Pricing earthworks is such a skill, the general approach is to use a provisional sum, basically because none of us own a set of x-ray goggles and within reason, who knows what you could come across?
We are lucky enough to have Roger in house, he is a civil QS (rare as hens teeth!) and he is ALL YOURS to ask your questions about pricing earthworks. If you ever want to reach him directly… flick him a message on firstname.lastname@example.org.
Rogers answers your questions
Roger was good enough to answer some earthworks specific questions that arrived in our inbox, the questions included;
- Using fixed price contracts VS m3 rates on trucks and machine hire, and how to take into consideration the skill level of operators
- Managing truck time when faced with traffic delays
- Managing traffic management plans in built up areas
- Managing expectations when using provisional sums, and how to protect yourself from ensuring you can claim legitimate variations.
Here is Rogers response;
With Earthworks and Excavations to Residential (and Commercial/Industrial for that matter) there naturally would be a number of contributing factors to establish and determine if one would provide pricing based on fixed Lump Sum or a Sum Allowance (aka Provisional Sum).
Below are the considering factors for providing a Lump Sum (predominantly based on a certain qty's m3 at a rate) or Sum Allowance (based on productivity/no days) :
- If for example you knew the location and had a pretty good idea of the average time it took to get the excavating plant from A to B for the works to be done.
- Whether the site is on a slope or level ground.
- Access requirements should be determined if excavating for materials to be set aside (s/a) for re-use or carted away (c/a) to a secure location. For example if it is anticipated there may be a large degree of non-productive time for this, one would add a % based factor to your pricing/rate per m3 for this.
- If the conditions of the existing soils/earths are known (to a degree of accuracy). For example if it is already known that at a certain depth one can expect to hit rock/clay/silt/swamp, etc. this may influence a higher rate/m3.
One of the questions used an example of the busy Auckland traffic causing blowouts on pricing. Well this is potentially by no means the fault of the contractor/sub-contractor (unless it can be proved that the contractor/sub-contractor mis-managed the lead times/anticipated date for works to commence), therefore if being requested to provide a lump sum price, the contractor would and should always qualify exactly what they have allowed for and the basis of the pricing (e.g. if any of the factors above have influenced the pricing). By qualifying, we mean use extremely clear tags and clarifications.
It isn't very often that a contractor or sub-contractor would get a price agreed and contract procured for excavations/earthworks based on productivity rates or a m3 rate, unless there is a BoQ provided to them which alleviates the contractor of any risk against provided quantities being incorrect.
Roger's earthworks tags
I would say the most important qualifications (or tags) one should always stipulate on the bottom of the quote/tender(for this type of works), etc. are as follows:
- Clarify exactly what has been allowed for in your pricing for the earthworks.
- The Contractor should always visit the site before pricing or submitting a price to satisfy themselves that there are no abnormalities that they may see or need to know about before submitting the final price.
- If on a steep slope or close to the boundary of a neighbouring property, tag whether you have allowed for benching, shear wall retention, propping, and any other 'Risk of Collapse' of the excavation.
- If you have priced based on a certain productivity rate for a crew/team of guys or a number of days to complete the excavation works, then it would perhaps be a good idea to qualify that your pricing allows for your teams having clear undisturbed access, and that the pricing does not allow for unforeseen ground conditions, pumping of water from excavations, etc.
- Always state on your quote/tender the exact documents referenced that the client has submitted to you for pricing so that there is no ambiguity and misunderstanding on drawing revisions/ specification, etc. used for the pricing.
- If you as the contractor have made allowance (or for that matter have excluded) for traffic conditions/weather delays and any other delays beyond your control, you should state and qualify this, as this single reason may be the reason why another contractor is much higher or lower than you on pricing. At least by stating this the client can ask you to add or take out of the pricing to compare apples with apples against your competitor.
- If you as the contractor/sub-contractor intend making use of another sub-contractor to carry out the works, then make sure you have predetermined/set agreed rates from them both for plant hire/operator charge per hr, etc.
Roger's real-life examples
Just as matter of interest and as a ‘real life’ example - in South Africa and a few other countries like India, Fiji, etc. most residential building sites (unless large development) are excavated by hand still (reason being is that labour rates are so cheap), so it is a lot easier to price as you have labour constants for m3/hr based on normal ground conditions, or alternatively in clay/hard rock, etc.
"One particular site I worked on and priced at the coast on a steep slope, we encountered solid rock in the stepped excavation so had to use dynamite to implode the existing ground/rock. This took days and days to do impacting the initial cost by 4x, but because we had clarified in our quote that our excavating and reduce dig allowed for standard ground conditions in the area and carting away materials by standard means, we were covered when submitting the variation for the extra over cost on this to which the client subsequently agreed."
So there you have it – terrible cleverness from Roger. How lucky are we to have him! Remember to get in touch with him directly if you have any other questions.
Will Kennedy of Kennedy Bros - Riverton, had this to say about RedQS "The massive benefit to using RedQS is there are no unknowns. For us as builders, it is an independent service that helps the clients understand the value of the home."
Like an acid test to see if the homeowner is genuine or not, Will added this "A lot of clients don’t realise how expensive it is to build, even to the minimum standards. People are surprised when we get the full QS report and it gives them a good reality check. If a client isn’t willing to pay two thousand dollars for a QS report, then they won’t be willing to pay for a $390,000 house."
Nelson based builder Chris Donnelly says "Previously I thought cost was an obstacle to using RedQS, but that was because I didn’t understand how to allow for it in my offsite overheads. I also didn’t know previously that there are different services, like materials only, labour only or peer checking of my own pricing, not just the full take off services."
The without prompting he added "I have already been recommending RedQS all over the place!"
Good on ya mate!