Pp2 assignment

SCHOOL OF ARCHITECTURE, BUILDING AND
DESIGN
Bachelor of Quantity Surveying (Honours)
PROFESSIONAL PRACTICE [QSB 3614]
Name Student ID
Alan Chung Jia Zen 0321487
Christina Ho Chia Hui 0326499
Hong Li Vian 0327007
Lee Xin Ying 0322432
Muhammad Fareez Bin Shahar Sham 0322961
Soo Ping Zheng 0331365
Tham Kai Loon 0323593
Lecturer Name : Eddie Lim Sek Cheon
Submission Date : 29th October 2018
TABLE OF CONTENTS

1
CONTENT PAGE NUMBER
Question 1 2
Question 2 3 - 10
Final Account
Statement of Final Account
Supporting Detail of Final Account

2
QUESTION 1
The Letter of Award for the above works was issued for RM 81,200,000.00 based on the
tender sum submitted by the Contractor. As you were preparing the contract
documents for binding and signature, you found some errors in the rates for aluminium
windows works submitted by the Contractor, which were very low. Kindly advise the
actions that you will take.
Answer :
According to Pam clause 13.1, the contract sum cannot be adjusted or altered in any way
whatsoever. Any errors in the prices and rates shall be corrected and/or rationalized by the
Architect or Consultant.Therefore, I will rationalize the aluminum windows work's rates and
get contractor to agreed before I bind the contract document since if the contract documents
once are signed, both parties will be agreeing on the amount even it’s a lower or higher price.
Rate rationalisation is a process that rationalize the error/inconsistent rate submitted by
contractor. It's simply mean that whenever contractor submitted a rate that not following
market rate, too low or too high, deviate too far from market rate or sometimes like the
similar item such as concrete with same grade that have few different rates then as a cost
consultant, will help to change the rate to suit market rate. To rationalise the rate normally
will use previous project to compare or call for quotation.

3
QUESTION 2
In accordance with clause 30.10 of the contract, the contractor duly submitted
his Final Accounts within 6 months after the issuance of the Certificate of Practical
Completion. You are then required to assess this application and prepare the Final
Account for the apartment project based of the following valuations and adjustments
made to the Contract Sum:
Information provided are as follows:
a) The Architect had granted the Contractor’s first application for extension of
time and approved additional insurance premium amounting to RM 30,000.00 in
accordance with clause 24 of the contract due to the delay in the completion of
the works caused by the Employer’s late decision on the toilet design.
In his second application for extension of time, the Contractor submitted
an an application for extension of time due to exceptionally inclement weather
and a loss and expense claim for RM120,000.00 in his Final Accounts to you. The
Architect approved the extension of time as per Clause 23.8.
Answer :
The first application by the Contractor stated that the contractor had granted his
application for EOT due the late design by the employer with additional insurance
premium amounting to RM30,000.00. Based on Clause 23.8 (e) mentioned that the
late issuance of AI of Architect causes the Contractor to not receiving the necessary
AI in due time including those for or in regard to the expenditure of P.C. Sums and
Provisional Sums, further drawings, details, levels and any other information. The
insurance policies should be extended and Employer have to pay extra premium
which the Contractor can claim under clause 24.3 for loss and expense.
In his second application for extension of time, the Contractor submitted an
application for EOT due to exceptionally inclement weather and a loss and expense
claim for RM120,000.00. The Architect approved the EOT as the adverse weather
condition fall under Clause 23.8 (b). The Contractor is entitled to claim for EOT but
not entitled to claim for loss and expense as the delayed is caused by neutral events
and it was not the employer’s default so there are no monetary compensation. The
contractor and employer should share the burden of delay.
b) The following are the nominated sub-contractor’s accounts:

4
Original P.C. & NSC’s
Provisional Sums final account
I. Lift Services: RM 1,300,000.00 RM1,600,000.00
Profit @ 2% RM 26,000.00
Attendance as item RM 20,000.00
II. Air Conditioning Services: RM 2,300,000.00 RM 2,200,000.00
Profit @ 2% RM 46,000.00
III. Electrical Services: RM 2,700,000.00 RM 2,600,000.00
Profit @ 2% RM 54,000.00
IV. Provisional Sums: Guard House RM 1,000,000.00 RM 1,250,000.00
V. Contingency Sum RM RM 2,064,000.00
RM 9,600,000.00
c) You have to evaluate the following variations for final account :
I. The Contractor had priced RM 130,000.00 for the Contractor All Risk
Insurance policy in the Preliminaries Bills. The Contractor failed to

5
purchase this insurance when the works commence. The Employer, then,
bought and paid for the said insurance for RM 180,000.00 on behalf of the
Contractor, for which the Contractor agreed. The Employer wants to
recover this cost.
Answer :
Insurance is one of the most important item in the preliminaries which covers
indemnity for injury to person or loss and/or damage of property and indemnity to the
employer. Based on Clause 18.0 of PAM Contract 2006 (with Quantities), it is clearly
states the importance of insurance. In the contract, it is the contractor’s responsibility
to provide and purchase the insurance. The preliminaries have included this item to be
priced by the contractor.
The contractor should purchase insurance such as the Contractor’s All Risk
commonly abbreviated as ‘CAR’ and insurance for Workmen’s Compensation or
commonly referred as ‘WC’. According to clause 20.A.1, the insurance policy should
be valid up to the Completion Date and the extended maintenance cover shall be for
the Defect Liability Period plus a further three (3) months.
Clause 20.A.3 states that if the contractor makes default in insuring or
continuing the insure as aforesaid, the employer may insure against any risks in
respect of which the default has occurred and the amount of premiums and any other
cost incurred or paid by the employer shall be set-off by the employer under clause
30.4.
In this case, the contractor had priced the insurance for RM 130,000.00. Due
to some circumstances, he had failed to secure the insurance on time. The employer
then purchased the insurance on the contractor’s behalf, however the insurance for the
work as quoted by the insurance company and was agreed between both parties
became RM 180,000.00 which means the contractor had underpriced for the
Insurance Premium.
The solution for the employer to recover his cost is the employer may choose
to pay the contractor RM 130,000.00 during the progress payment first, but set-off
RM 180,000.00 at any time the employer wishes to do so. This means the contractor
will bear the extra cost of RM 50,000.00 and it cannot be claimed from the employer.
The employer’s rights to set-off against this item and any other items in mentioned
under clause 30.4.
However, this set-off will not be included in the Final Account. This is based
on clause 30.11(f) which states that this matter shall not be included in the Final

6
Account and the matters are to be resolved separately between Employer and the
Contractor.
II. Under the Preliminaries, the Contractor is required to provide a black and
white photocopier machine on site for the Resident Engineer’s use but this item
was left un-priced, i.e. BQ item was left blank in the rate/amount column in the
contract document. During the progress, the Architect instructed the Contractor
to provide a colour photocopier machine costing RM8,000.00 instead of the black
and white one as specified. Contractor submitted a variation claim for
RM8,000.00.
Answer :
In the situation stated above, the variation order is valid as as the black and
white photocopier, which is originally an item in the preliminaries of a BQ, are
changed to color photocopier as instructed by the architect to be provided under
Clause 11.1(b). Clause 11.1(b) refers to the variation means the alteration of
modification of design, quality or quantity of the Works including the alteration of the
kind or standard of any materials and goods to be used in the Works.
As such, the variation is valued under Clause 11.6(c). Clause 11.6(c) states that
if the works is not of a similar character, the valuation shall be at fair market rates and
prices determined by the Quantity Surveyor. Besides, Clause 11.6(e) are one of the
variation based on the situation which states that the rates and prices in the Schedule
of Rate shall determine the valuation of items omitted. If the omission substantially
vary the conditions of any remaining works are carried out, the prices of such
remaining items shall be valued under Clause 11.6(c).
In this case, the Architect has instructed to provide a color photocopier instead
of a black and white photocopier. As the black and white photocopier is left unpriced
under the preliminaries part in the Contract Document, it is deemed that the cost of
the photocopier had been included by the contractor in other items of the Contract
Document.
Therefore, the variation is considered works of not similar character. The
reason being is that the black and white photocopier cannot perform the same function
which is color printing as the color photocopier. Hence, it is works of not similar
character. The omissions of black and white photocopier is then required and the
addition of color photocopier shall be done. Under Clause 11.6(c), the value for the

