DECEMBER 2023 – FEBRUARY 2024
06 VISUAL FEATURE
24 DECARBONISATION AND THE BUILT ENVIRONMENT
30 FUTURE LEADER
34 PRICING OF CONSTRUCTION WORK WHEN PROVIDING AN INDEPENDENT QUANTUM ASSESSMENT
CONTENTS
2 CEO Letter
23 The Valuation of Actual Cost Claims
4 Mark Chappé FAIQS, CQS
24 Decarbonisation and the Built Environment
6 Visual Feature: Developing New Workspaces for
25 GPT DesignSuites
Salesforce’s Flagship Australian Headquarters 12 Visionaries: The Future of Quantity Surveying
30 Future Leader 34 Pricing of Construction Work When Providing an
14 Embodied Carbon: How Wood Products are Leading Australia’s Green Building Transformation
Independent Quantum Assessment 36 Imperative for a National Construction Strategy
16 Q&A
38 Workplace Global Crisis Support
20 Should Social Value be Included in a Cost Plan?
42 Building Cost Index (available in print edition only)
About The Built Environment Economist is the flagship publication of The Australian Institute of Quantity Surveyors (AIQS). Produced quarterly, the Built Environment Economist seeks to provide information that is relevant for quantity surveying, cost management and construction professionals. Subscribe Visit www.aiqs.com.au/shop. You can purchase a copy of this edition or subscribe for 12 months.
Contribute AIQS encourages readers to submit articles relating to quantity surveying, the built environment and associated industries including: construction economics, cost estimating, cost planning, contract administration, project engineering. If you would like to contribute, email marketing@aiqs.com.au.
Advertise Contact AIQS to discuss available opportunities. Anthony Lieberman Engagement Manager T: +61 2 8234 4000 E: marketing@aiqs.com.au
Disclaimer AIQS does not take any responsibility for the opinions expressed by any third parties involved in the writing of the Built Environment Economist. ISSN 2652-4023
CEO LETTER
ADVANCING BUILT ENVIRONMENT COST PROFESSIONALS Looking back over the past twelve months, which have flown by, I would like to reflect on AIQS’s activities that have, are, and will be assisting in raising the profile of the quantity surveying profession and the Institute. Since December 2022, AIQS has embarked on and delivered a range of outcomes for the benefit of members, the broader quantity surveying profession, users of quantity surveyor services, and other stakeholders. Following a major review and update in content, a new edition of the Australian Cost Management Manual (ACMM) was published in December 2022. Volume One now incorporates much of the
2:
content from the previous volumes (One, Five and Six), which has been significantly updated. New sections have been added on Procurement, Contingency, Allowances, and Pricing Risk, as well as mapping of AIQS elemental codes to the International Cost Management Standard (ICMS) codes. Most of the content from the previous Volumes Three and Four (Life Cycle Costing and Evaluation of Sustainable Developing) have been excluded, with new material to be incorporated into subsequent editions under a section on Life-cycle Costing (which will also incorporate material on quantifying Embodied Carbon).
BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024
Volume Two retains the elemental codes with the addition of Chilled Beams and itemising of Special Provisions (YY Codes). The Australian and New Zealand Standard Method of Measurement (ANZSMM) has also been updated and now includes new sections on Signage and Pest Control. The latest edition of the ANZSMM was published in July 2023. Information Papers covering The Quantity Surveyor’s Role as an Expert Witness (June 2023) and the Quantity Surveyor’s Guide to Residential Tax Depreciation (August 2023) were launched in conjunction with CPD events.
CEO LETTER
Over the past eighteen months, a suite of Infrastructure (Transport) papers (Measurement, Cost Planning, Procurement, Preliminaries, and Provisional and PC Sums) has been going through development by AIQS’s Infrastructure Committee, which is based in Sydney. These papers will be finalised and released in 2024. In addition, NSW members have been working with the NSW Department of Planning Industry & Environment (DPIE) to develop a standard for Calculating Estimated Development Costs (for NSW State Significant Developments). This should be finalised in early 2024, with the DPIE providing initial explanatory information shortly. The QLD Chapter is developing standards addressing the Quantity Surveyor’s Role in Establishing Retirement Village Capital Replacement Funds and Maintenance Reserve Funds, to support Divisions 4 and 5 of the QLD Retirement Villages Act 1999, and Pricing Preliminaries which has come off the back of a successful seminar in 2022. Two Information Papers covering Contract Administration (Representing the Client) and Contract Administration (Representing the Contractor) have been under development for some time and are expected to be released as Exposure Drafts in early 2024. Established in late 2022, the AIQS Embodied Carbon Committee has been working with NABERS, GBCA, NATSPEC and representatives from quantity surveying and construction firms to develop a consistent approach to the measurement and quantification of embodied carbon in construction projects from A1–A5 (Product and Construction Stages) which will be adopted nationwide.
Over this year, AIQS has held Executive Roundtable lunches in capital cities across Australia, engaging with senior representatives from industry organisations including AIA, EA, PCA, UDIA, AIB, SOCLA, NAWIC, construction firms, developers, financial institutions, and quantity surveying firms to discuss issues impacting the construction sector to identify those matters where AIQS and the broader quantity surveying profession can have an input in addressing. One of the outcomes will be the development of guidelines around establishing a common understanding and definition of Levels of Development (LOD), which appear to be assessed from differing perspectives by consultants, head contractors, and subcontractors.
Over the course of the year, the AIQS LinkedIn page has seen a 43% increase in participation and visits to the AIQS website are up by 63% over the previous year. 2023 also saw the finalisation of a major review of the AIQS membership grades, which has resulted in a streamlining of membership entry pathways and a strengthening of entry requirements for MAIQS, CQS, which from 1 January 2024 will be the only membership grade available for applicants sitting an APC. Finally, I would like to give due recognition to Peter Clack and Adrian Bridge who were both awarded Life Fellowships in recognition of their outstanding contributions to AIQS and the quantity surveying profession over many years.
GRANT WARNER CEO Australian Institute of Quantity Surveyors
BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024:
3
RECOGNITION
MARK CHAPPÉ FAIQS, CQS We would like to honour Mark Chappé FAIQS, CQS by providing our readers with key highlights of Mark’s unwavering drive and passion to advance AIQS and the quantity surveying profession.
Mark has completed his term as Immediate Past President and Treasurer on the AIQS Board and we thank him for his tremendous contribution to the Institute over the years. Mark served on the AIQS Board for a total period of 8 years, and was involved in many industry development initiatives, including his position as a Trustee of the International Cost Management Standard (ICMS), representing AIQS.
4: BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024
“He inspired other board members with his insights and experience, which helped in the process of trying to do better.”
RECOGNITION
TESTIMONIAL BY AIQS DIRECTOR MIKE O’SHEA FAIQS, CQS
During my time on the AIQS Board of Directors, I had the pleasure of working with Mark Chappé, who held positions including National Council Member, Vice President, National Chapter Council President and Treasurer.
Mark demonstrated critical thinking, particularly during his time as President. He was able to analyse information, evaluate different options, and make informed decisions that resulted in successful outcomes.
He inspired other board members with his insights and experience, which helped in the process of trying to do better. Overall, his critical thinking skills were an asset to AIQS which resulted in successful board decisions.
ACHIEVEMENTS Elected Junior Vice President of AIQS in 2015
In 2011, he was elected as a Director on the AIQS Board
ASSOCIATE
DIRECTOR
Mark became an AIQS Associate Member in 1998
Elevated to Fellow grade in 2012 In 2023, completed his term as AIQS Immediate Past President and Treasurer
Elected AIQS President in 2019
SENIOR VICE PRESIDENT
Elected as AIQS Senior Vice President in 2017
JUNIOR VICE PRESIDENT
FELLOW
AIQS PRESIDENT
ICMS CODES IN ACMM
COMPLETED TERM
Mapped ICMS Codes against AIQS Elemental Codes in ACMM 2022
BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024:
5
VISUAL FEATURE
DEVELOPING NEW WORKSPACES FOR SALESFORCE’S FLAGSHIP AUSTRALIAN HEADQUARTERS PROJECT COST MANAGEMENT CLIENT TYPE SECTOR LOCATION
6:
SALESFORCE TOWER SYDNEY TURNER & TOWNSEND REAL ESTATE COMMERCIAL SYDNEY, AUSTRALIA
BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024
VISUAL FEATURE
A digital-first approach reaped major dividends for Sydney’s tallest office building — from delivering the business case to fitout.
PRIORITISE EMPLOYEE WELLBEING Salesforce Tower was built as part of the AUD 5 billion redevelopment of Sydney’s Circular Quay precinct and opened to the public in late 2022. In 2018, Turner & Townsend were appointed to support the business case for software company Salesforce’s occupancy and tenancy negotiations for its local headquarters. Our role was then extended to include full cost management services. The brief was to create state-of-the-art workspaces on the thirteen levels occupied by Salesforce, that supported new ways of working and encouraged employee wellbeing, and which met the client’s rigorous safety and sustainability standards.
