July 2010

SLQS JOURNAL
The Potential of the Method of
Measurements used by Engineers and
Contractors in Tendering and Subsequent
Contract Administration
Kalum Sudeshana BSc(QS), MRICS, AICIArb, MAACEI

The Abstract works and ensure the awareness of both parties of the
Amounts for payments for the work done in Measure & procedures of the method of measurements stated in the
Pay contracts are arrived at by measuring the quantities of contract to use for the measuring of works.
items which have pre-agreed unit rates. In measure & pay
contracts, the final price is dependent upon quantities. Through two practical examples of excavation works
So, the final price is dependent upon the Method of and concrete works, this article demonstrates the impact
Measurements we use to measure the quantities. of the method of measurements on the final price. In
excavation, the example of how extra volume is acquired
Some professionals in the construction industry measure by soil due to the loosening of soil particles is used for
the works arbitrarily without considering the specified consideration while a second case is dedicated to the
method of measurement for the project. Their perception possibility of a different method of measurements due to
is that it is not significant to concentrate heavily on the voids placed in suspended concrete slabs. The figures used
method of measurements enacted in the contract. But are for explanatory purposes and not the actual ones.
events that have arisen in the construction industry in
this regard indicate that it is not so simple to ignore the The Introduction
effect of the method of measurements. It is a clear fact which is not limited to the construction
industry, but common to all businesses, that the ultimate
This is mainly because quantities calculated using two aim of parties to a contract is to obtain the maximum
different methods could provide significantly different benefit from the contract. Contractors always seek to
quantities. So, significantly different quantities produce obtain the highest price for the work carried out under
significantly different final prices. If parties to the contract the contract. On the other hand, employers want to
adhere to the two different opinions regarding the method pay minimum price for the works completed under the
of measurement to be used, there could be a construction contract. Based on the determination of price of the
dispute. As we all know, disputes are most obstructive in contract, there are main three categories of contracts.
construction contracts. They can delay the project with
severe consequences to all parties to the contract. 1. Contracts that stipulate a fixed lump sum price
2. Contracts that stipulate unit rates and the final price
What is the solution? There are several means of resolving is arrived at by measuring the quantities of items
disputes by mediation, arbitration, adjudication or in which have pre -greed unit rates.
court system while the least expensive method is the use 3. Contracts where the final price is arrived at by
of negotiation. However, what is more important to avoid measuring the actual expenses incurred.
chances of disputes arising than to find solutions for the
disputes? So, what is important is to have a specified Fixed-price contracts belong to Category no 1, measure &
method of measurement in the contracts to cover all pay contracts are under Category no 2, cost reimbursable

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contracts belong to Category no 3 while target contracts most obstructive in construction contracts. It can delay
are a combination of Categories no 1 and no 3. the project with severe consequences to all parties of the
contract. What is the solution? There are several means of
The aim of this article is to address the importance of resolving disputes by arbitration, adjudication, in court
the method of measurements in contracts which fall system or mediation while the least expensive method is
under Category no 2 because the final price of this type the use of negotiation. But what is more important is to
of contract is arrived at by measuring the quantities of avoid chances of arising disputes than to find solutions
items which have pre-agreed unit rates. In measure & for the disputes. An old saying is that prevention is more
pay contracts, final price is dependent upon quantities. important than remedying defects. So if the issue is not
So finally, final price is dependent upon the Method of agreeing upon a defined method of measurements for
Measurements we use to measure the quantities. measuring the works at the time of signing the contract,
then how can disputes on measuring of the works
As mentioned above, it is the individual party’s interest be prevented?. It is very simple to have a well defined
to maximize their own return from the contract. In other method of measurements in the contract and focus the
words, Contractors always seek to obtain the highest necessary attention on it. There are standard ‘method of
quantities for the work carried out under the contract. measurements’ documents published by various institutes.
On the other hand, employers want to pay for minimum To name a few: CESMM3, POMI, SMM7, ICTAD
quantities. So it is the responsibility of the contract to … It is not necessary to agree to use standard methods
regulate the two parties having different objectives of measurements such as CESMM3 ,POMI,SMM7,
regarding the quantities of contract in a manner without but what is required is the definition of a methods of
dispute. The major mechanism used in this context in measurements to measure the work in a consistent
construction contracts is to have a pre-defined Method of manner which suits the conditions of the project.
Measurement system agreed upon by both parties at the
time of signing the contract, by inserting the Method of Ignoring the method of measurement can take place in
Measurement in the contract. Unfortunately, some may two forms.
neglect the importance of the method of measurement and
pay minimal attention to the method of measurement. 1. The consultant does not include the proper method
We will see the impact of negligence of the Method of of measurement.
Measurement in detail through a practical construction 2. The contractor disregards the method of
example. measurement stated in the contract.

