THE SOUTH AFRICAN COUNCIL FOR THE QUANTITY SURVEYING PROFESSION
PROJECT SPECIFIC REPORT
Name of Candidate
AACE member no #180020
Date of Submission:
30 June 2013
TABLE OF CONTENTS
Article I. INTRODUCTION 4
Section 1.01 Overview 4
Section 1.02 Personal Role 5
Article II. THE CLIENT 7
Section 2.01 Client Overview 7
Article III. THE PROJECT 8
Section 3.01 Project Details 8
Section 3.02 Purpose of Project 9
Section 3.01 Project Organisation Structure 9
Article IV. PROJECT CONSULTANT TEAM 11
Article V. QUANTITY SURVEYOR’S APPOINTMENT 12
Article VI. MAIN CONTRACTOR’S APPOINTMENT 13
Section 6.01 Tender Documentation 13
Section 6.02 Tender Stage 14
Section 6.03 Tender Adjudication 14
Section 6.04 Contract Award 15
Article VII. CONSTRUCTION PROGRAMME 16
Article VIII. PROJECT ADMINISTRATION BY THE QS 18
Section 8.01 Interim Valuations 18
Section 8.02 Appointment of Subcontractors 18
Section 8.03 Cost Management & Reporting 19
Article IX. FINAL ACCOUNT 20
Article X. POINTS OF SPECIAL INTEREST 21
Article XI. PROJECT SUMMARY 22
Article XII. CONCLUSION 23
Section 12.01 Challenges / Frustrations 23
Section 12.02 Lessons Learned 23
TABLE OF FIGURES
Figure 1: QS Internal Organisation 5
Figure 2: Project Consultant Team 11
LIST OF ABBREVIATIONS
ABBREVIATION FULL TERM
MSG Masingita Group of Companies
LPA LPA Architects
RNS Retail Network Services
BJV BJV Quantity Surveyora
DEV Devcon Development Managers
EQF EQF Project Managers
VLA Vlaming Construction
ROS Rosnovanu & Associates Engineers
Article I. INTRODUCTION
Section 1.01 Overview
The Protea Glen Shopping Centre is a project and highlight in my career as a Quantity Surveyor, the reason for the statement above is due to the responsibilities that I had on such a prestigious project, as my previous experiences with other companies proved to be easier as we were grouped into teams and assistance was freely available as these companies had larger resource bases, however being part of larger teams meant that responsibilities were divided into subgroups and each managed their own section which meant that although you had full duties a QS in your respective section, you never quite had the full picture.
I have in this report tried to detail as many highlights as possible in the vast array of daily activities and experiences which have shaped the very mind-set in which I pen this down today. A shopping centre in my personal view is one of the more complex type of projects to run for a QS budgetary and financially speaking. As these involve many of the elements of construction which are not mainstream and conventional in nature, these are due to many factors, firstly due to the many different tenants of which all have very specific requirements to portray their very own and personalized corporate identity.
This wonderful experience was gained during my employ at a relatively small firm called BJV QS, owned and very well managed by Mr Bernard Venter himself registered as a Professional Quantity Surveyor, and began practising with a specialisation on shopping centres in 2003. My tenure at this firm was during August 2011 until end June 2012.
In an attempt to demonstrate how I fitted into the internal organisational structure, I have detailed the internal structure within the organisation in Figure 1: QS Internal Organisation below:
Figure 1: QS Internal Organisation
Section 1.02 Personal Role
I was personally responsible for the delivery of the Quantity Surveying services on behalf of Bernard Venter. Mr. Venter, who was also my SACQSP supervisor during my journey at his firm, was responsible for the overseeing the project, the quality control and the checking and signing off of the necessary documentation up to the final account.
Although I was not involved right at the conceiving of the project, those areas of experience were gained in abundance on other projects as highlighted in the General Projects Report submitted together as a broad based map of my experiences. However I got into the project at a fairly early stage of the project with bulk earthworks having just begun on site and the tender awarded only a month and a half prior, not much work was completed and coming in at an early stage meant it was quite a good time in undertaking the journey together with the team. This was welcomed due to my lack of gaining great amounts of exposure during this phase of a project.
As we were already into the post contract phase of the project, I will just touch on some of the highlights of the pre-contract phase to the best of my ability, these were notes made through the procession of the project and I was required to catch up on the aspects of the project which were needed to fulfil certain post contract expectations.
