ADDIS COLLEGE

ARCHITECTURAL & URBAN PLANNING DEPARTMENT

PROFESSIONAL PRACTICE

COMPILE BY ID
BISRAT MANDEFRO 124/ 16

INSTRUCTOR SUBMISSION DATE

JUNE 21, 2025
1. Construction Industry
1.1 Overview of the Construction Industry

The construction industry plays a critical role in the economic development of any country. It
encompasses a wide range of activities including the planning, design, construction,
maintenance, and repair of buildings and infrastructure. This industry is not only one of the
largest global employers but also serves as a key driver of investment and innovation.

It is typically divided into three broad sectors:

 Residential: Housing developments, apartments, condominiums

 Commercial: Office buildings, shopping centers, hotels
 Infrastructure: Roads, bridges, airports, utilities, etc.

1.2 Key Players and Stakeholders

The construction ecosystem is a complex web involving multiple players, each with distinct roles
and responsibilities. Major stakeholders include:

 Clients/Owners: Individuals, corporations, or governments funding the project.

 Architects and Designers: Responsible for developing the design and technical
drawings.
 Civil and Structural Engineers: Ensure the design is structurally sound and meets
codes.
 Contractors and Subcontractors: Responsible for actual construction work.
 Project Managers: Oversee coordination, scheduling, and budgeting.
 Quantity Surveyors: Specialists in cost estimation and financial management of
construction.
 Suppliers and Vendors: Provide materials, machinery, and equipment.
 Regulatory Authorities: Set the legal framework and oversee safety and zoning
compliance.

1.3 Current Trends and Challenges

The modern construction industry is being reshaped by several dynamic trends and tough
challenges:

1.3.1 Trends:

 Sustainable Construction: Increasing emphasis on green materials, energy efficiency, and

LEED certifications.
 Digital Transformation: Use of BIM (Building Information Modeling), drones, and IoT
for efficiency and precision.
  Modular and Prefabricated Construction: Faster build times and reduced waste through
factory-assembled components.
 Smart Buildings: Integration of intelligent systems for HVAC, lighting, security, and
energy use.

1.3.2 Challenges:

 Rising Material Costs: Volatility in steel, concrete, and timber prices can wreak havoc on
budgets.
 Labor Shortages: Skilled labor is becoming increasingly scarce in many regions.
 Regulatory Complexities: Navigating legal requirements, permits, and codes can delay
projects.
 Environmental Pressures: Projects must increasingly demonstrate environmental
responsibility.
 Project Delays: Caused by poor planning, weather, supply chain issues, or financing
hiccups.

2. Quantity Surveying
2.1 Role of Quantity Surveyors in Construction

Quantity Surveyors (QS) are the financial and contractual backbone of the construction process.
Their primary mission? To ensure that projects are delivered on budget, provide value for
money, and comply with legal and quality standards.

A QS bridges the technical and financial aspects of construction, working closely with architects,
engineers, contractors, and clients. From conception to completion, they monitor costs, assess
risks, manage procurement, and resolve disputes if they arise. They're often involved even after
the construction ends—managing final accounts and evaluating post-occupancy performance.

In short: if construction were a ship, the quantity surveyor would be the navigator steering it
through cost storms and legal reefs.

2.2 Key Tasks: Cost Planning, Cost Control, and Financial Management

1. Cost Planning (Pre-Construction Phase) Cost planning starts early and helps ensure a
design that fits the client’s budget. This includes:

 Preparing initial feasibility studies and budget estimates

 Advising on materials, construction methods, and design alternatives based on cost
 Conducting life-cycle costing to assess long-term maintenance and operation expenses

2. Cost Control (During Construction) Once construction begins, QSs shift focus to
monitoring and managing spending. Their tasks include:

 Preparing and evaluating tenders and contracts

  Tracking actual costs versus forecasted budgets
 Managing change orders and variations
 Preventing cost overruns through proactive financial monitoring

3. Financial Management (Throughout the Project Lifecycle) beyond individual tasks, QSs
provide strategic financial oversight by:

 Managing cash flow forecasting and interim valuations for payments

 Preparing financial reports for stakeholders
 Negotiating with subcontractors and suppliers to secure cost-effective deals
 Finalizing the project’s financial close-out and post-project evaluations

2.3 Importance of Accurate Measurements and Documentation

Measurement and documentation are the lifeblood of quantity surveying. Accurate quantities
underpin realistic budgets, fair contracts, and efficient construction execution.

 Bills of Quantities (BoQ): A detailed listing of materials, components, and labor

required for a project—key to precise cost forecasting.
 Measurement Standards: Use of standardized rules like the New Rules of Measurement
(NRM) or SMM ensures uniformity and fairness.
 Record Keeping: Thorough documentation helps track variations, settle claims, and
manage disputes. Every change, no matter how minor, can impact project cost and needs
to be recorded.

