30 minute read
BALANCING RISK WITH A RISE AND FALL CLAUSE
LEGAL
BALANCING RISK WITH A RISE AND FALL CLAUSE
LEGAL
The emergence of the COVID-19 virus pandemic and the war in Ukraine have led to disrupted global supply chains which inevitably impact costs and time in the construction industry. Builders are suffering unprofitable contracts where they have adopted the usual lump sum model to price construction projects. Accordingly, it appears time to reconsider the inclusion of the 'rise and fall clause' in building construction contracts as has been necessary in times of high inflation in the past.
WHY AND WHAT IS A RISE AND FALL CLAUSE?
A 'rise and fall clause' in building construction contracts generally refers to an express clause which allows the builder to claim an increase in the contract sum where increases have occurred in the cost involved in a building's cost.
A properly drafted rise and fall clause will usually allow a builder to recover from the principal the extra costs permitted under the rise and fall clause. The rise and fall clause does not always provide for a full
LEGAL
recovery of all costs and is an agreed sharing of the cost increase adopting a formula which should be certain in operation even if not particularly accurate. An interesting decision for the builder is whether to agree to rise and fall clauses being included in its subcontracts. Presently major subcontractors and suggesting appropriate clauses in their contracts and passing on increased costs whenever a change or variation is required. The attraction of a rise and fall clause to a builder is clear but there are sound reasons why a principal should include a suitable clause in any substantial contract. If a rise and fall clause is not included each tenderer will include a margin to provide a contingency for the risk. The variability in the estimates of the tenderers will obscure who is the most suitable and competitive tenderer. Additionally, many principals are finding if the contractor does not have the margin in the contract price to absorb the cost increases problems of performance and disputes occur rapidly. Rise and fall clauses can be drafted as simply or as elaborately as required depending on the contracting parties’ preference. Often a contractor will be prepared to accept a clause which demonstrates that some adjustment will be made but others prefer the rigour of a clause which provides for precise calculation each month.
While the more general clause may be easier to negotiate at tender time the benefit of a rigorous clause is that the calculation is certain and on large projects can make a substantial contribution to the contractor’s profit and viability.
DRAFTING -THE DEVIL IS IN THE DETAIL
Some examples of rise and fall clauses for lump sum contracts include the following but these should be more carefully drafted: • “any increase in the cost of the labour and / or materials necessary for performance of part or whole of the
Works shall cause a proportionate adjustment in the Contract Sum” • the Contract Sum shall be subject to adjustment for changes in the cost of the labour and / or materials supplied by the Contractor under this Contract in accordance with the following formula:
Price = A x (B-C)
where: A = the quantity of labour and/or materials supplied by the Contractor as measured by the progress claim calculated at the rates used to calculate the Contract Sum B = the price of such labour and/or materials on the day the same were included in the progress claim under the Contract as measured by the CPI index C = the price of such labour and/ or materials as indicated in the Contractor’s tender as measured by the CPI index at the date of the Contractor’s tender.”
The preparation of a rise and fall clause generally includes a few components like the materials or labour inputs which are to be subject to the rise and fall calculations.
Another component is the index or indexes that may be used to calculate the change in the whole or part of the contract’s schedule of rates or prices. Various indices such as the Producer Price Indexes and Consumer Price Index published by the Australian Bureau of Statistics for the building industry, national award rates for labour costs and indexes published by other industry groups may be adopted in this regard. In Leighton Contractors Pty Ltd -v- Public Transport Authority Of Western Australia [No 6] [2008] WASC 193, the identity of an index to be substituted when one index terminated required much careful consideration by the Court to select the closest index and repayment of monies paid under the assumption that an incorrect index applied. So careful drafting and provision for indexes being discontinued or adjusted is required. In the case renowned for its view on frustration Codelfa Construction Pty. Ltd. v. State Rail Authority of N.S.W. (1982) 149 CLR 337, Aitken J was required to interpret a rise and fall clause and to decide if increases in allowances were to be included in the calculation of the “minimum rate of wages “. So, the clarity of expression in the drafting of a rise and fall clause may avoid bothering the High Court. An important element to be considered in drafting the rise and fall clause is to nominate the correct reference date at which the value of the index will be compared to measure the increase. The start date is usually agreed to be either the builder’s tender date or the date of the contract.