The project went through various revisions of the estimation and viability studies, namely 5, this was done to maximize the Return on Investment, it was also done after the Geotechnical investigation as this proved some risk on the foundation method to be executed, initially it was believed that piling would fit suitable however due to the dolomitic nature of the underlying soil, a raft was proposed by engineer ROS. The project was then given the green light and Nedbank Corporate Property finance agreed to finance 80% of the Capital Expenditure requirement, due to various satisfactory ROI scenarios and fast tracking the project to come online within 16 months from inception to opening.
My personal role after the above mentioned process and awarding of the tender to Vlaming Construction was to enforce the contractual obligations as per the JBCC PBA (2000 series) (July 2005 edition), and the management of tender arrangements, oversee the quantity measurements, attending of site meetings, attendance at tenant design and co-ordination meetings, drawings control, site instruction management, updating of BoQ as new information came online (this was due to fast tracking the BoQ was very provisional and tendered premature to the full detailed design), monthly valuations, site measurements, value engineering of elements and estimating cost prior to information being sent to site, managing the impact on cost of the various changing site conditions and co-ordinating with the various tenants their specific internal fit-out requirements and specifications, tendering of all sub-contracts and managing those, splitting sub-contract work packages, adjusting the tenant fit-out budgets as information became available, procurement of specific materials for direct contractors appointed on behalf of tenants.
Article II. THE CLIENT
Section 2.01 Client Overview
Masingita Group of Companies is a Broad Based Black Economic Empowerment Group of investors who are based in the Rosebank area of Johannesburg, they have a primary focus on partnering with other developers in developing housing and shopping centres in underdeveloped areas, this is a fantastic strategy which seems to be working well for the company as most studies show that in the years to come growth will come from these underlying areas, where cash is the general commodity of economic activity. They have partnered with Nedbank on all projects and this is proof of the firm belief and trust from the finance corporation in the ability of the Group.
They have now invested and successfully commissioned 3 shopping centres:
1 Masingita Mall in Giyani
2 Ilanga Mall in Nelspruit
3 Protea Glen Shopping Centre in Soweto
The client has a very firm belief in uplifting the communities in which they operate and employ locals to represent them to the areas in the form of CLO’s.
During tendering of all works domestic and nominated/selected subcontracts the CLO was involved in attaining skilled and unskilled labour from within the suburb of Protea Glen.
Article III. THE PROJECT
Section 3.01 Project Details
The Protea Glen Shopping Centre is classified as a regional shopping centre having a footprint of 32 000m2 Gross Building Area under roof. The shopping centre was built as a greenfield project on land purchased by the development company on the corner of Protea Boulevard and R558 Lenasia to Krugersdorp road in Protea Glen, Soweto, Johannesburg Metropolitan Area. The project was had an estimated cost of R200 000 000 000-00 inclusive of all tenant installation and budgets, with a 9.38% Return on Investment per annum.
The annexure buildings included for a KFC and McDonalds as standalone facilities with drive-thru and parking areas designated to serve these respectively.
The aim of the project was to satisfy a need for premier shopping facilities for the local residents due to a lack of development in the area, another view taken was to create a 1 stop shopping experience, having a wide mix of retailers, large and small to create equilibrium in a general shopper’s experience.
Some of the tenants that had leased space included:
1 Pick n Pay
3 Edcon Group – Edgars/Jet/Legit
5 TFG – Truworths/Daniel Hector/Sportscene
6 Famous Brands – Steers/Debonairs
7 Banks – Standard Bank/Nedbank/Absa/Capitec/FNB
8 Post Office
Section 3.02 Purpose of Project
The project was undertaken to uplift the vicinity in which it operates, create employment for the local residents and provide a much needed premier shopping destination for the people of Soweto, as we all know, this part of the Johannesburg Metropolitan area has the largest number of residents with the least developed infrastructure, and in the eyes of many developers and institutions a shopping centre is a beacon of hope, it creates a foot count unmatched, wonderful return on investment for the owners altogether while uplifting the value of property in the proximity and centres itself as a hub of economic activity, while also sparking a certain amount of enthusiasm from other developers.
Section 3.01 Project Organisation Structure
As mentioned above, DEVCON was contractually our client, however financial matters were discussed with the client directly as well as in the presence of the financiers “Nedbank Corporate Property Finance”.
Article IV. PROJECT CONSULTANT TEAM
Operationally, the Project team was led by DEVCON Development Managers. Devcon also fulfilled the role of the Principle agent on behalf of the client, this was due to the Project Managers EQF having being appointed for the specific purpose of handling the tenant’s information together with RNS
The roles fulfilled by the other consultants are highlighted Figure 3 below:
Figure 2: Project Consultant Team
Article V. QUANTITY SURVEYOR’S APPOINTMENT
The Client/Consultant Professional Services Agreement was used as the Client – Quantity Surveyor Agreement. Professional fees based on the Tariff of Professional Fees (2009), as issued by the South African Council for the Quantity Surveying Profession. The tariff recommends a fee scale, but allows for parties to negotiate the fee using the tariff as a guideline.