REFLECTING CORPORATE RESPONSIBILITY Salesforce needed its Sydney office to reflect its core values: equality, customer success, innovation, sustainability and trust. The project involved making the business case for and delivering the fit-out of its new offices which comprise seven administration floors and three ‘Ohana floors (‘Ohana: a Hawaiian word meaning extended family). A feature of every Salesforce headquarters, ‘Ohana floors are dedicated to giving back to the local community and providing project spaces to not-for-profits. In addition to a sky terrace, the remaining three floors comprise the Salesforce Innovation Centre, a social floor, and a training area with an auditorium.
DELIVERING SUSTAINABILITY IN CHALLENGING TIMES The project was delivered on time and within budget, despite facing significant pressures resulting from supply chain disruption, cost inflation, and changes to the design and scope of works related to COVID-19. Construction waste had a 94% diversion rate, meaning only 6% was sent to landfill. Incorporating Salesforce’s stringent global sustainability targets, the tower has a 5.5 Star NABERS Energy rating, a 6 Star Green Design from the Green Building Council of Australia and WELL Core and Shell Platinum pre-certification. Salesforce Tower anticipates a 38% reduction in water use and a 20% reduction in energy use, compared to a typical building as defined by the LEED baseline. “The Turner & Townsend team showed exceptional leadership and dedication in achieving the successful and timely delivery of the new Salesforce Tower. The team leveraged global benchmarking and proven cost reporting analysis to ensure that our planned outcomes were possible and could be achieved within the cost estimates and budgets.” Craig Wiseman, Director, REWS Project Director, JAPAC, Salesforce
“The team leveraged global benchmarking and proven cost reporting analysis to ensure that our planned outcomes were possible and could be achieved within the cost estimates and budgets.”
BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024:
7
VISUAL FEATURE
8:
BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024
VISUAL FEATURE
BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024: 9
VISUAL FEATURE
The brief was to create state-of-theart workspaces on the thirteen levels occupied by Salesforce, that supported new ways of working and encouraged employee wellbeing...
10: BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024
VISUAL FEATURE
Salesforce Tower anticipates a 38% reduction in water use and a 20% reduction in energy use...
This feature was written and all images provided by Turner & Townsend.
BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024: 11
VISIONARIES
THE FUTURE OF QUANTITY SURVEYING LEONG CHOONG PENG FAIQS, CQS Advisor, Mentabuild Limited
I entered the quantity surveying profession back in the early 1970s when the measurement of quantities was done manually with scale rules and bills of quantities were produced using the “cut-and-shuffle” method to sort out various elements within these documents. Since then, the profession has progressed over the years. Initially, planimeters were introduced for measurement and Lotus (later Excel) spreadsheets to produce bills of quantities. Subsequently, we embraced measurement software such as CostX and Revit, among others. The advent of Building Information Modelling (BIM) and the continuous improvement of quantity surveying software has led some to believe that traditional quantity surveying is becoming obsolete.
The measurement of quantities by quantity surveyors becomes less relevant. However, the quantity surveying profession is adapting and evolving to meet the demands of the modern construction industry. Today, quantity surveyors are increasingly sought after for cost management and advisory services, project audits, feasibility studies and expert witness roles. To remain pertinent in the future, quantity surveyors must embrace emerging technologies such as 5D, 6D or even 7D BIM, and harness the power of artificial intelligence. They should develop new competencies like wholelife carbon measurement, etc. While Asian markets may not yet demand the latest technology, it is prudent for local quantity surveyors to proactively acquire such knowledge to stay competitive.
12: BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024
Quantity surveyors should aim to be involved in projects from their inception to completion and potentially beyond. To achieve this, they may need to target project financiers and developers as potential clients. The scope of quantity surveying services coverage should expand beyond traditional boundaries to encompass infrastructure, building services, oil and gas, and environmental studies. This diversification will open a broader range of projects and opportunities. Cost management remains a critical aspect of any project, and quantity surveyors are renowned for their expertise in this area. While technology will undoubtedly continue to advance, the expertise of quantity surveyors in cost management will remain invaluable.
VISIONARIES
DOUG FLETCHER FAIQS, CQS
Senior Associate, GRC Quantity Surveyors My vision for the future involves the quantity surveyor becoming a more respected and valued member of the consultant team. Quantity surveyors continue to be left behind by other consultants and are not seen as key members of the team who can add real tangible value. More often than not, the quantity surveyor is left to react to decisions made by others, rather than given the opportunity to be involved in the process. I believe there is a direct correlation between this and the overwhelming desire of some to keep downward pressure on fees, meaning that service levels are often cut to remain competitive. Because of this, quantity surveyors are often unable to reveal our skills in cost management, asset management, cost control, value engineering and many more varied skills beyond the core skill of measurement.
Therefore, my vision is for the resurgence of the quantity surveyor. As a group, we need to come together to enlighten our clients on the value that a competent quantity surveyor can bring to the outcome of a project from the earliest stage, right through the full asset life. The key for me is taking ownership of the model. I hear so often that the model is not correct, doesn’t have enough detail or is no use. Well, let’s take the lead, not unlike what a quantity surveyor does by qualityassuring documents to allow the measurement of a bill of quantities, we could transform the model into a truly valuable tool by becoming enablers rather than complainers.
skills to the items that bring value to clients such as value management, proactive cost management, asset management, etc. Less time quantifying and more time creating real value through smart solutions to cost-related issues will prove to clients the longterm benefits of engaging a quantity surveyor from the outset to completion. With quantity surveyors demonstrating the full potential of our skills, our value will rise, along with industry recognition. Being seen as a valued profession to aspire to will further attract more talented emerging professionals to a quantity surveying career and consequently, improve industry standards.
By contributing to consistent and highquality modelling that can be used by the whole consultant team and by the quantity surveyor, we can direct our
BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024: 13
EMBODIED CARBON
EMBODIED CARBON:
HOW WOOD PRODUCTS ARE LEADING AUSTRALIA’S GREEN BUILDING TRANSFORMATION By WoodSolutions
As highlighted by the Green Building Council of Australia in a recent report1, Australia’s upfront carbon emissions will balloon from 16% to 85% of overall building emissions by 2050 if we fail to make better choices on building materials and construction methodologies. As many of Australia’s broader population take on the challenge of a changing climate, the building industry — an industry responsible for almost 20% of Australia’s annual carbon emissions and over 40% of Australia’s landfill2 — has an obligation to improve. While not the only answer, for many of Australia’s leading architects and builders, a key tool in the carbon reduction war chest has become the use of engineered wood products such as cross-laminated timber (CLT), glued laminated timber (glulam), or laminated veneer timber (LVL).
But how much of an impact does the specification of these products actually have? The only way to truly understand the impact of such a design intervention is through the rigorous and objective academic exercise that is a life cycle analysis (LCA). An LCA is a report prepared by a third party (often a sustainability consultant, although sometimes a university or other suitably qualified institution) that maps the entire life cycle of a building; from construction (considering the production and installation of all building materials) to operation, maintenance, and finally end of life. The report analyses the environmental impact of each of these stages with a focus on energy use and greenhouse gas emissions, amongst other impacts. Importantly, as buildings become more efficient to operate and energy
is increasingly produced through renewable means (e.g. solar, wind, or biogas) the materials and construction methodologies are becoming more prominent on the environmental impact balance sheet. So, what does this mean for timber buildings? Can we refer to an LCA for an Australian project, and how can we compare this to the concrete and steel status quo? Fortunately, there is a simple answer to this question. In 2013, Forest & Wood Products Australia funded a research group from the Royal Melbourne Institute of Technology to independently undertake an LCA of the iconic Forte building3. The first timber building built by Lendlease, and indeed the first large-scale mass timber building built in Australia, Forte sits on Bourke Street in the Melbourne suburb of Docklands.
1 Green Building Council of Australia 2023, Reducing upfront carbon at scale, <new.gbca.org.au>. 2 Hosseini, M. 2023, ‘Building activity produces 18% of emissions and a shocking 40% of our landfill waste. We must move to a circular economy — here’s how’, The Conversation, <theconversation.com>. 3
Durlinger, B., Crossin, E. & Wong, J. 2013, Life Cycle Assessment of a cross-laminated timber building, FWPA, <fwpa.com.au>.
14: BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024
EMBODIED CARBON
The building’s form was, at the time, revolutionary, with reinforced concrete footing, ground floor, and first-floor slab, with nine storeys of pure mass timber extending above.
...Leading to a total reduction in embodied carbon of approximately 35%. With engineered wood products sourced from Austria (there were no commercial suppliers of the products in Australia at the time — now there are many), you could be forgiven for assuming that an environmental benefit of the timber would be offset by weeks of shipping. Even with this accounted for, the global warming potential (embodied carbon) of the building was 22% lower than the concrete design of the same building.
