Calculation of the Professional Fees Payable

CALCULATION OF THE PROFESSIONAL FEES PAYABLE

TO A QUANTITY SURVEYOR IN NIGERIA

PRESENTED BY

ADEYANKINNU O. A. (ARC/03/1894)

OLANIRAN T. O. (ARC/05/5631)

SUBMITTED TO

THE DEPARTMENT OF ARCHITECTURE,

FEDERAL UNIVERSITY OF TECHNOLOGY, AKURE

IN PARTIAL FULFILMENT OF THE COURSE

BUILDING LAW (ARC 510)

LECTURER-IN-CHARGE

PROF. O. O. OGUNSOTE

NOVEMBER, 2009.

TABLE OF CONTENTS

Title pagei

Table of Contentsii

1.0Quantity Surveying 1

1.1Services rendered by Quantity Surveyors 1

1.1.1Contact Administration and Management2

1.2Approved Scale of fees professional Quantity Surveyors3

1.3Scale of fees for Consultant Quantity Surveyors3

1.4Scale of fees for Quantity Surveying in Multi-farious projects5

1.4.1Scale of fees approved as part of the Quantity Surveyors fees to the Mechanical or Electrical Engineer 5

1.4.2Stage payment for Quantity Surveyors6

1.4.3Calculations fees for stage payments for Consultant Quantity Surveyors6

1.4.4repetitive works for Quantity Surveyors6

1.5Additional Services6

2.0Schedule of Materials/Plants7

2.1Litigation and Arbitration7

2.2Rehabilitation, restoration and refurbishing work on damaged existing

building and structure8

2.3Construction cost of replacement for insurance and other purposes8

2.4Liquidation8

2.5Variation8

3.0Time charges9

3.1Project Management for Quantity Surveyors9

3.1.1Reimbursible expenses for Quantity Surveyors10

3.2Payment Stages10

3.2.1Reimbursable10

3.2.2Negotiation of fees11

3.3Consultancy Agreement 11

3.4Code of professional Conduct11

3.4.1The position of NIQS on Negotiation of fees and Consultancy Agreement12

3.4.2Effect of fees negotiation and consultancy agreement on Quantity

Surveyor’s Services13

4.0Conclusion16

References17

QUANTITY SURVEYING

SERVICES RENDERED BY QUANTITY SURVEYORS

Feasibility Studies of Capital Projects

Cost Modeling

Contract Documentation and procurement

Contract Administration and Management

Monitoring of Capital Projects

General works

Project Management

Facility Management

Direct Labour Projects

Arbitration and Expert Witness

APPROVED SCALE OF FEES FOR QUANTITY SURVEYORS

SCALE OF FEES

REIMBURSABLES

NEGOTIATIONOF FEES

NATIONAL INSTITUTE OF QUANTITY SURVEYORS (NIQS)

CODE OF PROFESSIONAL CONDUCT

THE POSITION OF NIQS ON FEES NEGOTIATION

EFFECT OF FEES NEGOTIATION AND CONSULTANCY AGREEMENT ON QUANTITY SURVEYORS’ SERVICES

CONCLUSION

1.0QUANTITY SURVEYING

Quantity surveying is a profession concerned with expertise in cost and procurement concerned with financial probity and achieving value for money in the conceptualization, planning and execution of building and engineering projects and developments. Quantity surveying is carried out in both new and refurbishment works. The profession responsible for the total cost and procurement management in Nigeria, for the achievement of client’s objectives in all types of capital project and development, from conception to commissioning and maintenance in all sectors of Nigeria, fir the attainment of sustainable National development and goals.

The Profession of Quantity Surveying is practiced in Nigeria along with the same pattern as in the United Kingdom and other Commonwealth countries. In America, they are known as Cost Engineers. The regulated and other Professions (Miscellaneous Provisions) Act 1978 recognised Quantity Surveying profession as one of the scheduled Professions while the decree No.31 of 1986 gave legal backing and recognition to the Quantity Surveying profession and also set up the Quantity Surveyors Registration Board of Nigeria (QSRBN) to regulate the Profession.

