The Role Of Quantity Surveyors In Cost Overrun In Building Projects Of New Zealand

Importance of Cost Management in Building Projects

Question:

Discuss about the Quantity Surveyor Role in Cost Overrun in Building.

A construction project is considered to be successful when it is delivered with the required quality standards within the estimated time and budget. The management of costs in an efficient manner is essential for achieving the desired outcomes from a project. The major expectation of the clients is that the project does not exceed approved budget (Adafin et al., 2017). Hence, Quantity Surveyors (QS) are being employed for managing the financial aspects related to the construction process in building projects. The building construction projects are dynamic nature and involves risks as the outcomes maybe uncertain. The cost overruns is a major risk that arises in a construction project which may seriously have an adverse effect on the client from financial perspectives. The effectiveness in terms of investments are reduced due to cost overruns and additional financial support is required to complete the project (Olanrewaju, 2016). Therefore, the profit margins of the contracting organizations are reduced or eliminated due to poor performance in terms of cost.

Smith (2014), states that cost overrun is considered as a common phenomenon associated with projects for building construction. Hence, the involvement of Quantity Surveyor (QS) is important to manage the building construction project in terms of the financial aspects. This study will help to illustrate the role that is being played by Quantity Surveyors while there is occurrence of cost overruns in projects for building construction. This study focuses particularly on the building construction projects of New Zealand to determine the causes of cost overruns and how Quantity Surveyors mitigate their negative effects. The investigation on the chosen topic will also help to gain an understanding of the service obligations of Quantity surveyor in the project development process, contractual service and professional ethics.

This study is aimed at investigating the role that is being played by Quantity Surveyor in cost overrun in building projects of New Zealand. This study will help to determine the roles and responsibilities of Quantity Surveyor in cost management for building construction projects. The efficient management of costs is an essential factor for the success of any construction project. There are various risks associated with development of construction projects and the most common is cost overrun which can even lead to project failure. The demand for Quantity Surveyor for cost management is increasing day by day with the rise of building construction projects in New Zealand. Hence, this research has been chosen to determine how Quantity Surveyors help to mitigate or reduce the negative impact of cost overrun in building construction projects.

The role of the quantity surveyor is just to estimate the total budget that will be required to complete a construction project.  Not only this but also they have many other roles to server also.  They must make sure that the production and construction budget are properly managed and efficient as well (Zhao, Mbachu & Domingo, 2017).  They also develop the “quantity schedule” estimating the labor and material cost those measures by the contractor’s tender.  In order to accomplish a construction project successfully the roles of the Quantity surveyors those are needed to be maintained are as follows:

Role of Quantity Surveyors in Cost Management

• Regardless of the type of the construction project such as house, bridge etc the finance details are managed by the surveyors
• They are responsible to complete the project within estimated timeframe
• Responsible to complete the project within budget
• Mitigate the issues the contractual parities (Ji, Mbachu & Domingo, 2014)
• For different kinds of buildings they are responsible to prepare replacements

Before the final submission of the project the budget for the construction should be estimated considering the requirements. For each phase of construction, whether the budget is sufficient or not is also calculated by the construction project surveyors (Smith, 2014).  The main operation and project functionalities that the project surveyors should focus on include the project cost, materials, labor cost and other services.

Mbachu and Cross (2015), perceived that the commitments of Quantity Surveyor are preliminary cost direction, cost organizing and regard organization, legitimately restricting procedures. Moreover, offering, choice of impermanent specialist, valuation of advancement work, project organization and extended efficiency. Adafin, Rotimi and Wilkinson (2015), raised a couple of organizations of Quantity Surveyor should be given in the midst of the assorted period of the undertaking.

In the pre-contract arrangement: The Quantity Surveyor has the role of preparing and making the cost plan, direction on cost of setup gathering's recommendation. Also, screen cost recommendations in the midst of the point by point setup design, keep up and make cost plan.

For the tendering stage: Quantity Surveyor should urge on the legitimately restricting documentation to clients. The Quantity Surveyor moreover needs to prepare recommendations for interim portions, post-contract cost control and last record (Mbachu, 2015). Additionally, Quantity Surveyor should give and esteem bills of sums, design cost examination, direct on money related implications, train on the use concerning areas and give an estimation of regions, give urging on legitimate issues. The surveyors can also help with probability considerations for a venture. They can largely survey what is related with the task, in light of estimations of the draftsman's or client's portrayals. The Quantity surveyor looks at the sketchers' and planners' outlines, perceives the costs included, and after that sets a general evaluated budget for spending on the venture (Adafin et al., 2016). They may differentiate the undertaking and others like it. The Quantity surveyor would then have the capacity to configure costs to empower the arrangement to aggregate stay inside the plan for budget using sensible courses of action. The last positive estimate is set up by the Quantity surveyor, together with a venture sketcher. This is the explanation behind evaluation of tenders.