Although this project was a private entity, and the general industry practise to offer discounts, we had not discounted the QS Project fee, this was due to the complexity of the project and the nature in which it was envisioned. However the fees were projected on a fixed monthly amount and not as per the standard procedure for payment of fees during different phases of the project timeline.
Article VI. MAIN CONTRACTOR’S APPOINTMENT
Section 6.01 Tender Documentation
Provisional Bill of Quantities were used and they were based on the South African Standard System for Measuring Building Work (Sixth Edition: Rev Feb 1999), The South African Model Preambles for Trades 1999 and the JBCC Principle Building Agreement Series 2000 (July 2005 edition), in conjunction with the JBCC Preliminaries and Nominated/Selected Subcontract agreement.
The contractor was required to take out the following:
1. Tender Bond to the value of 1%
2. Performance guarantee to the value of 10% of the Contract Sum
3. The contractor was required to waiver their lien
The tender was not subject to any CPAP escalation and the contractors tender rates were fixed, the retention was a fixed sum of 5% with 10% monthly deductible up to the maximum with 2,5% being released at works completion, the reason for this slight deviation from the standard practise was due to the phased and beneficial occupation dates in which the contract was structured. Due to having various groups of tenants and varying dates of beneficial occupation, the partial completion of works was done on a shop by shop basis with certain aspects having being to be completed by the tenant in their own capacity, e.g. some shops required a ceiling, others required no ceiling, and others required ceilings at varying heights.
The tender documentation was sent out for pricing with a large amount of risk quantities as the design of the centre was not finalised, however due to a 14month construction period there was a consensus to have larger contingencies as it would pay the investor back if the centre came online quicker, this was offset by the amortization of rental income over the months the centre would operate, rather than delaying it for a later opening.
Section 6.02 Tender Stage
Due to previously mentioned fast tracking of the project, the tender was prepared and negotiated with Vlaming Construction, due to their development business having significant shareholding in the project an agreement was made to charge 4% as a profit and attendance on all subcontracts (bulk of the budget) as well as a 9% P&G which was far below industry standard at the time of negotiation and definitely well worth prospect for both client and contractor. This also cut down the contractual agreement and tendering time and any saving on time meant it was worth the effort, with another 3 shopping centres being planned in the vicinity of the Protea Glen suburb the urgency to get on site and finish as soon as possible was a matter of whether the centre would be one part of a success story or the success story that was going to be told.
Two other tenderers were also invited as mock tenders for the purpose of ensuring the overall contract values and to assess current market conditions, and for assurance to the investment team, that the procurement method of choice would prove cost efficient.
Section 6.03 Tender Adjudication
The tender amount priced by Vlaming was a total of R176 089 433.88 excluding VAT which was within the budget amount as well as the amounts for the tenant contributions. Other tenderers prices were marginally over the R200 000 000.00 ex vat amount. It was concluded that the difference in value was large due to the effect of the Profit margin, where other companies generally make over 15% on materials and usually 10% as Profit and attendance on subcontracts (as previously stated this was bulk of the contract value R125 000 000.00 ex vat) hence on a sensitivity analysis, this proves an automatic saving of R7 500 000.00 (10% vs. 4%) (R12.5m – R5m). The procurement method chosen was proven to be cost effective in this regard. This also meant that we were comfortably within the budget and would maximise the IRR.
Section 6.04 Contract Award
The tender pack that we had issued to the tenderers had already included the form of tender and then letter of acceptance, together with a list of qualifications, assumptions and exclusions. This formed the binding agreement between Masingita and Vlaming construction. The procedure and procurement method used on this project, was like none other than previously experienced on other projects, and having only had slight involvement, it was worth my efforts to gain the knowledge of how these aspects played out. This granted me the knowledge in hindsight on the process undertaken as well as the lessons learnt by Bernard on the procurement route.
The contract start date was the 21st of July 2011 with a completion date set for the 27th of September 2012. The size of the centre at inception and at tender stage was a GBA of 32 000m2, however due to certain tenants having left the negotiation table and others brought on board, the final GBA was concluded at 33 150m2, the additional BA was due to Edcon having taken more space as well as offering more of their brands in the centre. This was measured, costed and approved by client as well as lessee before effecting the structural and services changes on site.
