The confidence trick
QSs may have their faults, but the greatest is they have lost faith in their own abilities. How can they keep up with prices, and retain the trust of clients?
We have had the “dodgy” developer, the “cowboy” contractor and now it seems to be the time to give the “querulous” QS a bit of a kicking. In recent weeks there has been a great deal of discussion about the future role of the quantity surveying profession and concern at the nature of some inaccurate cost plans by irked clients. There was even a whole letters page devoted to the topic in this very magazine.
So are some observers right to have lost faith in cost consultants?
It may surprise you to read that I agree with some of the commentary about the changing nature of the costs plans, the lack of transparency in the costing process and the need for our profession to shake itself up. We are in the era of BIM 2015 not the age of empire circa 1815.
The QS has a vital and, up until now, an unsung role in the whole process - whoever stood up in class at school and expressed the wish to be a QS when they grew up? Yet the designer, the project manager and the cost manager are all a part of the same team that give the client confidence to borrow the money to get things built.
The issue we seem to be facing is one of confidence in this role, or the lack thereof. The reason for this is complex and goes back to the recession and its long-term impact on the supply chain. Contractors are the part of the team that have been hit hardest since 2008. Vast swaths have been wiped out by a combination of poor cashflow, projects being cancelled or stalled, skills shortages, insecurity and in some cases pure stupidity. Those that are left now have the whip hand and they are not prepared to take on the risks that the client used to force them to adopt. You can cost steel, you can cost bricks, you can cost labour to a certain extent, but building in a margin for risk is not an exact science and in two-stage tendering, which is now the norm, “the risk premium” is being systematically added to contract costs that were not there before.
This has been exacerbated by the squeezing of timelines by clients who are keen to get projects built. The need for speed gives those QSs negotiating price variances a weak hand when it come to a situation where the on-site suppliers have a monopoly position. They are able to vary the tender in a manner that might have got them thrown off site in a previous era. The QS is playing a tricky game sitting between the client who needs the project built quickly and the supplier who wants to capitalise on their new-found strength. It’s not that the estimate of costs was incorrect, it’s that the market is changing on an almost weekly basis. The client wants risk taken by the contractor, the contractor won’t do this without recompense any more.
Also some of the cost consultancies themselves are not without blame. While not affected as badly as contractors, they also downsized during the recession, only to pick up quickly when the upturn came. Some were forced to merge or combine and, after the initial handcuffs were removed, experienced staff jumped ship. Hence some practices took on work they were not capable of managing and found that in a desire to meet timelines, costs estimates were submitted that had not been sufficiently future proofed.
This has led to under-costing and mistakes. At my firm we follow a specific methodology when taking over a job from a previous cost consultant who has disappeared: the ABC rule loved by the Met Police of Assume nothing, Believe no-one and Check everything.
Even the smallest projects of £5-£10m now need a team of two or three people working non-stop to keep the project within its cost estimate. It is hard when working for sophisticated clients who are building against the clock, in a market that has very complex challenges. Without the QS, the car will come off the track. In fact I believe in times like these the role of the cost manager becomes ever more significant and given the vicissitudes of the market, the profession will go from strength to strength. Now is the time when our skill set has a pivotal role in protecting and safeguarding the interests of our clients.
Richard Steer is Chairman of Gleeds Worldwide.
Opinion piece first published in Building on the 8th of July 2015