Preliminaries in Construction Projects.

Preliminaries in the Bill of Quantities.

A crucial component in construction Cost Estimation!

In construction cost estimation, a Bill of Quantities (BOQ) serves as a comprehensive document that lists all the materials, labor, and costs associated with a construction project. The BOQ is instrumental in accurately estimating the project's total cost and helps in budgeting and procurement.

One significant component within the BOQ is the "Preliminary Bill", a section dedicated to costs that cannot be directly attributed to specific measured work items. Preliminaries in a construction contract, commonly referred to as 'prelims,' encompass the part of the bills of quantities that consolidates various essential items. These items are necessary for the contractor to carry out the construction works successfully but do not constitute an integral part of the finished structure. Understanding and effectively managing preliminaries is vital for both contractors and clients to ensure a project's smooth and cost-effective execution.

Common Inclusions in Prelims.

1. Site Administration: This includes the cost of setting up and maintaining a site office, which serves as the nerve center for project management. The site office is used for activities like project meetings, document management, communication, and record-keeping.
2. Site Staff: Costs related to hiring and maintaining on-site staff, such as site engineers, supervisors, safety officers, and other personnel crucial for project supervision.
3. Site Facilities: This encompasses expenses for setting up essential site facilities like accommodation for laborers, storage areas, security measures, and site access infrastructure.
4. Plant and Equipment: Preliminaries also include costs associated with general plant and equipment that are not tied to a specific work item, such as cranes, generators, or earthmoving machinery.
5. Site-Based Services: These costs may involve providing site-based services like water supply, electricity, temporary sanitation facilities, and communication infrastructure for the project's duration.
6. Health and Safety Measures: Costs related to safety measures and equipment that ensure a secure work environment for all personnel involved in the project.

The Role of Prelims in Cost Estimation.

Prelims are essential for the accurate estimation of a project's total cost. By explicitly listing these costs in the Preliminary Bill section of the BOQ, they are made transparent and can be allocated appropriately within the project's budget. As they are not tied to specific work items, failing to account for preliminaries can lead to budgetary shortfalls, cost overruns, and financial surprises.

The real impact on the project budget.

In the intricate world of construction, where every nail, brick, and beam holds its significance in shaping the final structure, there exists a realm often overshadowed by the more conspicuous elements of a project. These are the preliminary items, discreetly nestled within the BOQ, concealing their considerable influence on the project's overall budget. While the spotlight often falls on material costs and labor expenses, the unassuming yet crucial prelims play an integral role in the financial landscape of construction.

As discussed, the Preliminary costs in a construction project encompass site-specific expenses directly associated with the operation and administration of the construction site. These costs are a fundamental component of any project's budget, typically ranging between 11% to 15% of the total project cost. However, in certain instances, these expenses may exceed this range.

Prelims might often be overshadowed by more visible project costs, but they are instrumental in ensuring the smooth operation, management, and execution of the entire construction endeavor. From setting up site facilities to managing health and safety requirements, these costs ensure the project's foundation is strong, enabling the more prominent aspects of construction to flourish. Understanding and meticulously managing preliminary costs are paramount for keeping a project on budget and schedule.

Why Prelims cannot be attributed to Measured Work?

It is important to understand that many of these costs are shared and spread out across the entire project, making it impractical or inaccurate to allocate them to individual work items in the BOQ. For example, the cost of a site office benefits the entire project, and it would be challenging to assign it to one specific aspect of the work.

Classification of Prelims in the BOQ.

In the BOQ for construction projects, the Prelims section plays a vital role in accounting for various preparatory and administrative costs that are not directly attributable to specific measured work items. Preliminaries are grouped into distinct categories based on their purpose and origin, reflecting their diverse roles in ensuring the smooth execution of the project. Here are the primary categories for preliminaries:

1. Contractual Requirements

This category encompasses the items that are specified in the Conditions of Contract to safeguard the contractual rights and interests of the Employer (or Client). These requirements are typically included to ensure that the contract is executed according to the agreed terms.

