The Building Economist - June 2018

PERFORMANCE

JUNE 2018

Safer. Faster. Cheaper.

Update your mid-rise timber knowledge.

Thanks to changes to the NCC that make it easier to design and build compliant Class, 2, 3 and 5 timber structures up to 25 metres tall, a whole new range of options are available for mid-rise residential projects.

From traditional timber framing to new mass timber systems, such as cross laminated timber (CLT), you’ll discover the safety, speed, financial and environmental benefits of updating to wood.

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2 FROM THE CEO

8 CONTRACT PERFORMANCE AND MANAGEMENT

21 BEHAVE YOURSELF AND YOU’LL PERFORM BETTER

31 BETTER BUILDING PERFORMANCE WITH BIM

CONTENTS 2

From The CEO

15

Challenging Current And Future Thinking

4

Global Performance

18

Performance Perspectives of a Quantity Surveyor

7

Performance of Australia’s Construction Industry

21

Behave Yourself and You’ll Perform Better

8

Contract Performance and Management

27

Navigating Risks in Collaborative Environments

11

ISO 41001

31

Better Building Performance with BIM

13

Performance Designation for Quantity Surveyors

36

Building Construction Index (available in print edition only)

About The Building Economist is the flagship publication of Australian Institute of Quantity Surveyors (AIQS). Produced quarterly, The Building Economist seeks to provide information that is relevant for quantity surveying, cost management and construction professionals.

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Disclaimer AIQS does not take any responsibility for the opinions expressed by any third parties involved in the writing of The Building Economist.

THE BUILDING ECONOMIST - JUNE 2018 - 1

FROM THE CEO

There are competing opportunities vs necessities associated with the delivery of high performance buildings, and cost management is at the core. Opportunities (high levels of energy and water efficiency, healthier workplaces and living spaces) lend themselves to additional costs if they are only considered as standalone / upfront costs and, when costs go over the budget, are typically the first to get cut.

These opportunities can be delivered cost effectively if the quantity surveying team works closely with the designer and construction project teams from the outset. Today, cost management professionals can rely on innovative technology and materials together with case studies, which have proven that high levels of performance can be achieved within a cost-controlled environment.

Research shows that high performance buildings use less energy and resources compared to standard buildings, can improve occupant health and productivity, and lower operational and ownership risks. The primary barriers to implementing innovative and sustainable structural materials includes increased costs, regulations that do not recognise new innovative materials and systems, and the availability of the materials themselves.

The construction industry is currently enamored with mass timber, based on the development of new methods for tall building construction using a rapidly renewable, carbon sequestering material that outperforms concrete and steel environmentally – that is hardwood Cross-Laminated Timber, commonly known as CLT.

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Often the lack of readily accessible and reliable information comparing alternative structural materials and systems also poses a significant barrier during the design and selection process.

Due to their perceived higher cost, many innovative or high-performance initiatives are currently eliminated from projects before the real costs are understood. Increased costs in the structural system could be offset by using less material elsewhere or reducing the size of other systems.

The performance of buildings are typically driven by client briefs / minimum building standards which are on the increase. The improvement of building performance invariably comes with both added capital cost and increased revenue. With regards to increased capital costs, these increased costs are associated with delivery of better

FROM THE CEO

facilities and improved energy efficiency.

This capital cost could be a combination of: • Increasing the staffing floor space ratio, which increases the demand on building services and the size of the building core. Traditionally, commercial office buildings had a staffing floor space rario of 1 person per 12 sqm (1:12), which has reduced to 1:10 for the current standard, and is now driving towards 1:8. New emerging business “hot desking” is even encroaching on 1:5.

• Improved toilet amenities lending themselves to lower levels of water use and higher levels of cleanliness.

• End of trip facilities which are designated places that support those employees who are using alternative ways (cycling, jogging or walking) to travel to work rather than driving or taking public transport.

• Best practice waste management systems.

• Efficient lift systems.

• Mechanical systems including energy efficient and healthy heating, ventilation and air condition systems (HVAC).

• Smart technology and automated systems including real time information and data.

• High performance building facades.

• Innovative building materials and construction systems.

The Quantity Surveyor plans an important role in ensuring the initial budget from the developer is reflective of the minimum building standards.

With the performance of buildings improving at increasing rates, it’s vital that Quantity Surveyors can capture previous benchmarking experiences, and make the necessary adjustments for time escalation, changing costs in labour and material, and more importantly to

account for the uplift in minimum building standards.

With the increasing pressure on developers and property owners to maximise performance, the Quantity Surveyor can advise their clients with regards to balancing the economic equation of sustainability and affordability. In addition to the traditional role of controlling costs, the Quantity Surveyor now guides clients on a wide variety of sustainable aspects of a building project, including energy conservation, analysing and advising on green capital costs, promoting the benefits of life-cycle management, costeffective sustainable strategies, as well as appropriate financing.

Today, cost management professionals can rely on innovative technology and materials together with case studies, which have proven that high levels of performance can be achieved within a cost-controlled environment.

Albert Einstein noted that; Education is not the learning of facts, but the training of the mind to think.

According to CPD – The CPD Certification Service; an individual should see Continuing Professional Development (CPD) as a way to remain competitive with their peers, and as an opportunity to differentiate themselves at moments where this may be required, such as in job interviews or in tenders for new work and business acquisition.

As more people become professionally qualified with similar qualifications, CPD becomes more important as a means of separating yourself from the pack.

Relevant and up-to-date CPD content helps Quantity Surveyors stay on top of the continuous improvements and requirements in the delivery of high performance buildings.

CPD should be viewed as an investment for you and your employer. An investment by you in your career and an investment in your development as a professional by your employer. Both parties (you and your employer) can contribute to the investment. Whilst you might be contributing time and effort your employer might be supporting you in a range of ways including accessing CPD/study leave and covering or sharing the cost.

The Australian Construction Industry Forum has released the May 2018 edition of the Australian Construction Market Report and results are mixed.

Infrastructure Construction activity is expected to grow by 10% to $62 billion next year. Non-Residential Building activity has been showing strong growth in approvals and work is expected to expand by 12% this year.

We are seeing a temporary uplift in Heavy Industry Including Mining this year. Residential Building activity has peaked and is now in decline.

We are delighted to host the ICECPAQS Conference 2018 in Sydney in November. We look forward to 400+ international and local attendees discussing current and future construction cost challenges, the latest technologies and construction systems.

Grant Warner

CEO Australian Institute of Quantity Surveyors

THE BUILDING ECONOMIST - JUNE 2018 - 3

GLOBAL PERFORMANCE

AFFORDABILITY, 4 YEARS ON MEASURING AFFORDABILITY LEVELS IN ABU DHABI, UAE An ongoing transformation of quality, affordable living.

Colliers International has released its latest white paper on measuring affordability levels in Abu Dhabi. The publication is the fourth in a series and the second on Abu Dhabi, the first report “Addressing the housing gap” issued in 2014, highlighted the need for and the undersupplied nature of the affordable housing market. This new research highlights the impact of our previous white paper and examines changes, if any, in the market since 2014.

In the 2014 paper, Colliers studied average income levels of households in the emirate and highlighted the opportunity for developers within this undersupplied market. Since then, the market witnessed significant regulatory and competitive changes, including; the introduction of new affordable housing plans and tier one developers launching more affordable developments which have proved successful despite the increasingly competitive market.

This new report looks at the elements impacting the Abu Dhabi residential market landscape such as Price per sqm, Product/unit size and Consumer profile. They review key elements during the time frame of 2014 to 2018, which helped in shaping the housing market in the emirate.

“Abu Dhabi has more than doubled the stock, to over 15% of the total market of affordable housing during the 4-year period. With this new supply, such as the new launch of Al Ghadeer by Aldar and with the increase in developments offering community facilities, we are seeing an opening up for new affordable properties with a resultant migration from old units to new, more modern ones.” highlighted Mansoor Ahmed, Director, Research and Advisory at Colliers International MENA. Ian Albert, Regional Director and Head of Research and Valuations at Colliers International MENA added “One of the key drivers has been the yield returns to investors. Our analysis shows that currently, irrespective of unit size, the highest yields are found in the affordable areas or the smaller units in the mid and upper sectors”.