Where the evaluation of tenders and the negotiations with the preferred tenderer take some months, the starting date can make a difference as if the builder’s tender date is adopted and a six-month period elapses before the contract is signed, the price may increase by 3% if inflation runs at 6% per annum.
LEGAL
LIMITATIONS UNDER DOMESTIC BUILDING LEGISLATION
While few states such as New South Wales, Queensland, Northern Territory, Tasmania and Australian Capital Territory allow the use of the rise and fall clause, some states, however, restrict the operation of rise and fall clauses. In Western Australia, for example, the Home Building Contracts Act (WA) , Section 13 (1) declares it illegal for contracts to have rise and fall clauses when valued at less than $500,000.
In Victoria, a rise and fall clause is only allowed where the contract price is over $500,000 and the contract encompasses a fair and reasonable estimate of the rise in costs due to inflation or wage escalation payment. Under the Domestic Building Contracts Act 1995 (VIC), the rise and fall clause is subject to the approval of the Director of Consumer Affairs Victoria, who has not approved any form of the clause. In South Australia, the use of the rise and fall clause is restricted to avoid the issue of the builder’s delay increasing the cost. Obviously, a sensitive approach must be taken to avoid contravening the legislative restrictions. evidence a variety of price levels.
That is only a method of measuring the actual liability contracted for. It is nothing but an indirect way of referring and the measurement of the obligation
‘to a sliding scale linked to price or other indices’.” (Stanwell Park Hotel Co
Ltd v Leslie (1952) 85 CLR 189). However, a rise and fall clause must satisfy a “pub test” in order to be to be enforceable. It must be conscionable (meaning reasonable and equitable) and avoid ambiguity. The case of Lewis Construction
(Engineering) Pty [1975] QSCF 23
illustrates the implications of a poorly drafted rise and fall clause where the agreed formula was expressed as follows: The contractor submitted that variation of the price index was to be made each month by comparing the monthly index value to the value of the index at the tender date. In opposition, the principal submitted the proper comparison was with the preceding month as otherwise the adjustment would be unreasonably inflated.
The Court noted that the contractor's interpretation would have inflated the Contract Sum disproportionally to the actual increase in the cost
ILLUSTRATIVE CASES
Under general contract law principles, parties are free to stipulate on price adjustments as part of their building contract.
"There is no principle of law preventing parties from adopting a fixed figure as the primary monetary expression of liability and then proceeding to effect a substantive variation of the liability by providing that more or less money must be paid accordingly as index numbers
WHEN THE IRRESISTIBLE MEETS THE IMMOVEABLE
Often in these circumstances where a builder and owner do not include a rise and fall clause and come to dispute, the builder often threatens to stop work without the protection of any clause of the contract. The tactic is not always successful.
In J-Corp Pty Ltd v Leadbitter [2009] WASAT 168 at 63, the Member Mr T Carey held:
”In my opinion, the authorities I have canvassed justify the finding on the facts of this case that the builder did exercise illegitimate pressure when it threatened to suspend the works further if the variations were not signed.” In that case, the builder did not recover the sums expected under the variations covering the cost increases despite the fact that the variations were agreed, signed and paid.
CONCLUSION
A price adjustment clause is crucial if a builder or principal wishes to properly manage its risk of price increases in the cost of materials, subcontractors, and labour.
A properly drafted rise and fall clause can spell the difference between a builder suffering a loss or making its expected profit from its building projects and provide a fair balancing of the inflationary risks between the parties to a construction contract.
This article has been written by the team at Doyles Construction Lawyers www.doylesconstructionlawyers.com
MENTAL HEALTH
MENTAL HEALTH
The MATES programme became operational in New Zealand in late 2019 and was introduced to reduce the high levels of suicide among construction workers. The research-based programme does this by raising awareness, building strength on construction sites, and connecting people to appropriate support. This September, MATES is asking industry to Fly the Flag for suicide prevention and on Friday the 9th, MATES is on a mission to encourage industry across New Zealand to put tools down for ten@ten – ten minutes at 10am to start the conversation.
