Infrastructure Cost Mitigation Improving Procurement of Cost Management & Estimation Services November 7, 2017

Improving Procurement of Cost Management & Estimation Presentation Outline Introduction What is a Professional Quantity Surveyor (PQS)? Promoting Independent Consulting QS CACQS Canadian Association of Consulting Quantity Surveyors Cost Management and Estimation – types of QS services in infrastructure Cost Estimates and Plans – ‘class’ of cost esimates for varying design stages / levels of cost certainty Cost Management during construction – improving cost mitigation & levels of cost certainty CACQS Audit on procurement of Consulting QS by public bodies Audit Results & Recommended Improvements

Improving Procurement of Cost Management & Estimation Introduction Donny Afonso BSc (Quantity Surveying) Accreditions: PQS Professional Quantity Surveyor, and MRICS Member of Royal Institute of Charter Surveyors 20 years in construction and infrastructure industry. Generally as: consulting QS Quantity Surveyor, project manager (client representative), and Lender’s Technical Advisor Principal of Pelican Woodcliff Inc Consultant QS firm in Richmond Hill, ON, operating for 20 years Involved in CACQS Canadian Association of Consulting Quantity Surveyors: Since 2012 Currently a Board Director and Secretary

Improving Procurement of Cost Management & Estimation What is a Professional Quantity Surveyor (PQS)? QS Quantity Surveyors building and infrastructure cost specialists Measure value of construction from concept to completion PQS Professional Quantity Surveying Accreditation issued by CIQS Canadian Institute of Quantity Surveyors Tested and proved to be meet CIQS membership requirements, and CIQS membership is to be kept current with annual CPD requirements QS Services with the following objectives in mind Cost Planning and Control - Help owners & design professionals plan for and control the costs of their building and infrastructure work Financial Success - Play a critical role in ensuring achievment of the financial goals of building and infrastructure capital development projects

Improving Procurement of Cost Management & Estimation What is a Professional Quantity Surveyor (PQS) (Cont’d)? QS Tools and techniques embody the following principles: Initial Cost Planning - Provide frame of reference containing realistic first estimate and plan how this will be spent, Cost Control Mechanism - Provide control mechanism that allows feedback or checking against the approved initial cost plan as work proceeds, and Procedure for Cost Mitigation - A clearly defined procedure for taking remedial action as the project proceeds

Improving Procurement of Cost Management & Estimation Promoting Independent Consulting QS History of CACQS Canadian Association of Consulting Quantity Surveyors Association launched 2012 (in currrent form) Senior representatives of consulting firms offering independent QS services Member Firms need at least one director with PQS accreditation (or similar) Mission of CACQS to advance the consulting QS Quantity Surveyor industry in Canada Memorandum of understanding with other QS organisations CIQS Canadian Institute of Quantity Surveyors RICS Royal Institute of Chartered Surveyors Based on tri-party Agreement dated June 16, 2016 CACQS, CIQS and RICS collectively agree to advance QS quantity surveying in Canada CACQS Best Practice Guide 2016 – best practice for various QS services Membership By-Law (March 28, 2017) emphasizing QS ‘independence’

Improving Procurement of Cost Management & Estimation Cost Management and Estimation – types of QS services in infrastructure Numerous QS services but main roles on building and infrastructure projects are: Cost estimation and planning Provide initial Cost Estimate or Cost Plan Provide updates to Cost Estimates or Cost Plan at various design stages Cost control, Change Order Reviews Assess that changes to Contract Price are reasonable and are ‘at market’ Cost control, Payment Certification Assess that requested payments for Work in Place are reasonable based on work performed (see CACQS Best Practice Guide for details of these and other QS services)

Improving Procurement of Cost Management & Estimation Cost Estimates and Plans – ‘class’ of cost esimates for varying design stages / levels of cost certainty What is the capital budget? The following are various capital cost components:

The Objective is to Balance Budget and Scope : Improving Procurement of Cost Management & Estimation Cost Estimates and Plans – ‘class’ of cost esimates for varying design stages / levels of cost certainty (Cont’d) The Objective is to Balance Budget and Scope : Need – a predetermined Goal Scope – Elements necessary to achieve Goal Budget – Amount of money dedicated and approved by the Authority having Jurisdiction to achieve a Predetermined Goal

Improving Procurement of Cost Management & Estimation Cost Estimates and Plans – ‘class’ of cost esimates for varying design stages / levels of cost certainty (Cont’d) Cost estimates - a ‘snapshot’ at particular point in time of probable cost of a project based on available information cannot be better than the info provided & cannot make up for deficiency in that info. Cost Estimates or Cost Plans are done in 4 classes; Class D to Class A (with Class A being highest precision, highest level of effort) Class of estimates & attributes: Source: ‘Estimate Classes: An explanation’ in Construction Economist dated June 2002.

Improving Procurement of Cost Management & Estimation Cost Management during construction – improving cost mitigation & levels of cost certainty Cost estimates - a ‘snapshot’ at particular point in time of probable cost of a project based on available information - Iterative process up until contract award QS Services for Cost Control during construction: change order review – Assess changes to Contract Price - reasonable & ‘at market’? payment certification - Assess requested payments for Work in Place - reasonable based on work performed? Stages of Cost Management & Estimation:

Improving Procurement of Cost Management & Estimation CACQS Audit on Procurement of Consulting QS by public bodies CACQS’ emphasizing ‘independence’ of QS services: CACQS By-law in March 2017 QS being independent considered the Best Practice to avoid Conflict of Interest. CACQS considers it Best Practice to have: Consulting QS independent of Project’s: Construction, Design, and Equity Consulting QS engaged by Owner directly More efficient way to engage QS services. Especially when cost mitigation, value engineering etc are necessary CACQS also wanted ‘health check’ performed on industry’s approach to procuring QS Services – do RFP list ‘PQS’ as accreditation requirement? PQS is deemed an appropriate accreditation requirement for QS Services

Improving Procurement of Cost Management & Estimation CACQS Audit on Procurement of Consulting QS by public bodies (Cont’d) Audit was done in collaboration with member firms. Review of random sample - of RFPs that QS firms responded to in 2016 and 2017. Review of 112 random RFPs. Picked to include sample of various Canadian regions, various levels of government, and various public bodies. Albeit a small sample, it would hopefully indicate market trends. The following were the Audit results: CACQS conclusion Generally not reflective of Best Practice approach Procurement of QS services could be improved Tested Requirement # of RFPs meeting requirement % of Total RFPs QS required to have PQS accreditation 20 18% QS directly engaged by Owner 18 16% Both QS required to have PQS and directly engaged by Owner 6 5%

Improving Procurement of Cost Management & Estimation CACQS Audit on Procurement of Consulting QS by public bodies (Cont’d) Next Steps? QS organisations (including CACQS) to support public body procurement teams on Best Practice for engaging cost management and estimation Industry to consider some standard procurement approach to engaging consulting QS firms CACQS to repeat Audit more current RFPs and with increased sample size. To measure and report on current RFP practices. Thank You – Questions?