The Discussion First we consider Case One. Construction works are

Some professionals in the construction industry measure completed without having proper agreement on how to
works as per their wish. The danger is that these measure the works. At the time of payment disputes arise
professionals engage in contracts relying on the quantities as there are different opinions regarding the mesurement
they calculated using their own methods without even of works. Therefore ignoring the method of measurement
seeing the methods of measurements specified in the in construction contracts is dangerous.
tender. People who don’t have much exposure to the
contractual aspects of construction contracts may think In Case Two, the outcome of ignoring the method of
that it is not significant to concentrate much on the measurements has two possibilities.
method of measurements enacted in the contract. But it
is not so easy to neglect the dilemma an organization has 1. The contractor calculates lower rates than if the
to face if it neglects the method of measurements. The method of measurement had been considered.
loss to the organization might be in the realm of millions 2. The contractor calculates higher rates than proper if
of dollars. the method of measurement had been considered.

Another aspect of negligence of the method of In first case, the contractor loses some money and receives
measurement is that it could be a situation that leads less payment due to the errors of his calculation while
to construction dispute. /As we all know disputes are in the second case, the contractor loses the chance of

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winning the completion of a project due to the errors of the net excavation as a method of measurement:
his calculation. Both are harmful to the contractor. The contractor arbitrarily uses his own method of
measuring gross volume to calculate his rate.
The examination of two practical examples will The contractor calculates it costing $ 10 per cubic meter
demonstrate the impact of the method of measurement of loose volume excavated. Though he has to convert this
on final price. rate to the net rate ($ 10 x 1.4 = $ 14), he does not look
at the method of measurement specified.
Case 1 At the end of project, the contractor receives only $
We will examine a practical example of excavation. 1,880,000 for a quantity of 188,000 m3.
Excavation works is a category that is included in many He argues for $ 2,632,000 for a quantity of 263,200
construction contracts. This is because excavation works m3 (188,000 x 1.4) based on his own method of
are necessary in building construction as well as in civil measurement.
engineering constructions such as roads, bridges, etc … Finally, the contractor receives only disrepute instead
It is also noted that the quantities involved in excavation of $ 1,880,000 for a quantity of 188,000 m3 as the
works are generally large, making a big impact on the consultant brings the specified method of measurement
final price. to his notice.

For the measuring of excavation work, there are two basic Scenario 3.
methods. The contract specifies the second method, which is to
(1) Measure the size of pit/ trench excavated. measure the net excavation as a method of measurement:
(Net volume) The contractor arbitrarily uses his own method of
(2) Measure excavated materials. (Gross volume) measuring net volume to calculate his rate.
The contractor calculates it costing $ 14 per cubic meter
Before the excavation, soil is in a compacted form. After of net volume excavated. Though he has to convert this
the excavation, soil particles are loosened. The loosening of rate to the net rate ($ 14 / 1.4 = $ 10), he does not look
soil particles will yield a final quantity of greater volume. at the method of measurement specified.
Undoubtedly, the second method, which measure loose At the end of bidding, the contractor’s price of $ 14
soil, will have a large quantity than that calculated from makes his tender price too high, as compared to another
the first method which measures the opening created contractor (who may be pricing their tender at $ 13 / net
by excavation. The expansion of soils will vary with soil cubic meter) and he loses the project.
type. Is just because of negligence of the method of measurement
specified in the contract.
Assume the following for our example:
Factor of expansion of soil = 1.4 Case 2
Quantity (net) = 188,000 m3 We will examine another practical example to further
Rate quoted by contractor = $ 10/m3 demonstrate the impact of method of measurement
on final price. Concreting works is also a category
Scenario 1. that is included in many construction contracts. This
The contract does not specify method of measurement: is because concrete is the most accepted solution as a
Both parties aim to maximize their return structural element in building construction as well as civil
The contractor is claiming $ 2,632,000 for a quantity of engineering constructions such as roads, bridges, etc…
263,200 m3 (188,000 x 1.4). It is also noted that the quantities involved in concrete
The client is ready to pay only $ 1,888,000 for a quantity works are generally large making a big impact on the
of 188,000 m3. final price.
A difference of more than half a million would be a root
cause for a dispute. It is common practice to have openings in concrete slabs
for various purposes. In the practical sense, it is easier to
Scenario 2. ignore the openings and measure the whole area once,
The contract specifies first method which is to measure measuring the volumes without deducting for voids.