UNACCEPTABLE STATISTICS – AN INDUSTRY IN CRISIS
The construction industry loses more workers to suicide every year than any other industry in New Zealand. On average, one construction worker takes their own life every week. Our industry is vibrant, exciting, and integral to the New Zealand economy, but it can also be a challenging industry to work in with long hours, transient working conditions and masculine stoic beliefs that can impact on our people’s mental health and wellbeing. The current context is exacerbating these pressures. CoreLogic recently reported that construction costs have risen at their fastest pace since 2012 and businesses across the industry are reporting that they are experiencing severe labour shortages according to the Ministry of Business and Innovation. Our people are also feeling the pressure at home with annual inflation hitting a 32-year high of 7.2%, the biggest financial squeeze for households seen in over three decades.
MATES in Construction are seeing the impacts of this in our mahi on the ground
MENTAL HEALTH
Image credit: MATES in Construction
WHAT CAN YOU DO TO SHOW YOUR COMMITMENT FOR THIS IMPORTANT WORK?
Fly the Flag for suicide prevention and join us to Take 10 at 10 on the 9th of September
and research carried out by MATES has also confirmed the impact that the global pandemic is having on our industry's mental wellbeing. In a recent survey of nearly 700 workers, 41% of respondents reported that the last 12 months have been the most difficult of their lives (up from 38% last year). This sentiment was observed across construction workers on the ground as well as those based in offices. The proportion of participants who reported seriously considering taking their own life in the last four months has also increased from 4% in 2021, to 5.5% in 2022.
TURNING THE TIDE – MATES IN CONSTRUCTION
MATES in Construction is an NGO working to support our industry to turn the tide on the unacceptably high rates of suicide that we currently see in construction. MATES is a community development programme In the last six months we have almost doubled our workforce so that we can make sure we are meeting the needs of our people.” – Victoria McArthur, CEO MATES. MATES is now operating out of Auckland, Christchurch, Wellington, and Dunedin with the ability to support our growing stakeholders.
that invests in the construction workforce to lift the knowledge, tools, and confidence of our people so they can reach out to a mate if they can see they are struggling, or to reach out for help themselves if they know they aren’t travelling well. MATES also runs a 24/7 help line and employs case managers that can connect someone who is struggling into the right support. This model has been shown to produce positive and statistically significant changes in workers’ suicide prevention awareness, knowledge, and attitudes - including willingness to seek help themselves and provide help to workmates (AISRAP, 2017; King et al., 2018). In 2021, MATES provided mental health and suicide awareness training to over 11,000 construction workers in New Zealand and that was a year with four months taken up in lockdown. “Now more than ever, we need to make sure we are showing up to support our industry and our most important asset, our people. For the last three years, our industry has flown the MATES in Construction Flag to show their commitment to reducing the unacceptably high number of suicides in our industry. Fly the flag is an opportunity to: • remember those in our industry and our communities that we have lost to suicide
• check in with a mate and make sure they’re doing okay • take a beat and check in with ourselves – “how am I doing, am I okay?” • recognise the incredible work of
MATES Connector and ASIST volunteers across our sites
• recognise World Suicide Prevention Day. This year, we are also introducing a new initiative and asking the industry to take part in 10@10. We want to see our industry down tools for 10 minutes at 10 o’clock on the 9th
MENTAL HEALTH
September to help start the conversation. Take 10 minutes at smoko time to put hammers, drills, pens, and electronic devices down to check how we are all going. We are hoping that this simple gesture of shared action will bring us closer and see our industry become stronger together. In our busy lives let’s highlight the importance of taking time to talk about mental health and checking in with our mates.
