Who needs bills of quantities?

While training I recall that measuring building works was a laborious, labour intensive task and one that became increasingly expensive. Since then, notwithstanding significant developments in terms of the preparation of bills of quantities (bills) through the use of technology and different codes of measurement, their worth continues to be questioned. Recently an associated question “Are bills of quantities a dying art?” was debated at RICS.org/LinkedIn. The relevance of the answer depends on the importance of bills in modern-day construction.

To enable bills to be prepared it is necessary for the work to be defined through drawings. But the drawings have to be adequate for such a purpose. Making decisions on design and specification has time implications and can delay commencement on site. Consequently, bills are often based on incomplete information and, as a result, bills of approximate quantities have grown in significance. The concept of a contract sum based on bills, generally seen as a traditional form of procurement, has been seriously challenged.

Traditional procurement has been rejected by some industry participants. As bills are an integral part of traditional forms of contracting, their existence is also questioned; but bills can come in many forms and have many functions.

According to the Association of Project Management’s definition “Project management is the process by which projects are detailed, planned, monitored, controlled and delivered”, notwithstanding the fact that its definition has since been updated, it surely points to the fact that some means is necessary to detail a project and create a basis for measuring change. Bills achieve those purposes. The issue is not that bills are redundant - they are not - the definition and quantification of building works is essential. The issues are its place and the functions it performs within the procurement process.

Take the use of a JCT Minor Works Contract or, indeed, a JCT Standard Building Contract without quantities where it is not intended that bills are required to define the work. Bills may, nevertheless, be prepared by or on behalf of the contractor to quantify the work for pricing, ordering or obtaining sub-contract prices.

Quantification is necessary, but here it is not generally presented in a form that constitutes a contract document - the risk of quantification remains with the contractor. That risk extends even to items not detailed on the employer’s drawings but deemed necessary for completion. Such items will be at the contractor’s expense (Williams vs Fitzmaurice 1858). It is because of such transference of risk to the contractor that some employers prefer not to use contracts where bills are a contract document. But the extent of risk transference depends on the scope of the work and how well it is defined.

Contracts that have bills as contract documents limit the risk to the contractor in that quantification risks generally rest with the employer. “The quality and quantity of the work included in the Contract Sum shall be that set out in the Contract Bills” (clause 4.1 SBC 2011), but the contractor shall nevertheless “carry out and complete the Works in accordance with the Contract Documents” (article 1 and clause 2.1).

The contract documents include the contract bills and consequently the scope of work may go beyond anything defined in such bills. Nevertheless, the bills determine risk as to price and where work is not measured in accordance with the stipulated method of measurement or quantification is inaccurate, it must be corrected.

Although fixed price lump sum tendering has fallen out of favour with some in the industry because of difficulties with certain forms of competitive tendering, it is clear that it is the tendering process, that is the problem , not the bills (where prepared correctly).

Quantification of building work serves many other purposes, including setting target costs, providing data for cost planning and forming a basis for valuing variations. Its use in building contracts is inevitable, but whether or not it is the basis for agreeing a fixed price is another matter.

With developments in technology and in BIM it is now cost effective to quantify building works in ways to meet the different needs of participants. It is not whether we should produce a quantification of the works, but rather how is it produced and how is it used within the legal framework adopted by the contracting parties.

So if measuring is a dying art, it surely needs to be addressed so that new technologies can be programmed to produce outputs to conform not only to the RICS’ New Rules of Measurement but other forms of measurement as required.

Peter Hibberd is the past chair of the Joint Contracts Tribunal