As demonstrated in a more recent article4 from a research team at the University of Melbourne, this benefit is only amplified with local procurement. This paper compared two mid-rise buildings (one built from mass timber, one built from reinforced concrete) in Melbourne, Sydney, and Brisbane, performing a full LCA (in addition to a life cycle costing) on each. Ultimately, this research identified that the use of a locally manufactured mass timber structure resulted in a more than 50% reduction of embodied carbon in the construction phase, leading to a total reduction in embodied carbon of ~35% across all stages of the project’s life cycle (35% in Melbourne, 36% in Sydney, and 33% in Brisbane).
a positive impact on the environmental outcomes of a project. To learn more about the embodied carbon of engineered wood products and find case studies of local projects of all types and scales, simply visit the WoodSolutions website at www.woodsolutions.com.au.
This is a sponsored article by AIQS Corporate Partner, WoodSolutions.
Whether procuring locally or from overseas markets, both completed projects and academic research show that the use of timber systems can have
4 Jayalath, A., Navaratname, S., Ngo, T. & Mendis, P. 2020, ‘Life cycle performance of cross laminated timber mid-rise residential buildings in Australia’, Energy and Buildings, DOI:10.1016/j.enbuild.2020.110091.
BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024: 15
Q&A
HOW HAVE YOU SEEN THE QUANTITY SURVEYING PROFESSION CHANGE IN 2023? AUTUMN LU MAIQS Director, MBMpl
Although the cost escalation has stabilised slightly in 2023 compared to the previous two years, the impact of subcontractor insolvency, the shortage of skilled labour, increases in energy costs, and new Enterprise Bargaining Agreements (EBAs) haven’t eased. Consequently, the reliance on cost guidelines, such as Rawlinsons or past tender results, is still risky. Given the prevailing market uncertainties, I prioritise engaging with builders and suppliers to enhance the accuracy of MBM’s cost planning advice and estimates. I’ve observed an increasing demand from clients for guidance on suitable procurement models, contractual arrangements, and insights into experience with various builders from a quantity surveying perspective.
This trend reflects a proactive approach by clients to mitigate commercial risks before awarding the construction contract. Sustainability is a hot topic in 2023, with a NABERS Embodied Emissions Material Form in SSDA submission becoming a compulsory requirement under the new SEPP. As a result, more quantity surveying firms are embracing the calculation of embodied carbon as an integral component of services. While AI hasn’t significantly impacted the quantity surveying profession in my view, I’ve observed the AI tool used for mass data analysis. The application can drive efficiencies in benchmarking database buildups for quantity surveying, but the security of the imported data is questionable.
16: BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024
On a parallel front, my experiences this year involved an increased utilisation of Building Information Modelling (BIM) in MBM’s cost planning services, involving intricate coordination with the design team to leverage the full potential of BIM models for quantity surveyors’ use.
Q&A
FRANKE OOSTHUIZEN MAIQS
Senior Quantity Surveyor, Altus Group If I had to use one word to describe how I feel about the profession as 2023 draws to a close, it would be inspired. With a rise in construction costs, soaring interest rates and fears of construction activity slowing down, inspired would probably not be the first word that comes to mind. However, despite the setbacks that the industry has faced over the last months, I have watched my colleagues guide clients through this period of uncertainty with the utmost professionalism. Additionally, big topics have been discussed this year such as sustainability and digitalisation of the industry. Our profession has had to adapt and change as required to accommodate these growing client and environmental needs.
Another topic that is very close to my heart, and which I am passionate about is the importance of diversity and inclusion. Earlier in my career, I found this was undervalued in the profession. As of late, I have noted and been thrilled to see company corporate structures embrace individuals’ differences and ensure that employees know that no matter what their background, nationality or gender may be, they are able to be comfortable and successful. Having a sense of belonging and knowing that I am part of a profession that prides itself on integrity and inclusivity makes me want to keep striving to add value to what I do every day.
BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024: 17
Q&A
KEELEY POMEROY NZIQS
SHELLEY ROGERS MAIQS, CQS
It’s always a challenge to pinpoint industry change. Like when change moves from a niche to being widely recognised, then is generally adopted. Led by clients, I have seen a large burst of environmental, social and governance (ESG) requirements entering the design and management of their projects. I have seen our quantity surveying profession change in 2023 to provide the skills and services needed to meet these client needs.
In an ever-changing economy, a quantity surveying firm that has its finger on the pulse and is privy to current market pricing is best positioned to provide the most reliable advice to its clients.
NZ Estimating Lead, AECOM
Projects with well-developed ESG goals have the best intentions for people and the future legacy of the building. Whether it be inclusiveness in procurement (broader outcomes and waste diversion/recycling), greenhouse gas accounting (embodied and operational), whole-of-life considerations (capital vs. operational costs) and project sustainability features. I’m proud to see the quantity surveying profession change and adapt quickly to these client requirements. By using our skills and services, quantity surveyors are actively supporting the sustainable future of people. I’m equally proud to see main contractors and their suppliers/subcontractors deliver the ESG project goals set by clients and themselves. We are all a part of the solution. I encourage everyone to learn about their client’s ESG goals and to be a great delivery partner. Check your organisation’s ESG goals, and make sure that you are a part of the reason they succeed.
Director, Rider Levett Bucknall
We’ve had to keep abreast of changing material prices, labour shortages, fuel price hikes, insolvency, and international conflicts; the list goes on, and all have a bearing on local construction costs to some degree. Without dwelling on these challenges, I’m sure my AIQS peers would agree that it’s never been more important to engage a quantity surveyor at the project onset. Gone are the days of pricing a project based on the last job you worked on. An in-depth understanding of the current pressures facing every trade is required to ensure we are not caught off-guard and become the loser, or worse the winner, at tender time. Market intel and a deep industry understanding are the golden tickets for the quantity surveyor, and ultimately our clients. Despite this, our appointment profile is somewhat changing. We have seen a shift this year toward quantity surveying engagements based on milestone cost planning services only, rather than full service engagements. A quasi-valuemanaged arrangement. Whilst this strategy might translate to a saving on quantity surveying fees, inadvertently this could be to the detriment of the project.
18: BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024
Ultimately, the closer we are to the design journey, the better we can control the cost to ensure the project comes in on budget when it finally goes to the market. It enables us to perform at our highest-value level.
Q&A
ANGIE TAN MAIQS, CQS
Lead Quantity Surveyor, WT Partnership Over the years, the role of quantity surveyors has transformed significantly with advancements in the construction industry. Beyond the fundamental responsibilities of providing cost estimates and managing project costs during construction, quantity surveying professionals are now expected to navigate diverse procurement methods and contracting models such as collaborative contracting. In response to the surge in new construction technologies, a quantity surveyor must possess a comprehensive understanding of construction technology, methods, and materials such as prefabrication components, bendable concrete, and innovative formwork systems.
The integration of innovative software like Building Information Modelling (BIM) is gaining prominence in Singapore, aiming to enhance the precision and efficiency of project plans. Quantity surveying professionals are now required to proficiently manage project costs and contractual agreements using these specialised technologies, and those who embrace the digital age are poised for career success. Furthermore, the expanding role of the quantity surveyor extends to advising the design team or clients on various cost aspects, including capital costs (embodied carbon), life cycle costs (value decisions), and “wholeof-life” costs (operational carbon).
This involvement begins from project inception, ensuring early assessment of embodied carbon and facilitating the achievement of necessary reductions in embodied and operational carbon. In a nutshell, the dynamic evolution of the construction sector necessitates constant adaptation and an expanded role for quantity surveying professionals. This evolution enables quantity surveyors to not only keep pace with industry changes but also to proactively enhance service offerings and provide invaluable advice to clients throughout the project life cycle.
TECH TIPS Powered by AIQS Corporate Partner, RIB The construction industry is increasingly focused on reducing carbon emissions, with governments globally implementing embodied carbon regulations. In order to stay ahead of the curve, both anticipating Australian government regulations, and keeping your business at the forefront of sustainability, you must ensure you implement embodied carbon accounting as part of your estimation process.
RIB CostX allows for both cost estimating and embodied carbon accounting side by side in the same program, creating a world-leading 6D BIM solution that enables quantity surveying businesses to lead the way in sustainability. The quantity surveyor can then be more involved in early-stage design and material discussions and contribute to assessing the long-term energy implications of the project, materials used and other considerations.
Contact our team today on sales.pac.costX@rib-software.com or 07 3300 6222 to find out more!
BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024: 19
SOCIAL VALUE
SHOULD SOCIAL VALUE BE INCLUDED IN A COST PLAN? By Carmel Luck
20: BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024
SOCIAL VALUE
According to a recent report by Mordor Intelligence, Australia’s construction industry is expected to grow to over USD 200 billion in the next five years. Let that sink in while you compare the latest national defence budget allocation of a meagre 10 billion over the next 10 years. Whilst this outlook on construction spend may not surprise you, I’d be willing to guess you hadn’t pondered the proportion of this moola earmarked for social causes, initiatives, and outcomes associated with construction. For the uninitiated, the term or concept of “social value” will soon be something we speak of and hear about increasingly, so lean in. It combines two seemingly unlikely ideas: the intangible norms, customs and feels of a group or community; with an assigned fiscal or other numeric measurement. With somewhat of a head start, our friends in the UK are leading the way in the realm of social value, launching the first standard addressing social value via British Standards International in 2021. Since then, all government procurement exercises are required to evaluate the social value commitments being offered by all potential bidders, and base at least 10% of the final evaluation score on the social, economic and environmental benefits created as a result. Social Value UK describes the measurement of social value as how to “understand and record the relative importance we place on the wellbeing changes we experience. It helps to inform better decision-making to increase positive change and decrease the negative.” Simply put, it’s how much it might cost to increase wellbeing, by therefore decreasing the perceived or actual negative associations of something.