“Flying the Flag to recognise World Suicide Prevention Day demonstrates not only to our industry that we are on a journey to turn the tide on those we lose to suicide, but also has a greater impact across the communities in which we build, live, work and play. We all need to work collectively, to not only start the conversations about mental health and suicide prevention, but also to know what to do if a mate is struggling,” – CEO, MATES in Construction, Victoria McArthur says.
If you’re interested in learning more about Fly the Flag, Take 10 at 10 or MATES in Construction, visit our website: www.mates.net.nz
Join the conversation and grab a MATES flag today by scanning the QR Code below.
If you or someone you know in the industry is struggling or needs help, call 0800 111 315.
This article has been provided by NZIQS.
Image credit: MATES in Construction
Q & A
WHAT ARE THE TOP THREE THINGS THAT YOU WOULD LIKE ASSET OWNERS TO KNOW ABOUT QUANTITY SURVEYING?
Q & A
CHANTAL ZHANG MAIQS
Quantity Surveyors work in various aspects and represents different interests in the construction industry. We perform many functions from cost planning, procurement and tendering, contractual claims, cost control etc. Working as a consultant Quantity Surveyor, represent the client most of the time. In my opinion, the top three things about quantity surveying that the owners sometimes neglect would be: 1. First, at an early stage, the Quantity
Surveyor is the best person to help the owner with establishing the requirements and undertaking feasibility studies. It will be easy for
owners to track the costs update due to design and scope changes with the help of the Quantity Surveyor. It would be a key step for the owner to achieve better value for money by engaging a Quantity Surveyor to carry out the value engineering exercise at this stage. With full knowledge of their financial implications to the client, the cost advice enables design decision making. 2. Second, before the owner enters the contract, it would be beneficial to harness the expertise of a
Quantity Surveyor to negotiate with contractors, review, and structure the contract from a cost perspective to the owner’s benefit.
3. Third, managing the risk in the whole process is a key to project success, which can be carried out well by a
Quantity Surveyor. The commercial risks will be identified, analysed, and reported immediately to the owner following a discussion of possible solutions.
Overall, a Quantity Surveyor is to help the owner keep the financials of the project in perfect shape through efficient cost management while implementing the owners’ idea.
VIVIAN PACHOUD MNZIQS
1. Design for the lifespan of your building, rather the initial budget. Quality materials, materials that can be reused later, and futureproofing – can all be well worth the initial premium, so keep that in mind during value engineering.
Only a small percentage of the lifespan cost is the initial budget; a much larger sum is paid for maintenance, upkeep, and refurbishment.
2. A money saving tip – don’t design in detail before getting a cost estimate, then don’t build anything before adding detail. An experienced
Quantity Surveyor can do a concept estimate using a floor plan and elevations (ask them to note their assumptions!) before you have paid too much for a design that is not financially feasible. Once you have a budget, design as thoroughly as possible to avoid variations. 3. Read your contract, your specifications and study your plans before construction commences. If you can’t interpret them, it is well worth investing in a consultant who can on your behalf. The documents are there for both the building team and the owner alike. Know your terms, express your top two or three nonnegotiable terms (e.g., time, quality, cleanliness, sustainability etc.) and communicate your expectations from the beginning to avoid misunderstandings.
Q & A
JACQUELINE LEE O'DONNELL MNZIQS
Quantity surveying has changed fundamentally over the years and progressed from traditional measure and value to a broad and varying range of skills across the construction industry. For asset owners, understanding the full scope and capability of quantity surveying will benefit the industry as a Quantity Surveyor can provide expert cost management and forecasting on all aspects over the lifespan of an asset. Due to having experience in all aspects of building, a Quantity Surveyor can provide effective cost management advice around future spend profiles including maintenance, repairs, and end of life replacement of plant and materials. This could also be providing budget estimates to a client for effective capital expenditure whether that may be maintenance, seismic upgrading, remediation, or construction works or advice about retaining an asset. The industry is also moving to be more environmentally sustainable. Having a Quantity Surveyor on board can allow a client to better understand the impact of the build to determine the carbon footprint of the asset. For existing assets, a Quantity Surveyor can provide budget options for different scenarios of what a client may be considering for future forecasting to retain an asset to ensure sustainability. The virtual world is also an effective part of the construction process. Quantity Surveyors can utilise good BIM Models to provide more concise quantities, provide advice and better risk management around design concerns, buildability, HSE and co-ordination. The information in a BIM Model can also help to produce information for cost estimates on the ongoing maintenance requirements for the lifespan of an asset. For asset owners, quantity surveying provides a fundamental aspect for effective cost management.
