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Cost Engineering Skills: Opportunities for Quantity Surveyors.

Ojo, Ademola Eyitope1, MNIQS,RQS,MBA

Abstract. The increasing efforts of government and huge investment toward deliberate creation of opportunities for Nigerians in the oil and gas industry, orchestrated the enactment of the Nigerian Content Monitoring Board Act (2010). Regrettably, what particular benefit has accrued to the Nigeria professional Quantity surveyors, in terms of employment and other opportunities, despite their skills and competencies(similar to that of cost engineers) applicable in the oil and gas services? This paper therefore examined the required skills and competencies of Cost Engineering (CE) and Quantity Surveying (QS) particularly the engineering skills and knowledge require for cost dimension in construction. It concluded that the training and skill of the Quantity Surveying sufficiently prepares the Nigerian Quantity Surveyor to seize the opportunities in the oil and gas industry as Contract engineers, Project Control Engineers etc. Keyword: Cost Engineering, Quantity Surveying, Oil and gas, Skills, Opportunities. 1. Introduction. The trend of practices in the Nigerian construction industry sector, certain professional views and recent publications in the press on professionalism particularly related to practice of Cost engineering(CE) and Quantity Surveying(QS) continue to reveal naivety of many practitioners Ojo(2011). One finds it difficult to imagine the exposure and information gap or unawareness of some practitioners despite the avalanche of literature, electronic information access etc. This precarious scenario not only portend a fragile base for our national development but risky and showcases the causation of our economic and infrastructure decay. Hence it will not be out of way to imagine and question the literatecy of the assumed heralds of infrastructure development. Though (Jagboro, 1991) quantity surveying profession was at start known for expertise in building work however, an increasing evolution of the profession into new areas including engineering, contract management, project management etc. In agreement with this, Mogbo (1998) submitted that quantity surveying is an applied science but with root in construction economics and management, which is applicable in engineering: Civil, Electrical, Mechanical, Process, petroleum etc). These positions show that the quantity surveyor has an inter-disciplinary training in Business management and Finance, Law, construction and Project Management. Engineering or more generally, the application of scientific principles and techniques is most often responsible for creating functional things, but has multiple dimensions. One of these
Registered Quantity Surveyor (RQS), Construction Arbitrator and Independent Researcher. Formerly a Quantity Surveyor with Nigerdock Nigeria Plc, Managing Partner, OJ. Connects Resources, P7, Blk D, GRA, Akure. Ondo State Nigeria. email; ojconnects@yahoo.com

A paper delivered at the NIQS Symposium The Nigeria Content Law: Optimizing Opportunities For The Professional Quantity Surveyors.25TH November, 2011. Page 1

functions is cost dimension of engineering. This techniques and skill require for Cost engineering resides in the cost engineer whose understanding and managing of cost dimensions requires skills and knowledge in business and program planning, cost estimating; economic and financial analysis AACEI (2007). These positions synchronies with the QS training, skill, competences and practices. This paper therefore identified similarities between the skill competences and practices of cost engineers and quantity surveyors with a view to provoke opportunities for Nigeria Quantity Surveyors particularly in the oil and gas industry and part of the opportunities created by Nigerian content local content law. 2. What are skills and Competences? Lepsinge and Anntoinette (1999) submitted that competency is a descriptive tool that identifies the skills, knowledge, personal characteristics, and behaviors needed to effectively perform a role in the organization and help the business meet its strategic objective. Similarly, (Holmes and Joyce, 1993) defined competency as action, behaviour or outcome which a person should be able to demonstrate, or the ability to transfer skills and knowledge to new situations within an occupational area. Their definitions suggest that for best performance, a model not only identify the skills and knowledge needed for a job, but define the expected levels of performance. It goes further to suggest that the competency tie skills and knowledge to organizational roles, and tie everything back to business objectives and strategies. However, (Hassall et al., 1996; Nkado, 2000 ) suggest that competent professionals must have a range of skills, knowledge and understanding which can be applied in a range of contexts and organisations. The fact that the Quantity Surveyor occupies a central role of interacting with other members of the design and construction team calls for a multi-disciplinary knowledge of other related professional disciplines. 3. Cost Engineering Skill Vs Quantity Surveying Skill. Climbing on the pedestal of the above, Association for the Advancement of Cost Engineering International (AACEI), outlined 31 skills and knowledge areas of cost engineering AACEI, (2007) graphically described thus: while engineers are responsible for functional and physical creation (design) in term of dimensional element of structures e.g. road and bridge. However, seeing beyond the functional and physical dimension, less tangle dimensions of money, time and other resources invested (collectively referred to as Costs),someone need to estimate the cost, determine activities time to build it, continually monitor and control ,assess the progress in relation with time and money expended to ensure clients objectives. However, the engineering skills and knowledge require for cost dimension in construction are quite different. From that difference, the skills of a cost engineer is born The skill and knowledge areas are : A paper delivered at the NIQS Symposium The Nigeria Content Law: Optimizing Opportunities For The Professional Quantity Surveyors.25TH November, 2011. Page 2