Social value will continue to grow in relevance; both for clients and for socially conscious, prospective employees, who seek out roles and employers known to be socially responsible.
HOW CAN THIS BE TRANSLATED TO THE CONSTRUCTION INDUSTRY? In an infrastructure project context, a trafficked road or highway holds a social value by virtue of its use. If you use Smith Street day in and day out on your commute, then during roadworks upgrades, or when detours are applied, your ability to arrive at your destination the same way you did (or by the same travel time) before works commenced is impacted. Similarly, if road upgrades caused wholesale changes to the driving experience, and the knock-on effects of these resulted in a person deciding to find a new job or change their entire journey to avoid the road altogether — then the project has negatively impacted this person. Construction impacts can be temporary during the build, or long-lasting if, for example, roads close permanently. Conversely, projects can markedly improve the social value of infrastructure, by making it safer, easier to use, and reducing travel times through upgrades. The wholesale gains of safer communities have numerous impacts on those nearby.
HOW CAN SOCIAL VALUE BE CREATED? For some finite projects, social value can simply be created and measured across the lifespan of a project. Some social value-adding initiatives could include training and employment programs; whereby in a defined area, upskilling initiatives can offer
BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024: 21
SOCIAL VALUE
...Budgets for social value-building initiatives either shrink or don’t make it into delivery.
all things fluffy and those things that can be measured and quantified simply can’t be ignored in this discussion. Perhaps the way to get more buy-in for social value is to quantify it better.
medium to long-term wins for the local community, whose collective new skills may equate to increased business and economic opportunities.
For some, measuring social value is simply a figure to represent the financial cost of implementing a program or initiative. For others it’s more qualitative, representing their perceptions about the outcomes of an initiative. While the qualitative portion provides crucial feedback and lessons learned, it makes it challenging to promote and communicate the social value to stakeholders.
Of course, other, shorter-term social value adds may take the form of sponsorship agreements for local sporting teams, or the instigation of “buy local” programs, for businesses near to the project or construction works. Each of these is fantastic for those they impact during the construction period. And while many governments across Australia require constructors to implement social value-adding initiatives during project construction, this doesn’t necessarily equate to a budget readily available for the running of and/or maintaining them.
HOW DOES SOCIAL VALUE LOOK IN PROJECT DELIVERY? If you’ve ever worked on a project, you’re likely to be familiar with the concept of unexpected delays, unforeseen costs or schedules sliding “to the right”. It’s little wonder then, that when the going gets tough, the socalled “fluffy stuff” falls away or takes a back seat. Despite the best intentions of the tendering team to incorporate social value-building initiatives into the bid, budgets for social initiatives either shrink or don’t make it into delivery. It’s not difficult to understand why this decision-making takes precedence over another school of thought though, especially when during project delivery, every dollar needs to be accounted for. The natural tension that exists between
This then begs the question: how can social value be measured?
For example, measuring resources expended to deliver a staff volunteering day would be a simple calculation of the staff hourly rate of pay, the cost of materials, PPE, and catering. By comparison, quantifying a more involved social initiative; like a training program, run at the construction site for practical skills training is also a simple calculation of the staff hourly rate of pay, the cost of materials, PPE, and catering, right? Not exactly. The complete social value of the training program would quickly outweigh the cost of facilitating it. We could project and quantify some of the other, less obvious social values of the program, such as: •
The possibility of seeking employment and the increased self esteem of the program participants. This would also have knock-on effects on those living in the same household.
•
The prospect of program participants starting a business and employing other people.
•
The upskilling opportunities provided to the staff members who led and facilitated the program.
22: BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024
It is clear then, that the social return on investment of the training program far outweighs the cost to run it.
HOW CAN WE KEEP SOCIAL VALUE ADDING INITIATIVES IN THE BUDGET? As a community relations practitioner, I know all too well the scenario whereby social initiative ideas are presented and not supported due to a lack of resources. Frequently, community or sustainability proposals are seen as “nice-to-haves”, and ultimately, as costs that are unrecovered during the project delivery. In addition to the healthy social outcomes on offer; if contractors planned for the costs to deliver high social value programs or initiatives, and shifted their thinking to these being investments in the community — then two things would likely happen: 1. All programs and initiatives would be good news to the communities in the vicinity of the project. With sufficient advanced planning, the social licence to operate in the area and project acceptance would be greatly enhanced. 2. The contractor would become a credible, socially responsible partner of choice, and an employer of choice — attracting a high calibre, socially conscious workforce, who in turn would engage with and value the commitment to its social investment. Should social value be included in a cost plan? Absolutely. Contractors planning to stay relevant amongst the wave of social consciousness upon us simply cannot afford to leave it out.
This article was written by Communications Specialist, Carmel Luck.
COST CLAIMS
THE VALUATION OF ACTUAL COST CLAIMS By Graham Topp FAIQS, CQS
My objective in this informal article is to identify and describe three tests that seem to be the logical starting point for the appraiser of construction cost claims. In my experience, the appraiser is typically drawn from the quantity surveying profession. The proper allocation of costs in disputes of quantum is crucial for establishing recovery. The quantity surveyor must have the knowledge and skills to allocate costs appropriately. To my mind, these skills are both technical construction expertise and the adept handling of relevant financial data. Whilst consideration should always be given to the terms of the contract, proof of causation is usually essential in all cost claims. Thus, the umbrella under which the three tests sit is a “but for” analysis, which seeks to establish the nexus between cause and effect. It establishes whether the cost would have arisen in the absence of the claimed event. I set out below the three tests that I consider to be the logical framework within which an actual cost quantification should commence. It seems clear to me that they apply to many different types of actual cost
claims, including those that seek recovery for defect rectification, components of the contract, termination-related claims, and delay and disruption claims. The expertise of the quantity surveyor charged with the assessment of the claim rests in the application of the three tests. It is not a one-size-fits-all model.
TEST 1 This test examines the extent to which the sums claimed are attributable to the matters relied on by the claimant. The test considers the allocation of costs, causation, cost nature (one-off, timebased, volume-related), costs in any event and other similar factors.
TEST 2 This test is the requirement to verify that the claimant has incurred the cost it claims. The analysis involves assessing invoices, outputs from the claimant’s accounting system, bank remittances and other similar contemporaneous documents.
TEST 3 This test considers if the costs claimed by the claimant are reasonable. Consideration ought to be given to the nature and type of the procurement process, terms under which costs were incurred, potential duplications or double-counting and other similar factors. The assessment of reasonableness often involves benchmarking against market rates. The concept of a “market rate” is specific to the project circumstances, location, industry dynamics, and prevailing supply and demand factors. Where the assessment is time distant from the event, it seems to me that the actual costs incurred are (absent some particular reason) often the best and most reliable measure of ascertaining reasonableness. The correct approach to valuation is driven by the terms of the contract and the circumstances. The quantity surveyor should consider the circumstances as they relate to each claim.
This article was written by Graham Topp FAIQS, CQS from GTQ Expert Services.
BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024: 23
DECARBONISATION
DECARBONISATION AND THE BUILT ENVIRONMENT
By Stephen Ballesty FAIQS, CQS
On the 2nd of November, In-Touch Advisory assisted RLB Singapore with its decarbonisation webinar. This wellattended event started with a broad review of the status and experience of the Singapore market by Colin Kin. This was followed by my presentation which started with showing people a tool where they can view how much CO2 concentration carbon content was in the global atmosphere in their birth year compared to now (nature.org). This highlights the CO2 level changes over recent history in parts per million and personalises atmospheric CO2 to your lifetime change index. The presentation went on to examine the use of integrated life cycle and carbon emissions reporting for both new construction and existing facilities covering: 1.
Carbon context: standards and sustainability
2.
Carbon calculation: ICMS, life cycles and solutions
3.
Supporting sustainable development.
The presented content included an update on the CIB paper prepared
with Dr. Anil Sawhney for the W070 conference in Trondheim, Norway in May 2023. This latest decarbonisation webinar also clearly articulated our industry’s sustainability needs statement and the decarbonisation challenge, providing details of the role of standards and the quantity surveying profession in meeting this global challenge.
MECLA’s Dictionary of Carbon (2022) provides a useful carbon vocabulary. Plus, the soon-to-be-published ISO/ TR 41019 shall contribute context on sustainability, resilience and adaptability in the management of our built environment, supporting ESG principles and aligning with the United Nation’s Sustainable Development Goals (SDGs).
“If you can’t measure it, you can’t improve it” Lord Kelvin (1824–1907).