SINEAD O'HARE MNZIQS
1. Asset owners should know that if they are embarking on a project, then early engagement of a Quantity Surveyor is money well spent, value engineering exercises will take into consideration not only construction costs but also the life span maintenance costs to help you decide the most cost effective options. 2. A detailed budget from a Quantity
Surveyor before you start works is a must- we have all seen the Grand Designs episodes where clients are self-managing the project, budgets are low and they are confident they will be in their new homes by Christmas, cut to the end and they have borrowed from their parents, are on the brink of divorce and have lived in a caravan for three years – a detailed budget lets clients know exactly what they are in for and while sometimes it may reveal the project isn’t currently feasible this is best known before projects begin to avoid project delays due to cashflow issues.
3. In the current market of constant cost fluctuations and ever extending lead times the procurement of trades is complex and the engagement of a Quantity Surveyor to manage risk and maximize opportunities will save money and stress and ensure project flow.
Q & A
KIRSTY HOPEWELL MNZIQS, REG QS
1. A Quantity Surveyor is a skilled professional who specialises in building construction measurement and cost estimation. Quantity
Surveyors are able to use their expertise to estimate the cost of building works on any civil, infrastructure project, residential or commercial property project, throughout the various stages of construction. They will often specialise in providing their expertise at a particular stage in the construction process. 2. Quantity Surveyors can minimise the asset owners exposure to risk through: • due diligence reporting • procurement advice • risk and opportunity analysis based on:
• conditions of contract
• design variations • competency of contractors and subcontractors
• price inflation for building materials • time, cost, quality • quantity take-offs and cost estimation
• knowledge of the going rate for various margins (on-site and offsite overheads & profit) and they will know if a contractor is underpricing or over-pricing those parts of the price. 3. Whilst Quantity Surveyors are involved in numerous construction projects over the course of their careers, some asset owners may only go through the construction process once. An experienced Quantity Surveyor provides an extra pair of eyes to help keep the project moving, to assist in identifying items that have been overlooked, call out people when they over-promise, scrutinise quotations and proposals, evaluate concerns and seek resolutions. A good Quantity
Surveyor provide a wide range of skills to make the construction process a positive experience for all parties.
CHLOE NERISSA GORDON MNZIQS, REG QS
1. Having a knowledgeable Quantity
Surveyor engaged right from the beginning of a project can make a huge difference to the project. A
Quantity Surveyor can provide the most value at the beginning of the project as they are able to set the project up, so it runs smoothly as well as providing cost advise before it is too difficult to make changes. 2. Even though there is cost in engaging a Quantity Surveyor, the benefit a client receives outweighs the investment. A Quantity Surveyor can ensure the client receives the best value for money, they can minimise and manage the risk associated with the construction project as well as ensuring the contractor doesn’t take advantage of the client. 3. To help manage the budget, it is advantageous for a Quantity
Surveyor to provide an estimate of the construction costs during several stages of the design process to ensure there is cost control over the design and any value engineering opportunities can be explored.
TENDERING
ALL ABOUT TENDERING
By Trevor Moseley MAIQS
TENDERING
Tendering today generally has a workflow from the client to the building contractors. However, before arriving at an invitation to tender, there are a few things the prospective client must address to get to the tendering stage. He should have prepared a feasibility study for the intended project, in regard to the following: • land costs
• holding cost • headworks costs
• any special conditions to be identified and allowed for
• sales cost
• advertising costs • preliminary design cost, and of course • building costs. Having said that, some clients go ahead and purchase the land and then do the feasibility. This can become risky if they haven’t done a pre-purchase feasibility (prior to purchasing the land) so they can work back through this feasibility to determine what they should actually be paying for the land to make the project work.