CHINA GREEN BUILDING REPORT FROM GREEN TO HEALTH According to a report released in 2017 by CBRE titled ‘China Green Building Report from Green to Health’, the development of green buildings in China has undergone major advancements in 2017.

Key milestones emerged in 2017 that are helping to advance the industry. Firstly, the Architectural Society of China released the ‘Assessment Standard for Healthy Building’. Secondly, the Ministry of Housing and UrbanRural Development released ‘China’s 13th Five-Year Plan of Green Building Development’. Thirdly, the People’s Bank of China along with seven other administrative departments published ‘Masterplan for Pilot Zones for Green Finance Reform and Innovations’ which established new pilot zones in the provinces of Guangdong, Jiangxi, Zhejiang, Guizhou, and Xinjiang.

By end of September 2016, China had accumulated over 520 million sqm of green building space at the national standard in 336 cities. CBRE estimated that, with the inclusion of LEED certified projects, China currently has over 600 million sqm of accredited green building space.

According to the 13th Five-Year Plan of Green Building Development, 2016-2020 will be a period of acceleration of “quantity and quality” for green buildings in China.

This Plan sets out these goals • At least 50% of all newly constructed buildings should be green building certified • Over 80% of certified projects should fulfill the two-star requirements • At least 30% should receive certification for operations.

All three indicators have vastly improved since September 2016. By 2020, it is estimated that new supply of green building space will reach 2 billion sqm.

ELEVATORS ARE GOING GREEN According to an article published by the Smithsonian Institution, each day, more than seven billion elevator journeys are taken in tall buildings all over the globe.

Considering that half the world’s population live in cities—a number expected to jump to 70 percent by the year 2050—

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GLOBAL PERFORMANCE

efficient vertical transportation has become a pressing challenge. To keep pace with an influx of urban dwellers and rising sea levels, developers will not only need to build higher, they will also need to devise greener vertical transport: that is, safe and sustainable ways to move residents from the ground up into the sky.

The day will come when a passenger can ride up to the 300th story of a cloud-covered tower, their upward journey propelled by rope-less cabs and solar power. Elevators will then be free to journey any which way, Willy Wonka-style, and architects will no longer be limited by the vertical direction of upward travel, or by the constraints of the ground below. On a planet where land resources are finite, sustainable elevation is paramount.

The above is an extract from the original article published on 27 April 2018 on www.smithsonianmag.com

INTERNATIONAL GREEN BUILDING ADOPTION INDEX 2018 In 2018, more than 227 million square feet out of 1.2 billion square feet of office space is classed as green. This 18.6% increase is impressive considering green office space was 6.4% back in 2007.

This Index was produced by the partnership of CBRE and Maastricht University.

The list below shows the markets covered in the Index and their % of square feet of buildings that are classed as green.

Vancouver = 51.6% Toronto = 50.6% Sydney = 46.4% Melbourne = 28.8%

SOUTH AFRICAN CITIES STRIVE TO MAKE ALL NEW BUILDINGS ZERO CARBON In April 2018, Mayors of Tshwane, Johannesburg, Cape Town and Durban launched the C40 Cities South Africa Buildings Programme to introduce requirements ensuring all new buildings are energy efficient, cutting electricity bills and greenhouse gas emissions.

C40 Cities South Africa Buildings Programme aspires to make zero carbon buildings standard practice across South African cities.

The C40 Cities Climate Leadership Group connects more than 90 of the world’s greatest cities, representing over 650 million people and one quarter of the global economy.

Created and led by cities, C40 is focused on tackling climate change and driving urban action that reduces greenhouse gas emissions and climate risks, while increasing the health, wellbeing and economic opportunities of urban citizens.

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Warsaw = 12.2% Stockholm = 12.0% Amsterdam = 11.0% Paris = 9.1% London = 8.7%

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Frankfurt = 5.1% This Index confirms that building owners have been progressively improving the environmental performance of their assets.

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THE BUILDING ECONOMIST - JUNE 2018 - 5

DATA

PERFORMANCE OF AUSTRALIA’S CONSTRUCTION INDUSTRY

Building Construction Work Done Building and and Construction Work Done (AUD(AUD billion)billion)

Source: Australian Bureau Of Statistics and Australian Construction Industry Forum Construction Forecasting Council Source: Australian Bureau Of Statistics and Australian Construction Industry Forum Construction Forecasting Council

Building and Construction Work Done (AUD billion)

120 120120

Residential - Actual Residential - Actual Residential - Actual Residential - Forecast

Residential - Forecast Residential - Forecast

100 100

Infrastructure Construction - Actual

Infrastructure Construction - ActualInfrastructure Construction

100

Infrastructure Construction - Forecast

Actual

Infrastructure Construction - Forecast Infrastructure Construction - Forecast

Non-residential - Actual

80 80

Non-residentialNon-residential - Forecast - Actual Non-Residential - Actual

80

Heavy IndustryNon-residential incl Mining - Actual- Forecast Non-Residential - Forecast

60 60

Heavy Industry incl Mining - Forecast

Heavy incl incl Mining - ActualHeavyIndustry Industry Mining

Actual

Heavy incl incl Mining - Forecast HeavyIndustry Industry Mining - Forecast

60

Infrastructure Construction activity is on a rebound, if not a boom, and it is expected to grow by 10% to $62 billion next year.

Non-Residential Building activity has been showing strong growth in approvals over the last two years and work is expected to expand by a hefty 12% this year, lifting the value of activity to $42 billion.

A spike from the installation of the massive prelude floating LNG facility offshore from Western Australia is driving an uplift in Heavy Industry Including Mining this year.

This will be temporary and mining related construction is expected to continue a trend decline and ‘bottom-out’ over the next two years or so.

2019-20

2019-20 2019-20

Source: Australian Bureau Of Statistics and Australian Construction Industry Forum Construction Forecast Council

2018-19

2017-18 2018-19

2017-18

2016-17 2017-18 2016-17

2015-16 2016-17 2015-16

2015-16

2014-15

2014-15

2014-15

2013-14

2013-14 2013-14

2012-13

2012-13 2012-13

2011-12

2011-12 2011-12

2010-11

2010-11

2010-11

2009-10

2009-10

2009-10

2008-09 2008-08

2008-09

2007-08 2007-08

2007-08

20

20 20

2006-07

40

2006-07 2006-07

40 40

Residential Building activity has peaked and is now in decline. While the housing market is in a different stage of the cycle in each of states (and cities), the ACIF Construction Forecasting Council expects nationwide Residential Building work to fall this year and for the fall to deepen next year to nearly 5%. This will drag Residential Building activity down from the $101 billion achieved at the peak of the ‘boom’ to $93 billion over the next 2-3 years.

and in Non-Residential Building will be dominated by the forthcoming dip in Residential Building and the underlying decline in Heavy Industry Including Mining. These forces will balance themselves out in 2019-20 and total building and construction activity is expected to show a fall of only 0.1%.

The outlook for total building activity will bounce around, reflecting the combined impact of different cycles. A significant fall of 5% is expected next year as the upturns in Infrastructure Construction

The details contained on this page are excerpts from the Australian Construction Market Report May 2018 issued by ACIF (Australian Construction Industry Forum) To receive a copy of the full report, visit www.acif.com.au

THE BUILDING ECONOMIST - JUNE 2018 - 7

VIEWPOINT

CONTRACT PERFORMANCE MANAGEMENT AND

‘a construction contract should be seen and used by the parties as a road map for the successful completion of a project.’

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VIEWPOINT

Construction contracts are generally drafted with the intention to deliver a defined physical structure on time and to an acceptable quality standard.

Increasingly best practice performance requires more from a contractor, to achieve the practical objectives, ensure business continuity and an overall positive experience with the participants in the construction project.

all projects. Key clauses within standard form contracts are often the subject of dispute demonstrating some of their limitations and why parties opt to amend them to suit project specific needs.

Best practice contracts are now including Key Performance Indicators for aspects of the service required including features such as safety, environmental standards and training. Those contracts are emphasising the service nature of construction contracts as project delivery needs to perform so as to satisfy the objectives of many stakeholders.