Article VII. CONSTRUCTION PROGRAMME
The project was scheduled to be completed within 14 months from bulk earthworks to the opening, an extremely demanding timeframe for any type of construction to complete 32 000 m2 under roof. There were various methods of acceleration being used on this project, the professional team used for this is the very same professional team from another project, this meant that the continuity of the knowledge base made it a lot easier, leasing was a huge factor in the design process, as it may be easily understood the layout of the centre depended on the tenant mix and their various placements within the centre, this aspect was counteracted with upfront MOU agreements which gave a basic outline of a tenant shop with their m2 requirement, coupled with the same professional team, the architect was successfully able to create a reasonable layout which allowed for construction to progress without any delay.
As the QS team our contribution to the acceleration of the program, and agreed together with the main contractor, was to structure the sub-contract tenders such that we would tender long lead items before December 2011 and have these contractors on site as early as possible, we have also pro-actively split each sub-contract tender into packages and tendered them at the same time to the same set of tenderers however notifying them that 2 or 3 may be appointed for the differing packages due to capacity issues and risk aversion. E.g., tiling was split into 3 packages, one for the Pick n Pay fit-out, 2nd for the Shoprite fit-out with minor work in shops and others which were our responsibility as per lease agreement i.e. Clicks & Edgars, the 3rd package was for the Mall General Areas (corridors, ablutions and centre management). This meant much more management on our part and greater control needed, however proved beneficial to the project as a whole.
The contractor submitted a delay claim for R1 200 000.00 with 38 days extension of time due to founding conditions and change in scope from piling to ground beam and raft slab, however this was negotiated and turned over into a supplemented acceleration of the project to complete on the 27th of September 2012. Due to the political nature of the project and the previous explanations of urgency a delay was unacceptable.
Article VIII. PROJECT ADMINISTRATION BY THE QS
Section 8.01 Interim Valuations
Valuations were submitted by the Main contractor on the 22nd of each month together with claims from the subcontractors; the valuations were done entirely by myself with final approval by Bernard. I would arrange a site walkabout with the contractors QS on the 20th to review the conditions on site and to do the site measurements, in doing so it provided a level and equal platform, as well as an open relationship on various issues pertaining to cost on the site. Due to the nature and vast array of differences within each shop, a set of A3 & A4 drawings were used to detail the progress of each shop, this was implemented by myself solely for the purpose of better control, as imaginable the sheer pace of the project meant that control was vital and these were kept together with its respective valuation for any queries or future reference and to measure the performance of the contractor on a monthly basis, another benefit of the implementation of this system was ensuring compliance on the specifications of each lease agreement e.g. Mr Price requires its wall to be plastered full height, with a double coat, while Identity required walls to be plastered once 100mm above the ceiling height. The valuations took approximately 10days to finalise and agree, after which it was submitted to the bank and payment was made within 5 days, the bank made regular visits to site. We paid materials on site up to the value of 80% and materials off site was allowed on one occasion due to the large increase in steel prices with a cessation agreement to forward the ownership of materials to the Client.
Section 8.02 Appointment of Subcontractors
All sub-contract tenders were measured, billed and tendered in open tender to an agreed list, between QS and contractor, this meant they were each tendered as Nominated sub-contractors; certain elements of construction were contracted as Selected as these were either tenant requirements or centre management inputs, such as the waste compactor and the refrigeration of Pick n Pay. As explained all tender packages were split into 2 or 3 packages due to the timeframe and to eliminate delays emanating from capacity/resources. At the height of the project we had 26 sub-contractors on site. This is a part of the 10 day long monthly valuation period.
Section 8.03 Cost Management & Reporting
As per the previous highlights in the report, the only 2 major changes which occurred were the acceleration of contract to complete within the time frame and the addition of the Edcon group stores which required client decision and additional funds, there were no major changes in the cost of the project, the impact of the acceleration was paid out of the contingencies as it was prematurely predicted that we would need a larger fund for the acceleration of the project. The impact of Edcon extensions to the building were recapitalised over the rental to be gained for the larger footprint over the investment term and additional finance was granted by Nedbank.
The management of costs were compiled and reported after the monthly valuation, taking into account the latest progression of site activities, this also forecasted changes to the budget as design information became more detailed. We had a mechanism to measure the current standing of the project at every valuation which incorporated the latest changes, this was in the form of a “current cost” column in our excel valuation sheets, next to the original tendered BOQ item, basically this was done in preparation for the Final Account and a window into the expected final quantity for that element. See example below:
Article IX. FINAL ACCOUNT
With the benefit of having the final account re-measurements as an on-going monthly process as the latest information became available and being reported in the cost reports, the process of final account begun on the very first progressive valuation claim.