1.1SERVICES RENDERED BY QUANTITY SURVEYORS INCLUDE:

Feasibility Studies of Capital Projects

Which includes budgetary planning for annual, rolling, medium and perspective development plans, capital investment policy advice, advice on financial plans and procurements and cash flow forecasts and analysis. Others are profitability studies and Sensitivity analysis, value analysis and management and cost benefit studies, life cycle studies and cost-in-use and time effect on costs and profitability.

Cost Modeling which includes cost estimates and budgeting, cost planning, monitoring, and control to ensure that client's budget is not exceeded as well as cost studies and research of construction resources.

Contract Documentation and procurement. This includestendering procedures and contractual arrangements. Preparation of Bills of Quantities and other documents for obtaining tenders for the purpose of contract administration and tender evaluation, analysis and reporting.

1.1.1Contract Administration and Management

Preparation of interim valuations, adjustment and measurement of changes in scope of works, management of cost implications of contractual issues, cost control -preparing financial statements, cash flow and final accounts.

Monitoring of Capital Projects

Which includes programme management, project auditing as well as monitoring and evaluation of developments.

General services

Like preparation of cost reports, priced bills of quantities and appropriate documentation for:

• Capital allowances and taxation advice,
• Technical and Contract Auditing,
• Bank loans and facilities,
• Capital market finance proposals and
• Planning approvals.
  

1.1.2Project Management

Project Management reinforces client control over the complexities of modern developments. The Project Manager is the client's expert representative responsible for coordinating the whole development process to ensure timely completion within budget and performance requirements.

As Quantity Surveyors have been specially trained in economic, financial, management, legal and contractual aspect of construction, they are particularly well qualified for the role of Project Manager among others.

1.2APPROVED SCALE OF FEES FOR PROFESSIONAL QUANTITY

SURVEYORS

The quantity surveyors with other professionals in the construction industry have a standard scale of fees approved by the Federal government in 1996 which is based on the value of work done and/or contract sum. The consultant shall be paid for the services rendered in accordance with the scale of fees approved by the Federal government and published under the ‘consultancy fee payable by the public sector’. Fees shall be based on the accepted tendered estimated cost of the project but shall be calculated on the accepted tendered cost of construction in the lesser of the two amounts.

This may also include the final cost of provisional sum within the estimated cost of the project. Fees are based on the accepted total cost of the project regardless of the number of construction contract involved in accordance with employer’s requirement. The fee is calculated on the basis of first five million naira, next ten million naira like that… until the contract sum is exhausted. Payment thereof is in stages of contract of ‘pre contract, contract and post contract stages’.

Where repetitive work is involved, fee calculation for each element full fees are allowed on non repetitive work such as preliminaries and the first building or element of each type. Fees indicated on the remainder of the sliding scale for repetitive work shall be applied. Reimbursable expenses shall be allowed in addition to the agreed sum when authorized and approved by the employer in respect of transportation, accommodation and any form of traveling, supervision and printing of documents.

1.3SCALE OF FEES FOR CONSULTANT QUANTITY SURVEYORS

For the purpose of remunerating the Consultant Quantity Surveyor for his services projects are classified into the following two broad based groups.

i.SCALE OF FEES FOR QUANTITY SURVEYING WORKS IN PROJECTS WHERE THE ARCHITECT, MECHANICAL, ELECTRICAL OR STRUCTURAL ENGINEER IS THE PRIME CONSULTANT

The scale of fees for Quantity Surveyors in Projects where the Architect, Mechanical, Electrical or Structural Engineer is the Prime Consultant shall be as in Table 1.0

Table 1.0Scale of fees for Quantity Surveying works in projects where the Architect, Mechanical, Electrical or Structural Engineer is the Prime Consultant

COST O PROJECT (N) / FEES AS A PERCENTAGE OF COST OF PROJECT
Up to 5 million / 2.75%
Next 10 million of part thereof / 2.50%
Next 15 million or part thereof / 2.30%
Next 45 million or part thereof / 2.0%
Next 75 million or part thereof / 1.75%
Next 150 million or part thereof / 1.40%
Next 200million or part thereof / 1.0%
Balance over 500 million / 0.8%

(iii)Scale of fees for Quantity Surveying Works in Projects where the Civil Engineers is the Prime Consultant.