These costs should be factored into the original feasibility study. However, before doing any design work, it is always advisable to get the relevant consultants engaged early to confirm that the intended project will indeed be viable. Some developers have purchased land (in the past), only to discover that they have paid too much for it. Their only option then is to either hold on to it, in the hope that as market prices increase their development will become viable or dispose of it and get what they can. There has to be an understanding that sometimes the viability of the project can rest on something as simple as the efficiency of the building, or what the client would like as a building and what the market will pay for the product. How many times have we seen that, in the early stages, the feasibility supports the client’s feasibility outcome; only later to find that as the design advances, it is no longer feasible in its current state? This is where early intervention between the following consultants will prove to be invaluable:
• architects
• structural engineers • mechanical, electrical, and other specialist services • quantity surveyors for cost planning • quantity surveyors for providing a measured Bill of Quantities (BoQ) to tenderers.
What appears to happen in this respect (in some instances) is that as fees are getting squeezed in these areas, the documentation and coordination of the consultants becomes less and less. The saving grace is that the quantity surveyor is the one more likely to coordinate this shortfall, due to measuring and addressing issues early between consultants. So, the quantity surveyor is the one that most likely finishes up doing what other consultants should have been doing from the start.
Let’s not blame the consultants entirely. As mentioned earlier, as fees get reduced, the amount of work these consultants still have to do, does not, and eventually it gets passed down the line with less detail and coordination until it finally arrives at the subcontractors and suppliers door. Getting back to the question: How can construction companies win work and make a profit in the process, if the process from the client is flawed to start with?
From the client’s point of view, there are always things to consider when tendering for new projects. • does the company already have the necessary 'in house' skills and resources to deliver the project? • can it deliver the project on time and within budget? • can it provide a good quality finish higher than the client’s expectations? • can it add value to the project by innovation?
• can it still make a profit at the end of the day? Currently some building contractors have to deal with issues like:
• insufficient detail on the architectural, structural and services drawings • structural drawings not coordinated between the architectural, structural and services drawings • pages and pages of specifications that are not always relevant to the project in question. And, what ever happened to the specification writer who meticulously used to write a detailed and meaningful specification for the project that builders, subcontractors, and suppliers could understand.
I think it’s worth mentioning, getting each building contractor to measure and produce their own BoQ only increases
TENDERING
costs to each tender and these costs will be a cost included in their tender price anyway. The client’s quantity surveyor is more apt at producing the BoQ on behalf of the client and can nominate (if required) any PC and/or provision sums within the BoQ where insufficient detail has not been provided at tender stage due to design issues. It makes sense therefore that all the tenderers should be using the same documents including the BoQ produced by the client’s quantity surveyor. These are but a few questions that need to be answered before moving forward to the tendering phase. Some companies will attempt to tender everything that comes their way, whilst others target specific markets that they feel comfortable with. At the end of the day, the outcome must be to provide a good result for all parties, i.e., clients, consultants, builder, subcontractors, and suppliers. Clients have high expectations that the more 'construction companies' that are invited to tender on a specific project, the better the price they will receive. This is 'in most cases' a misconception and can be viewed as a two-edged sword. An old adage that 'less is more' when it comes to tendering is likely to apply. Generally, if subcontractors and suppliers see a flood of pricing requests for the same project coming in from ten or more builders (all with their own version of a BoQ), they are more likely either not to price at all, or if they do price, increase their prices on the basis that it is highly unlikely they would get the job anyway. If invitations were limited to between four and six tenderers per project, I believe the client would receive better pricing. Whilst this is probably yet to be tested, having anywhere from eight to twelve tenderers, each measuring their own BoQ’s for every trade or supplier only creates more confusion when most of these BoQ’s are different from each other, depending on how the BoQ’s were measured. It’s false economy on the client side, just because ‘they think’ they won’t have to pay the fees to a quantity surveyor, as each builder should provide this anyway. At the end of the day, it much more difficult to get a true comparison of tendered prices when each BoQ may be different, especially for the subcontractors and suppliers.