• Examples: Bonds & Guarantees: Financial securities or guarantees required by the contract to secure the completion of the project. Insurances: Insurance policies, such as liability insurance or professional indemnity insurance, that the contractor must procure to comply with contractual obligations.

2. Specific Requirements

This category includes the items and costs that are specific to the project and are typically stipulated by the Employer to meet the project's unique needs. These items can range from facilities to testing to temporary works.

Examples:

• Employer's and Engineer's Facilities: Construction and maintenance of facilities required for project management and supervision, such as site offices, meeting rooms, or laboratories.
• Testing of Materials: Costs associated with the testing and quality assurance of construction materials to ensure compliance with project specifications. Testing of Works: Expenses related to inspecting and testing the quality and integrity of completed work items.
• Temporary Works: Includes items like traffic diversion, temporary access roads, and the installation of project signage and documentation, such as photographs for progress monitoring.

3. Method-Related Charges

This category is tied to the specific methodology chosen by the tenderer (contractor) for executing the works. It encompasses costs associated with the contractor's intended construction methods and practices.

Examples:

• Contractor's Facilities: Provision of facilities required by the contractor to support their chosen work methods, which may include on-site batching plants for concrete or temporary construction platforms.
• Site Transport: Costs for site-based transportation, such as vehicles for moving materials or equipment within the construction site.
• Plants: Expenses for plant and machinery, like concrete mixing plants, needed to execute the construction work according to the contractor's chosen method.

Categorizing prelims in these groups not only enhances transparency in cost estimation but also facilitates efficient budgeting and financial planning for the entire construction project. By properly allocating these costs to their respective categories, stakeholders can have a clearer understanding of how the project's financial resources will be utilized, ultimately contributing to successful project management and execution.

Classification of Preliminary items based on Cost and Time factors.

Preliminary items in the BOQ can also be categorized based on how their costs are incurred, which can be essential for project budgeting and resource allocation. These categories reflect whether a cost is predominantly fixed or if it varies over time based on the project's duration. Here are the primary categories based on cost and time factors:

1. Cost-Related Items

Cost-related preliminary items are those for which the costs are primarily fixed and do not significantly change regardless of the project's duration. These costs are often linked to fulfilling specific requirements or standards set by the Employer (or Client) and typically involve one-time expenses.

Examples:

• Erection of Site Office: The cost to set up the site office is a classic example of a cost-related preliminary item. The cost is generally fixed and is determined by the size, type, and facilities required for the site office. Once incurred, it remains relatively consistent throughout the project.

2. Time-Related Items

Time-related preliminary items are directly associated with the duration of the project. The longer the project takes to complete, the higher the costs for these items. They typically have a unit of measurement linked to time, such as 'Month.'

Examples:

• Maintenance of Site Office (Running Cost): This is a prime illustration of a time-related preliminary item. The cost of maintaining the site office is ongoing and is directly proportional to the duration of the project. The longer the project's duration, the more months of maintenance cost will be incurred.

Categorizing preliminary items based on cost and time considerations allows project stakeholders to better manage their budgeting and financial planning. Cost-related items are more predictable and can be budgeted for as fixed expenses, while time-related items require careful consideration of the project timeline to estimate their costs accurately. This approach aids in the transparent allocation of financial resources throughout the project's lifecycle, ensuring financial sustainability and successful project completion.

Classification of Preliminary items based on Method of Payment.

In the BOQ, preliminary items can also be categorized based on the method of payment. This classification helps in understanding whether these items involve a one-time payment or a combination of an initial cost followed by ongoing payments. Here are the two primary categories based on the method of payment:

1. Single Payment Items

Single payment items are those for which payment is made once, typically at the beginning of the item's execution. These items do not incur running or recurring costs; instead, they involve a single, upfront payment.