Cost management professionals are poised to take a central role in a holistic carbon strategy. This includes the analysis and benchmarking of the costs or availability of low-carbon products, materials and components.
Standards matter; they provide us with a basis for enhanced understanding and improved performance across a range of activities necessary for progressing solutions. Decarbonisation is no different, solutions seeking will benefit from systematic analysis and transparency of products, processes and projects. Amongst the many available resources, AIQS has been active in the development of key publications. These include the International Cost Management Standards, 3rd edition (ICMS#3), which provides us with an approach for consistent integrated life cycle cost and carbon emissions reporting.
24: BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024
Strategically, “The role of the quantity surveyor is to show stakeholders where the cliff is... Not to tell them how far they fell.” Cost analysis and reporting remain powerful communication tools for built environment influencers and decisionmakers.
This article was written by Stephen Ballesty FAIQS, CQS from In-Touch Advisory.
CASE STUDY
GPT DESIGNSUITES Responses by Tim Lowrie MAIQS, and Tom Dean
BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024: 25
CASE STUDY
WHAT WAS YOUR TEAM’S ROLE IN THE PROJECT? TIM LOWRIE MAIQS Buildcorp was appointed as the main contractor during the early contractor involvement (ECI) phase to provide support and advice to The GPT Group (GPT) and the consultant team, which consisted of Jones Lang LaSalle (project manager), BVN (interior design), Compass Group (services design) NDY (fire design), Slattery (quantity surveying), SKS (audiovisual) and Arup (acoustics).
TOM DEAN Slattery was engaged as both cost planners and carbon planners for GPT DesignSuites. Our carbon planning role included: •
Measuring the upfront embodied carbon of the designs of all sites in detail.
•
Highlighting the carbon-intensive areas of the designs and suggesting alternative design/ specification options to reduce upfront embodied carbon.
•
Providing cost impacts of the lower carbon options to support databacked informed decision-making throughout the design.
•
Educate and advise GPT and the consultant team on the upfront embodied carbon within the designs and provide support for the Green Star submission.
Our key responsibilities included: •
To perform an initial upfront embodied carbon measurement and produce detailed Carbon Plans for the Pilot Project, Tranche 1 sites and Tranche 2 sites.
Our key responsibilities included: •
To review and provide advice on the project’s proposed design “suite of settings”, which was prepared by the consultant team, with GPT’s ESG objectives being front of mind, along with the programme and cost.
•
To validate the site conditions to understand elements that could be reused to reduce the project’s overall carbon impact.
•
To advise on the delivery approach, risks/mitigation strategies and the programme for a smooth sequential delivery.
•
To identify early procurement items and advise on elements of the project that could be simplified, such as joinery.
Following our involvement during the ECI period, we competitively tendered the project and secured the delivery of the GPT DesignSuites Project in the 530 Collins Street building, which was delivered in two stages and included approximately 11,500m2 of space over nine floors.
26: BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024
Images have been provided by Buildcorp
CASE STUDY
Analysis of these initial measurements identified carbonintensive areas and opportunities to reduce upfront embodied carbon within the designs to achieve the required upfront embodied carbon percentage reductions. •
•
To work collaboratively with GPT and the consultant team to achieve both cost and carbon-effective design solutions to minimise the upfront embodied carbon within the designs. To complete revised upfront embodied measurements for all sites based on the as-built designs, which were then incorporated into the Green Star submission.
TELL US HOW FIRST NATIONS CULTURE WAS CONSIDERED TIM LOWRIE MAIQS BVN and GPT collaborated to deliver a Designing with Country framework to involve social and environmental outcomes, which Buildcorp adopted to deliver the project. We were very fortunate that a considerable amount of the project’s furniture was provided and installed by First Nations-owned business, Spatial Hub Pty Ltd. Additionally, we had the support of First Nation supplier, RAW Group, to assist with labour resourcing on the project.
HOW WAS THE COST PLANNING PROCESS MANAGED TO AVOID THE DILUTION OF SUSTAINABLE FEATURES? TIM LOWRIE MAIQS During the ECI phase, we worked collaboratively with the consultant team to protect the design intent and incorporate delivery smarts and efficiencies for a successful outcome.
These considerations were further refined during the cost planning phase alongside Slattery and the consultant team to find a balance between cost and the overall project sustainability objectives. This was difficult due to the project being delivered while Melbourne’s construction industry was experiencing a labour shortage, and as inflation on building materials continued to rise. Notwithstanding this pressure, some sustainable elements of the project were low-hanging fruit, and others were harder to achieve. As an example, we worked with the consultant team to standardise the sizes of elements of the project and installed materials in a particular way to assist with reducing wastage. To assist better buying to protect the overall project budget across the roll-out, certain elements of the project were procured directly by GPT and novated to Buildcorp during construction, such as the joinery package, audiovisual package and FF&E elements.
TOM DEAN It is not always easy to balance priorities between upfront embodied carbon reduction and financial cost. Slattery is the first quantity surveying firm in Australia to launch a carbon planning service. We are well-informed and connected within the industry to provide carbon and cost advisory services and accurate data. We support our clients in delivering their projects within budgets but also assist in achieving their desired sustainability targets. Once the sustainability targets of this project were confirmed (6 Star Green Star), we worked collaboratively with
“...If you measure, manage and reduce the upfront embodied carbon with smart, efficient and costeffective design decisions, then successful project outcomes can be achieved.” GPT and the consultant team and provided upfront embodied carbon reduction pathways. The pathways outlined multiple lower upfront embodied carbon design and specification options that could be incorporated into the project designs, guiding the projects to achieve the required upfront embodied carbon percentage reduction for Green Star certification. This was supplemented with indicative cost impacts for each lower carbon option to ensure that the team were aware of any cost implications of the lower carbon design decisions. This information assisted GPT and the consulting team in making informed design decisions to stay within their project budgets but still make the necessary changes to achieve the sustainability targets. Many of the lower carbon strategies incorporated into the designs had a negligible cost impact. This highlights that if you measure, manage and reduce the upfront embodied carbon with smart, efficient and cost-effective design decisions, then successful project outcomes can be achieved.
BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024: 27
CASE STUDY
Additionally, the services design by Compass, which considered several key areas of the project fundamental to its functionality, also ensured a 6 Star rating was achieved. These included fresh air requirements, lighting levels, metering requirements, the reuse of existing plant infrastructure within mechanical design, and a review by an independent commissioning agent.
TOM DEAN
Images have been provided by Buildcorp
Involving Slattery as a carbon planner in the project team was an innovative step made by GPT, as carbon planning is still a new service offering in the Australian construction industry. Slattery identified that the top upfront embodied carbon elements within the standard Pilot Project fit-out were the fitments, finishes, internal walls and partitions, and services. Innovative, lower upfront embodied carbon design solutions were implemented into the projects which assisted in achieving the 6 Star Green Star rating. Some of the key opportunities that were identified, measured and quantified (both carbon and cost) by Slattery and applied to the designs include:
WHAT ROLE DID INNOVATION PLAY IN ACHIEVING THE 6 STAR GREEN STAR RATING? TIM LOWRIE MAIQS The inclusion of innovation was reinforced by JLL, BVN and GPT when we first met to discuss the project.
The project consultant team worked collaboratively to think outside the box to deliver the project to GPT’s requirements. The initial strategy delivered by BVN focused on materials selection, sustainable building products, low VOC adhesives and paint finishes. Also, the floor layout, access to natural light and the best reuse of existing furniture were key considerations.
28: BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024
•
Reusing existing loose furniture and procurement of refurbished or vintage furniture
•
Re-design of workstations to reduce materials and resultant upfront embodied carbon
•
Reduction in partition wall and internal screen areas
•
Reduction of metal mesh ceiling areas
•
Specification of lower carbon and carbon-neutral floor, wall, and ceiling finishes.
CASE STUDY
All in all, it was a fantastic project to be involved in and we are very thankful for the opportunity.
TOM DEAN As an innovative and emerging service, we faced and continue to face challenges along the way. Being pioneers of carbon planning services in Australia is indeed something that we are proud of but at the same time, it is challenging.
Images have been provided by Buildcorp
Therefore, we went to extra lengths to ensure that we provided reliable data and information regarding realistic options within the current market to reduce the upfront embodied carbon of the GPT DesignSuites. Another major challenge is balancing our position as carbon planners and cost advisors. We research the market for products and materials that can be viably and cost-effectively used to reduce upfront embodied carbon. In the current Australian market, this is challenging as the supply chain cannot pivot to lower carbon materials as quickly as industry ambition desires.
WERE THERE ANY CHALLENGES THAT YOU WOULD LIKE TO TELL US ABOUT? TIM LOWRIE MAIQS There were several challenges, but that’s construction! Working to achieve the budget in hot market conditions was a key challenge throughout the project’s progress.
Others include the integration of existing equipment into the mechanical installation, the at-height installation of new outside air intake louvres in the external façade to deliver fresh air requirements, dealing with site conditions to accommodate new design and acoustic requirements, and coordinating the project in an asset where several other builders were undertaking construction works in parallel to our project.