7
addition of color photocopier will be determined by the Quantity Surveyor at a fair
market price, likewise for the value of omission of black and white photocopier under
Clause 11.6(e). Quotation on both the photocopier shall be asked for by the Quantity
Surveyor to determine the fair market price later.
III. The Contractor had delivered to site all marble floor tiles needed for the lift
lobbies as specified in the contract and construction drawings. However the
Architect decided to use granite floor instead and instructed the Contractor to
remove all the marble tiles from site. The Contractor paid RM 50,000.00 for the
marble tiles. The Contractor returned the marble tiles to the supplier but only
managed a refund of RM 30,000.00. The Contractor submitted a claim for the
loss of RM 20,000.00 that he suffered.
Answer :
The contractor is allowed to make a contractual claim for loss and/ or
expenses suffered or additional expense incurred when the default is caused by the
Employer or Architect. In this situation, the Employer is the one who has ordered for
a change in the material used and the Architect’s instruction is too late as the supplier
had delivered the marble floor tiles to the site and the Contractor had paid for it.
The variation order of changing the marble floor tiles to granite floor tiles
issued by the Architect is one of the criteria set under Clause 11.6 (c) of PAM
Contract 2006; “where work is not of a similar character to work as set out in the
Contract Documents, the valuation shall be at fair market rates and prices determined
by the Architect.”. The character of the work has changed and it is different from
what has stated in the Contract Document; it is agreed between the Contractor and
Employer in the contract that the floor tiles to be used for the lift lobbies are marble
floor tiles, however, the Architect now decided to change to granite floor tile.
Clause 11.7 allowed the Contractor to claim for additional expenses which he
has incurred or likely to incurred due to variation works under clause 11.6. Under
Clause 11.6 (c), it will only help the Contractor to cover the costs of the variation
work (as discussed above) which is the cost of the granite floor tiles but not the
additional expenses he incurred. In this situation, the Contractor has suffered the loss
of RM20, 000.00 as he only received RM30,000.00 when he returned the marble tiles
which cost RM50, 000.00 to the supplier.
According to clause 11.7 (a), the Contractor must give a notice to the
Architect in a written form which is to notify the Architect that he is intend to claim
for additional expenses which he has incurred due to the Variation order issued by the
Architect; an initial estimate of his claim together with all necessary calculations.

8
Other than that, the written notice should be submitted within 28 days from the date of
the Architect’s instruction (AI) or Confirmation Architect’s Instruction (CAI) is
issued. In this situation, the Contractor shall submit a written notice to the Architect
not later than 28 days from the day which the Architect instructs him to change the
marble tiles to granite tiles. The contractor should estimate how much that he is going
to claim, for example, approximately RM15,000 so that the Architect will be aware
that the Contractor is going to claim for certain amount of money. All these rules must
be strictly followed by the Contractor because the Contractor would not be able to
proceed to the following step without this written notice.
After the Contractor has completed the Variation ordered by the Architect
which is to change the marble tiles to granite tiles for the lift lobbies, he should
submit all the proofs like the delivery order, the invoice of refund by the supplier and
so on together with all necessary calculations within 28 days of completing the
variation work as stated in Clause 11.7(b) of PAM Contract 2006. If the Contractor
failed to do so, it will be interpreted that the Contractor decided to bear all the extra
costs himself.
In conclusion, after accessing all the matters discussed above, the request of
contractor to claim for the additional expenses of RM20, 000.00 can be approved as
long as the contractor has followed all the steps stated in clause 11.7 and the
additional expenses incurred is not due to his own negligence. Some adjustments need
to be made in the final account, the cost of the marble tiles ( RM50,000.00) is put
under omission while the cost of RM20,000.00 can be claimed under Additional
expenses.This adjustment of Contract Amount shall be part of the Final Account in
accordance to Clause 30.11(a).
IV. Mistake was made in the price for excavation through rocks at RM 50 per
m3. Item was not rationalised during contract documentation. However, original
quantity in BQ is 10 m3 but re-measured as-built quantity was 100 m3. The
Contractor submitted a claim for RM 55,000 based on a revised rates of RM 550
per m3 for the total quantity of 100 m3.
Answer :
According to Clause 11.1(a) under PAM Contract 2006, the addition,
omission or substitution of any work is deemed to be a variation work. As the first
10m3 is the original quantity stated in the BQ with the rates of RM 50 per m3, the
contract rates and prices should be used for the variation in accordance with Clause
11.6(a) which is the works have the similar character, executed under similar
condition and there is no significantly change in the quantity of works carried out.