Traditionally, the role of the construction contract is to outline the parties’ roles and obligations and the implications of a failure to keep to the Contract (known as the traditional contract theory).

STANDARD FORM CONTRACTS Although every project is unique in its own right, the construction industry encourages the use of standard form contracts as they possess common elements as to processes and management arrangements.

As contractual performance and management in the construction industry necessitate effective communication and recording of terms, it is important to understand the framework of commonly adopted standard form contracts, both as to content and form.

Standard form construction contracts are intended to assist the parties understand their roles and responsibilities and to aid the contractual negotiation between them with a view to sing time and cost.

Notwithstanding this, it cannot be stated that standard forms (including ones that have published by industry bodies and evolved over time) contain no redundancies or that will be suitable for

contingency plans and parties may disagree and look to punch it out, rather than focus on the overall objective of the contract and how mutual adjustments may assist both achieve their objectives.

It should be remembered that the potential for waste is overwhelming when each party believes that only the other party is at risk.

THE ROLE OF THE CONSTRUCTION CONTRACT

An emerging and more prevalent approach is the need to include provision for co-operation such that facilitates and encourages parties to keep lines of communication open and the adoption of a proactive approach to the resolution of disputes (known as the relational contract theory).

The latter shifts the standard away from ascribing liability or establishing fault to working cooperatively to achieve the objectives of the agreement (or as close to).

A failure to plan for the required performance is always a recipe for disaster. Contingency planning for the unexpected is also vital for resilient contract performance. The plan should anticipate the performance which is essential for success, including particularly the service KPI’s which are essential in order that if poor performance does occur it is quickly realised and triggers an appropriate pre-planned response, in line with the relational contract theory.

Otherwise response to poor performance of the contract will be at best reactive and at worst not rectified if the poor performance or its consequences are not promptly recognised. If a breach or unexpected situation arises without

CONTRACTING TO EVADE DISPUTES In theory, co-operative contracting is encouraged in the industry, however it is not surprising that in practice such provisions are not always adhered to.

The common cause when a problem is encountered during a construction project is communication breakdown.

Not only does the lack of communication delay the resolution of disputes it negatively effects the trust and mutual confidence that was once in existence between the parties at the time of contracting.

To counter the occurrence of a dispute, it is not uncommon to find provisions that impose duties the parties to act in good faith. It is noted that the inclusion of such duty has been embraced by countries such as the UK and the USA, however there is much debate on the enforceability of the same in Australia.

Further, disputes in this space arise from unforeseen conditions such that prompts the inclusion of provision for collaborative risk management i.e. the parties jointly engaging in a process of identifying (early detection, assessing and eliminating the risks). This enables the parties to have more control over the outcome if an issue that may have material impact on the project arises.

THE BUILDING ECONOMIST - JUNE 2018 - 9

VIEWPOINT

EFFECTIVE DISPUTE RESOLUTION CLAUSE During negotiations, emphasis should be placed on what can go wrong in a contract (risk management) so as to deal with it adequately if it arises and provide for quick resolution.

The inclusion of effective dispute resolution clauses which encourage early intervention promotes performance of the contract to completion.

Some standard form contracts provide for mediation and failing resolution, the parties may opt to approach the Court.

Such provision does not facilitate an effective resolution of the dispute, rather may result in the parties being locked in to a time consuming and costly litigation, placing the fate of the project and their entitlements in the hands of the Court.

An interim decision-making process may be inserted into the construction contract to restore order to ongoing performance

on an interim basis ahead of a formal resolution by arbitration.

MULTIPLE STAKEHOLDERS When engaging in large construction projects, there are generally multiple stakeholders who have an interest in the performance of the contract, including; the principal (the owner of the project), financiers and future purchasers, a project manager, engineers, architects, surveyors and builders, and subcontractors.

Many different stakeholders will come to the table with different objectives, training and values, thus there needs to be adequate communication and consideration of legitimate expectation of others to ensure a project is properly delivered.

Despite all the safeguards and proactive measures that may exist within the

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general contract, each parties have their own duties to fulfil in order to perform properly, however ensuring that parties comply with the above will mitigate risk and assist in the overall performance and management of the contract to the benefit of the parties.

CONCLUSION Those leading projects and influencing the contracts which bind projects together need to maximise the prospects of the co-operation and efficiency by building performance monitoring and management into all of the projects contracts.

This article has been brought to you by Doyles Construction Lawyers for further information of if you have any questions in relation to this article visit www.doylesconstructionlawyers.com or email doyles@doylesconstructionlawyers.com

STANDARDS

ISO 41001 FACILITY MANAGEMENT – MANAGEMENT SYSTEMS

International Organisation for Standardisation has recently published ISO 41001, Facility Management – Management Systems – Requirements with Guidance for Use, to help facility management teams achieve optimum efficiency.

ISO 41001 establishes a benchmark for developing and driving an effective strategic, tactical and operational Facility Management (FM) regime.

It will assist organisations seeking to outsource FM, as those providers who are able to demonstrate ISO 41001 compliance with the standard,

will provide them with an assurance regarding their approach and processes.

We asked Stephen Ballesty FRICS, FAIQS, ICECA, CQS, CFM three questions related to ISO 41001.

Stephen Ballesty is a Director of Rider Levett Bucknall (RLB) and RLB's Sydney-based Head of Advisory and Head of Research.

FM is defined as an “organisational function which integrates people, place and process within the Built Environment with the purpose of improving the quality of life of people and the productivity of the core business.” (Source: ISO 41011: 2017)

Stephen has been an Australian representative to ISO/TC-267 working on the international Facility Management standards initiative. Australia is one of 43 countries involved in the initiative.

THE BUILDING ECONOMIST - JUNE 2018 - 11

STANDARDS

HOW WILL ISO 41001 CONTRIBUTE TOWARDS BUILDING PERFORMANCE? ISO 41001 will support organisations to manage, operate and maintain facilities, assets and services in order to meet ever-changing operational requirements in an efficient and effective manner.

FM is an integrator and can organise disparate stakeholder group requirements and the interrelationships between core business activities and the support services required to meet the demand organisation’s needs.

FM has the potential the foremost contributors to a more productive, sustainable and liveable built environment for all.

DOES THE ESTABLISHMENT OF ISO 41001 HAVE AN IMPACT ON PROJECT COSTS, IF SO HOW? Yes, to the extent that this FM standard is focused on the processes to be used in managing facilities over their full life cycles.

Hence, ISO 41001 provides for responsible management of the built environment establishing the method and criteria for decision making. So as for impact on project costs, we could anticipate improved design through FM’s influence, alignment with user requirements and planned upgrades, maintenance and operations.

WILL ISO 41001 IMPACT THE DAY TO DAY WORK OF A QUANTITY SURVEYOR, IF SO HOW? Not perhaps in the ‘traditional QS’ sense.

But in ‘modern QS’ terms, for those with an understanding of whole of life principles and the documenting of the processes to be used in managing facility life cycles including prioritising tasks, coordinating resources, cost planning and risk profiling to achieve strategic objectives, the future is bright.

Effective FM needs to ensure that performance outcomes are measurable, ISO 41001 provides guidance for defining the need to evaluate and report on: - facility asset characteristics (e.g. ownership, design parameters, vendor information, physical location, condition, in service dates, materials); - performance management and reporting requirements (e.g. performance data, continuous improvement objectives, applicable reporting); - financial and resource management issues (e.g. historical cost, replacement value, date of acquisition, materiality, life cycle costing analysis, useful service lives); - contract management (e.g. facilities and facilities services related contractual information, vendor information, service objectives, third party agreements); and - risk management per ISO 31000.

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For more information: committee.iso.org or contact stephen.ballesty@au.rlb.com

SPOTLIGHT

PERFORMANCE DESIGNATION FOR QUANTITY SURVEYORS A Quantity Surveyor who is awarded a Certified Quantity Surveyor (CQS) designation by Australian Institute of Quantity Surveyors (AIQS) has the requisite education, knowledge and experience to provide exemplary service and advice to clients.