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However, there is a limit to the size of voids as ignoring Though it theoretically requires 195 m2, we have to
large voids is not acceptable practice, especially to clients. consider the fact that it is not economical to cut the
Generally, the limit is 1 m3 meaning that any void less formwork sheets in void areas and might be most
than 1 m3 in volume would not be deducted and hence economical to allow having formwork under the voids.
the contractor would get payments even if he has not Also, the cutting of formwork for voids will produce
concreted that part. formwork that cannot be reused for another structure.

Another case that we have to concentrate on here is Formwork for sides of voids: for internal voids = 20 * 4 *
formwork. It is evident that when making a void, it may 1* 0.2 = 16 m2
require some additional formwork. It is important to Formwork for sides of voids: for external voids; let’s
specify in the contract that this additional form work assume that only two voids are at corners.
related to voids is going to be measured. Some may prefer So, for corner voids there is no additional formwork
not to measure these additional form works as they are required.
cumbersome measurements and in order for themselves For the other three voids = 3 * 2 * 1 * 0.2 = 1.2 m2 (Only
to get compensated from paid prices for voids. two sides are additional)

Also, there are two types of openings, internal and Consider the possible different ways of measuring the
external. Internal openings mean openings which are concrete work:
completely inside of the concrete slabs. External openings (1) Measure complete slab without deducting any
mean openings which are at the boundary of the concrete openings.
slabs. So it is clear that there could be more options for (2) Measure complete slab deducting only external
specifying the method of measurement. What is needed openings which are at boundaries
from the contractor’s side is clear identification of the (3) Measure complete slab deducting all openings.
difference between the work to be done and the work to
be paid and adjustment the rates accordingly. Contractor Consider the possible various methods of measurement
prices need to be more competitive as well as profitable for the formwork of this case:
so as not to lose. (1) Measure all formwork without deducting for soffits
of openings
Assume the following for the example: (2) Measure all formwork without deducting for soffits
Dimensions of the suspended concrete slab = 20m * 50m of internal openings
*200mm (3) Measure all formwork without deducting for soffits
Inside of the suspended concrete slab: no of 1m *1m of external openings
openings = 20 (4) Measure all formwork, deducting for soffits of all
At the boundaries of suspended concrete slab: no of 1m openings
*1m openings = 5 (5) Measure formwork without deducting for soffits
Unit rate for concrete works quoted by contractor = $ of openings but also without adding any sides of
100/m3 openings.
Unit rate for formwork works quoted by contractor = $ (6) Measure formwork without deducting for soffits of
30/m2 will examine how the method of measurement internal openings but also without adding any sides
will change the final price. of openings.
(7) Measure formwork without deducting for soffits of
Before examining the possible various methods of external openings but also without adding any sides
measurement that can be adapted to the problem, first of openings.
we will see quantities that the contractor actually needs (8) Measure formwork deducting for soffits of all
to measure. openings but also without adding any sides of
Concrete = 20 * 50 * 0.2 – 20 * (1*1 *0.2) – 5 * (1*1* openings.
0.2) = 195m3 (9) Measure formwork without deducting for soffits of
Formwork for soffit of slab = 20 *50 – 5 * (1*1) – 20 * openings but also without adding sides of external
(1*1) = 195m2 openings.

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(10) Measure formwork without deducting for soffits of Therefore, we will have nine possible scenarios. The table
internal openings but also without adding sides of below depicts the outcomes (final prices) for these nine
external opening. scenarios.
(11) Measure formwork without deducting for soffits of
external openings but also without adding external The first combination gives the highest price of $ 50,516
sides of opening. while the last combination gives the lowest price of $
(12) Measure formwork deducting for soffits of all 48,750. The difference is $ 1,766 which makes 3.5 %
openings but also without adding external sides of profit. In highly competitive construction contracts,
which have limited profit margins of around 5 %, can it
openings.
be possible to ignore a 3.5 % profit?
Observe how many different approaches are available
for the measurement of works. If concerned with the Conclusion
measurement of concrete, there will besixteen different As we have seen in the two above examples, there could
approaches. For the sake of simplicity we will consider be large differences in final prices based on the method
only three possible methods of measurements for the of measurement used to measure the works. The strength
measuring of formwork which are the most critical. of method of measurement over cost engineering is high
and the knowledge of methods of measurement will play
1. Measure all the formwork including sides of openings a significant role in cost management..
without deducting soffits of any openings. Finally it should be stressed that, contractually, no
2. Measure all the formwork including sides of method can be said to be superior over the rest. This is
openings but deduct soffits of all the openings because once themethod of measurement is included in
3. Only measure formwork in slab without including the contract, the contractor can decide prices based on it
sides of any openings but deduct soffits of all and can increase or decrease according to differences in
openings. the specified method of measurement and actual works.
In other words the contractor would be able to make
The formwork calculations are as follows: adjustments in his rates when he is aware of the advantages
Whole soffit area = 20 * 50 = 1000 m2 and disadvantages of the method of measurements
Soffits of internal openings = 20 * 1 * 1 = 20 m2 compared to actual works he needs to carry out. However,
Soffits of external openings = 5 * 1 * 1 = 5 m2 for the comfort and suitability of measurement there
Sides of internal openings = 20 * 4 * 1 * 0.2 = 16 m2 could be a ‘best’ method of measurements and a ‘bad’
Sides of external openings = 3 * 2 * 1 * 0.2 = 1.2 m2 method of measurements. Let’s imagine a situation where
the method of measurement dictates deducting each