SECTION 5PROJECT MANAGEMENT 18. Project Management Fundamentals. 19. Project Organization Structure 20. Project Planning. 21. Project Labor Cost Control. 22. Leadership and Management of Project People. 23. Quality Management. 24. Value Analysis. 25. Contracting for Capital Projects.. 26. Strategic Asset Management. SECTION 6ECONOMIC ANALYSIS 27. Basic Engineering Economics. 28. Applied Engineering Economics. SECTION 7STATISTICS, PROBABILITY, & SECTION 3PLANNING & SCHEDULING RISK 12. Planning . 29. Statistics & Probability. 13. Scheduling. 30. Basic Concepts in Descriptive Statistics. SECTION 4PROGRESS & COST 31. Risk Management CONTROL 14. Progress Measurement and Earned Value. 15. Earned Value for Variable Budgets. 16. Tracking Cost and Schedule Performance. 17. Performance and Productivity Management Source: ACCEI, Skill and Knowledge Book, 2007 In Nigeria, the training of quantity surveyors at both university/Polytechnic and professional levels suffice the 31 skill and knowledge areas of cost engineering. The core studies in the syllabus for training of quantity surveyors in Nigerian Universities are as follows: 1 General Physics and Chemistry 12 Construction Economics and Management 2 Architectural Graphics and Design 13 Principle and Measurement of Building Works 3 Building Construction and Materials 14 Measurement of Civil Works 4 Structural Mechanics 15 Measurement of Electrical Construction Works Building and Architectural Science 16 Measurement of Mechanical Construction 5 Works 6 Design of Reinforced Concrete Structure 7 Land Surveying and Land Economics 17 Tendering and Estimating 8 Building Maintenance Technology 18 Project Cost Control 19 Construction Cost Information Science 9 Law and Legal System 20 Introduction to Valuation Construction Contract Law and 21 Productivity Studies on Site 10 Administration 11 Professional Practice II 22 Introduction to financial Accounting I 23 Marketing Management Source: Excerpt from Nigeria University Commission Approved Syllabus A paper delivered at the NIQS Symposium The Nigeria Content Law: Optimizing Opportunities For The Professional Quantity Surveyors.25TH November, 2011. Page 3

SECTION 1COST 1. Cost Elements 2. Pricing 3. Materials 4. Labor 5. Engineering 6. Equipment, Parts, and Tools. 7. Economic Costs 8. Activity-Based Cost Management. SECTION 2COST ESTIMATING 9. Estimating. 10 Process Product Manufacturing. 11. Discrete Product Manufacturing.