CQS provide clients with independent, impartial and expert advice in identifying and sing risks associated with time, cost, quality, environment, performance and safety. An additional assurance of expertise for clients.

Let’s look at how a CQS can assist project teams deliver a performancebased construction project.

4. Providing operational, ongoing, and whole of life costs for future proofing.

5. Drawing on experience in gateway and milestone reporting for business cases and / or economic appraisals.

SES RISK CQS se and manage the risk exposure on your project by: 1. Providing due diligence reporting to assist with strategic decision making.

2. Advising on potential risks and opportunities arising from:

b. Construction program planning c. Subcontracting competency

CQS will minimise uncertainties in project costs and delivery by: 1. Providing certainty of costs based on current tendered market pricing.

2. Benchmarking against other projects and providing known metrics for comparison and decision making.

3. Advising on strategies to avoid cost and time overruns throughout the entire project.

CQS protect your financial interests from the earliest point of involvement through to the conclusion of the project by: 1. Establishing robust initial budgets and advising on ongoing and future operational costs.

a. Design variations

PROVIDES CERTAINTY

CONTROLS COST

d. Government approval process

2. Monitoring and providing advice on cost and quality for each design component as the design develops.

3. Correctly certifying progress payments to enable you to maintain cashflows.

4. Value managing to ensure you get the best value for money from the design, construction and operation of your assets.

5. Advising on the best funding and delivery model.

e. Price inflation of materials 3. Providing procurement advice best suited to your project.

4. Delivering independent, impartial and expert advice.

5. Identifying and sing risks associated with time, cost quality, environment, performance and safety.

To find out more about becoming a Certified Quantity Surveyor, visit aiqs.com.au or speak with one of our AIQS Membership Officers on +61 2 8234 4000. You can also send an email to membership@aiqs.com.au

THE BUILDING ECONOMIST - JUNE 2018 - 13

AUSTRALIAN INSTITUTE OF QUANTITY SURVEYORS

AMPLIFY YOUR ACHIEVEMENTS BECOME A CERTIFIED QUANTITY SURVEYOR (CQS).

Visit aiqs.com.au for more information or contact our Membership Team on +61 2 8234 4000 and ask them how you can receive a CQS designation.

SPOTLIGHT

CHALLENGING CURRENT AND FUTURE THINKING International and Local Quantity Surveyors and Cost Engineers to Attend ICEC-PAQS Conference 2018 in Sydney

The theme, ‘Grassroots To Concrete Jungle: Dynamics in the Built Environment’ is sure to challenge current and future thinking.

Attendees will meet over three days in November, at the International Convention Centre Sydney, to hear onpoint presentations from industry experts and discuss with industry colleagues, the latest construction and cost management techniques and technology, standards and issues facing the industry today and in the future.

In this article, we feature two keynote speakers:

PROFESSOR GENEVIEVE BELL

ANU in February 2017.

A cultural anthropologist, technologist and futurist, Professor Bell is best known for her work at the intersection of cultural practice and technology development.

Professor Bell completed her PhD in Cultural Anthropology at Stanford University, California in 1998.

After having spent 18 years in Silicon Valley, helping guide Intel’s product development by developing the company’s social science and design research capabilities, Prof Bell joined

Professor Bell is now focused on building a new applied science around the management of artificial intelligence, data, technology and their impact on humanity at the 3A (Autonomy, Agency and Assurance) Institute, launched by the Australian National University (ANU) in collaboration with CSIRO’s Data61 Australia’s leading data innovation group.

Professor Bell is the inaugural appointee to The Florence McKenzie Chair at ANU, named in honour of Australia’s first female electrical engineer. Florence McKenzie

THE BUILDING ECONOMIST - JUNE 2018 - 15

SPOTLIGHT

exemplifies the pioneering spirit and lifelong pursuit of inclusive use of technology in society this Chair represents, and we proudly acknowledge and celebrate Florence Violet McKenzie and her legacy.

The task is to redefine what it means to exist in a technologically driven world and how to drive fit-for-purpose technological development.

Whilst presenting the highly acclaimed ABC Boyer Lectures for 2017, Professor Bell interrogated what it means to be human, and Australian, in a digital world.

DR BEN GUY Dr Guy is a Doctorate Qualified Urban Planner as well as a Psychologist and Physicist.

Dr Guy established Urban Circus more than a decade ago. As Founder and CEO, his passion is building creative and collaborative cultures. He uses visual tools like digital 3D to build intuitive workflows to ensure shared understanding across stakeholders in real-time.

According to Dr Guy, a circus (for example Oxford Circus in London) is an urban outcome with an emergent ‘spirit of place’ creating high economic value with integrated functionality across elements.

Dr Guy believes that such outcomes should be the de facto in city development and has built a planning system and service to support this thinking. Now deployed in many major jurisdictions and projects, this system empowers clients to control project planning, ensure integration and maintain stakeholder alignment for accelerated progress with quality outcomes.

ICEC-PAQS Conference 2018 will also incorporate the 3rd International QS BIM Conference into the three-day program.

For program details and to register, visit icecpaqs2018.com

16 - JUNE 2018 - THE BUILDING ECONOMIST

Construction Cost "Construction Cost

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ABOUT IRENA With over 15 years of experience in the property and construction industry, Irena has gained a considerable amount of knowledge and practical expertise in Cost Management and Design Economics. She has worked in almost all sectors of the industry on various types of projects, in both the public and private spheres.

Irena’s qualifications include a Bachelor of Building in Construction Economics from the University of Technology, Sydney and an accreditation from the International Cost Engineering Council.

Irena has a deep understanding and immense appreciation towards solution driven leadership on projects and is an advocate for conscious innovation and purposeful disruption of service and project delivery. Nevertheless, she always upholds fundamental practices, and has refined an ability to maintain a grasp on the detail while absorbing the greater picture of each project.

Irena has held various successful positions on Committees and Chapters in the Property, Construction Industry, and is a key member and current President of the New South Wales Chapter of Australian Institute of Quantity Surveyors.

PERFORMANCE PERSPECTIVES OF A ANQUANTITY SURVEYOR INTERVIEW WITH IRENA KUZMAN 18 - JUNE 2018 - THE BUILDING ECONOMIST

PERSPECTIVES

PREFACE Considering the theme of this edition of The Building Economist being Performance, we wanted to explore how Irena collaborates with her team members, external contractors and suppliers to ensure that the projects she works on meets the highest level of performance required by the client.

Q1: HOW DOES A QUANTITY SURVEYOR POSITIVELY INFLUENCE THE DELIVERY OF PROJECTS THAT REQUIRE HIGHER LEVELS OF PERFORMANCE - ENERGY EFFICIENCY, THERMAL EFFICIENCY, HEALTH, SOCIAL SUSTAINABILITY? The role of the QS in managing costs which are one of the fundamental measures of value of a project are directly linked to project performance.

When delivering projects that require higher levels of performance, the QS must manage the cost of these against all other performance criteria, especially at the earlier phases to aid the project design in achieving the highest level of overall building performance. How we translate the materials (products) and labour (techniques) within our costing analysis and advice, can greatly impact the project direction and the level of performance the project can achieve.

The QS can positively influence the performance levels of a project by applying conscious Design Economics to guide the design to maximum performance potential. This requires the QS to work very closely and collaboratively with the design team and have a proactive and flexible approach in their cost management.

Design Economics is a methodology where the QS not only analyses the cost of the project, but also suggests

design options, alternative products and various construction techniques.

In which case the QS will be required to be very well versed in the products, techniques and technologies available both old, new and developing.

Q2: DOES THE INTEGRATION OF SUSTAINABILITY / PERFORMANCE FEATURES INTO A PROJECT IMPACT THE COST OF BUILDING CONSTRUCTION, OPERATION AND MAINTENANCE? All elements of a project impact the cost of construction, operation and maintenance. The levels of performance, quality or simply functional expectations will always attract a variable price, and the industry outlook on these are that the price will always be high for sustainability performance features. However, recently completed top performing projects have shown that the price tag is not as high as expected, and the returns outweigh the initial cost. Good design incorporates high performance levels without attracting an excessive premium.