The scale of fees for Quantity Surveyors in projects like roads, bridges, etc. where the Civil Engineer is the Prime Consultant shall be as in Table 1.1 below.

Table 1.1Scale of fees for Quantity Surveyors where the Civil Engineer is the Prime Consultant

COST O PROJECT (N) / FEES AS A PERCENTAGE OF COST OF PROJECT
Up to 5 million / 1.37%
Next 10 million of part thereof / 1.25%
Next 15 million or part thereof / 1.15%
Next 45 million or part thereof / 1.0%
Next 75 million or part thereof / 0.87%
Next 150 million or part thereof / 0.70%
Next 200million or part thereof / 0.5%
Balance over 500 million / 0.40%

1.4SCALE OF FEES FOR QUANTITY SURVEYING IN MULTI-FARIOUS PROJECTS WHERE THE CONSULTANTS IN VARIOUS DISCIPLINES PERFORM AS PRIME CONSULTANTS

On this type of project, there are several Prime Consultants. Examples of such projects are the University, complexes, Housing Estates etc where the civil Engineer (Prime Consultant) takes care of Estate Roads, Architect (prime Consultant) takes care charge of Building, Electrical Engineer (Prime Consultant) takes care of street lighting, while the Structural Engineer (Prime Consultant) takes charge of the sewage treatment plant. Under these circumstances, the scale of fees for quantity surveyors as in table 1.0 and 1.1 are applied appropriately using each Prime Consultant as a base to determine the Estimated Total Cost of Project for his area of operation.

1.4.1SCALE OF FEES APPROVED AS PART OF THE QUANTITY SURVEYORS FEES TO THE MECHANICAL OR ELECTRICAL ENGINEER

1. Where the services of the Mechanical or Electrical Engineer is employed by the Quantity Surveyors in the preparation of bills of Quantities or making an input into the preparation of the bills of Quantities for a project, the fee payable to each Engineer shall be negotiated, but not more than 50% of the fee accruable to the Quantity Surveyors in consideration of cost of works of the respective Engineers.
2. SCALE FEES APPROVED AS PART OF THE QUANTITY SURVEYOR’S FEES TO THE CIVIL ENGINEER

Where the services of the Civil Engineer is employed by he Quantity Surveyors in the preparation of bills of Quantities or making an input into the preparation of the bills of Quantities for a project, the fee payable to the Civil Engineer shall be negotiated, but not more than 50% of the fee accruable to the Quantity Surveyors in consideration of the cost of civil works

iii.MULTI-FARIOUS PROJECTS

The rules enunciated in items (i) and (ii) shall apply to multi projects appropriately.

1.4.2STAGE PAYMENT FOR QUANTITY SURVEYORS

Stage payment for Consultant Quantity Surveyors are made as stipulated in paragraph 2 of section A.

1.4.3CALCULATING FEES FOR STAGE PAYMENTS FOR CONSULTANT QUANTITY SURVEYORS

Fees for stage payment for Consultant Quantity Surveyors shall be calculated as stipulated paragraph 3 of section a

1.4.4REPETITIVE WORKS FOR QUANTITY SURVEYORS

The scale of fees for repetitive works for Consultant Quantity Surveyors shall be as stipulated in section a (in paragraph 4)

1.5ADDITIONAL SERVICES

When the consultant Quantity Surveyors is employed to perform additional services beyond the normal service and contract period, he shall be entitled to remuneration at the rates indicated for the individuals services considered hereunder.