3. Project Cost Estimation

3.1 Methods of Cost Estimation

Cost estimation isn't one-size-fits-all—different methods apply depending on the stage of the
project, availability of information, and required level of accuracy:

1. Detailed Estimation (Bottom-Up) This method is used when the design is complete or near-
complete. It involves quantifying each element (materials, labor, equipment) and assigning unit
costs.

 Highly accurate, but time-consuming

 Best for tendering and final budgeting

2. Parametric Estimation Relies on mathematical models using historical data and project
parameters (e.g. $/sq.m or $/bedroom).

 Faster and good for early-stage budgeting

 Accuracy depends on quality of data
3. Analogous Estimation (Top-Down) Uses data from similar past projects to estimate costs of
a new one.

 Quick, but less accurate

 Useful for early feasibility studies or when detailed data is lacking

4. Expert Judgment Taps into the experience of seasoned professionals. This is often combined
with other methods.

 Subjective, but valuable where data is limited

5. Three-Point Estimating Incorporates uncertainty by considering optimistic, pessimistic, and

most likely scenarios.

 Useful for risk-based planning and probabilistic models

3.2 Factors Influencing Project Costs

Cost estimators must juggle a wide array of variables that can influence total costs. These
include:

 Design Complexity: Innovative or custom designs require unique materials, engineering,

and labor skills
 Site Conditions: Terrain, soil quality, access roads, and weather significantly affect
productivity and logistics
 Materials & Labor Prices: Volatility in supply chains and availability of skilled labor
can lead to rapid cost shifts
 Project Duration: Longer schedules might incur higher costs in overhead and inflation,
but rushed jobs can also be more expensive
 Project Location: Urban centers often have higher costs due to regulations, logistics, and
cost of living
 Regulatory Requirements: Building codes, environmental assessments, and safety laws
can impose compliance costs
 Technology and Equipment: Use of modern tech like prefabrication or automation may
reduce long-term costs but involve higher upfront investment

3.3 Tools and Software for Cost Estimation

Modern cost estimation has gone digital, with powerful platforms helping estimators forecast and
track project finances more accurately:

 CostX: 2D/3D takeoff tool that integrates with BIM for precise quantity extraction and
estimating
 Bluebeam Revu: Known for markup and takeoff features on PDF drawings
 PlanSwift: Easy-to-use tool for quick material and labor takeoffs
  Primavera P6 and Microsoft Project: Though not pure cost estimators, they help
integrate time and cost in project schedules
 Autodesk Quantity Takeoff and Revit: Commonly used with BIM to derive quantities
directly from digital models
 Candy (by CCS): Especially popular in infrastructure-heavy regions for its robust cost
control and reporting functions
 Excel: Still widely used for custom-built estimating models and budget templates

Thorough cost estimation isn’t just about numbers—it’s strategic foresight. It minimizes
surprises, builds trust with stakeholders, and strengthens a project’s financial backbone.

4. Contract, Specification & Quantity Survey

4.1 Types of Construction Contracts and Their Implications

Construction contracts define the legal and financial relationship between the client (owner) and
contractor. The type of contract selected impacts project risk distribution, cost control, timeline
enforcement, and dispute resolution. Here are the major types:

1. Lump Sum (Fixed Price) Contracts

 Contractor agrees to deliver the project for a single agreed sum.

 Implication: Risk is mostly on the contractor; beneficial when project scope is clear and
stable.
 Challenge: Any variations or unexpected conditions may lead to disputes or change
orders.

2. Cost-Plus Contracts

 Client pays actual cost of work plus a fee (fixed or percentage).

 Implication: Greater transparency but less cost certainty for the client.
 Often used when full scope is unknown at the start.

3. Time and Materials (T&M) Contracts

 Based on actual labor hours and material costs.

 Implication: Flexible, good for small-scale or undefined-scope projects.
 Needs careful monitoring to avoid runaway costs.

4. Unit Price Contracts

 Pricing is based on agreed rates for defined work items (e.g., per meter of piping).
 Implication: Common in civil and infrastructure work; predictable where quantity
variability is high.

5. Design-Build Contracts
  One entity handles both design and construction.
 Implication: Single point of responsibility, often faster, but may reduce transparency and
design independence.

Each contract shifts responsibility and risk differently—and quantity surveyors play a key role in
advising on contract selection and preparing tender documentation.

4.2 Importance of Specifications in Project Execution

Specifications are the technical instructions that complement drawings in a construction project.
They define the quality, standards, workmanship, materials, and performance criteria required.

Why they matter:

 Clarity: They translate client expectations into tangible execution guidelines.