After the beginning of construction works, the Quantity surveyor will be able to provide wage data so the client can sort out the records essential for each period of the endeavor. The Quantity surveyor can in like manner assess the impacts on cost when changes occur within the undertaking happen, for instance, delays, and agree on 'assortment' with legally binding specialists (Adafin, Wilkinson & Rotimi, 2015). The Quantity surveyor can outfit a deal with a record with an endeavor report and enable a client by preparing draw down supports for money to be progressed by the bank. The setup of discussions between clients and the originators as well as building legally binding specialists is another part in a couple of exercises. After satisfaction of improvement, the Quantity surveyor can set up a declaration of indisputable record in which the real costs for all portions of the movement are recorded.

Roles and Responsibilities of Quantity Surveyors in Cost Management

Cost overrun are typical on development projects. Development projects are dynamic and dangerous endeavors where results are regularly dubious. The business is portrayed by the development of irregular bespoke structures on destinations whose conditions and imperatives are very factor. Durdyev, Omarov and Ismail (2017), opined that each project includes exceptional plan and development challenges which are commonly embraced by impermanent associations gathered for the specific undertaking; lessons learned are hard to catch in these conditions. Undertakings frequently set aside a long opportunity to finish and constantly there are strains between the needs with respect to quality, time and cost. Durdyev et al. (2017), demonstrated that the market of construction is profoundly recurrent with resulting weights on assets. Amid the pre-contract period of the task the QS is fundamentally worried about guaranteeing that the rising outline stays inside spending plan. This procedure to a great extent focusses on checking the plan group's proposition and exhorting the group on the different cost issues and issues as they emerge. This can be a testing assignment, and is one that proceeds into the development stage. Smith (2014), had stated that the undertaking of controlling expenses amid the development stage, be that as it may, goes up against a radical new measurement with the passage of the temporary worker. Temporary workers are business endeavors whose need is to make a benefit. In New Zealand, most building projects are secured utilizing 'conventional' aggressive offering courses of action to name temporary workers. This approach has the impact of stifling the overall revenue contractual workers can charge in trying to win the delicate. Undoubtedly, in recessionary periods, contractual workers might be headed to delicate negative edges keeping in mind the end goal to produce Cashflow and to secure rare work. It is guaranteed, that where 'a vocation is losing cash' that the contractual worker will look to recuperate their misfortunes from the customer by different means. Cost control in these circumstances can turn into an exceptionally requesting assignment.

Adafin, Rotimi and Wilkinson (2016), illustrated that Cost overruns decrease the viability of projects and require extra back to be raised. On open works contracts cost invades redirect reserves from different activities, making negative thump on impacts in the more extensive economy. In the private segment the extra subsidizing must be sourced from holds or obtained. In contracting associations, poor cost execution lessens or takes out net revenues. In extraordinary cases this may prompt extend or organization disappointment. Cost overwhelms, in this manner are a noteworthy issue among development customers, project directors and development organizations alike. They cause debate, baffle project goals, and strain continuous business relations. Counteracting cost overruns, in this way, is a key target amid the execution of development projects.

In context to Quantity Surveying, the cost control process includes guaranteeing that the monetary allowance is not surpassed without prior approval from client. In this unique situation, the monetary allowance is the agreement entirety in addition to the possibility whole. The agreement aggregate on generous tasks is regularly separated in a valued bill of amounts, which thus is connected back to the first cost arrangement (Lessing, Thurnell & Durdyev, 2017). Possibility wholes are likewise regularly related back to the cost design, however on numerous events the possibility is not made known to the contractual worker and stays secret to the customer, planner and amount surveyor. Genuine advance is observed, estimated and routinely contrasted with the cost design and income conjectures. The interims between interval (regularly scheduled) installments shapes a helpful comparator period for this procedure. The contractual workers' installment applications furnish amount surveyors with definite input about the advancing position of variable parts of the record. Investigations of fluctuations inside PC (prime cost) totals, temporary aggregates, varieties and cases may uncover that remedial activity is required to keep up budgetary control (Wong, Salleh & Rahim, 2015). The QS reports the current budgetary position and foreseen last record to the customer and configuration group for the most part on a month to month premise. The customer's response to awful news might be 'awkward' for those included.