Similarly, the synopsis of The Nigeria Institute of Quantity Surveyors syllabus for Test of Professional Competence (TPC) (final) stage is as thus: Professional Practice and Procedure 1 Principle and practice of professional service Nature, Organisation and formation of 2 Construction Industry Interpretation and application of Standard Forms 3 of Contracts Construction Procurement Practice and 4 Procedure 5 Financial Management in Construction 6 Life Cycle Costing and Cost Elements 7 Development Economics-Finance, Investment Appraisal and Budget. 8 Cost In Use 9 Land Use and Value Determinant 10 Value Engineering Measurement of Building and Engineering Works Application of Standard Methods of A Measurement Processes of Preparation of Different Bills of 1 Quantities Specification Writing and Contract 2 Documentation B Measurement of Building Works 1 Residential Estate, Resort/Sporting, Commercial, Institutional Buildings etc. C Measurement of Engineering Works 1 Mechanical - Fire Control, Air Handling and Movement- Installations Electrical -Power and Lighting Extra Low 2 Voltage facilities ,Heating system Installations Source: Excerpt from NIQS Approved Syllabus

3 Civil- Soil Stabilization structure, Underground -Tunnels, Underpass etc 1 structures 2 3 4 D Marine Associated Works Road, Bridges, Subway and Air field Railway Track works Heavy and Industrial Engineering Scope, Nature and Constituent of Heavy 1 Engineering Measurement and Control of Engineering 2 Project Project Management 1 Contracting and Procurement Methods International Bidding Strategies and 2 Services 3 Construction Management and Financing Procurement and Financing of Engineering 4 work Project Information Technology and 5 Management Project Marketing Management and 6 Strategies

A paper delivered at the NIQS Symposium The Nigeria Content Law: Optimizing Opportunities For The Professional Quantity Surveyors.25TH November, 2011. Page 4

However, Opawale et al (2006) suggested continuous abridgement, update and standardization of QS training in skill and competence in order to meet the dynamic engineering projects challenges. Again, International Cost Engineering Council (ICEC) (2006) gave the list of the similar functions of Cost Engineering (CE) and Quantity Surveying (QS) to include: i. to provide independent, objective, accurate, and reliable capital and operating cost assessments usable for investment funding and project control; ii. to analyze investment and development for the guidance of owners, financiers and contractors; estimates of capital or asset costs including development costs;estimates of operating and manufacturing costs through an asset's life cycle; iii. risk assessment and analysis; trending of scope and cost changes; decision analysis; financial analysis (eg, net present value, rate of return, etc); iv. project cost control; appraisals of existing assets; project analyses, databases, and benchmarking; planning and scheduling; sitting studies, etc.; v. productive and investment needs assessment; facility management needs assessment; project feasibility and budget assessment; vi. cost management; vii. procurement management; contract administration; viii. whole-life appraisals, quality audits and value management; ix. Dispute resolution. It must be emphasized that these are typical functions of the CE or QS but not all practitioners in the field perform all of these functions. Many specialize in a limited number of these functions. 4. Who then are quantity surveyors and cost engineers? There is urgent need to properly educate ourselves on how this situation stands. According to the official publication of International Cost Engineering Council (ICEC)(the most referred cost engineering certifying body in the world) issued February, 1996 and revised June ,2002, as the white paper document that summarized the conclusion of discussions held at ICEC International Congresses and endeavors to compare the similarities and differences between three professions thus: Cost Engineering and Quantity Surveying have similar and highly overlapping functions. Quantity Surveying relates more to building design and construction, while Cost Engineering relates more to engineering projects and processes. However Cost Engineers and Quantity Surveyors commonly work in both areas. Cost Engineering and Quantity Surveying differ primarily in the route taken to professional qualification, not to any substantive difference in the two professions. Project Management overlaps both Quantity Surveying and Cost engineering in the project cost management area to some