The most critical challenge was educating those involved in the project on the growing importance and significance of upfront embodied carbon in the built environment, how we as the project team can reduce it, and where carbon planning fits within the project team and work stream. However, the collaborative work between all stakeholders of the project made our job easy. It was an interesting journey, and we are proud to have been a part of such a successful team and project.
This interview was put together with the help of Tim Lowrie MAIQS, State Manager VIC, Buildcorp and Tom Dean, Director Carbon Planning, Slattery Australia.
BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024: 29
FUTURE LEADER
FUTURE LEADER By Joanne Chan MAIQS, CQS
JOANNE CHAN MAIQS, CQS
Executive Quantity Surveyor, MBMpl
WHAT ARE THE PRIMARY CHALLENGES THAT FACE THE PROPERTY INDUSTRY IN THE NEXT 20 YEARS? WHAT SHOULD INDUSTRY LEADERS BE DOING NOW TO ADDRESS THESE CHALLENGES? According to the Australian Bureau of Statistics, the population of Australia is expected to grow to 31 million by 2041. The country is witnessing unprecedented levels of infrastructure investment. The total investment in these projects exceeds AUD 218 billion, with spending projected to peak at AUD 52 billion in 2023 and multiple times in the post-Global Financial Crisis investment.
However, to build a sustainable property sector in the next two decades, the industry will need to tackle several key challenges. These challenges include dealing with population pressures in major cities, mitigating the impact of climate change, and addressing diversity and skills shortages to attract and retain talent.
POPULATION PRESSURE AND INFRASTRUCTURE INEFFICIENCIES The first major challenge is the issue of overpopulation in major cities, which is compounded by inadequate planning and management of infrastructure development. The high population density in urban areas can be attributed to a variety of factors, including limited job opportunities in regional and remote areas, resulting in over 80% of Australians living within the coastal zone. Another factor contributing to urban consolidation is the concentration of
1
jobs and healthcare facilities in cities. However, global and local trends require a shift in how we deliver, maintain, and use social infrastructure. Collaboration between all levels of policymakers, designers and contractors is crucial to overcoming the complexities of various priorities and challenges associated with planning the development of cities, towns, and precincts. Another challenge is the reliance on cars for transportation caused by urban sprawl. While there is a need to accommodate a rising urban population, this is also driven by a desire for increased living space and other residential amenities. In Melbourne, for example, 84% of residents in outer suburbs drive to work, the highest level among Australia’s four largest cities, whilst only 9% use public transport according to the Bureau of Infrastructure, Transport, and Regional Economics1. As of January 2022, there were 20.7 million registered motor vehicles in Australia.
Bureau of Infrastructure and Transport Research Economics (BITRE) 2022, Australian Infrastructure and Transport Statistics Year Book 2022, ISBN: 978-1-922521-78-1.
30: BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024
FUTURE LEADER
increased frequency, bike paths, and proximity to facilities such as childcare and medical services. Denmark is known for being the world’s happiest country, partly due to the widespread use of bicycles, which reduces dependence on cars and fuel costs. Despite high taxes, Danes enjoy a high quality of life at a lower cost3.
Victoria experienced the largest increase in per capita passenger vehicle registrations between 2021 and 2022, rising from 594 to 611 registered passenger vehicles per 1,000 persons, meaning that 61% of its population relies on cars for transportation2. In addition to the challenges of overpopulation and inadequate infrastructure, there are ongoing issues of cost blow-outs and delays in major projects (not only in Victoria but also in New South Wales and other cities). In September 2021, the Victorian AuditorGeneral reviewed 110 government projects, with 63% experiencing a change in total cost and 48% experiencing a change in completion date.
•
To address these problems, government agencies should collaborate and take necessary actions, including: •
•
Improving infrastructure, social, and health facilities in remote and regional areas to create job opportunities and improve living standards, reducing the need for people to move to big cities for work. Advanced medical facilities, quality education, and ample job opportunities can help attract city professionals from industries such as medicine, law, property, and construction to live and work in regional and remote areas. Improving the walkability score of neighbourhoods, providing residents with better options for running errands, accessing essential services, and shopping without relying on cars. This can be achieved through better public transport networks and
•
Utilising innovative digital technologies to accelerate evidence-based city planning and management, including traffic management, live congestion detectors, and energy-efficient smart lighting. Vehicle, pedestrian, and cyclist counting technology can also help reduce congestion and improve transport connections, as well as promote employability through tools like e-Careers. Avoiding premature announcements of government projects by developing a strategic plan that involves property and engineering institutes taking the lead in advising the government on the availability of skilled labour and consultant capacity. Proper consultation with various professional institutes is key to understanding the availability of professional resources. For instance, the following professional services member counts can be compared from 2018 to 2023: •
Engineers Australia, approx. 100,000 to 115,000
•
AIQS, approx. 4,000 to 6,000.
•
Proper scoping in the design process is critical because the scope and design should be clearly defined for proper risk analysis. Sufficient time and money must be dedicated to assessing the project’s viability and feasibility before final investment.
All stakeholders in the industry should support a shift towards improved diversity, wellbeing, and an improved work-life balance. •
Promoting the practice of quantity surveying and engaging Certified Quantity Surveyors and competent cost engineers to establish a thorough estimate and avoid cost blow-outs. Quantity Surveyors who have a strong understanding of costs, benefits, opportunities, and contingencies should be engaged.
•
Addressing the pressure points identified by the Merrow 2006 Report that inhibit project delivery and create stress on a project or its participants. These include a shortage of skilled resources, poor risk allocation in contracts, and inefficient contracting practices, among others.
•
Investing more than 1% of the construction value in cost estimating and control services as a lack of proper investment could result in significant cost blowouts in infrastructure and social developments4.
2 Lindsay, R. 2018, Professional Services — Industry Capacity, Competency and Resilience to cope with the planned infrastructure pipeline, the ‘infrastructure bubble’. 3
Wiking, M. 2017, The Little Book of Lykke: Secrets of the World’s Happiest People, HarperCollins Nordic, Sweden.
Charrett, D. n.d., Challenges in achieving successful mega projects, accessed from Melbourne TEC Chambers: <https://mtecc.com.au/ challenges-in-achieving-successful-mega-projects/>. 4
BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024: 31
FUTURE LEADER
THE IMPACT OF CLIMATE CHANGE Long-term environmental concerns include pollution and the management and protection of coastal areas such as the Great Barrier Reef. Rising sea levels, higher tides, and more frequent storms could potentially affect all major cities in Australia, except for Canberra, which includes low-lying areas and important commercial precincts, infrastructure, and residential properties. More than 80% of Australians live within the coastal zone.
•
Building a low-pollution economy and encouraging carbon-neutral certification for organisations, as well as implementing innovative hybrid working models, can reduce national emissions.
•
Shutting down coal-fired power stations and investing in renewable energy. Burning coal is one of the single biggest sources of carbon emissions on the planet, and it is harmful to human health.
•
The cause of climate change is attributed to human activities, such as burning fossil fuels for industrial production, deforestation, transportation systems, and modern construction methodologies resulting in greenhouse gas emissions.
Promoting passive house design and 7 Star homes, and making it mandatory for building inspectors to confirm compliance.
•
Retrofitting existing buildings to make them more energy-efficient and sustainable, while promoting economic growth and jobs.
Buildings consume:
•
Establishing green city frameworks based on examples of cities like Vancouver, a leader in cleantech innovation. Vancouver’s Greenest City Action Plan involves zerocarbon buildings, zero waste, and a healthy ecosystem.
32% GLOBAL RESOURCES 40% GLOBAL ENERGY and generate:
GREENHOUSE 30% GLOBAL GASES Road vehicles make up 85% of full fuel cycle greenhouse gas emissions from all transport modes5. To address this issue, the following measures and innovations can be implemented: •
Government can lead by mandating sustainable and smart building design through initiatives such as the Smart Cities and Suburbs Program.
•
Establish a global carbon reporting mechanism, helping to reduce embodied carbon and support the transition to a net-zero carbon future.
•
Replacement of diesel-powered trains with hydrogen-powered passenger trains. These have proven to run successfully in Germany, keeping 4,000 tons of carbon dioxide out of the atmosphere each year.
DIVERSITY AND SKILL SHORTAGES TO ATTRACT AND RETAIN TALENT Staff turnover, knowledge loss and an inability to find suitable workers are issues that cost the Australian economy billions of dollars each year. These are largely due to long working hours, a lack of workplace/industry diversity, and neglect of employee wellbeing. As the population grows, there is increasing pressure on the industry to improve productivity and sustainability. The current number of awarded major projects in New South Wales is 19, Victoria is 7, Queensland is 4, Western Australia is 3, and other states and territories have 4 in total. Planned infrastructure is set to significantly increase from previous years, leading to increasing pressure on engineers, architects, and specialist support consultancies to accelerate their work to keep up with planned delivery6. To address these challenges and improve overall productivity, all stakeholders in the industry should support a cultural shift towards greater diversity, wellbeing, and work-life balance. This can be achieved through measures such as committing to engage and support construction services that meet the culture standard developed by the Construction Industry Culture Taskforce, piloting the culture standard across different types of projects, and promoting flexibility and sensitivity to personal demands in the workplace. The industry needs to champion and support organisations such as Culture in Construction, Mates in Construction and Wellness in Infrastructure, to actively engage workers and employers.