9
The 10m3 of rock excavation will stick to the original rates stated in the BQ instead of
the revised rates due to this is the rates and quantity agreed by both parties when they
are entering the contract and cannot be made any changes or amendment.
Furthermore, Clause 13.1 states that the Contract Sum shall not be adjusted or altered
in any way whatsoever, other than in accordance with the express condition of the
Contract. Any errors in the prices and rates shall be rationalised by the Architect or
Consultant without any change to the Contract Sum before signing of the Contract.
Therefore, The Employer and the Contractor shall agree on all the rates and prices in
the Contract Bills before signing of the Contract.
In this case, there is an additional work for 90m3 of rock excavation. Due to
this 90m3 is not in the contract, so it is considered as a variation work. The condition
of this case is suited with the variation rules in accordance with Clause 11.6(b) as the
fair adjustment is allowed to the rates for the difference by using the contract rates
and price with the pre-condition that the work is the similar character but there is a
significant change in the quantity of work carried out. In this situation, the total
quantities of rock excavation became 10 times larger which is from the original 10m3
increased to 100m3, excavation method and the plant used are different due to
different quantities, so the Contractor is allowed to change the original rates to a fair
adjustment rates. Assumed that the RM 550 per m3 is a fair rates adjusted from the
contract rates which is RM 50 per m3, the contractor is allowed to claim the
additional 90m3 of rock excavation based on the revised rates which is RM 550 per
m3. This adjustment of Contract Amount shall be part of the Final Account in
accordance to Clause 30.11(a). In this case, the job for quantity surveyor is to
determine reasonable of the new rate submitted by the contractor.
The recommended revised amount of the rock excavation is RM 50,000.
Calculation:
First 10m3 (BQ),
10m3 x RM 50/m3 = RM 500
Remaining 90m3 (Variation Order),
90m3 x RM 550/m3 = RM 49,500
Total for rock excavation need to pay to the contractor
= RM 500 + RM 49,500
= RM 50,000

10
Project: Condominium Project
Employer: Eddie Lim Sdn Bhd
Contractor: Taylor’s BQS Sdn Bhd
FINAL ACCOUNT
RM RM
1.0 Original Contract Sum 81,200,000.00
2.0 Less: P.C. & Provisional Sums (1A) (9,600,000.00)
Total Builder’s works 71,600,000.00
3.0 Add: Variation works (V.O. Nos. 1 – xx)
Total Additions (2cii, iv) 57,500.00
Total Omissions (2ciii) (50,000.00)
Nett Additions 7,500.00
71,607,500.00
4.0 Add back: NSCs’ final account
4.1 Lift Services 1,600,000.00
4.2 Air – Conditioning Service 2,200,000.00
4.3 Electrical & Plumbing Service 2,600,000.00
4.4 Guard house 1,250,000.00
7,650,000.00
4.4 Profit and Attendance:
a. Profit @ 2% of RM 6,400,000.00 153,000.00
b. Attendance @ lump sum 110,000.00
263,000.00
5.0 Contractual Claims:
5.1 Additional Expenses (2ciii) 20,000.00
5.2 Loss and Expenses (2a) 30,000.00
50,000.00
FINAL CONTRACT VALUE 79,570,500.00

