THE HONG KONG INSTITUTE OF SURVEYORS
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1 PART II ASSESSMENT 2013 DAY 2 Wednesday, 18 th September, 2013
2 NOTES TO CANDIDATES A. Headings to questions are for ease of identification only and do not form part of the questions. B. The number of main questions is as follows: (1) First day Questions with varying marks but aggregate mark is 50% (2) Second day Questions with varying marks but aggregate mark is 50% DAY 2 Question No. 1 Interim Payment 12 marks Question No. 2 Care of the Works 15 marks Question No. 3 Supplier s Quotation 10 marks Question No. 4 Valuation of Variations 13 marks C. All Main Questions and Sub-Questions are compulsory marks D. The total mark for each day s paper is 50. The passing mark of each day s paper is 55% of the total mark of that paper. Candidates who have passed both days papers will be considered as having passed the Part II Written Test. E. Refer also to INSTRUCTIONS TO CANDIDATES, which were issued to you in advance. Page 2
3 FIVE COMMON CRITERIA Candidates are expected to illustrate a reasonable level of professional competence against five common criteria outlined below, sufficient for the Assessors to answer the question Would I employ the Candidate to work as a qualified Quantity Surveyor with the ability to resolve problems in a professional manner? However, it should be recognized that not all these criteria apply to every problem, nor do they carry equal weight. 1. Perception: A full understanding of the problem posed, evidenced by a response to each item in the question. Candidates should also show foresight by anticipating additional problems not specifically mentioned. 2. Imagination: The assumption of essential supplementary information so as to provide a full response; also the use of imaginary telephone inquiries, quotations, notes, etc. 3. Technical skills: The correct use of measurement principles, prices, discount factors, etc. The use of appropriate short cuts, rounding off of figures, etc. to suit the scale of the problem. The provision of analysis to a depth appropriate to the stage reached by Candidates and the time constraints imposed on Candidates. 4. Judgement: The provision of sound professional advice indicative of professional knowledge and experience gained by Candidates. The advice should be firm and unhesitating, except where suitable caveats are essential. 5. Communication: Free of ambiguity, with clear expression and an absence of irrelevant or inappropriate technical details, particularly when provided to a lay Employer. Correct syntax and good professional style in letters and reports are important. Candidates should clearly convey their interpretations and proposals. Page 3
4 DAY 2 18 th SEPTEMBER 2013 Page 4
5 Question No. 1 Interim Payment You are the consultant project quantity surveyor of a residential building project. (a) Based on the contract particulars given below, please write a note to your new assistant QS, Peter, to point out the errors in the draft summary of Interim Payment Valuation No. 15 at the attached Appendix A prepared by him. Contract Particulars Contract Sum: HK$316,000, Percentage of Certified Value Retained: 10% Limit of Retention Fund: 5% of Contract Sum (to the nearest thousand) [4 Marks] (b) The Employer s PM, Mr. S Wong just call you and said the Contractor had called him and asked for help in easing cash flow by paying the deposit for kitchen cabinets. Mr. Wong understands that there is no material-off-site payment clause in the Contract and he is not contractually bound to pay the deposit. However, he would like to maintain a partnering relationship with the Contractor and asked you to analyze the risks and considerations, from the Employer s point of view, of help paying the deposit. [8 Marks] Page 5
6 Appendix A to Question 1 Draft Interim Payment Valuation ABC QS Consultant Project Name: XYZ Residential Development in Tseung Kwan O Employer: AA Development Co., Ltd. Contractor: BB Construction Co., Ltd. Interim Payment Valuation No.: 15 Valuation Date: 10 th September 2013 DRAFT Summary Valued Amount HK$ Contract Work Done 150,500,000 Materials On Site 3,400,000 Variations 4,000,000 Loss and Expense Claims 500,000 Adjustment for Fluctuations 100,000 Gross Valuation 158,500,000 Less Retention (10% of Gross Valuation) (15,850,000) Less Previous Payment (130,100,000) Net Amount Due to the Contactor 12,550,000 Page 6
7 Question No. 2 Care of the Works You are the project quantity surveyor of the Contractor for the construction of a residential building. Four months ago, a fire took place in that building, when it was near the topping out of its reinforced concrete structure, causing substantial damage and delay to the project. Your company has procured a Contractor s All Risks insurance containing the usual terms. While the loss adjuster has taken a very detailed investigation, it remains uncertain whether the fire was caused by the default of the Employer, the default of your company or otherwise. Your boss asked you to give advice, quoting relevant contract clauses, on the matters listed in (a) to (d) below for each of the following scenarios: Scenario A The fire was caused by the default of your company; Scenario B The fire was caused by the default of the Employer; and Scenario C The fire was NOT caused by the default of the Employer or your company. "the Employer" or "your company" in the above scenarios would include persons for whom each of them is responsible for. Matters to be addressed: (a) Whether your company is entitled to an extension of time for the completion of the Works. [3 Marks] (b) Whether your company is entitled to recover from the Employer the additional expenditure incurred during the prolonged construction period. [3 Marks] (c) Whether your company is entitled to determine its employment under the Contract on the ground of the substantial delay which would probably exceed 120 days. [3 Marks] (d) Whether your company is liable for the cost of restoring the damage caused by the fire. [6 Marks] Page 7