As a QS on a high performance project, we will be expected to highlight where cost will increase due to performance levels. However, a more vital part of our role is not to simply calculate these costs, but also communicate alternative solutions if the design is not feasible, and analyse return-on-investment of the high performing project, as opposed to the initial delivery cost.

Q3: IS IT IMPORTANT FOR QUANTITY SURVEYORS TO STAY UP-TO-DATE WITH LATEST PRODUCTS AND CONSTRUCTION TECHNIQUES?

technologies. These aspects of construction are the essence of what we analyse to define the cost of a project, and are the core categories that we measure and price.

A good QS will always sustain a good knowledge and library of products and techniques, maintain CPD with respect to these subjects, and maintain and nurture a relationship with local and international product suppliers. However, it is worrying that this connection to the supplier world seems to be slowly fading with Quantity Surveyors, due to many factors like lack of time and difficulty of connectivity to said suppliers.

Quantity Surveyors should always maintain a great relationship with suppliers, to benefit the outcome of the project.

Q4: WITH RESPECT TO THIS RELATIONSHIP, WHAT DO SUPPLIERS NEED TO PROVIDE, TO HELP THE QUANTITY SURVEYOR WITH ANALYSING THE PERFORMANCE OF A PROJECT? The essentials are always product information, including cost data.

However, the beneficial aspects are not necessary in this one dimensional information, but in the education that the supplier would provide to the QS in how their products perform, what new developments are happening and what research is currently underway to improve this performance.

This education will arm the QS with the ability to positively influence the performance levels of a project though Design Economics.

It is absolutely vital for any Quantity Surveyor to stay up to date on current and new products, techniques and

THE BUILDING ECONOMIST - JUNE 2018 - 19

ICEC–PAQS Conference 2018 Sydney, Australia

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Australian Institute of Quantity Surveyors is proud to host the joint Conference for ICEC and PAQS. The Conference is expected to attract over 400 local and international participants from a variety of professions including: Quantity Surveyors | Cost Planners | Cost Engineers | Cost Estimators Project Managers | Contract Administrators | Cost Managers

AUSTRALIAN INSTITUTE OF QUANTITY SURVEYORS

FEATURE

BEHAVE YOURSELF AND YOU’LL PERFORM BETTER THE RELATIONSHIP BETWEEN BUILDING PERFORMANCE AND HUMAN BEHAVIOUR By Sara Wilkinson BSc MA MPhil PhD FRICS AAPI, Associate Professor, Faculty of Design Architecture & Building, School of Built Environment, University of Technology Sydney.

Dr Agnieszka Zalejska Jonsson, Director Center Construction Efficiency. School of Architecture, KTH, Stockholm, Sweden.

THE BUILDING ECONOMIST - JUNE 2018 - 21

FEATURE

INTRODUCTION It’s the elephant in the room. We’ve been aware of climate change and GHG emissions for 30 years plus since the 1987 UN Bruntland Report and yet, per capita greenhouse gas emissions increase, per capita water consumption increases, environmental impacts, such as waste, grow as do other building performance metrics.

It’s not that we don’t talk about taking action. We have taken action. There have been increases in building code minimum standards as well as the development of building rating tools for all property types. In Australia, Green Building Council of Australia (GBCA) Green Star covers the ‘as designed’ phase and now the ‘as built’ phase of the building lifecycle. Clearly, it is at both stages initial design and building operation, that the best opportunity to consider and enhance building performance lies. The technology is there to reduce energy and water consumption, to ensure optimum air quality and IEQ metrics are delivered.

Furthermore, this technology is improving continuously. The equipment we can specify today is better than what was available on the market even one to two years ago. So, we should be registering lower energy and water consumption per capita, shouldn’t we?

How often have you read or heard about buildings that aren’t performing as designed? Quite often I would have thought. How often do you hear of a building that has far exceeded design expectations in respect of sustainability performance targets? Rarely, I expect.

Something is going wrong. Possibly

there is over-optimism at design stage, or it’s in the build quality, corners cut and/or insufficient inspections during construction. Or maybe it’s the commissioning of the services?

If we have the means to design, build and operate better performing buildings; why isn’t it happening to a greater extent, and to the extent needed to mitigate climate change? Part of the issue, and the elephant in the room is behaviour; human behaviour. That’s you, and me.

This article explores various types of behaviour identified by psychologists in respect of sustainability and actions, and how Quantity Surveyors can be aware of the crucial relationship in the delivery of better outcomes in building performance.

HUMANS So, it seems that part of the problem in delivering optimum building performance is down to actions we do, or don’t, take.

Environmental psychologists examined this lack of action and identified 29 Dragons or ‘drag ons’ of inaction in seven categories. Environmental related inaction has three phases; 1. Genuine ignorance.

2. Various psychological processes that interfere with effective action.

3. Some action taken; which fades to inaction as it makes too little difference to the persons environmental footprint or, is counter-productive. Witness the current revelations about recycling and landfill.

What are the seven typologies of inaction? And; which ones apply to

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you? Let’s look at examples relating to Quantity Surveyor services, sustainability and building performance.

DRAGON 1 – LIMITED COGNITION Overall, a lack of knowledge and awareness of the issues that relate to advice that could be given to clients at the design stage about building performance over the lifecycle and, during the construction phase to reduce environmental impact and improve performance. This can include lowering GHG emissions, waste, water consumption, recommending adoption of rating tolls or going beyond Building Code of Australia (BCA) minimum standards to future proof the development against inevitable increases in standards. Quantity Surveyors can raise these issues at design stage in respect of procurement and construction methods and ongoing maintenance.

Some psychologists refer to ‘ancient brain’ (Ornstein & Ehrlich 1989) asserting human brains have not evolved much in thousands of years and that C21st climate change is too new for us to react to. Ignorance, not knowing there is a problem or, not knowing what to do, also limits action. Others point to environmental numbness, being overwhelmed with too many cues and becoming selective in what you take in.

Also, if an issue, like exploring the best performance options over the lifecycle does not cause any direct difficulties because clients do not ask for this guidance, behaviours are unlikely to change. At the other end of spectrum; when we see repeated information soon

FEATURE

our attention shrinks.

Perceived and real uncertainty, reduces pro-environmental behaviour, justifying inaction and well-intentioned efforts of scientists and industry bodies, like the GBCA, to quantify the level of certainty can be counter-productive (Hine & Gifford, 1996). Another behaviour is judgemental discounting, where future risks are undervalued. For example, respondents in 15 of 18 countries surveyed thought problems were worse elsewhere, which results in less motivation to act locally and now (Gifford et al, 2009). A sixth drag on action is ‘optimisation bias’, this is where we discount personal risks to the detriment of own well-being; “she’ll be right” (Weinstein et al 1988). The final limitation is ‘perceived behavioural control and selfefficiency’; where someone believes they cannot do anything as ‘an individual’ and so does nothing (Olson, 1965).

DRAGON 2 – IDEOLOGIES Worldviews are a significant predictor of action and behaviour, for example, the belief in free enterprise capitalism. The Freedom of the Commons worldview has led to devastation of fisheries, forests and other landscapes (Heath & Gifford, 2006).

With the superhuman powers ideology, the belief is Mother Nature will do what it wants anyway and really, we are powerless (Montreux & Barnett, 2009).

Techno-salvation is a technocentric world view which acts as a barrier for some, a belief that geo-engineering in the form of artificial trees will save us. Finally, system justification is the tendency to defend the status quo, whereas climate

change mitigation requires adjustments to behaviour such as Quantity Surveyors emphasising lifecycle performance of buildings and the need to invest in more sustainable design and procurement (Feygina et al, 2010).

DRAGON 3 – COMPARISON WITH OTHERS Social comparison is where people compare what they do with others (AKA the Theory of Planned Behaviour (Ajzen, 1991)) or the Value Belief Norm Model (Stern, 2000). So, if your competitors are not taking any action; neither will you.

With social norms and networks, whilst norms are a potential for progress, they also allow regression (Thogersen 2008).

In a residential power use study, people adjusted their action and energy use to fit the ‘norm’, and consumption overall increased (Schultz et al, 2007). Another drag on behaviour is perceived inequity or; ‘why should I change, if others don’t?’ and studies find co-operation declines where inequity is perceived to exist.