This made it easier to actively agree sections of the building as they were being completed, the process was simplified as seen in the previous “cut out” of a typical section of the monthly control documentation.
The sub-consultants were responsible for agreeing the final values with their respective subcontractors (Mechanical & Electrical). I collated all this information and put it into one document so that we could also calculate the contractors profit and attendance on the work done by the subcontractors.
The project was completed within the revised budget which was naturally acceptable to the client. The rates were fixed for the duration of the project and therefore there was no price escalation on this project. There were some hiccups during the measurement of the plumbing and drainage, various changes had to be made to accommodate the raft foundation, this meant that HDPE pipes were used and a change request had to be effected “after the fact”. There were also changes to the Traffic Impact and the JRA had requested more traffic signals and additional lanes be added after the original proposal was approved. This had a financial impact on the project, however due to numerous savings on other areas such as the structural steel, roof sheeting and fire protection tenders, we were able to mitigate certain additional costs.
I was not involved in the entire Final account measurement and agreement; however a majority of the on-going measurements (and valuations 11 of the 14) were completed by myself and laid a pretty good platform for the FA.
Sections completed and not limited to Roof Coverings, Structural Steel, Bulk Earthworks, Foundations, Concrete Structures, Bulk Services, Plastering, Shopfronts, Fencing, Carpets, Timber Roofs, Matts, Ironmongery, Vanities, Sanitary ware, Roller Shutters & Paintwork.
Article X. POINTS OF SPECIAL INTEREST
The Protea Glen Shopping Centre as mentioned many times in this report was built at an extremely rapid pace, this left no room for error and created a huge amount of urgency in every daily activity, this exerted an enormous amount of pressure on the professional team which through the course of the project had and understandably so a few errors and conflicting information. As the client was prepared for this financially it did not prove to be a huge issue, but it did bring about challenges on site. In many instances we had no choice or time assess the full impact of certain decisions as they were critical to the program, we were left doing a lot of “after the fact” damage control. There were many instances of floor slabs that had to be removed entirely and re-laid, walls that needed to be broken down, needed to be chopped for services entry and exits, doors and openings that needed to be relocated as well as certain sections placed on hold. These acts were attributed to rapid construction and leasing information not coming through at the required time. Overall the risk was managed well and the team did a fabulous job co-ordinating but at the speed of construction it was impossible to expect there to be no errors/mismatched information and mistakes.
Article XI. PROJECT SUMMARY
The project was completed within the required time frame, opened on time and completed within the budget. Due to varying factors it was not an easy task to accomplish and there were many dull and drop dead silence moments in the project.
The overall experience of being pushed far beyond the limits of generally acceptable methods meant that it was extremely challenging and created a scary and thrilling sense of what was going to be achieved. However if the boundaries are not tested, one would never be able to create new goals to achieve, new capabilities are seen and accepted when we reach out further than previously possible.
I have gained a lot of insight and hindsight in this project, it allowed me an opportunity which was not available at previous projects, to manage solely the daily activities of a project in its middle phase (post-contract) which was lacking in my previous experiences. This project gave me a benchmark in my life, where at another firm I formed part of a team of 8 Quantity Surveyors working on a shopping centre.
I gained the exposure in this project that the entire team was doing, this put into perspective the full duties of a Quantity Surveyor.
Article XII. CONCLUSION
Section 12.01 Challenges / Frustrations
The main frustration point for all consultants during this project was the fact that all information that was required at any point through the project was extremely urgent. This did not allow anybody an opportunity to review the best possible solution to the problems that were faced, it created a sense of “is it in or out” as opposed to proposing a detailed and informed decision on many aspects. I think with time and many more people willing to push boundaries and construction times becoming shorter, the risks will be managed and controlled more efficiently. In regards to the cost aspects of these elements, we had some frustration on the fact that our hands were tied at certain junctions, however we did have an opinion and ultimately cost was a factor. There were many notifications mentally of doing things better and during these kinds of projects do innovations come alive.
Section 12.02 Lessons Learned
I do feel that the project was built too rapidly, I think that another 2 months prior to construction for design development could have lined the project with many more details that would have been thought through entirely and implemented knowing it was a choice and not a chance. I must add that from the QS perspective we did not encounter much resistance on costing issues and we had a limited amount of funds, some items had to be value engineered of which time was of the essence and some non-core elements removed entirely. This proved to rob the project what was conceptualised and eventually the job was driven by time and not cost or legacy. A certain amount of professionalism was lost in agreeing to such tight deadlines, as I firmly believe that “good food takes time to prepare” and you will always get out what you put in. Foresight and advice to clients for more time has been viewed as a sign of failure, when it should be viewed as a sign of professionalism.
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