Video 1 Cost Management for M&E Works

Summary

In this presentation, Dr. Sarajev Mohammad emphasizes the importance of project cost management for mechanical and electrical (M&E) works in construction projects, particularly in the rapidly growing Malaysian and ASEAN markets. He discusses the rising costs of M&E services, the essential role of quantity surveyors and design teams, and the challenges of using the lump sum method for cost estimation. The speaker advocates for the use of standardized measurement methods to streamline cost management, avoid over or under-measurement, and improve tendering processes. The session also introduces a course on M&E services, covering measurement rules, financial management, and dispute resolution.

Takeaways

• 😀 M&E cost management is essential in construction, particularly in Malaysia and other ASEAN countries, as the sector is rapidly growing and becoming more complex.
• 😀 Systematic measurement of M&E services ensures that projects adhere to international best practices and helps manage rising costs effectively.
• 😀 The cost of M&E services can account for a significant portion of construction costs, ranging from 20% to over 60% depending on the type of building (e.g., schools, hotels, hospitals, data centers).
• 😀 Design teams and consultants must ensure that M&E costs are managed systematically and that the design process is completed before starting construction.
• 😀 Using a standard method of measurement (SMM) allows the design team to finalize designs early and helps contractors with cost estimation for tenders.
• 😀 A well-structured Bill of Quantities (BQ) provides clarity and guidance for contractors, helping them avoid the need to remeasure M&E works themselves.
• 😀 The BQ also aids in tender evaluation by providing clear, standardized rates and quantities, making it easier to select the best contractor for the job.
• 😀 The coding system used in BQ enables integration with computer applications and Building Information Modeling (BIM) for better project management and cost estimation.
• 😀 The rates in the BQ serve as a basis for evaluating variations during construction, ensuring that changes to design, equipment, or space can be accurately assessed and costed.
• 😀 The lump sum method of cost estimation can lead to challenges in tendering, such as difficulty in evaluation and potential over- or under-measurement by contractors.
• 😀 The course will cover the necessary knowledge for understanding M&E services, measurement rules, construction economics, financial management, and provide practical workshops on preparing BQs for M&E works in buildings.

Q & A

Why is project cost management important for M&E works in construction?

Project cost management for M&E works is crucial as M&E services often account for a significant portion of total building costs, ranging from 20% to 60%, depending on the type of project. Effective cost management helps control expenses, ensures budget adherence, and improves the efficiency of the design and construction processes.

What are the challenges faced when cost management for M&E services is neglected?

When M&E cost management is neglected, there can be difficulties in accurately estimating costs, leading to inflated project expenses. Additionally, lack of systematic measurement can result in inaccurate tender pricing, difficulties in project evaluation, and complications in managing design changes during construction.

What percentage of total building costs does M&E services account for in different types of buildings?

The cost of M&E services varies by building type: for schools, it is 20-25%, for hotels 30-40%, for hospitals 40-45%, and for data centers, particularly in telecommunications, it can be as high as 60%.

How does using a standard method of measurement benefit the construction project?

Using a standard method of measurement ensures that the design team finalizes all details before construction begins, reduces the contractor's need to remeasure, provides reliable pricing for tenders, facilitates progress monitoring, and simplifies valuation of variations during construction.

What are the key benefits of having a Bill of Quantities (BQ) for M&E services?

The BQ serves several purposes: it provides accurate cost estimates, helps contractors prepare their tender submissions, supports the design team in selecting the best contractor, enables progress tracking during construction, and acts as a basis for evaluating variations or design changes.

What are the disadvantages of using lump sum contracts for M&E works?

Lump sum contracts can lead to difficulties in tender evaluation, as contractors submit a single price for M&E works without detailed breakdowns. This can increase estimating costs for contractors and make it harder for consultants to assess the work progress during construction, complicating the interim valuation process.

How does using the Bill of Quantities (BQ) help during the construction stage?

During construction, the BQ helps assess the physical progress of M&E works and provides a basis for interim valuations. It also serves as a reference for determining the value of any variations or additional work requested during the project.

Why is it important for the design team to finalize M&E designs before construction begins?

Finalizing M&E designs before construction begins ensures that all engineering services are accurately planned and measured, reducing the risk of errors and unnecessary changes during construction. It also allows for precise cost estimating and smoother project execution.

How does the use of technology, such as BIM, enhance the management of M&E services in construction?

BIM (Building Information Modeling) can be linked with the BQ, providing real-time data on quantities, rates, and cost estimates. This integration helps streamline the construction process, enhances collaboration among the design team, consultants, and contractors, and improves accuracy in project management.

What are some of the key topics covered in the module on project cost management for M&E works?

The module covers topics such as understanding M&E services, their components, and terminology, measurement rules for M&E installations, construction economics and financial management, construction law, and dispute resolution between clients and contractors.