Quantity Surveyors can acknowledge these tendencies and be proactive to encourage positive behaviour.

DRAGON 4 – SUNK COSTS With financial investments, once you have invested in something, dispensing with it is more difficult (Arkes & Hutzel, 2000). On a societal scale, using car ownership as an example; people are loss averse and do not want an expense to be thrown away ‘you’ve bought it, so use it’. This may affect some contractors who have invested in equipment to

deliver developments using certain materials and methods, and so this is their preferred specification when asked to tender. Closely aligned, is ‘behavioural momentum habit’ (James, 1890). Look at eating and smoking habits, we know eating or smoking too much is hazardous to health and yet many do. Again, with specifications and procurement methods, we may choose the familiar over the new which may offer greater sustainability and better performing buildings.

With design teams and construction teams we come across conflicting values, goals and aspirations; multiple goals that are incompatible (Stern, 2000). For example, time, cost and quality will all have impacts on building performance outcomes. Generally, lack of place attachment is associated with lower proenvironmental behaviour (Clayton, 2003) so having teams from outside a local area may affect prioritising designs and specifications that might deliver better performance over the lifecycle.

DRAGON 5 – DISCREDENCE Trust is easily damaged and when soured, the probability of adopting proenvironmental behaviour diminishes (Terwel et al, 2009) this goes for the design and construction team as well as building occupants. Many programs have been launched to encourage better building performance, few are mandatory or have sanctions for non-compliance.

Cognitive dissonance occurs when people decide a program is not good enough for them and this justifies nonparticipation.

Denial in the form of uncertainty, mistrust

THE BUILDING ECONOMIST - JUNE 2018 - 23

FEATURE

and sunk costs can lead to denial of the problem (Norgaard, 2006). An example is climate change deniers (McCright & Dunlap, 2010), those holding this view tend to be more outspoken than those who believe otherwise (Jayson, 2009).

With reactance, there is evidence that many of us distrust messages from scientists and governments (Earle, 2004) and evidence also that fossil fuel industries encourage this (Hoggan 2009).

In the light of recent Facebook and Cambridge Data Analytica allegations of interference with elections, this is a credible assertion.

DRAGON 6 – PERCEIVED RISK The perceived risk has six drag on actions. Consider electric plug in cars.

• Functional risk - will it work?

• Financial risk - what’s the payback period?

• Social risk - what will my friends think?

• Psychological risk - will people tease me?

• Temporal risk; time involved researching the technology – will it be wasted?

It is easy to see how these risks lead us to stick with familiar specifications, procurement teams and options. Sticking to the tried and tested ensures that risk taking to deliver better building performance especially through behaviour change is a low priority. The incentive is often lacking, as interest in building performance typically ends when the property is completed and sold to a third party.

• Physical risk - is it safe?

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DRAGON 7 – LIMITED BEHAVIOUR Tokenism, once you get past environmental numbness, denial, judgmental discounting, habit and perceived risk and think you can act; which changes are most likely? Some actions are easier than others. Easier ones get chosen more often than harder, but more effective ones. So, waste separation for recycling might be easy but changing behaviour to reduce energy and water usage, and monitoring it, either during the construction or operation phases might be harder. Eliminating plastics again would be a harder option to deliver compared to recycling plastic waste. The Rebound Effect or Jevons Paradox (Jevons 1865) is where the savings made are lost in other actions.

The UK BedZed housing development is an example of a development where great energy and water savings were realised by occupants who then spent the

FEATURE

money saved on overseas holidays. Their total greenhouse gas emissions related to air travel far exceeded the GHG emission savings in their homes. So, we need to be careful to retain the savings made in building performance.

WHAT CAN WE DO? The first step is to develop a taxonomy of psychological barriers to behaviour change and investigate some solutions.

We need to recognise these behavioural barriers exist and that they can be challenged but, this will involve planning and awareness raising among the whole team during design and construction, and; education of occupants during the operational phase. It staggers me that we spend a minimum 120 hours teaching people to drive cars but little, if any time, teaching people how to operate residential buildings efficiently.

The theory of planned behaviour (TPB) and value belief norm (VBN) are used in health and safety sectors to effect behaviour change and this could be adopted and extended into building performance (including residential) and sustainability aspects. Our understanding of the relationships between the drag ons of inaction above also needs further investigation and development of strategies to focus on optimising performance through behaviour change.

SOME INITIAL STEPS We need to recognise and acknowledge that despite all the technological features we can design and build into buildings;

1. Structural barriers prevent behavioural changes that would mitigate climate change and increase building performance. If we cannot afford solar panels because they are too expensive or; if we live in the suburbs we might not be close to public transport – these are structural barriers to behaving in a more sustainable way. Legislation and urban renewal can remove some of the structural barriers and in this way, our sector has a major role.

2. Many psychological barriers exist for people, which we have little understanding of in construction.

Psychologists can play an important role.

At an industry level, five strategies to overcome behaviour-based barriers to better building performance are; 1. Analyse specific barriers at behavioural level.

2. Create better measures of carbon cost of various behaviour choices and provide better feedback to consumers and citizens.

3. Improve understanding of the bases of public support of, and opposition to, policies and technologies limiting climate change and integrate those into design and construction and operational performance decision making.

4. Design and conduct more intervention studies aimed at important carbon related behaviour choices (e.g. travel mode choice and energy use and integrate findings into design and construction).

5. Work with other disciplines (e.g. government agencies and technical experts).

THERE IS HOPE The dragons of inaction can be overcome, but it will take time and will never be complete. Some enlightened industry groups are taking action and are investigating the impact of human behaviour on sustainable adaptation to ascertain the different outcomes in terms of building performance. A team from Western Sydney University and University of Technology Sydney are working with a window company measuring energy use and performance in housings pre and post installation of Double Glazing in Canberra. In addition, data is also being collected to understanding occupant’s behaviour and the correlation to energy consumption.

In another sustainable residential development in Western Sydney a major national developer intends to evaluate the performance of the properties along with behaviour aspects to understand these aspects better.

We must act now, as with climate change, we might not have the five decades it took to reduce smoking. We need to manage damage already caused and prevent worse problems for future generations. The role of the Quantity Surveyor is crucial, as the primary professional providing cost and risk advice at the design, construction and operation phase of the building lifecycle, you have the opportunity to raise these issues. So, learn how behaviour can make your buildings perform better.

THE BUILDING ECONOMIST - JUNE 2018 - 25

AUSTRALIAN INSTITUTE OF QUANTITY SURVEYORS

ACCUMULATE KNOWLEDGE ACCESS 100 ONLINE TOPICS TO HELP YOU DEVELOP YOUR QUANTITY SURVEYING SKILLS.

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INSIGHT

NAVIGATING RISKS IN COLLABORATIVE ENVIRONMENTS High performance has a close link with collaboration. Engaging and relying upon each party performing their own specialist function ensures that the sum is greater than the parts.

The nature of both your contractual engagement, as well as who else you may engage, are important leading factors to gain perspective on how liabilities may be shared across multiple parties.

In either structure the actual activities undertaken by the Quantity Surveyor do not significantly change. However, the nature of your interaction and the chain of liability changes dramatically.

For the Quantity Surveyor, in a multiparty project the default consideration is one of “what is my role?” However, when assessed from a risk management perspective that one consideration is sandwiched between two other key questions;

Navigating the risks involved in collaboration ensures an understanding of each interaction, and gives the Quantity Surveyor perspective on how to best align their Services, Contracts, and Insurances all the while focussing on what they do best, and providing high quality specialist services.

Figure 1 outlines an example of a flat project structure for example in a tender or feasibility environment preconstruction. Under a flat structure, each consulting professional has an engagement and reporting line back to the Principal or Project Manager.

Any liability for the conduct of others is limited, as there are not multiple layers of sub-contracting.

1. How am I being engaged and by whom?

2. What is my role?

3. What or who else am I responsible for?

Projects can often tend towards one of two ends of the sub-contacting spectrum, with either a very flat structure, or a much longer “daisy chain” structure.

In this environment, a Quantity Surveyor provides their own services, and only carries responsibility for their own work.

