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You need to know about the “measure fee” that is a point of contention between Party A and Party B

2022-12-03View Original

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Measurement fees refer to the costs incurred prior to and during the construction of a project to carry out its work, and these are costs that are not related to the physical structure of the project itself. They consist of technical measurement fees and organizational measurement fees. What are the “measure fees” that Party A and Party B compete over? The following text and images will provide you with a detailed explanation: Costs related to construction technical measures 1. Costs for construction drainage and dewatering: These refer to the various expenses incurred as a result of implementing different drainage and dewatering measures to ensure that the construction can proceed under normal conditions. 2. Costs for concrete, reinforced concrete formwork and scaffolding: These refer to the costs associated with the installation, removal, and transportation of various steel and wooden formworks sowie scaffolding used in concrete construction, as well as the amortization (or rental) costs of such formwork and scaffolding. 3. Scaffolding costs: refer to the expenses associated with the erection, dismantling, and transportation of various scaffolds required for construction, as well as the amortization (or rental) costs of such scaffolds. 4. Costs for the transportation in and out of site and installation/dismantling of large machinery: These refer to the costs associated with transporting the machinery, either as a whole or in separate parts, from the storage location to the construction site, or from one construction site to another. They also include the labor costs, material costs, machinery costs, testing costs, as well as the costs of any auxiliary facilities needed for the installation of the machinery at the construction site. 5. Costs for other construction technical measures: These refer to the items for technical measures that are added based on the characteristics of projects in various specialties and regions. Construction organization measures fee 1. Environmental protection fee: refers to the various costs required at the construction site to meet the requirements of environmental protection authorities. Environmental protection fee = Direct project cost x Environmental protection fee rate. The environmental protection fee rate is calculated as: Annual average expenditure on this type of expense ÷ (Total annual construction value × Proportion of direct project costs in the total cost). 2. Temporary facility costs refer to the expenses associated with temporary buildings, structures, and other facilities that construction companies need to set up for living and operational purposes during the construction of buildings. Temporary facilities include: temporary dormitories, buildings and structures for cultural welfare and utilities, warehouses, offices, processing plants, as well as temporary facilities such as roads, water, electricity, and pipelines within the designated area, along with small-scale temporary structures. The costs of temporary facilities include the expenses for setting up, maintaining, demolishing temporary facilities, or amortizing such costs. Temporary facility cost = (Cost of temporarily used facilities + Cost of facilities used once only) x (1 + Proportion of other temporary facilities). Where: (1) Cost of temporarily used facilities = ∑【{(Temporary area X Cost per square meter)÷(Service life X 365 X Utilization rate)} x Duration (days)] + One-time demolition cost; (2) Cost of facilities used once only = ∑ Temporary area X Cost per square meter x (1 – Residual value rate) + One-time demolition cost. 3. Safety construction cost: refers to all the expenses required for safe construction at the construction site. Cost for safe construction = Direct project costs x Rate for safe construction costs. The rate for safe construction costs = Annual average expenditure on this type of cost ÷ (Total annual construction value × Proportion of direct project costs in the total cost). 4. Cost for civilized construction: This refers to all the expenses required to ensure civilized construction practices at the construction site. Cost of civilized construction = Direct project cost x Rate for civilized construction. The rate for civilized construction is calculated as the annual average expenditure on this type of cost divided by (annual construction value × proportion of direct project costs in the total cost). 5. Cost of night-time construction: This refers to expenses such as overtime pay for working at night, reduced efficiency due to night-time construction, depreciation of lighting equipment used during night construction, and electricity costs related to lighting. 6. Cost increase for shortened construction period: refers to the additional costs incurred as a result of the requirement to shorten the construction period, including costs associated with night work and increased expenses due to higher usage of reusable materials. 7. Secondary handling cost: refers to the costs associated with secondary handling that arise due to special circumstances such as a limited construction site. 8. Protection costs for completed works and equipment: These refer to the expenses required to protect the completed works and equipment prior to final acceptance. 