11
Project: Condominium Project
Employer: Eddie Lim Sdn Bhd
Contractor: Taylor’s BQS Sdn Bhd
STATEMENT OF FINAL ACCOUNT
Final Contract Value RM 79,570,500.00
Deduct: Amount previously certified (Cert No.1 – xx) RM
BALANCE DUE TO CONTRACTOR RM 79,570,500.00
Notes:
*Question 2a the loss and expenses claim for inclement weather, no approved by the
architect, dispute the claim also exclude from the final account
*Question 2ci , regarding set - off issue so that the cost exclude from final account
*Question 2cii, iv, purchases the color instead of b&w photocopier issued by architect
(8,000) and extra quantities of rock excavation for variation order (90m3 * RM550/m3 =
RM49,500)
So that total amount of addition valuation is RM57,500

12
Summary of Original Contract Sum
Item Description Original
Contract
Sum
Addition (Omission) Net Addition /
(Omission)
1.
2.
3.
4.
Preliminaries
Building Works
Local
Infrastructure
Works
P.C. and
Provisional Sums
RM
4,250,000.00
62,850,000.00
4,500,000.00
9,600,000.00
RM
-
-
-
-
RM
-
-
-
(9,600,000.00)
RM
4,250,000.00
62,850,000.00
4,500,000.00
(9,600,000.00)
TOTAL CARRIED TO
STATEMENT OF
FINAL ACCOUNT 81,200,000.00 - (9,600,000.00) 71,600,000.00

13
Summary of Variation Order
Variatio
n Item
Description Addition (Omission) Net
Addition /
(Omission)
VO/1
VO/2
Architect instructed the Contractor to
provide a colour photocopier machine
instead of the black and white
photocopier machine.
Extra quantities for rock excavation.
RM
8,000
49,500
RM
-
-
RM
8,000
49,500
TOTAL CARRIED TO
STATEMENT OF FINAL ACCOUNT 57,500 - 57,500

14
Summary Nominated Sub-contractor’s Final Account
NSC Item Description Original P.C. &
Provisional
Sum
NSC’s Final
Account
NSC/1
NSC/2
NSC/3
NSC/4
NSC/5
Lift Services
Profit @ 2%
Attendance as item
Air Conditioning Services
Profit @ 2%
Attendance as item
Electrical Services:
Profit @ 2%
Attendance as item
Provisional Sums: Guard House
Profit @ 2%
Contingency Sum
RM
1,300,000.00
26,000.00
20,000.00
2,300,000.00
46,000.00
40,000.00
2,700,000.00
54,000.00
50,000.00
1,000,000.00
2,064,000.00
RM
1,600,000.00
32,000.00
20,000.00
2,200,000.00
44,000.00
40,000.00
2,600,000.00
52,000.00
50,000.00
1,250,000.00
25,000.00
TOTAL CARRIED TO
STATEMENT OF FINAL ACCOUNT 9,600,000.00 7,888,000.00
Total NCS Final Account 9,364,000.00 7.650,000.00
Total Profit 126,000.00 153,000.00
Total Attendance 110,000.00 110,000.00

15
Summary of Extension of Time
Cause of Delay Clause Ref. Remarks
Employer’s late decision on the
toilet design
23.8 (e) Architect granted extension of
time to Contractor as the delay
is caused by Employer.
Adverse weather conditions 23.8 (b) The cause of delay is not the
Contractor’s fault as the delay is
caused by neutral event.
Summary of Loss and Expenses
Cause of Loss and
Expenses
Clause Ref. Amount
Claimed
Remarks
Employer’s late decision
on the toilet design
24.3 (a) RM 30,000.00 Contractor can granted for
RM30,000.00 as the cause of
delay falls under relevant event.
Adverse weather
conditions
Not a
relevant
event
- No provision for lost and
expenses for exceptionally
inclement weather as the delay
actually caused by neutral event
so both the employer and
contractor have to bear with the
cost. Hence, it is not approved
by the Architect.
TOTAL CARRIED TO
STATEMENT OF FINAL
ACCOUNT
RM 30,000.00
Summary of Additional Expenses
Cause of Additional Expenses Clause Ref. Amount Claimed
Change of marble floor to granite floor under
Architect Instruction after Contractor
delivered the marble floor tiles to site.
11.7 RM 20,000.00
TOTAL CARRIED TO
STATEMENT OF FINAL ACCOUNT RM 20,000.00

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