THE BUILDING ECONOMIST - JUNE 2018 - 27

INSIGHT

Comparing this to the daisy chain example, the responsibilities of the Quantity Surveyor change significantly.

Figure 2 highlights an alternate project structure where the Quantity Surveyor is not only providing their own services, but they are also engaging other professionals on a sub-contract basis.

Figure 1

While collaboration will occur, and in order to accurately cost a prospective job the Quantity Surveyor will be relying on information from other parties such as the Architect and Geotechnical Engineer, this information is being supplied as an independent third party and the Quantity Surveyor does not carry responsibility for appointment or quality of the other professionals.

As soon as you engage a sub-contractor outside your own area of expertise, you not only take on vicarious liabilities for their actions, but you also take on deemed project management responsibilities ranging from the timeliness of your sub-contractors work through to their expertise and suitability for the role. All of this risk is added while the services being provided by the Quantity Surveyor are fundamentally unchanged.

Even though you may take on the subcontractors either because you feel it will be easier or enable you to do your role better, or commercially to bill a margin for the project management and subcontracted services, is this within your own capability, and is the additional remuneration commensurate to the additional risk?

If we return to the links between high performance and collaboration, an ideal scenario may be that a Quantity Surveyor’s output is linked solely to their area of specialisation; let the Project Manager manage, so as to avoid vicarious liability or project management risks associated with sub-contracting other related professionals. This ensures that you can focus on what you do best, and in turn, ensure your risk is limited to what you do best.

Figure 2

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This is not to say that the Quantity Surveyor may not rely on the work of others, of course in a construction environment the detail provided by the Architect and Engineer will be imperative to the output of the Quantity Surveyor.

The key point is that by not being the one to directly engage or sub-contract their services, the Quantity Surveyor ses contractual responsibility for their work.

We inherently think about things from a common sense perspective; I am only responsible for my own work, and I can only be held responsible to the extent that I caused or contributed to a loss.

In the contracts you sign, and more importantly in the potential outcome of multi-party litigation, this is rarely the case.

So why does this matter?

SHARING THE WORK – SHARING THE RISK Collaboration in work should be met with collaboration in risk, but onerous contract terms can see a Quantity Surveyor being held to account for liabilities greater than their own through three key areas; 1. Contractual Liabilities greater than common law (such as agreeing to pay ALL costs; courts often award costs on a percentage basis).

2. Contractual Liabilities that remove or reduce proportionate liability rights (such as a failure to reduce liability to the extent that you were responsible only).

3. Contractual Liabilities that remove

INSIGHT

or reduce recovery rights (such as Hold Harmless or Waiver of Subrogation clauses).

Below are three different indemnity clauses taken from sub-contractor agreements, with vastly different legal implications despite no change in the activities undertaken by the Quantity Surveyor.

• Liability reduced to the extent that your Client contributed.

• Liability not reduced to the extent any other third party or collaborator contributed – Quantity Surveyor can still be held contractually responsible for 100% of the loss where another collaborating party was partly at fault.

Poor

Good

The Quantity Surveyor must indemnify and keep indemnified the Client, its related bodies corporate and their respective employees (“Indemnified Parties”) from and against all loss, damage, or expense (including legal fees) incurred by an Indemnified Party arising directly or indirectly out of the Contract.

In addition to this indemnity clause, the following write-back is offered;

Issues: • Responsible for “all” loss, damage, and legal fees.

• Courts unlikely to award 100% costs.

• No reduction in liability for proportionate contribution.

• Very broadly responsible for loss “indirectly” arising out of the contract.

Average In addition to this indemnity clause, the following write-back is offered; The Quantity Surveyor’s liability will be reduced proportionately to the extent that a negligent or wrongful act or omission of the Client, caused the loss, damage, or expense.

The Quantity Surveyor’s liability will be reduced proportionately to the extent that a negligent or wrongful act or omission of the Client or any third party for whom the Quantity Surveyor is not responsible, caused the loss, damage, or expense.

ALIGNING THE WORK – TRANSFERRING THE RISK Professional Indemnity Insurance is the cornerstone tool for Quantity Surveyors to transfer risk on to an Insurer. As a risk management tool, it is both prudent to carry and also in many cases a compulsory purchase, both under contract and also under professional registrations e.g. the Victorian Building Authority.

Ensuring there is a tripartite alignment between your Services, your Contracts, and your Insurances, as shown in Figure 3, will minimise potential exposures to the Quantity Surveyor that would be uninsured and commercial risks directly impacting on the business.

• Liability now reduced proportionately to the extent that a loss was contributed to by any other third party the Quantity Surveyor is not responsible for.

• Contract terms now reasonably reflect common law, and insurance coverage.

While these clauses are examples only, they show the breadth in potential liability faced under contract irrespective of the services being offered. Other useful clauses to consider in conjunction with your legal counsel include a clear definition of Services, a “reasonable” not a “high” standard of work, and Limitation of Liability clauses, whether a monetary cap, or types of losses e.g. no responsibility for consequential losses.

Figure 3

Between your Insurance and your Contract, alignment of coverage ensures sed commercial gaps. Relevant to the various indemnity clauses highlighted, one of the biggest commercial risks lies

THE BUILDING ECONOMIST - JUNE 2018 - 29

INSIGHT

with contracting into liabilities above and beyond your common law liability. In most cases your Professional Indemnity Insurance will exclude any liability above and beyond your common law liability, so the alignment is best managed by seeking reasonable and equitable contract terms, and where appropriate seeking advice from your Insurance Broker that terms align with your Insurances.

Between your Insurance and your Services, an understanding of your professional services is the most frequent issue we see arising for Quantity Surveyors.

The skills of a Quantity Surveyor are aptly applied across a broad range of related business activities such as Project Management, Contract Administration, Asset and Facilities Management but it is important to note that while a Quantity Surveyor may perform these activities, they are not Quantity Surveying.

This is a common trap which will see a Quantity Surveying practice only insured for “Quantity Surveying” despite performing a far broader range of services. These ancillary business activities are not viewed as particularly high risk by the Insurance market however, so alignment of Services and Insurance is a matter of working with your Insurance Broker to ensure a full and accurate description of your services are being covered and the risk transferred to your Professional Indemnity Insurance policy.

EXAMPLES IN PRACTICE Build Stage and Progress Payments.

A New South Wales (NSW) council appointed a Quantity Surveyor to manage progress payments, variations and defects in relation to a new institutional building.

Under the contract however the Quantity Surveyor was not only responsible for certifying progress payments (acceptable) but also responsible for certifying building completion (not acceptable).

While the Quantity Surveyor is reliant on submissions in conjunction with site inspections regarding stages of completion, certifying the construction states is of itself the role of a Building Certifier in NSW. The Quantity Surveyor had no intention of doing this role and was relying on the Principal Contractor’s appointed Certifier to provide these services, however, under their contract with the council body, the Quantity Surveyor was also liable for the Certification services.

Compared to other professionals operating in the building and construction industry, Quantity Surveyors seem to feature less frequently in litigation however, this was a timely reminder that all professionals need to ensure they have appropriate quality assurance systems and processes, a written terms of engagement (preferably including a limitation of liability), and only take on work for which you are experienced and qualified to do so.

Ensuring you take on work which you are experienced and qualified to do sits at the forefront of high performing collaboration; the art of bringing together a range of experts in their respective to achieve a superior outcome.

Following on from this, ensuring you comprehend and align both your contracts and insurances with the services you provide will se the potential risks faced in navigating multi-party engagements.

This was a clear example where the Contract did not align with the Services being provided by the Quantity Surveyor, resulting in contractual liabilities above and beyond their role.

In a separate matter, a financier was able to successfully claim a sum of around $2.000.000 from a Quantity Surveying firm due to alleged negligence in assessing the builder’s progress claims independently and advising if works were complete to the extent claimed.

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This article has been written by Matt Kuc. Matt is the Professional Risks Manager at Member Advantage Insurance Broking, the preferred partner for Insurance & Financial Services of AIQS.