Bureau of Infrastructure and Transport Research Economics (BITRE) 2022, Australian Infrastructure and Transport Statistics Year Book 2022, ISBN: 978-1-922521-78-1. 5
6
Pipeline, A.N. 2023, Australia New Zealand Infrastructure Pipeline, <https://infrastructurepipeline.org/charts/status-location>.
32: BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024
FUTURE LEADER
As an industry, we should do more before we lose another skilled worker to mental health struggles amplified by working in the industry. It is also important to develop the capacity, competence, and resilience of the industry to cope with the planned infrastructure pipeline through effective planning, recruitment, and training programs. This should involve a heavy focus on developing competence at an early stage through involvement in policy development, STEM training, and graduate programs. The Australian industry needs champions to lead and make a difference in culture and organisational strategic directions. We also need to aim high if we want to attract new talents and inspire all of us to be the best that we possibly can be. Having known and worked closely with Marita Cheng from Robogals Global, I understand how young individuals see a relatable role model as a quintessential motivation for their personal development. Marita was named the 2012 Young Australian of the Year for demonstrating vision and leadership well beyond her years as the Founder of Robogals. Noticing the low number of girls in her engineering classes at university, Marita rounded up her fellow engineering peers and went to schools to teach girls robotics and encourage girls into engineering. Diversity in the workplace should also be encouraged, not only in terms of gender and race but also diversity of thought. When a team is comprised of a range of ethnicities, cultural and religious beliefs, education and skills, ages, and physical and mental abilities, different views can be shared and considered, and teams can find 7
different ways of working. Inclusion means that all people are respected, valued and invited to take part in a meaningful way with equitable opportunity, free from discrimination or prejudice.
misinformation and disinformation is impacting all of us in some shape or form. Education bodies and employers need to consider strategies to tackle these problems and better utilise the strengths of individuals.
New research commissioned by BIS Oxford Economics finds that cultural issues are costing the Australian economy nearly AUD 8 billion annually due to workplace injuries, mental illness, suicide, long working hours and a lack of diversity7.
Studies have shown that this generation is more likely to experience mental health concerns and is increasingly diverse and digitally native. This requires a proactive approach to promoting employee wellbeing, including addressing the contributing factors of social media and information technology and providing appropriate support and resources for mental health concerns.
In 2021, the Australian Bureau of Statistics Census results show the Millennial generation has become the nation’s largest, displacing the post-war Boomers, and creating new market trends. The way people live and learn, the way they do business, and the way they spend their downtime or retirement, are all under pressure to evolve. It is important to recognise the challenges facing younger generations, for instance, Generation Z’ers were born between the mid-to-late 1990s and the early 2010s. They are the first social generation to have grown up with access to the internet from a young age. The increasing popularity of social media giants such as YouTube, TikTok and Instagram are dominating the lives of younger generations, and these companies are here to stay for the next 20 years.
The property industry faces significant and multifaceted challenges. By taking concrete steps such as addressing the lack of planning and cost overruns, implementing sustainable building practices and adopting renewable energy to combat climate change, recognising and developing talent, and promoting a culture of diversity and wellbeing, industry leaders can begin to tackle these issues and create a more sustainable and resilient future.
This is a shortened version of Joanne Chan’s MAIQS, CQS submission for the Property Council of Australia’s Future Leader of the Year Award.
These sites are intentionally programmed to make individuals hooked on reading and wanting more, resulting in more revenue generated from advertisements. However, the incredibly fast and widespread dissemination of information means that individuals consume a plethora of unverified information. The notion of
Crook, D. & Tressler, A. 2021, The Cost of Doing Nothing Report, BIS Oxford, Sydney.
BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024: 33
PRICING
PRICING OF CONSTRUCTION WORK WHEN PROVIDING AN INDEPENDENT QUANTUM ASSESSMENT By Paul McArd MAIQS, CQS
34: BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024
PRICING
Whether it be assessing insurance claims, variation claims, or the remediation of defective works, a quantum expert is called upon to provide an independent subjective opinion to assist an insurer or a tribunal or in some cases, to help parties settle a matter outside of formal proceedings. Before any quantification can occur, a construction quantum expert needs to understand the full scope of work involved. A detailed breakdown of the personnel, labour, plant and materials for each portion/work activity needs to be provided by the quantum expert. Blended rates should not be used as they do not demonstrate the potential cost and can be viewed as subjective. Price books should be avoided as they are generally only to be used for indicative cost plans. If rates from a price book are used, detailed reasoning should be provided as to why a first principal estimate cannot be provided. Activities such as scaffolding may be difficult to price without a temporary works design and the m2 rate for scaffolding from a price book may be useful as a guide and should be treated as a conditional item. The industry profit margins detailed in price books are a good reference point when applying project if no other primary data is available. However, the quantum expert should use their own judgement and experience and investigate other sources when applying profit margins and should not solely rely on price books.
A quantity surveyor must be vigilant to ensure he counsels his client and others against any inappropriate conduct... When pricing materials, primary data should be referenced. For example, the price of a twenty litre paint container can be sources from a builder’s merchant or national DIY supplier online. Speculation or assumptions that a subcontractor may obtain a “trade discount” should not be assumed and applied to the pricing unless evidence is available to support this claim. If no primary data has been supplied to support the labour costs, a quantum expert can make a reasoned assessment on the cost of each type of trade by referring to primary data such as specific Enterprise Bargaining Agreements and modern awards to determine the salaries and oncosts. This approach is more subjective than simply stating the average rate of a painter is X or Y in the expert’s experience. Again, price books should not be relied upon as the sole source of data.
This article was written by Paul McArd MAIQS, CQS from Accura Consulting.
The production rates used to determine the total cost per work activity should be explained in detail and reasoning for assumptions should be used.
BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024: 35
INDUSTRY
IMPERATIVE FOR A NATIONAL CONSTRUCTION STRATEGY By Jon Davies
Construction is a risky business. For many companies, the risks have been too significant to bear. It is no exaggeration to say that companies are struggling, profits are vanishing, and workforce shortages are everywhere — the industry’s future is on the line. We must address this problem if we are to have any chance of fixing the housing crisis, providing infrastructure for half a million new migrants every year, or building the transmission and new energy assets to meet our decarbonisation targets.
ALL RISK, NO REWARD
TRUST DEFICIT
Building firms today are falling into administration at a rate twice that of other sectors. Profit margins have nosedived from 3% to under 1%, and liquidity has evaporated, dropping from 15% to below 5%. Alarmingly, over half of major builders are teetering on the edge of insolvency, a glaring indication of a market in crisis.
Often confused with delayed payment practices, the poor financial health of the industry is actually linked to a myopic focus on getting the lowest price at the tender box. This focus has driven a race to the bottom that has not only contributed to an industry that accounts for a disproportionate share of business insolvencies but also a worryingly high incidence of suicide among its workers, the lowest rate of female participation in any sector, and non-existent productivity growth.
36: BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024
INDUSTRY
Contrary to popular belief, industry payment times are not the problem. The industry pays almost 70% of its invoices on time, aligning closely with the economy-wide average. Sectors like health, IT, and retail lag in timely payments.
WILL TO CHANGE If for no other reason, the industry needs to change to attract enough workers to deliver the projects Australia needs. The next generation of workers does not want to work fifty–sixty inflexible hours in an industry that still considers Excel spreadsheets to be the height of technology and has shown no significant commitment to decarbonisation. And so, improving the culture of the industry is not a matter of choice. It is a necessity. The ACA has the will to change. The Construction Industry Culture Taskforce, formed by ACA along with the Governments of NSW and Victoria, has developed a ground-breaking culture standard focused on driving improvements in providing workers with more time for life, better personal wellbeing and greater diversity and inclusion. The standard is being trialled on several projects in NSW and Victoria. A rigorous academic study of the outcomes will guide the finalisation of the standard with a view to it forming part of government procurement going forward. In a bottom-up approach to this problem, ACA members have pledged that all workers will have individual flexibility plans. Within five years, 75% of members will be accredited by the Workplace Gender Equality Agency as employers of choice. For context, there are currently only about 111 accredited companies across the whole economy, of which four are construction companies.
NAILING CONSTRUCTION PRODUCTIVITY
NATIONAL CONSTRUCTION STRATEGY
Improving the industry’s culture is intrinsically linked to improving productivity. Improving productivity is the silver bullet for capability, capacity and budget constraints. If we could close the gap in productivity growth between construction and major industries, we could easily afford the projects that are needed and have enough people to construct them.
The Australian Constructors Association is proposing a concerted national approach to construction productivity reform — a National Construction Strategy. Our plan is a genuinely national and tripartite Strategy with shared responsibility between all levels of government, industry and the unions.
