 1 year actual build (mobilisation to handover), then how many days do you think would be involved? Everyone needs to make money at the end of the day, but taking that approach and dividing it up on a day rate came back with an insane number of days!?!?
Apologies for all the questions - we have never engaged a QS/CA before so might be out of line here.
Thanks,
Raj
We have started looking to get the CA/QS(Cost consultant?) appointed for a new project.
The fee estimates we have had seem to be percentages of our estimated build cost. This is not yet finalised, but broadly should come in at just under £3.5m (part of the build was fully costed out, but then there was some planning gain so more units added).
We are having a highly detailed design put together by the architect, M&E, and Structural Engineer and then going to tender on traditional route (everything down to the door handles specified). None of our consultants to date have gone for percentage fee quotes.
Is this still normal in the industry, or have we been a bit unlucky? There would seem to be all sorts of conflicts of interest if the person/team supposed to be saving costs is paid a percentage of them?
Finally, if the project is say 1 year actual build (mobilisation to handover), then how many days do you think would be involved? Everyone needs to make money at the end of the day, but taking that approach and dividing it up on a day rate came back with an insane number of days!?!?
Apologies for all the questions - we have never engaged a QS/CA before so might be out of line here.
Thanks,
Raj
Honest answer is that i'm not sure. Can see your argument though - i.e. if QS and Contractor were arguing over money, you'd want the QS to save you money, not pay the contractor more to raise their fee.
I run/own a Construction Cost Consultancy but we're not very front end at all - we provide estimating more than anything else, and in particular more so than contract administration. Fee-wise, everything we do is fixed fee stuff - based on our own anticipated duration OR based on a day rate with a cap at £x. Never had any issues with that to date - albeit our works tend to never take more than a couple of weeks, whereby CA for a £3.5m scheme may be a year on and off for a QS with 40 hours one week, 2 hours the next etc.
I've got a few contacts though if you do want me to have an impartial word. Drop me a message if interested.
I run/own a Construction Cost Consultancy but we're not very front end at all - we provide estimating more than anything else, and in particular more so than contract administration. Fee-wise, everything we do is fixed fee stuff - based on our own anticipated duration OR based on a day rate with a cap at £x. Never had any issues with that to date - albeit our works tend to never take more than a couple of weeks, whereby CA for a £3.5m scheme may be a year on and off for a QS with 40 hours one week, 2 hours the next etc.
I've got a few contacts though if you do want me to have an impartial word. Drop me a message if interested.
Edited by sider on Monday 30th May 23:05
No, its still common for QS to base their fee on a percentage. but I would be asking what have they allowed for within their quote- eg: how many hours/ days/ weeks? who is going to be looking after the project (trainee, project surveyor, managing surveyor, Chartered surveyor, director or partner in the firm (or charging you for those and its just the receptionist!)
a good way to get round the conflict of interest you mentioned is what about having a pain/gain share clause in the contract? so if the QS comes up with a good saving (proposing lower cost same spec items: fixings, fittings, different subcontractors....) they get to keep 5/10/25/50% of the saving, and if it goes the other way and theres changes to the contract price, their fee only goes up by a small percentage (eg the cost of door handles goes up, how much impact does that really have on our QS fee?!?!)
a good way to get round the conflict of interest you mentioned is what about having a pain/gain share clause in the contract? so if the QS comes up with a good saving (proposing lower cost same spec items: fixings, fittings, different subcontractors....) they get to keep 5/10/25/50% of the saving, and if it goes the other way and theres changes to the contract price, their fee only goes up by a small percentage (eg the cost of door handles goes up, how much impact does that really have on our QS fee?!?!)
We generally do all ours on a percentage. That said I assume they are all waiting for the tendered sum's to come back so they may then switch or have a better idea of the contract sum to weigh up their percentage. Once you know this you could ask them for a fixed fee ? having cost plans isn't always as real as a tendered sum as you'll be surprised what contractors will price so i suspect they will be waiting for a market figure.