SELECTING BUILDING CONTRACTORS – CLIENT SIDE
So how can these problems be overcome? Well, firstly, clients should do their own research and select building contractors based on past performance and other factors like:
• do they have current capacity to undertake the works?
• do they carry the necessary insurances and are they up to date and adequate for the project being tendered? • do they have any existing projects running that appear to be in trouble financially? • are subcontractors and suppliers being paid on time? • are they currently having 'union problems' that’s likely to cause them delay? Some of the above items will also apply to subcontractors and suppliers alike. Again, this just a small list, but is worth checking out. If the client wants, less delays, less variations, and a good quality building he needs to be part of the overall team, not a bystander. Squeezing lower fees from the consultants is not the answer, because at the end of the day, someone is still going to pay the cost. Builders, subcontractors, and suppliers will inevitably be passing these back to the client.
The only way it can become a win, win situation is if everyone in the team (including the client) each play their part to deliver a successful project. Ultimately this process should start at the top, and work down the chain to resolve problems as quickly and as efficiently as possible. So, assuming that the client decides that there will be no more than, say four to possibly six tenders invited to submit a price for the project at hand, and that builders equally apply the same logic in the selection of their subcontractors and suppliers, the more likelihood they will get better tender pricing. One can only hope! I might add, that creating a team where all team players are willing to participate in the overall successful result of the project, would be a positive step forward, instead of the ‘them and us’ attitude which seems to apply on some projects. Then and only then, will all stakeholders realise that if this structure breaks down, someone is eventually going to pay. That might be the clients, builders, subcontractors and/or suppliers. I have worked on projects that have been delivered on time, on budget and a credit to everyone that took part. I have also worked on projects that have been a complete disaster with everyone blaming everyone else. Let’s hopefully apply the first option rather than the latter.
The views expressed by the writer are based on his own experiences and are provided on an ‘as is basis’.
Trevor Moseley MAIQS, Director at QS Project Services. Trevor is a Mentor, Trainer, Estimator, Quantity Surveyor and Software Solutions Facilitator. If you have any questions for Trevor, you may email him: tmoseley@3keys.com.au.
EMISSIONS
NEW ZEALAND COMMERCIAL BUILD PROJECTS TO COUNT THE ‘COST’ OF CARBON
By Ivana Brown
Construction projects in New Zealand will soon come with both a financial budget and a projected carbon estimate as quantity surveyors increasingly include carbon emissions in their advice to clients.
The New Zealand Institute of Quantity Surveyors (NZIQS) has established a Carbon Accounting Working Group to upskill quantity surveyors in this climate initiative – how to estimate the amount of carbon that will be ‘released’ as part of the overall build process, and, in due course, the amount to be released over the life of the building. Chair of the Institute’s working group, Michael Crutchley, says the sector’s increased focus on carbon emissions is being driven by new climate change legislation and moves by government agencies, the construction sector’s biggest client-type. Crutchley says carbon estimates will include the amount of carbon likely to be released in the manufacture of the raw building materials, the building’s construction stage, its operation, and its end of life.
“Quantity surveyors have an important role to play through value engineering, whereby they can recommend alternative specifications, or methods that achieve better outcomes for both carbon emissions and build cost,” he said. “There are also clear parallels between capital cost estimating and whole of life costing, and the estimating of carbon emissions.”
Common building materials already come with an Environmental Product Declaration (EPD) which measures the carbon impact of their production. And while low carbon building materials are already available, Crutchley says they will become more commonly used as emissions budgets gain traction within the construction industry.
“To some extent quantity surveyors and clients will have to balance the build’s financial costs with its carbon impact, however there are good opportunities to reduce both, and strike the right balance.”
Crutchley says reducing carbon emissions will be an important factor in ensuring the wider construction sector plays its part in helping New Zealand reduce overall carbon output to the targets set in the national Emissions Reduction Plan.
“NZIQS is keen to get more formalised training and CPD programmes in place to upskill quantity surveyors in what is going to be an increasingly important component of the construction sector build process.”
This article has been provided by NZIQS.