ADDITIONAL SERVICES STAGE 1

i.Feasibility or Viability Studies

The Consultant Quantity Surveyor is entitled to remuneration for this Additional Service at the rate of 0.2% of the Estimated Total Cost of Project.

ii.Pricing Bills of Quantities

This is the normal service of the Quantity Surveyor However, Revalidation or re-evaluation of a suspended, abandoned of terminated contract is an additional service which should be remunerated at a fee of 0.1% of the Estimated Total Cost of Project (ETC)

ADDITIONAL SERVICES STAGE 3 (See Table 20)

i.Making Any Site Visits or Attending Any Site Meetings Other Than The Normal Single Monthly Meetings

The Consultant Quantity Surveyor is entitled to remuneration in accordance with the man month rate(s) on Time Charges (Table 21)

ii.Any Visits or Work Done To Rectify defects During The Defect Liability

This is normal service of the Consultant Quantity Surveyor and therefore shall not be additionally remunerated.

iii.Any Normal Supervision Rendered Beyond The Original Contract Period

The Consultant Quantity Surveyors is entitled to remuneration accordance with the man month rates on Time Charges (Table 21).

Table 1.3:ADDITIONAL SERVICES STAGE 3

ITEM / DESCRIPTION OF SERVICE / FEES PAYABLE
(i) / Making any site visits or attending any site meetings other than the normal single monthly meetings / Man-month rates on Time Charge (Table 21)
(ii) / Any visits or work done to rectify defects during the Defect Liability Period / Normal Service No Additional Remuneration
(iii) / Any supervision rendered beyond the original contract period / Man-month rates on Time Charges (Table 21)

2.0SCHEDULE OF MATERIALS/PLANTS

Where a Quantity Surveyor is invited to prepare the schedule of materials. It shall constitutes an additional service and shall be remunerated at the rate of 0.1% of the Estimated Total Cost of Project

2.1LITIGATION AND ARBITRATION

The fee payable for these services shall be negotiated

2.2REHABILITATION, RESTORATION AND REFURBISHING WORK ON DAMAGED EXISTING BUILDING AND STRUCTURE

The Consultant Quantity Surveyor is remunerated in accordance with the relevant scale of fees for basic Quantity Surveying services applying the cost of restoration in place of cost of the project.

2.3CONSTRUCTION COST OF REPLACEMENT FOR INSURANCE AND OTHER PURPOSES

The service shall attract a fee of 0.5% of the Estimated Cost of replacement

2.4LIQUIDATION

Where an independent consultant Quantity Surveyor is appointed to advice the client on issues of Liquidation, he shall be remunerated in accordance with the man month rate(s) on time charges.

2.5VARIATION

Stage 3 payment which shall in this case be based on the Total Construction Sum (TCS) shall take care of this service. Therefore no additional fee is payable.

FLUCTUATIONS: PRICE INVESTIGATION

The fee payable for this service shall be limited to 1% of the amount to fluctuation

WHEN WORKS ARE DAMAGED OR DESTROYED DURING THE PERIOD OF CONSTRUCTION

Stage 3 payment based on the Total Construction Sum (TCS) shall take care of this service. Therefore no additional fee is payable.

RESIDENT SUPERVISION FOR QUANTITY SURVEYING SERVICES

The Quantity Surveyor is involved in resident Supervision in the following situations.

1. Where several Contractors and sub-contractors are opening on the same site or there are multiple contracts on one project.
2. Large projects of complex nature that require measure and value as work progresses on daily basis.
3. Where contracts are based on schedule of Rates or Approximate Bills of Quantities, which require site remeasurement as the work progresses.

The fees for Resident Supervision by the Consultant Quantity Surveyors is in accordance with the man-month rates as shown in Table 21

3.0TIME CHARGES

All man-month rates are applicable to time charges in accordance with the following principles

10 months (200 days) in a year

20 days in a month and

8 hour in a day

TABLE 1.4MAN-MONTH RATES FOR CONSULTANT QUANTITY SURVEYOR IN 1996

CATEGORY OF STAFF / MINIMUM YEARS OF EXPERIENCES / MAN-MOTH RATES N
Chief Resident Quantity Surveyor / 5 / 92,400
Principal Resident Quantity Surveyor / 12 / 78,000
Senior Resident Quantity Surveyor / 8 / 56,100
Resident Quantity Surveyor / 4 / 46,200
Assistant Resident Quantity Surveyor / Under 4 / 33,000
Snr. Technical Officer / - / 52,800
Technical Officer / - / 33,000
Asst. technical Officer / - / 23,100
Draughtsman / - / 16,500

The above detailed man-month rates are applicable in 1996. To obtain figures applicable in 1997 and other succeeding years, the Central Bank inflation index for 1996 and other proceeding years is applied.