The irony is we know how to get more productive. The challenge is removing the barriers to their implementation. And it isn’t an easy task because the construction industry fundamentally needs a new operating system. One that is more compatible with the wide range of solutions already available to drive productivity growth. One that provides a commercial environment encourages the longer-term planning and decision-making needed to drive productivity growth. The key to unlocking productivity is creating an environment for the industry to innovate. Contractors and consultants must be incentivised to invest in and adopt innovative solutions, and clients should actively encourage and empower innovation in their projects. However, the true catalyst for this productivity transformation lies with the government. Only the government has the power and freedom to lead this charge. They already recognise their responsibility in leveraging public spending for broader societal goals, such as training, indigenous participation, and diversity. Productivity should be placed at the forefront of these social performance objectives, as it underpins our overall standard of living.
The National Construction Strategy would aim to increase construction industry productivity to reach or exceed the rest of the economy’s annual productivity growth rate by 2033. It would do this by focusing on optimising and harmonising how projects are procured, including a nationally consistent set of procurement principles. It would create a national digital alliance where deidentified data would be collated on all government projects from across jurisdictions in a standard format and secure environment. It would articulate a national strategic framework for lifting the overall skill level of the construction industry, including re-skilling to enable the workforce to adapt to new construction technologies and methodologies quickly and flexibly. There is no time to waste. Australia’s construction industry has been too inefficient for too long. Improving construction productivity is now a nation-building priority requiring Commonwealth leadership to create a National Construction Strategy.
This article was written by Jon Davies, CEO, Australian Constructors Association.
BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024: 37
WELLBEING
WORKPLACE GLOBAL CRISIS SUPPORT 38: BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024
WELLBEING
In the context of global crises, how can employers ensure that their team is equipped to navigate the emotional and mental toll they take? This article highlights the essential support systems employers can implement to foster a resilient and empathetic workplace during turbulent times. Here’s a quick summary: •
•
•
•
•
Tailored support through understanding: Employers must first understand their employees’ unique situations to offer empathetic and effective support during times of distress. Supporting employee emotional and mental health during global crisis: The emotional toll of global events can be overwhelming. Effective support includes practising active listening, providing tailored resources and training, and creating a culture of care. Balancing workloads with international turmoil: The challenges of global crises extend to everyday tasks. Employers can assist by offering flexibility, maintaining open communication, and celebrating small victories to boost morale. Financial aid during tough times: Global events can amplify financial worries. Providing financial support services can provide stability and demonstrate an employer’s commitment to collective wellbeing. Adaptive support dynamics: A commitment to ongoing feedback and policy evolution is essential for maintaining a resilient support system that meets employees’ evolving needs in a changing world.
UNDERSTANDING BEFORE IMPLEMENTING Before organisations can effectively support their employees during times of global upheaval, they must first seek to understand the unique perspectives and challenges that their workforce brings to the table. This understanding is the cornerstone of empathy and effective support. Research and Recognise: Take the time to learn about the regions and current events that may be impacting your employees. Recognising the geopolitical landscape can offer insights into the personal challenges faced by your team. Note: if there’s an ongoing conflict or natural disaster, understand the basic facts of the situation. Consider the potential impact on your employees, such as stress due to the safety of loved ones or the economic effects on their home regions. Diverse Backgrounds, Diverse Needs: Acknowledge that employees from different regions may be affected in various ways, and their needs will differ accordingly. Note: Employees from affected regions may require different kinds of support, such as flexible hours or mental health services. Cultural sensitivity training can help managers and coworkers provide support that is respectful and appropriate. By prioritising understanding before implementation, employers can ensure that their support systems are as effective and compassionate as possible, fostering a workplace that not only survives but thrives, even during global crises.
BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024: 39
WELLBEING
STRATEGIES FOR COMPREHENSIVE EMPLOYEE SUPPORT Organisations are tasked with the delicate balance of maintaining productivity while supporting their employees’ wellbeing during global upheavals. This necessitates a multifaceted approach to employee support, addressing emotional, mental, organisational, and financial needs.
1. EMOTIONAL AND MENTAL HEALTH SUPPORT When a global crisis hits, it’s more than just headlines — it’s personal. Everyone’s trying to find their footing, and for many, the workplace becomes a touchstone. Offering emotional and mental health support isn’t just about policies or programs; it’s about understanding, listening and reminding each other that, amid chaos, human connection can help navigate the toughest storms. •
•
•
Resources Beyond the Handbook: Offering counselling services, EAP Assist for community-specific support, and other resources ensures that employees don’t have to seek support — it’s already within their reach. Equipping the Frontline: Managers are pivotal in the employee support system. Invest in managerial training focused on emotional intelligence, psychological safety, and cultural competence, empowering leaders to recognise and appropriately respond to signs of distress. Empowering Through Active Listening: Equip managers and team leaders with communication prompts that honour employee boundaries and comfort levels.
This toolkit of prompts can guide leaders during check-ins and support conversations, ensuring they respond with empathy and encourage employee agency.
act as a vital support system for employees. These connections are the threads that weave the social fabric of the workplace, ensuring that every individual feels part of the collective and their contributions are recognised.
Here are some prompts for empathetic engagement: “In times like these, connection is key. Who do you feel you can reach out to within the team for support?”
•
“It’s understandable to feel overwhelmed. Can we explore what has helped you manage stress effectively before?” “I hear your concerns and they are valid. Would you be open to discussing this further with a professional who can provide more targeted support?” “Focusing on what we can control can be empowering. What are some aspects of your work or routine that you feel you can manage right now?”
2. WORKLOAD SUPPORT Amidst global crises, the balance between professional commitments and personal wellbeing becomes even more delicate. It goes beyond ticking off tasks, ensuring every team member feels valued and understood. Such understanding during challenging times can be the difference between burnout and resilience. •
•
Flexibility as a Standard: There will be times when employees need to adjust their schedules due to personal or global events. Flexibility is less about bending rules and more about accommodating the human side of work. The Power of Connection: Regular check-ins, team meetings, and open lines of communication
40: BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024
Celebrating Collective Strength: Highlighting and acknowledging small achievements can uplift team morale, providing a sense of accomplishment and shared purpose. These celebrations act as beacons of positivity, reinforcing the team’s resilience and collective ability to overcome.
3. FINANCIAL SUPPORT Money worries can keep anyone up at night, especially when global events add to the uncertainty. By offering a financial helping hand, employers can provide a bit of stability in an otherwise unpredictable world.
4. CONTINUOUS FEEDBACK AND ADAPTATION: KEYSTONE OF SUSTAINABLE SUPPORT Given the ever-changing nature of global business and societal shifts, a static approach to employee support is insufficient. It is the process of continuous feedback and adaptation that truly fortifies an organisation’s resilience and capacity to support its workforce effectively. •
Feedback as a Growth Instrument: Promote a culture of open communication, where employees feel comfortable sharing their thoughts and experiences about the support they receive. This feedback is incredibly valuable, providing a live measure of how well current policies and support systems are working.
WELLBEING
•
Relevant and Responsive Policy Development: Use feedback to refine and enhance support strategies. This iterative process ensures that the measures in place are current and proactive in anticipating future needs.
SUPPORT NETWORKS FOR IMMEDIATE CRISIS ASSISTANCE For those experiencing a crisis, immediate help is available through the following services: •
Suicide Call Back Service: A national (Australian) 24/7 telehealth that offers professional phone and online counselling to assist with suicide-related issues. Professionally trained counsellors have specialist skills in working with suicide-related issues and they can help you work through pain and distress. The counsellor will help you with goal planning, ensuring your own safety and help to link you to other services in the community. All staff managing our telephone or online counselling services are qualified professional counsellors, social workers or psychologists. Help is provided to anyone who is feeling suicidal, caring for someone who is feeling suicidal or anyone who has lost someone to suicide.
•
Grief and Bereavement Program: A responsive, evidence-based and personalised telephone and online grief counselling for individuals and families confronted with loss to help them express their feelings and experiences. Many people often find the best way to deal with their emotions and feelings is to share them.
Accepting the reality of the loss of someone or something we love and value can be challenging. Support may be provided for issues including death, suicide, terminal illness, natural disasters and pet loss. The aim is to listen, care and support those experiencing loss and grief at any stage in life and to strengthen people and communities through counselling support and confidence building.
This article was written by EAP Assist.
BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024: 41
BCI
BUILDING COST INDEX
DECEMBER 2023
THE BUILDING COST INDEX IS PUBLISHED IN THE PRINT VERSION OF THE BUILT ENVIRONMENT ECONOMIST. IT CONTAINS DATA THAT CAN BE USED AS A PREDICTOR FOR THE ESTIMATED TIMES FOR DESIGN AND CONSTRUCTION AND INCLUDES A SUMMARY OF THE PAST, PRESENT AND ESTIMATED FUTURE CONSTRUCTION COSTS.
42: BUILT ENVIRONMENT ECONOMIST: DECEMBER 2023 – FEBRUARY 2024
Level 3, 70 Pitt Street, Sydney, New South Wales, Australia 2000 +61 2 8234 4000 www.aiqs.com.au