Method of concrete First First First Second Second Second Third Third Third
measurement method method method method method method method method method

Method of form- First Second Third First Second Third First Second Third
work measurement method method method method method method method method method

Quantity of 200 200 200 199 199 199 195 195 195
Concrete (m3)

Quantity of form- 10,17.2 992.2 975 1017.2 992.2 975 1017.2 992.2 975
work (m2)
Price of Concrete 20,000 20,000 20,000 19,900 19,900 19,900 19,500 19,500 19,500

Price of formwork 30,516 29,766 29,250 30,516 29,766 29,250 30,516 29,766 29,250

Total price 50,516 49,766 49,250 50,416 49,666 49,150 50,016 49,266 48,750

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opening including very small ones in plastering works. What is important is having a specified method of
How cumbersome this is method compared to measuring measurement in the contract to cover all works with
the whole area without deducting openings. Here it is both parties aware of the procedures of the method
evident that the second method (measuring the whole of measurements stated in the contract to use for the
area without deducting openings) is more comfortable in measuring of works. The golden rule to avoid disputes
the context of ease of measurement. regarding the measurement of works is for organizations
to have more competent and knowledgeable cost engineers
who are conversant on the contractual matters.

Regina -v- Chung Tak Lam Mary Lam Patricia Lam Christopher John Lam and
Peter Brennan (T/a ‘Namesakes of Torbay’) and Borough of Torbay [1997]
The claimant sought damages after the planning authority allowed the first defendant to conduct
a manufacturing business in the course of which spraying activities took place which caused
them personal injuries and loss of business. Held: The planning system is a regulatory system
as envisaged in X (Minors), such that there should be no private right of action for a breach of
statutory duty. The claim failed.

The first defendant started work in Unit 1 at the rear of No. 34 and constructed a paint spraying
filter and extractor which ventilated the paint spray fumes out through his premises at the rear of
34 to discharge at low level into the backyard of the appellants. Following complaints starting
in September 1989 from the appellants and a number of other local people who were adversely
affected by fumes (including a specific complaint by the second plaintiff that the effects included
nausea, dizziness and memory loss), the respondents’ Environmental Health Officer wrote on 21st
September 1989 to the first defendant recommending that his spraying booth be moved to first floor
level so that the fumes could be extracted above roof ridge level, and that the planning department
be contacted to see if planning permission was required. The urgent attention of the first defendant
was demanded. On 28th September 1989 the Environmental Health Officer asked the Planning
Department to check the planning permission in respect of the first defendant’s premises. The first
defendant accordingly applied on 9 October 1989 for planning permission for “re-location of
extractor system” and provided a plan of a “chimney” on the roof of the premises at the rear of 34
for escape of the fumes. Meanwhile, the appellants’ complaints continued. Permission was granted
for the chimney work by a delegated decision of the Planning Officer on 24th November 1989, the
chimney being installed in January 1990

So far as the third head of claim was concerned i.e. that based on the alleged failure to take
enforcement action, the judge held that the principles applicable to pollution and planning were
essentially similar, enforcement also being a matter which the local authority has to consider in
the public interest. By way of analogy with the position of the Crown Prosecution Service (see
Elguzouli-Daf -v- Commissioner of Police of the Metropolis [1995] QB 335), the judge held that
the decision of a planning and enforcement authority as to taking enforcement proceedings in the
public interest or in the interests of the inhabitants of a particular area is one which should not be
influenced by considerations as to whether there might be a claim for negligence if action was or
was not taken in a particular case

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