At £3.5m is there a reason you haven't gone down a design and build route ?
with regards construction professionals adding to increase their fee - they shouldn't as theres a duty of Care / ethics issue with their professional bodies RICS / RIBA etc and you as the client. Likewise if you feel they are stinging you then you won't use them again - so I suspect they will be more interested in repeat business tbh.
Kind regards
Rob
At £3.5m is there a reason you haven't gone down a design and build route ?
with regards construction professionals adding to increase their fee - they shouldn't as theres a duty of Care / ethics issue with their professional bodies RICS / RIBA etc and you as the client. Likewise if you feel they are stinging you then you won't use them again - so I suspect they will be more interested in repeat business tbh.
Kind regards
Rob
Thanks for all the replies.
Thinking about what malks222 said, an incentive system sounds like a good idea, but then as it's going to be fully specified before going to tender, this would all be front loaded. In that sense, it'd probably be better to purchase a day or more of time, and let the cost consultant/qs comment on our direction in terms of spec and where they think savings could be achieved.
Rob makes sense about the cost plan. Actually, our thinking now is that there's no point in getting one done, as the market is the market and if fully specified what we get back (on average etc) is what it's going to cost. Maybe we can just PAYG till we find out the contract sums involved and then can work out something from there?
If we stick to £3.5m on a 18 month package (from reviewing professional engagement paperwork with architect/s.engineer etc, compiling tender docs, reviewing tenders, and finally the CA/CC role) at even 2% that's £70k, which is about 125 days at £75/hr on an 8 hour day, so 25 weeks. Giving leeway of 5 weeks for pre-contractor start stuff, that's 20 weeks to admin a 12 month contract. Not trying to be a stingy git here, but what am I missing?
We didn't go with D&B as we actually wanted to make sure tenders were for the same thing, and also that we got exactly what we wanted. I suppose a pitfall is that sometimes contractors can have their own input in terms of value engineering or options, so we are then heavily dependent on the Architect, QS, and our own experience in terms of what to go for. Someone mentioned having a section where comments could be made by the contractor for alternative options/potential cost savings, so this may be a way to go?
Thanks again,
Raj
Thinking about what malks222 said, an incentive system sounds like a good idea, but then as it's going to be fully specified before going to tender, this would all be front loaded. In that sense, it'd probably be better to purchase a day or more of time, and let the cost consultant/qs comment on our direction in terms of spec and where they think savings could be achieved.
Rob makes sense about the cost plan. Actually, our thinking now is that there's no point in getting one done, as the market is the market and if fully specified what we get back (on average etc) is what it's going to cost. Maybe we can just PAYG till we find out the contract sums involved and then can work out something from there?
If we stick to £3.5m on a 18 month package (from reviewing professional engagement paperwork with architect/s.engineer etc, compiling tender docs, reviewing tenders, and finally the CA/CC role) at even 2% that's £70k, which is about 125 days at £75/hr on an 8 hour day, so 25 weeks. Giving leeway of 5 weeks for pre-contractor start stuff, that's 20 weeks to admin a 12 month contract. Not trying to be a stingy git here, but what am I missing?
We didn't go with D&B as we actually wanted to make sure tenders were for the same thing, and also that we got exactly what we wanted. I suppose a pitfall is that sometimes contractors can have their own input in terms of value engineering or options, so we are then heavily dependent on the Architect, QS, and our own experience in terms of what to go for. Someone mentioned having a section where comments could be made by the contractor for alternative options/potential cost savings, so this may be a way to go?
Thanks again,
Raj
Percentage fees are still very common but not universal by any means - as responses here show.
Be clear on scope of service and deliverables and, if you'd rather fixed price lump sum or time & materials, ask them to price on that basis. Most reputable firms will happily do either.
Echoing an earlier comment, unless your building is highly specialised, why are you going down the full design route?
Be clear on scope of service and deliverables and, if you'd rather fixed price lump sum or time & materials, ask them to price on that basis. Most reputable firms will happily do either.
Echoing an earlier comment, unless your building is highly specialised, why are you going down the full design route?
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