ADMINISTRATION OF PRELIMINARIES ON CONSTRUCTION PROJECTS

Estimators and Project administrators often administer preliminaries as either function of

project cost, project duration or adjudication parameters. Also, most contracts in the
Middle East often include an item under preambles indicating a fixed method of
administering preliminaries as either value related or based on project duration. These
approaches do not agree with the logic of preliminaries because a number of problems as
been identified with them and which in the long run are to the disadvantage of both the
clients and contractors. Apart, administration of preliminaries has often been the cause of
dispute between the consultant quantity surveyor and the contractors’ quantity surveyors
on most contracts.
The nature of preliminaries is such that it covers financial matters, which relate to the
contract as a whole and not confined to any particular work section in the Bill of
quantities. Contractor thus given an opportunity to put a price for all matters affecting its
cost that arise out of the condition of contract, any special requirement of the client on his
professional advice and for all temporary work necessary for carrying out the contract.

As the construction work proceeds, the contractor is entitled for the payment of the total
value of the work properly executed, less a specified percentage for retention as it will be
unreasonable to expect contractors to finance construction operations without assistance
from employers. All the standard forms include provisions for periodic interim payments
to be made for these reasons.
Two common methods of valuation of preliminaries that often used by contract
administrators are monthly proportion of total preliminaries and proportion of contract
value. In the first method, the cost of preliminaries is apportion over the contract
duration on a constantly monthly basis, while in the second method, the preliminaries are
paid to the contractor in proportion to the total value of the contract he has achieved at
any time. Under both of these methods, any PC sums included in the contract must be
deducted prior to calculation. The argument in support of these methods is that it saves
time but a number of disadvantages have associated with their use.

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The first method often resulted into overpayment to the contractor because when
proportioning preliminaries against contract period, it does not take into account that
work may be behind programme to the extent that the complete preliminaries costs may
be paid to the contractor before the work is completed.
Secondly, neither of them deals effectively with lump sums inserted in the preliminaries
relating to items that will be executed early in contract resulting in under-valuation, while
other items may be included prematurely. Examples of such items are site fencing and
temporary roads may have to be inadequately valued because they have to be completed
early. While items such as drying out the building and cleaning away on completion will
be included in part prematurely.
Therefore, each item of preliminaries should be assessed individually and this permits a
much more realistic and accurate approach to be adopted to suit the particular
circumstances as shown below.
• Certain items may be required at the outset and can accordingly be valued in
full, such as the provision of temporary site fencing, construction of
temporary roads, and the erection of hoardings, storage compounds and site
huts.
• Items valued in full or in part according to their usage, such as scaffolding and
plant.
• Items valued in proportion to the works executed, such as wages of general
foreman and cost of telephone calls and insurance.
• Items valued on completion such as cleaning and drying out.
These constituent parts are viewing from various cost parameters such as Time related/on
going periodic cost, Work related cost, Site overhead cost Lump sum, establishment cost
(front end cost), Terminal lump sum (back end cost) and Time and work related cost
(combined).
This process of breakdown preliminaries will be made very much easier and the results
will be more satisfactory if the co-operation of the contractor is obtained. Once an
agreement is made between both parties, these amounts will then be available for
valuation purposes and later, for the adjustment of preliminaries, if necessary, in the final
account.