 Compliance: Ensure conformity with legal, safety, and environmental standards.
 Quality Assurance: Help avoid ambiguity that leads to rework or disputes.
 Tendering: Bidders need specs to prepare accurate cost estimates and assess feasibility.
 Dispute Resolution: Serve as a reference when disagreements arise over workmanship or
deliverables.

There are typically three types:

 Performance Specifications: Focus on outcomes rather than methods.

 Prescriptive Specifications: Detail the exact materials, brands, and procedures.
 Proprietary Specifications: Specify particular brands or manufacturers.

Imagine them as the DNA of a project—they define the outcome before a single brick is laid.

4.3 Integration of Quantity Surveying with Contract Management

Quantity surveying and contract management are tightly interwoven. While the QS ensures the
financial and quantitative integrity of a project, contract management ensures legal compliance
and smooth execution.

How they complement each other:

 Tender Documentation: QS prepares the Bill of Quantities (BoQ); contract managers

ensure alignment with contract terms.
 Variation Orders: QS quantifies changes; contract managers assess their contractual
validity.
 Progress Payments: QS evaluates work done and certifies interim valuations; contract
managers ensure these follow payment schedules.
 Claims and Disputes: QS provides cost-related evidence; contract managers build the
case for arbitration or negotiation.
  Contract Close-Out: Final account preparation is led by QSs, while contract managers
ensure all terms are fulfilled.

5. Project Valuation
5.1 Methods of Property Valuation

There are several recognized approaches used to assess property value, each chosen based on
property type, available data, and valuation purpose:

1. Cost Approach Assumes a buyer wouldn’t pay more than the cost to build an equivalent
structure.

 Formula: Cost of replacing or reproducing the building – depreciation + land value

 Common for new or unique buildings with few market comparables (e.g. hospitals,
schools)

2. Sales Comparison Approach (Market Approach) Values a property by comparing it to

recent sales of similar properties nearby.

 Adjustments are made for location, condition, size, and features.

 Ideal for residential properties and highly active real estate markets.

3. Income Approach Estimates value based on a property's income-generating potential.

 Direct Capitalization: Net Operating Income (NOI) ÷ Capitalization Rate

 Discounted Cash Flow (DCF): Projects future cash flows and discounts them to present
value.
 Commonly used for commercial, rental, or investment properties.

4. Residual Method Used primarily in development scenarios.

 Land Value = Projected Sales Value of Completed Project – Development and

Construction Costs – Profit Margin
 Helps assess the viability of undeveloped or underused land.

5. Gross Rent Multiplier (GRM) A simpler version of the income approach.

 Formula: Property Price ÷ Gross Rental Income

 Useful for rough comparisons between rental properties.

5.2 Factors Affecting Property Values

Property values are influenced by a wide range of interrelated variables:

  Location: The golden rule—proximity to amenities, infrastructure, and economic centers
significantly boosts value.
 Demand and Supply: Market trends, economic cycles, and interest rates sway property
desirability.
 Condition and Age: Newer, well-maintained properties tend to command higher prices.
 Zoning and Legal Use: Permitted land use affects potential development and earnings.
 Size and Layout: Usable floor area, design efficiency, and flexibility of space play key
roles.
 Environmental Factors: Views, flood risk, pollution, and climate resilience matter more
than ever.
 Future Potential: Investors often value properties based on development rights or
gentrification potential.

5.3 Role of Valuations in Financing and Investment Decisions

Property valuations are not just for paperwork—they're the compass guiding major financial
decisions:

 Loan and Mortgage Approval: Lenders use valuations to determine how much they’re
willing to lend and set loan-to-value (LTV) ratios.
 Risk Assessment: Helps banks and investors evaluate potential losses in case of default
or price drops.
 Investment Appraisal: Investors analyze valuations alongside expected returns to assess
profitability.
 Taxation and Insurance: Valuations help set fair property taxes and determine
insurance premiums.
 Negotiations and Disputes: Accurate values ensure fair pricing in sales, inheritance,
divorce, or compulsory purchase.
 Performance Tracking: Valuations help property funds and REITs assess portfolio
growth or depreciation.

6. Procurement in Construction
6.1 Overview of Procurement Methods

Procurement methods define the relationship between design, construction, and the project
owner. Each method carries unique dynamics of responsibility, risk, and workflow.

1. Design-Bid-Build (DBB) The most traditional method:

 Step 1: The client hires a designer to complete the design.