A paper delivered at the NIQS Symposium The Nigeria Content Law: Optimizing Opportunities For The Professional Quantity Surveyors.25TH November, 2011. Page 5

degree but most Project Management functions are quite different from those of Cost Engineering and Quantity Surveying. Accordingly, AACEI only require at least 8 years of post graduation of which four must be a degree/HND in any discipline which may be law, business administration, information technology, accounting etc. (www.aacei.org), whereas to qualify as a QS (in Nigeria or UK) must follow a similar course of education and training (usually degree/HND level in quantity surveying and 36months industrial experience). Virtually no college or university offers cost engineering as a degree course in America or UK. This implies that, one does not need to poses a degree/HND in engineering discipline from an institution before being certified in any of the four grades of specializations ( Certified Cost Consultant(CCC), Certified Cost Engineer(CCE), Planning and Scheduling Professional(PSP) and Certified Cost Technician(CCT)) in cost engineering. However, that Nigerian engineer undergone one elective subject of 2 semesters duration in quantity surveying have turned them to cost engineers is laughable. The CE or QS is trained in techniques of construction total cost management. Total Cost Management(AACEI,2007; Mbelede, 2010) is that area of engineering practice where engineering judgment and experience are utilized in the application of scientific principles and techniques to problems of business and program planning; cost estimating; economic and financial analysis; cost engineering; program and project management; planning and scheduling; and cost and schedule performance measurement and change control. Hence, the practice area is called cost engineering; while the process through which these practices are applied is called Total Cost Management (TCM). The CE or QS provides this service by estimating costs and analyzing risk, trending and controlling costs and assessing design, and documenting costs. Hence, the quantity surveyor or cost engineer is a professional who is skilled in the knowledge to ensure systematic approach to managing cost throughout the life cycle of a project, programme or facility through the application of cost management principles, methodologies and technology. However, those CEs or QSs, who emphasize the cost discipline, often use the term "Construction Cost Consultant" and Estimating Engineer/Estimator. They ensure that projects are designed and constructed in such a manner as to secure value for money, cost certainty and programme dates. Others emphasize on commercial contracts management-trained to draft, interpret and administer complex contracts in construction, often adopt other titles such as "Contracts Engineer" or Contract Administrators" or Proposal Engineer. A number of CEs or QSs work in procurement management in the oil & gas industry, process and power industries, and civil engineering. Their preferred title, in countries where the CEs or QS profession is less known, is "Procurement engineer". Some QSs specialize in project management, the QS background being a good foundation for understanding the complexities of modern large-scale projects. A true and trusted QS in Nigeria is a professional certified by the Nigerian Institute of Quantity Surveyors and registered by the Quantity Surveying Registration Board of Nigeria (the A paper delivered at the NIQS Symposium The Nigeria Content Law: Optimizing Opportunities For The Professional Quantity Surveyors.25TH November, 2011. Page 6