The Service Obligations and Professional Ethics of Quantity Surveyors

Lessing, Thurnell and Durdyev (2017), states that apart from this it is the role of the construction project surveyors to prevent the cost overrun and time overrun as these will interrupt the project success In New Zealand.  They survey consists of 55 construction opinions given by the professionals.   Different actions are again ranked to avoid construction project overrun issues.  On a scale of 1 to 3 these measurements are rated by the QS. 3 is a higher rank whereas; 1 is poorer one. The below table represents the result of the measurement:

Principally, there are three kinds of research rationality, for example, positivism, interpretivism along with it is realism. In this specific study, the expert associated the possibility of positivism as the exploration reasoning which understands reality of the examination work. It takes the investigation focus to do legitimate examination on the accumulated data to make a suitable framework (Taylor, Bogdan and DeVault, 2015). Along these lines, the reasoning is relied upon to appreciate to lead the examination on chosen topic for this particular research.

Two different types of research approaches are there such as deductive and inductive and based on background of the research topic “Role of a quantity surveyor in construction projects of New Zealand” the researcher should adopt the most suitable one to conduct this study.  For this research topic the inductive approach is avoided as it is based on real scientific research frameworks.  Considering the research background for this topic deductive research approach is selected because it implies on the established theories and data collection also.  It is expected that the above mentioned research questions will help to learn more dominant idea related to this research domain.

Mainly, two types of data are associated with research such as primary and secondary data that can be used for this particular topic. The primary data for conducting this research will be collected with the help of survey by preparing online questionnaire. The secondary data will be collected from the previous studies being published as journals and blogs over the internet (Lewis, 2015). For this particular research a mixed approach will be used for collection of data to have a deep understanding of the topic. The different perspectives of the chosen topic can be identified from the mixed data collection approach.

The primary data source will consist of contractors and construction project managers who will participate in the online surveys to provide some light on the chosen topic. The primary data will also be collected by holding interview sessions with the managers being operating in the construction industry. The secondary source of data will comprise of the peer reviewed journals focused on the role of Quantity surveyor role in cost overrun associated with construction projects. The survey with online questionnaire will help the researcher to generate a statistical outcome to ensure success of research on the chosen topic (Flick, 2015). The sampling will be done based on random probability method and a total of 100 participants will be chosen for the online survey. The sample size will be 100 with 50 contractors and 50 project managers from different construction industries of New Zealand. The suitable application of data collection method will ensure successful analysis of data to achieve the desired outcomes from the research.

Conclusion

Research design is an essential element of research methodology as it provides and well-structured and organized approach for the researcher to conduct the research successfully. It is being considered to be the blueprint for conducting the research work and it presents the detailed plan for research along with data analysis. The research design can be divided into three major categories as exploratory along with explanatory and descriptive (Silverman, 2016). For this research on the chosen topic, explanatory design is chosen for assisting and gaining knowledge on the selected research topic. The chosen design will help the research to gain an insight into the selected topic as it will help to fulfill the gaps identified from previous studies.

The exploration will be led according to the examination rules. The exploration will be submitted inside the time and additionally the information those are gathered to lead the examination will be precise according to the learning of the specialist. The information will not be unveiled to any outsider (Panneerselvam, 2014). The review will be directed according to the run and no such inquiries will be solicited that may hurt the feelings from the clients. All the examination inquiries will be picked according to the exploration subject. The examination will be done sincerely with the goal that it gives the precise result and discoveries according to the whole investigation of the gathered information.

The focus of this study is on determining the role being played by Quantity Surveyor in cost overrun from the perspective of building construction projects. The effective management of cost is an essential aspect for the success of a construction project and this study will demonstrate whether there is a need or not for Quantity Surveyor in such projects. This study will help the researcher to analyze the strengths and weaknesses of the Quantity Surveyors and their impact on construction projects. The study will contribute towards determining the various actions that are being taken by the Quantity Surveyors to control the costs of construction projects.

Conclusion

This research project will investigate the role of Quantity Surveyor in context to the occurrence of cost overruns in the projects of New Zealand related to building construction. A wide range of skills have to be employed by a Quantity Surveyor to gain competitive advantage in their profession. They must have the capability of negotiating with the different types of people that will be associated with the building construction projects. Hence, this study will also demonstrate the skills and knowledge of Quantity Surveyor that are essential for cost control and management in building construction projects. The involvement of a Quantity Surveyor is essential for the success of construction projects as they play an important role in applying suitable methods or techniques for management and controlling of costs. This research will also help to identify the potential strengths along with the weaknesses of Quantity Surveyors in context to the building construction projects.

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