8 Question No. 3 Supplier s Quotation You are the project quantity surveyor of the Contractor for the construction of a private hospital. You have just received a quotation from a supplier for the supply of tiles with the following terms and conditions: (a) Title and Delivery Title to the goods remains with the Supplier until the goods are paid in full. Risk of loss of or damage to the goods passes to the Buyer upon delivery to the Buyer. (b) Payment Terms Terms are Cash-On-Delivery. Overdue accounts are subject to interest charges of 1.5% per month. (c) Delays The Supplier shall not be liable for delay of delivery caused by happenings or occurrences due to force majeure or any cause beyond the Supplier s control. (d) Warranty Any goods sold or provided by the Supplier shall be deemed accepted by the Buyer upon delivery. Claims for damage, shortage or errors in delivery must be recorded on the original receiving documents and reported within twenty-four hours following delivery to the Buyer. The Supplier warrants only to the Buyer, and to no other person, that the goods supplied will meet the terms of the Sales Order pursuant to which such goods are sold for a period of twelve months from the date of delivery. (e) Prices The prices for the goods are only applicable to the quantities stated in the Quotation. If the Buyer requests for any alterations in the specification or quantity of the goods, the Supplier is entitled to vary the price should the Supplier choose to accept such alterations. All tile sizes stated are nominal sizes. Sizes and prices include recommended joint allowances but exclude cutting and other wastages. Page 8
9 Question No. 3 Supplier s Quotation Your senior would like to know in what aspects the terms of the Main Contract are not put through to this Supply Contract. You are requested to identify the gaps between the Contractor s obligations under the Main Contract and the Supplier s obligations under the Supply Contract in respect of items (a) to (e). [2 Marks for each items (a) to (e)] Page 9
10 Question No. 4 Valuation of Variations You are the consultant project quantity surveyor of a residential development which has been tendered and awarded based on a lump sum (without quantities) contract. During yesterday s monthly financial meeting, the Project Director, Mr. E Chan, of the Employer raised his concerns about the following cost claims submitted by the Contractor. (a) Cost Claim for Lighting for Hoardings The details of the lighting arrangement for the hoardings were confirmed by the Employer and covered by an Architect s instruction shortly after the commencement of the Works. The Contractor submitted that no scheme of hoarding lightings was shown on the Contract Drawings and therefore the lighting arrangement covered by the Architect s instruction should constitute a variation addition under the Contract. However, Mr. E Chan considered that though there was no scheme of hoarding lighting shown on the drawings, the pricing in Schedule No. 1 for hoardings, etc. against Specification Preliminaries clause (see Extract below) should have included for the cost of the hoarding lightings as instructed by the Architect. (b) Cost Claim for Modification of Hoardings To suit statutory requirements, one more manhole close to the existing hoardings was added. The said work was covered by an Architect s instruction shortly after the commencement of the Works. In order to suit the site construction, the hoardings close to the newly added manhole had to be modified accordingly. The Contractor submitted that the modification of the hoardings, resulted from the newly added manhole, should constitute a variation under the Contract. However, Mr. E Chan considered that the pricing in Schedule No. 1 for hoardings, etc. against Specification Preliminaries clause (see Extract below) should have included for the cost of the said modification of the hoardings. Page 10
11 Question No. 4 Valuation of Variations Extract from the Specification Preliminaries Hoardings, Fencings and Covered Walkways (i) (ii) (iii) The Contractor shall construct hoardings as shown on the Drawings. In addition, the Contractor shall take over, make good and adapt any existing hoardings, fencings, covered walkways, gantries and the like left by the previous contractors. The Contractor shall also provide any necessary lighting provisions to the hoardings, whether they are erected or adapted by the Contractor, as directed by the Architect. The Contractor is required to modify the hoardings, etc. in accordance with the Drawings and paint / write the logo and graphics as directed by the Architect. The Contractor shall maintain the hoardings, etc. including carrying out any necessary modification, extension, new erection and adaptation to suit the actual site construction during the course of this Contract. (c) Omission of Flat Number Signs Flat number signs were not shown on the Drawings and Specification of the Contract. Due to unknown reason, they were measured in item 5.7/5/A of the Schedule of Quantities and Rates. Shortly after the commencement of the Works, the Employer in a meeting with the Contractor recalled that the Flat Number Signs should be done by the fitting out direct contractor as stipulated in the Contract. The Employer would wish the Architect to issue an instruction to omit item 5.7/5/A of the Schedule of Quantities and Rates. The Contractor protested that there should be no cost implication under the Contract. However, Mr. E Chan considered that the price for item 5.7/5/A of the Schedule of Quantities and Rates for the flat number signs should be omitted. Mr. E Chan would like you to advise on the validity and entitlement of the Contractor s above cost claims. Please draft a written reply to express your views with the support of contract provisions. [13 Marks] Page 11
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