only authorized body regulating the practice of total cost management in the construction industry) with official stamp and seal( for the original QSs and CEs dem get logo). 5. Job opportunities for Quantity Surveyors The increasing efforts of government toward creation of opportunities for Nigerians as the benefit of our God endowed resources orchestrated the enactment of the Nigerian Content Development Act, April, 2010. This stem from the fact that an estimated $8 billion is spent annually on servicing the industry in operations such as fabrication, engineering procurement, construction (EPC), Front End Engineering Design (FEED), conceptual designs and seismic studies Business Day, (2008). And, this figure is projected to hit $15 billion within the next few years to come. Now, oil, gas, mining, metals and other industries are planning a tsunami of capital investment in new and expanded facilities worldwide Hollmann and Elliott(2006). But the only human capital they have to deal with the growing wave is a handful of experienced baby boomers nearing retirement; many of whom are overworked and poorly motivated to lead or train new recruits. Again, it may be shocking to reveal that the bulk of cost engineers in Nigeria oil and gas industry are mechanical or and metallurgical and material Engineers. But , it will easier for the QS to practice cost engineering than these set of engineers measuring from their training. Under the, Nigerian Content Monitoring Board Act (2010) , Local Content is defined as the quantum of composite value added or created in the Nigerian economy by a systematic development of capacity and capabilities through the deliberate utilization of Nigerian human, material resources and services in the Nigerian oil and gas industry. By this, particular in clauses 15, 28 and 42, Nigeria Institute of Quantity Surveyors (NIQS) has the chance creating opportunities for its members in order to compliment the few in the industry working as contract engineers, Project Control Engineers, Proposal and Estimating Engineer, Planning Engineers etc. Based on our competence - skill and knowledge areas- QS is better service as 1. Contract Engineers/ Contract Administrators. Duties; i. Preparation and Management of Project Budgets, ii. Preparation of Contract Documents, iii. Responsible for ensuring the consistency of all contractual and commercial terms and condition at overall package level , iv. Finalize Tender Documents and participate in prequalification of tenderers. v. Deal with queries during the bid phase, perform bid evaluation and participate in negotiations. vi. Ensure the application and respect of the procedures in the tender process, vii. Preparation and expediting of the Contracts / Purchase Orders documents , viii. Preparation of the commercial and contractual evaluations up to the final recommendation. ix. Contractual/commercial administration throughout the execution of the Contracts. A paper delivered at the NIQS Symposium The Nigeria Content Law: Optimizing Opportunities For The Professional Quantity Surveyors.25TH November, 2011. Page 7

2. Project Control/ (Planner and Scheduler) Engineers /.Project control engineer are experts in project status and performance measurement, and involve conceptual and detailed estimates and milestone schedules necessary to evaluate and support planned objectives. Essentially must be good in the use of planning software like Primavera 3 or 6 MS Project, Spread Sheet MS Excel, and Powerpoint. Duties; i. Provides a full planning, work management, analysis of construction activities and Identify schedule key milestones dates for engineering, procurement and construction and all critical Items as specified in the contract requirement. ii. Develop Project System and Sub-system Schedule. iii. Prepares Progress Reports for project Management Organization and the Client in accordance with Project Controls Procedures and contract requirements. Such reports will include, but may not be limited to the production of Actual/schedule Progress Curves, Manpower Histograms and Equipment Schedule. iv. Responsible for preparing revised Level 1 or 2 schedule for tender purposes and 3 and 4 Schedule for post contract project control including short term schedules (Look-Ahead) based on approved Master Construction Schedule and actual resources available (Manpower, Materials, Equipment) Prepares Mitigation Plan & schedule analysis prior to delay recovery. 3. Cost Engineers/ Estimating or Proposal Engineer. The primary purpose of the Estimation Engineer is the preparation of proposal and project cost estimations by liaising Project Managers, in order to achieve the most technically optimal and commercially viable estimation of project costs. Duties: i. Prepares the preliminary cost estimates for proposals ,project's Cost estimation, and Finalizes Project cost estimates after discussion with the Project Manager and Client. ii. Prepares all Bill of Material (BOM) based of Material Take off (MTO) for bulk material cost estimates and procurement purposes. Prepares Capital and operating cost estimates, and /from cost data bank and Reviews and evaluates change orders. iii. Liaises with all Engineering Disciplines of relevance to a project in order to obtain and validate the Bill of Quantities in preparation for cost estimation. iv. Prepares the Price Breakdown as a contribution to proposal compilation and Delivers the Cost Estimate Report at the end of FEED and / or Conceptual Design stages of a project. v. Responds to client queries concerning cost estimation details Identify potential contractual risk items and suggest/implement strategies to mitigate these risks. For prospecting job seekers, the following websites will serve good purposes. 1. www.oilcareers.com A paper delivered at the NIQS Symposium The Nigeria Content Law: Optimizing Opportunities For The Professional Quantity Surveyors.25TH November, 2011. Page 8