 Step 2: Contractors bid to construct the project based on that design.
 Step 3: The lowest (or best) bid is awarded the contract.
Implications:

 Clear separation between design and construction

 Competitive bidding may reduce costs
 Risk of disputes if design errors surface during construction

2. Design-Build (DB) A single entity handles both design and construction:

 Speeds up timelines and encourages collaboration

 Minimizes finger-pointing between designers and builders
 Risk: reduced client control over design decisions

3. Construction Management at Risk (CMAR) A construction manager (CM) is engaged

early:

 Offers input during design to improve constructability and cost-efficiency

 CM guarantees maximum price, sharing risk with the owner
 Promotes partnership, often used on complex or fast-track projects

4. Integrated Project Delivery (IPD) A highly collaborative model:

 All major stakeholders (owner, architect, contractor) share risks and rewards under one
multi-party agreement
 Focused on transparency, value engineering, and lean construction

5. Public-Private Partnerships (PPP or P3) Used for infrastructure or public facilities:

 A private firm finances, builds, and sometimes operates the project

 Reduces public capital expenditure, but contracts are long-term and complex

6.2 Evaluation and Selection of Contractors

Choosing the right contractor is critical. The process includes:

1. Prequalification

 Filters firms based on experience, financial standing, safety record, legal history, and
technical capacity
 Ensures only capable bidders proceed

2. Tendering

 Bidders submit proposals based on the design and BoQ

  Evaluations may follow lowest-bid, best-value, or two-envelope methods (technical and
financial proposals evaluated separately)

3. Bid Evaluation Involves:

 Price review: Is it realistic or suspiciously low?

 Technical assessment: Does their methodology meet the project’s complexity?
 Risk analysis: Can they handle the scope within time and quality?
 References: Performance history on similar projects

4. Interviews and Negotiation Clarifies uncertainties, evaluates team chemistry, and aligns
expectations before contract award.

6.3 Importance of Procurement Strategies in Project Success

An effective procurement strategy aligns the project's objectives, budget, timeline, and risk
appetite with the method and partners selected. Its importance includes:

 Risk Management: Determines who bears what risk—design flaws, cost overruns,
delays
 Schedule Control: Some methods fast-track delivery by overlapping design and
construction (e.g. Design-Build)
 Cost Certainty vs Flexibility: Fixed-price contracts offer predictability; others allow
more adaptability
 Stakeholder Integration: IPD and CMAR promote collaborative decision-making,
reducing adversarial relationships
 Quality Assurance: Strategic procurement ensures that qualified teams and clear
specifications are in place, reducing errors

7. Contract, Specification & Quantity Survey

7.1 Summary of Key Contract Types and Their Uses

Understanding contract types is vital—they dictate how risks, responsibilities, and payments are
handled throughout a project. Here’s a streamlined look:

 Lump Sum (Fixed Price) A single fixed fee for the entire project. Use: When design is
complete and well-defined. Good for cost certainty.
 Cost-Plus Client pays actual construction costs plus a fee (percentage or fixed). Use:
Suitable for projects with undefined scope or when flexibility is needed.
 Time and Materials (T&M) Payment based on actual hours and materials used. Use:
Ideal for short-term or emergency works with unpredictable scope.
 Unit Price Payment based on quantities of work performed at agreed unit rates. Use:
Common in roadwork or infrastructure projects where quantities vary.
 Design-Build (DB) Single party responsible for both design and construction. Use: For
faster project delivery and streamlined coordination.
  Construction Management Contracts Owner hires a manager to oversee and coordinate
trade contractors. Use: Suitable for large or complex projects needing phased design and
execution.

7.2 Importance of Clear Specifications in Minimizing Disputes

Specifications are the technical DNA of a project—they instruct what, how, and to what standard
work should be executed. Here's why clarity in specs is crucial:

 Prevents Ambiguity: Vague specs can lead to different interpretations between

designers, contractors, and clients.
 Reduces Claims and Delays: Clear details on materials, workmanship, and tolerances
help avoid costly rework or litigation.
 Supports Tendering Accuracy: Bidders need specs to price work correctly. Poor specs
= poor bids = unreliable budgets.
 Strengthens Quality Assurance: Specifications act as benchmarks for inspections,
acceptance criteria, and defect management.

Best Practice Tip: Use industry standards like CSI MasterFormat, and pair prescriptive specs
(specific brands/materials) with performance specs (expected results) for both precision and
flexibility.

7.3 Best Practices in Quantity Surveying for Effective Project Delivery

Quantity Surveyors (QS) are cost custodians and contractual guardians. Here’s how they ensure
effective project outcomes:

 Comprehensive Cost Planning: From feasibility studies to budget development and life-
cycle costing, QSs ensure that design aligns with funding from the very beginning.
 Accurate Measurement and Documentation: Creating Bills of Quantities (BoQ) and
maintaining change logs to support transparent cost control.
 Value Engineering: Propose cost-saving alternatives without compromising quality or
functionality.
 Contract Advice and Risk Management: Assist in selecting appropriate contract types
and identifying potential financial and legal risks.
 Interim Valuations and Payment Certification: Certify contractor payments based on
work progress to ensure fair compensation.
 Final Account Closure: Prepare the final financial statement, including change orders, to
reconcile payments and close out contracts efficiently.