3.1 PROJECT MANAGEMENT FOR QUANTITY SURVEYOR

Where a Quantity Surveyor is the project manager, the sliding scale of fees as detailed in paragraph 6 table 4 section A shall apply.

3.1.1 REIMBURSIBLE EXPENSES FOR QUANTITY SURVEYORS

The Clause under Reimbursible expenses applicable to Prime Consultant in Paragraph 7 or Section A shall apply.

3.2 PAYMENT STAGES

The proportion of the total fees payable to all categories of consultants for normal services at the different stages of implementation is as follows:

Stage 1: 25% of fees based on the estimated total cost of the project.

Stage 2: 50% of fees based on estimated total cost of project.

Stage 3: 25% of fees based on the estimated total cost of the project

The above is the position of the federal ministry of works and housing as at April 1996, while the Nigerian institute of Quantity surveyors(2004) stipulate that the fee payable to the consultant quantity surveyor shall be made as follows:

Stages Description of each stage % of fees

1 Preliminary Estimate 10%

2 Final Budget Estimate 15%

3 Tender Documentation 20%

4 Tender Analysis and Report 5%

5 Contract Documentation 20%

6 Contract Administration 25%

7 Final Account 5%

TOTAL 100

3.2.1REIMBURSABLES

Reimbursable expenses are maximum of 1% of the project and it’s distributed as follows:

Architect or prime consultant 40%

Structural engineer 15%

Quantity surveyor 15%

Mechanical engineer 10%

Electrical engineer 10%

Geotechnical engineer 5%

Builders 5%

3.2.2NEGOTIATION OF FEES

Clients most times particularly private clients may not want to pay the total fee of a commissioned quantity surveyor due to the selfish nature of private clients and corrupt activities of government officials on government projects. The quantity surveyor; in a bid to get commissioned break the code of conduct stipulated by the regulatory body of Nigeria institute of quantity surveyors by negotiating their fees or quoting any variation from the fees which is unethical on part of any culprit.

3.3CONSULTANCY AGREEMENT

As the name implies, consultancy agreement for construction professional is the agreement which states the involvement of any professional in a project, the relationship among the professionals, the roles taken by various professionals, the superiority of each of the professionals and an oath to abide by the ethical conduct of the various profession. Included in the consultancy agreement is the conditions of engagement of the professionals and the consultancy agreement is recognized by the Federal Government and the various professional bodies in the construction industry. The consultancy agreement is not expected to be breached by the professionals engaged in a construction work.

3.4CODE OF PROFESSIONAL CONDUCT

Members of the Nigerian Institute of Quantity Surveyors are governed by its Constitution, Bye-laws and Code of Professional Conduct, in addition to the General Laws of Nigeria. The practice of quantity surveying profession in Nigeria is regulated by Decree No.31 of 1986, which set up the Quantity Surveyors Registration Board of Nigeria. The purpose of the code is to regularise the level of discipline/skill and the behaviour of all categories of the membership of the Institute and the Registration Board in the pursuance of the practice of the profession of Quantity Surveying in Nigeria.
The code comprises six main sections containing inter-related clauses, which will be of universal application and deal with specific injunctions. All practitioners are expected to be conversant with all the provisions and apply the rules in their dealings with fellow professionals and the public in general. The subject headings of the Code of Professional Conduct include Introduction, Preface, Professional Obligations, Professional Conduct, Partnership and Company details, Registration of Practicing Firms, Remuneration, Firms/Companies, Consortia, Engagement in other Businesses/Occupations, General Practice rules; Services commissions, Taking over uncompleted commissions or supplanting existing commissions, Independent assessment of work by other practitioners, Presentation of Quantity Surveying documents etc., Standard name places and site boards, Copyright, Advertisement and Publicity; General Brochures, letters and Published Articles, Public Speaking, Lectures, Radio and Television appearance; Relationship with other Professional colleagues and Glossary .