2. www. jobs.trovit.co.uk 3. www.oilandgasjobsearch.com Some companies in Nigeria where services of QS, are required visit; www.nigeria-oil-gas.com 4. Conclusion. Though challenges associated with construction project management will definitely require strong teamwork, however construction Professionals in the construction industry should see their roles as being though fragmented along core competence areas but integrated and complimentary in achieving construction projects success. One way to achieve this is by updating and leveraging others profession's knowledge base to ensure that the constituent skills, abilities i.e. competencies values of other professions are not only appreciated but subjected to the fact that it is highly essential. The training of quantity surveyors should therefore embrace all facets of construction work if they are to function effectively as financial managers of the construction industry. Hence we can no longer consider anything we do on projects parochially and purely QS and national things, which are constrained by the borders of Nigeria and by a single currency, but everything we do must be considered in light of international service and competitive amongst other professionals. The NIQS must, more than ever before, start and rapidly progress on an aggressive marketing of the profession in the Nigerian oil and gas sector. QS must seize the cost engineering principles and the opportunities in the Nigerian Local Content Law, and Nigeria oil and Gas to benefit ourselves.

References Association for the Advancement of Cost Engineering International (AACEI)(2007). Skill And Knowledge Of Cost Engineering, Fifth Edition,pg.1-489 Hassal, T., Dunlop, A. and Lewis, S. (1996): Internal Audit Education: Exploring Professional Competence, Managerial Auditing Journal, 11/5, p.28-36. Holmes, L. and Joyce, P. (1993): Rescuing the Useful Concept of Managerial Competence: From Outcomes Back to Process, Personnel Review, Vol. 22 No. 6, P.37-52. Hollmann J. K. and Elliott B.G.(2006). Core Competencies, Expectations and Career Path for an Estimating Professional. AACE International Transactions www.aacei.org. Retrieved 10/6/2009 International Cost Engineering Council (ICEC) (2006). What Are Cost Engineering, Quantity Surveying, and Project Management? www.icec.org. Retrieved 20/08/2009. Jagboro G.O.(1991) Education for Quantity Surveyors Proceedings of the International

A paper delivered at the NIQS Symposium The Nigeria Content Law: Optimizing Opportunities For The Professional Quantity Surveyors.25TH November, 2011. Page 9

Conference on Quantity Surveying and Developing World, 16th -20th Oct., Ahmadu Bello University, Zaria, Nigeria. Lepsinger, R. and Anntoinette D. (1999). The Art and Science of Competency Models: Pinpointing Critical Success Factors in Organizations, Jossey-Bass/Pfieffer, San Francisco . Mbelede C.(2010). Cost Engineering Practice In 21st Century Nigeria. Nigerian Society of Engineers, Annual Technical Conference, June. Mogbo T.O. (1998) Quantity Surveying in the Nigeria University System: A pragmatic Approach for the New Millennium. The Quantity Surveyor.(27),17 Nigerian Content Monitoring Board Act (2010) . Nigeria Institute of Quantity Surveyors (NIQS); Approved Syllabus for Test of Professional Competence. Nigerian University Commission; Approved Curriculum of Study for Quantity Surveying. Nkado, R. N. (2000). Competencies of Professional Quantity Surveyors in a Developing Economy. Proceeding of the 2nd international conference on construction. www.buildnet.csir.co.za Retrieved 29/10/2011 Ojo A.E.(2011). Cost Engineering or Quantity Surveying; Dont Be Deceived. Construction Connects Volume 1, Issue 4, June, 2011 Opawale A., Awodele O. and Oyediran O.(2006). Correlation Between Quantity Surveyors Education and Training and Requirement for Administration of Civil Engineering Projects In Nigeria.Paper Presented at 22nd Biennial Conference of NIQS, Calabar, 22nd 25th November.

A paper delivered at the NIQS Symposium The Nigeria Content Law: Optimizing Opportunities For The Professional Quantity Surveyors.25TH November, 2011. Page 10