Examples:

• Provision of Temporary Access Roads: Temporary access roads that do not require maintenance during the project fall into this category. Payment is made once for their establishment, and no further costs are incurred.

1. Combined Payment Items

Combined payment items encompass both the initial cost of setting up an item and subsequent running or maintenance costs, which lead to recurring payments. These items involve a two-part payment structure: an upfront cost followed by ongoing expenditures.

Examples:

• Site Offices: Site offices are an example of combined payment items. They require an initial payment for their setup (acquisition, construction, or installation) and continuous monthly or periodic payments for maintenance, utilities, and other running costs.
• Vehicles for Employer's and Engineer's Use: Providing vehicles for the Employer and Engineer's use involves both an initial purchase or rental cost and ongoing costs such as fuel, maintenance, and insurance.
• Telephones: Installing telecommunication facilities requires an initial setup cost, and recurring payments are made for monthly telephone service charges.

Categorizing preliminary items based on the method of payment is important for financial planning and budgeting. It helps project stakeholders differentiate between one-time expenses and recurring costs, ensuring that financial resources are allocated appropriately and efficiently. This classification aids in the transparent management of project finances and contributes to the overall success of construction projects.

Factors to be considered while pricing of Prelims!

The pricing of preliminaries in a construction project involves considering various factors that can influence the overall cost. These factors include,

1. Size and Duration of the Project: Larger and longer projects may have higher preliminary costs, as they require more extensive site setup and facilities over an extended period.
2. Availability of Utilities Facilities: The availability and accessibility of utilities such as electricity, telephone, and water can impact preliminary costs. Projects in remote areas or those requiring temporary utility installations may incur higher expenses.
3. Access Conditions to the Site: Difficult or restricted access to the construction site may necessitate additional logistics and resources, potentially increasing preliminary costs.
4. Contractual Requirements: The specific requirements outlined in the construction contract, including any unique conditions or services that the contractor must provide, can affect the pricing of preliminaries.
5. Employer’s Specified Requirements: The project owner or employer may have specific requirements or expectations for site facilities, services, or administration that must be factored into the preliminary costs.
6. Health and Safety Regulations: Compliance with health and safety regulations may lead to additional costs related to safety measures and equipment.
7. Local Regulations: Local building codes, zoning regulations, and other legal requirements can influence preliminary costs, especially if they necessitate particular site preparations or facilities.
8. Site Conditions: The condition of the construction site, including its topography, soil quality, and environmental factors, can impact preliminary costs. Sites that require extensive site preparation or environmental mitigation may incur higher expenses.
9. Project Complexity: The overall complexity of the project, including the number of stakeholders, project phases, and coordination requirements, can affect preliminary costs.
10. Economic Factors: Economic conditions, including inflation, can influence the pricing of preliminaries, as costs for resources, labor, and equipment may fluctuate.

Consideration of these factors is crucial during the cost estimation and tendering phases of a construction project. By accurately assessing and pricing preliminaries, contractors and project owners can ensure that these critical aspects of a project are adequately funded and accounted for in the overall budget.

In a nutshell, preliminaries in a BOQ are a crucial element in construction cost estimation. They represent the essential costs associated with administering a construction project, setting up and maintaining the construction site, ensuring safety, and providing the necessary facilities and services. Properly accounting for preliminaries helps in creating a more accurate and comprehensive budget for the entire project, ultimately contributing to efficient project management and successful project completion.

The Writer: Chathurka VINDANA, the founder of MrQS; the newsletter for sharing the QS and Contracts Management wisdom around the Globe for FREE!

𝐌𝐫𝐐𝐒 𝐍𝐄𝐖𝐒𝐋𝐄𝐓𝐓𝐄𝐑 𝗦𝘂𝗯𝘀𝗰𝗿𝗶𝗯𝗲 𝗼𝗻 𝗟𝗶𝗻𝗸𝗲𝗱𝗜𝗻: https://lnkd.in/gWm2WKbc