Administration of project preliminaries

by Fattah Aderinto

Estimators and project administrators often administer preliminaries as either function of project cost, project duration or adjudication parameters. Also, most contracts in the Middle East often include an item under preambles, indicating a fixed method of administering preliminaries. These approaches do not agree with the logic of preliminaries and in the long run, are to the disadvantage of both the client and the contractor.

Apart from this, administration of preliminaries has often been the cause of dispute between the consultant quantity surveyor and the contractors’ quantity surveyors.
The nature of preliminaries is such that it covers financial matters, which relate to the contract as a whole, and not confined to any particular work section. The contractor is thus given an opportunity to put a price for all matters affecting costs that arise out of the condition of contract, any special requirements of the client on his professional advice and for all temporary work necessary to carry out the contract.

As the construction work proceeds, the contractor is entitled to payment of the total value of work that is properly executed, less a specified percentage for retention, as it will be unreasonable to expect contractors to finance construction operations without assistance from employers. All the standard forms include provisions for periodic interim payments to be made for these reasons.

Two common methods of valuation of preliminaries that are often used by contract administrators are monthly proportions of total preliminaries and proportion of the contract value. In the first method, the cost of preliminaries is apportion over the contract duration on a monthly basis, while in the second method, the preliminaries are paid to the contractor in proportion to the total value of the contract he has achieved at any time.

Under both of these methods, any PC sums included in the contract must be deducted prior to calculation. The argument in support of these methods is that it saves time, but a number of disadvantages have been associated with their use.

The first method often resulted in overpayment to the contractor because when proportioning preliminaries against contract period, it does not take into account that work may be behind schedule, to the extent that the complete preliminaries costs may be paid to the contractor before the work is completed.

Secondly, neither of them deals effectively with lump sums inserted in the preliminaries. Examples of such items are site fencing and temporary roads, which may have to be inadequately valued because they have to be completed early.

Therefore, each item of preliminaries should be assessed individually and this permits a much more realistic and accurate approach to be adopted to suit the circumstances.

Certain items may be required at the outset and can accordingly be valued in full, such as the provision of temporary site fencing, construction of temporary roads, and the erection of hoardings, storage compounds and site huts.

These constituent parts are viewing from various cost parameters such as time related/on-going periodic cost, work related cost, site overhead cost lumpsum, establishment cost (front end cost), terminal lumpsum (backend cost) and time and work related cost (combined).

This process of breakdown preliminaries will be made easier and the results will be more satisfactory if the co-operation of the contractor is obtained. Once an agreement is made between both parties, these amounts will then be available for valuation purposes and later, for the adjustment of preliminaries, if necessary, in the final account.

CW