VIEWPOINT

BETTER BUILDING PERFORMANCE WITH BIM INTRODUCTION This article examines Building Information Modelling (BIM) and building performance from the perspective of the opportunities they represent for the Quantity Surveying profession. Without doubt, BIM presents a number of challenges for Quantity Surveyors – including the variable quality of models they receive – but it is equally clear there are significant potential benefits for those willing to come to grips with them.

Let’s place all of these things in the

context of a few trends that can be identified in the construction industry: • Increasing digitisation of information, workflows and tools used by stakeholders. One of the more obvious manifestations of this is the use of BIM and performance assessment software.

• A more strategic, whole of life view of building procurement. This is based on the recognition that the initial design and construction cost compared to operational and maintenance costs is a small proportion of the total cost of

ownership, especially for large public projects such as hospitals.

• Greater attention is now given to predicting performance regarding energy consumption and maintenance costs, for example, during the early planning and design stages of projects.

• Rising expectations about building performance and project delivery, coupled with increasing building complexity, demands more collaborative procurement strategies.

Digital technologies offer the means for improving collaboration between stakeholders.

THE BUILDING ECONOMIST - JUNE 2018 - 31

VIEWPOINT

BIM AND BUILDING PERFORMANCE In addition to common uses such as visualisation of design proposals and detecting clashes between building elements, BIM also has the potential to significantly improve the performance of buildings. Linking models to simulation software makes it much more feasible to quickly and accurately explore alternative design solutions than in the past. This is because of the parametric behaviour of BIM models – as the designer changes the geometry of the model, the data associated with the model elements – areas, volumes, etc – are automatically updated. The time saved not having to remeasure and recalculate performance every time the design changes can be used to explore options and optimise the design.

Specialised software can be used for modelling and analysing such things as structural, thermal, acoustic, lighting, HVAC and fire behaviour, energy consumption and embodied carbon.

Australia has developed a number of innovative performance evaluation applications that work directly with virtual models or can exchange data with BIM authoring applications.

An example: • LCADesign™, Life Cycle Assessment (LCA) modelling software developed by the Cooperative Research Centre for Construction Innovation (CRC-CI), since succeeded by the Sustainable Built Environment National Research Centre (SBEnrc). Based on the ISO 14000 series of environmental management standards, LCADesign™ assists designers to make quantitatively informed decisions on the full

spectrum of operational and embodied environmental impacts of commercial buildings. It allows environmental assessments to be made in real time, directly and automatically from Building Information Models, dramatically cutting assessment time. Building product Life Cycle Inventory (LCI) databases are currently available for the supply chains of Australia, Netherlands, Belgium, Luxembourg, Germany and California.

COST AS A COMMON METRIC FOR EVALUATING PERFORMANCE Very few projects, if any, can afford to pursue performance aspirations unconstrained by budget considerations.

In the real world, quality, construction time, performance, etc have to be balanced against cost – trade-offs are the norm. The planning and design process is characterised by trying to find the optimum balance between a whole range of competing considerations. Cost is a metric applied to most considerations – it tends to be the common thread tying them all together.

As for other performance evaluation applications, cost estimation software linked to Building Information Models can be used to deliver savings and better value for money on projects. Quantities and costs can be calculated more accurately.

Just as important, the costing of design changes or alternative proposals can be calculated more quickly than by traditional methods. By linking directly to the model, they eliminate the risk of quantity and cost calculations getting out of alignment with the model or drawings.

BIM-enabled cost estimation software

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can also visually display revisions to models and drawings, and produce reports including Bills of Quantities and Cost Plans in a number of customisable formats. Leading cost estimation software has been developed in Australia. Apart from its quality, it has the advantage of incorporating Australian practices such as methods of measurement and classification systems.

BIM AS AN OPPORTUNITY FOR THE QS PROFESSION The foundation of Quantity Surveyors’ skillset is the disciplined and accurate calculation of quantities and costs; but their most valuable skills are those based on experience and judgement. These include being able to offer reliable advice about the feasibility of a project at the very earliest stage, usually based on very sketchy information.

The on-going advice Quantity Surveyors provide as a design passes through a number of iterations forms the basis for the informed decision making necessary for a successful outcome. The ability to progressively refine a model of a project with BIM and quickly update quantities and costs as changes are made can help underpin Quantity Surveyors’ judgement and give them greater confidence in their advice.

BIM is well suited to measurement and calculation, particularly of items that are subject to constant change. To be an effective tool, however, BIM requires a strategic and disciplined approach to data management. The approach it demands meshes well with the ordered analytical mindset of Quantity Surveyors.

Going further, Quantity Surveyors’

VIEWPOINT

expertise in providing crucial information for decision making as a project is progressively designed and constructed does not need to be confined strictly to cost.

BIM does not just provide a better calculation tool for Quantity Surveyors, it offers an opportunity for them to leverage the more valuable cost management skills they offer industry.

The evaluation of a number of building performance measures is based on the measurement of the same areas, volumes and quantities that Quantity Surveyors already make for the purpose of costing.

It makes sense for the measurement of many items for costing purposes and performance purposes to be conducted by the same group, particularly when this data is used to make further evaluations of cost versus performance. If Quantity Surveyors do not wish to learn how to directly calculate some aspects of performance themselves, there is scope for them to form productive working partnerships with those who do.

BIM IMPLEMENTATION CONSIDERATIONS FOR QUANTITY SURVEYORS To realise the benefits of BIM when implementing it in, an organisation requires: • A more strategic approach to project information management.

• Better organised office standards and management systems.

• Greater upfront investment of time and effort in a project.

• Greater coordination between team members.

• A planned, disciplined approach to modelling and data management by the whole project team.

• Open data exchange standards.

INDUSTRY CHALLENGES It is clear BIM is being increasingly adopted by the industry. Expectations about sharing project information by these means can only continue to rise.

This also highlights one of the challenges for Quantity Surveyors not mentioned in this commentary so far: Quantity Surveyors have to work with models created by other stakeholders such as architects and engineers for purposes other than cost management.

standards and shared workflows available at present is buildingSMART’s Industry Foundation Classes (IFC). To make this data schema more accessible and useable NATSPEC has recently launched the BIM Object Properties Generator. By providing an accessible shared library of BIM object properties it makes it much easier to create BIM content that can be exchanged between disciplines and across all projects. See www.propgen.bim.natspec.com.au

As there is no widely adopted standard practice for modelling, let alone modelling for quantity take-off and costing, the models that quantity surveyors receive can vary enormously in terms of quality and suitability for their purposes. Put bluntly: many models are not fit for Quantity Surveying purposes.

The only real, constructive solution to this problem is collaboration between stakeholders on the development of agreed modelling practice, data exchange standards and workflows necessary to support effective cost management practice when using BIM. A modest investment of effort in this endeavour would save an untold amount of time and effort on project after project trying to resolve these issues in a piecemeal way.

The only viable foundation for such

This article has been written by Neil Greenstreet. Neil is the editor of the NATSPEC National BIM Guide, author of the NATSPEC BIM Management Plan Template and Chair of Standards Australia Committee BD-104 Building Information Modelling.

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VIEWPOINT

Using OpenBIM for quantity surveying allows models from any software to be analysed and interrogated providing the following benefits: • Greater project and scope certainty.

• Fast, effective and efficient quantity take-off.

• Reliable and correct quantities.

• Automated calculations reduce human errors and allow revisioning of quantities.

• Quantity dissection into areas, blocks, elements, subcontracts, work breakdown structures, etc with speed.

• Visualisation and comparison of all project models for measurement to avoiding omissions.

• Enhanced query communication and collaboration with team members.

David Mitchell, QSx Consulting

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VIEWPOINT

Different BIM software produce models in different file formats. This can cause issues when exchanging information between consultants. buildingSMART, an industryled body has developed the Industry Foundation Classes (IFC) as a universal language to improve communication and interoperability between the different software platforms in the construction industry. With this file format, model information from one software can be exported and imported to another software platform for sharing and further use.

David Mitchell, QSx Consulting

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BCI

BUILDING COST INDEX THE BUILDING COST INDEX IS PUBLISHED IN THE PRINT VERSION OF THE BUILDING 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. 36 - JUNE 2018 - THE BUILDING ECONOMIST

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