9. Other construction organization measures costs: refer to the items of construction organization measures costs that are added based on the characteristics of various projects and regions. One party wants to demand high amounts, while the other is hesitant, which often leads to delays in project settlement. Since the two parties cannot agree on a suitable price point, no agreement can be reached. Therefore, when dealing with costs related to supplementary measures, the following rules should be followed: The contractor should keep in mind that, regardless of the type of contract, such costs are generally fixed in advance. Thus, when preparing the plans for implementing these supplementary measures, the contractor must use as much visual material and detailed calculation formulas as possible. This will help secure a reasonable price during settlement, and it also provides the employer with a basis for dealing with any audits ; The items related to measure costs must be detailed and comprehensive. It is impossible for just one or two people to think of all such items during the bidding process; it is necessary to leverage the strength of a team and work together to ensure that all measure cost items are included fully ; Measurement fees affect the total cost; many of these items are subject to competition. In addition to setting reasonable prices, it is advisable to optimize these measurement fees in order to reduce costs. 1. Omission of costs related to temporary measures: Temporary measure costs are intangible; it’s somewhat unfair to accuse the tendering party of omitting such costs. Although consulting firms are specialized in cost estimation, no one can predict what additional expenses will arise during actual construction, so they can only list some common costs based on experience, such as those related to formwork, scaffolding, and utilities ; As for other factors such as the groundwater level, the size of the construction site, and the quality of transportation conditions, they can only be provided by the project owner. But whether the construction party pretends to be ignorant or truly doesn’t understand, in any case it’s impossible to list all possible measures involved. Moreover, obtaining those measures is like trying to get an apple from a tree – there are various ways to do it, and no one can list all the methods available to retrieve the apple. If the bidder fails to list the cost items for measures on their own, no one can help. 2. Measure rates: Except for non-competitive measure costs, all measure items allow for the establishment of their own cost bases and rates, with the fees being set based on what is required during the construction period. Just like picking apples from a tree, if you want to use a lift, you include the cost associated with using that lift in the additional costs; if you prefer to climb the tree to pick the apples, then you account for the labor costs and insurance expenses related to climbing the tree. 3. Addition of measure costs for additional items: Except for independent major additional items, general changes and negotiations do not incur any additional measure costs. 4. If the measure costs are not incurred, should they still be deducted at settlement? From another perspective, measure costs are essentially a type of risk fee; just like insurance, if such costs are not incurred, deductions are still made. But what about compensation in cases where these costs are actually incurred? 5. Measure costs are not profit: Some people ask whether, since the cost of internal inspections is included in the quote, it is necessary to provide an internal inspection report once the project is completed, as the client may request one That’s natural. Why is it said that measure costs are expenses that are difficult for both the employer and the contractor to handle? 1. For the employer: It is a cost related to items that are not part of the physical structure of the project; this word \"not\" means that measure costs are intangible and cannot be seen or touched. Even if Party A pays the money directly, it will still be unable to cope with future inspections by higher authorities and auditors. In reality, during the actual construction process, these various costs related to measures differ significantly: for example, costs associated with special projects and material testing should be included in the costs related to technical construction measures, while costs related to disturbing the local community, garbage removal, post-construction cleaning, and the protection of finished products should be included in the costs related to construction organization measures, and so on. Furthermore, there is usually no basis for determining the cost of additional measures; both parties have their own opinions as to whether it should be high or low, making it difficult to reach an agreement. It is precisely due to the wide variety, difficulty in billing, and vague criteria that measure fees are what Party A is least willing to pay. 2. As for Party B: Since expenses are incurred before and during the construction of the project, it is only natural for them to think about how to get their money back; this is a completely normal way of thinking. However, measure costs are not as straightforward as the drawings; moreover, they are usually calculated only at the time of settlement. Therefore, it is common in practice to request a somewhat higher amount, and the key lies in one’s skills and communication abilities.

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