We are always asked about a Quantity Surveyor and what they do and whether they are needed for a development project. In this blog we look to answer the common questions we get around a QS.
What is a Quantity Surveyor (QS)?
A Quantity SurveyorS, otherwise known as a QS, is an individual whose primary responsibility is to figure out what a construction project will cost. The name stems from the job description because they prepare a ‘schedule of quantities’ (an estimate of materials, labour and service costs).
Each building company will have a QS that works internally. This is how most building companies would assess how much they should quote for work. There are also independent QS firms that contract out to developers or lenders to assist with an independent assessment of a project.
What does a Quantity Surveyor do ?
A QS’s prime responsibility (as above) is to review a construction or development budget to ensure it is accurate and fit for purpose. The roles includes measuring and estimating material and labour costs to build-up detailed estimates about construction costs.
An independent QS, however, will often have further responsibilities than just review of the budget. They will prepare an initial report that covers off the consents, the contractor(s), pre-sales and all other key contracts, consultants and consents. The purpose of this report is to identify the risks of the project and how these may be managed.
An independent QS will also certify the monthly drawdown’s for lending purposes. This involves a review of the work completed on site and ensuring it aligns with the budget and programme. The QS will make sure that the Cost to Complete (link to another blog) remains adequate to complete the project and the project is on programme.
The QS will also have other responsibilities under a lenders brief such as ensuring that all trades are paid and up to date (the money advanced hasn’t been paid to others) and perhaps advising on or helping with contractual issues.
Why is the lender asking me to engage with a QS?
These items are a key risk management tool for a lender and can be for yourself. They help to ensure, from an independent perspective, that firstly the project stacks up and secondly that it remains on course.
A lender, whilst they often engage in developments, will not always be experts in some of the finer details around the budget, contracts and consent. They therefore will often look to outsource some of this risk, much like they would to a valuer regarding establishing values. Effectively the QS helps to manage the risk for a lender and are able to perform much the same role for a developer.
How much does a QS cost?
This will vary widely depending on the size and complexity of the project, however, for a standard small – mid sized development we often see the costs as follows;
- Initial report - $5,000.00 - $10,000.00 + GST.
- Drawdown reports - $1,750.00 - $3,000.00 + GST
Overall, for a standard 12 month programme a QS could cost between $25,000.00 - $40,000.00.
This may vary if the QS is engaged for further or additional work (such as working both for the client and the lender).
Do I need to engage a QS?
Some lenders, particularly banks, will mandate that a QS needs to be involved with most projects and if you are seeking to secure funding from them you will need to go through the process.
There are funders in the market that will be happy to move forward without a QS. This can be appropriate if the project is of a simple nature or you are a more experienced developer and can manage the project well yourself.
It may, however, be of value if you are a novice developer to engage with a QS to assist you to manage your risk much as a lender would to manage theirs. You may also, however, find that some of this is covered by the lenders QS function although it is important to note that the lender in this instance is technically working for the lender.
Are there any other functions of a QS?
Yes. A QS can help pre-development with a tender for your construction. This would be where they reach out to 3 – 4 contractors on your behalf to get them to quote the work and then assist you with deciding as to who to move forward with. They would review the pricing sent through, capability of the contractor and their suitability to the job before providing a recommendation.
They can also assist with preparing and reviewing the construction contracts. The QS will be able to ensure that these carry the relevant protection and mechanisms to manage the developer and lenders risk. Often lenders will have particular items (such as a performance bond) that they require and a QS can ensure that this is fleshed out early enough as to not prove an issue when securing funding.
Many QS’s will also be attached to firms that, or they themselves, provide project management services. This can be an important function for novice developers or larger projects where there are many consultants and contractors that need to be cajoled in a single direction. They can be involved as early as site acquisition / design right through to project completion to make sure the development is pushed forward at a good rate.
All of this, of course, can come at a cost additional to their core responsibility.
Can I pick my own QS?
You may pick the QS you want to work with on your project, however, often a lender will have a panel of acceptable Quantity Surveyors that they are comfortable to use. It is important to establish with your lender if the QS you have in mind is acceptable before engaging with them as if they are not on the lenders panel then you may need to get another QS on the job and can end up spending unnecessary funds with the other QS.
Who are the best QS firms to use?
There are a number of good QS firms across New Zealand. Some that Lateral Partners have worked closely with and are able to work with most funders include Andrew Newlands at Omni Development Partners, Darren Rowe at Axcia Consulting, Mike Casey at Kingstons, Phil Griffiths and the team at Rhodes & Associates.
If you need an introduction or are considering a QS for your project please reach out.
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