Quantity Assumption Risk

The situation

Two competent documents that do not agree

A developer held a cost plan produced by their own team. The contractor held a priced document produced by theirs. Both were competent, both were internally consistent, and the two did not agree.

Nobody treated this as a problem, because the total was close enough. However, a total that matches is not the same as quantities that match. Underneath two similar bottom lines sat significant divergence across individual elements, with overs in some packages offsetting unders in others.

That arrangement holds until the first variation. At that point the parties have to agree a rate and a base quantity, and they discover they have been working from different measurements for months.

What we found

Each party had resolved uncertainty in its own favour

The divergence was not random. It followed the pattern it usually follows, which is that each party had resolved uncertainty in its own favour without anyone doing so dishonestly.

01

Substructure quantities differed because the two parties had made different assumptions about excavation working space and disposal. Neither assumption was stated in writing.

02

Finishes were measured net by one party and gross by the other, which produced a consistent gap across every internal area.

03

The contract documents did not state whether quantities formed part of the contract or were provided for information only. Consequently the risk position on measurement error had never been allocated.

04

Rates in the priced document were internally inconsistent, with several packages front loaded in a way that would have distorted valuation of any early omission.

What changed

One measured base, agreed before execution

When variations arrived, both parties valued them from the same base. The conversation was about the change, not about the measurement.

1

Agree a single measured base

One set of quantities was fixed before execution, with the measurement rules stated on the face of the document so neither party could later apply a different convention.

2

State whether quantities govern

The contract made explicit whether the quantities or the drawings prevailed. That is a one line decision and it determines who pays for every measurement error found later.

3

Re-balance the front loaded rates

Front loading was identified and corrected, which protects the client on interim valuation and, more importantly, protects them if works are omitted or the contractor fails.

4

Value change from the agreed base

Every subsequent variation was assessed against the same measurement, so the argument stayed on the change itself rather than on which figure was correct.

Why this happens

Measurement is a risk allocation exercise

Measurement looks like a technical exercise, so it is treated as one. In fact the decision about whose quantities govern is one of the most consequential commercial decisions on a project, and it is usually taken by default rather than deliberately.

Quantities and take-off produces the measured base and tests it against the model and the documents. Furthermore, tendering and procurement fixes how that base sits inside the contract, and cost control and variations holds the position once the works begin.

Questions

Asked about quantities and their basis

Why does a cost plan need quantities at all?

Because a rate applied to an assumed quantity produces a number with no traceable basis. Rates carry the market view, quantities carry the scheme, and only one of those is specific to your building. Where the quantity is assumed, the total moves when the assumption is corrected, and the correction usually arrives after the price is fixed. Measured quantities also let you test a contractor's price line by line rather than comparing two totals that were built from different assumptions about the same work.

What is the difference between measured and assumed quantities?

A measured quantity comes from a drawing or a model and can be checked by anyone with the same information. An assumed quantity comes from a rate per square metre, a percentage uplift or a benchmark from another scheme, and cannot be checked at all, because there is nothing behind it to check. Both appear in a cost plan as a number. Distinguishing them on the face of the document is the single change that most improves how a budget behaves as design develops.

Can quantities be taken from a BIM model reliably?

They can, provided the model is interrogated rather than exported. Schedules generated automatically inherit whatever the modeller assumed about object classification, and an element modelled generically will report as a quantity of something it is not. We check classification and completeness before we trust an output, which is the work described under quantities and take-off. A model gives you speed and repeatability; it does not remove the need for someone to look at what has been counted.

At what design stage should quantities replace rates?

Earlier than most programmes allow, and progressively rather than all at once. Substructure, frame and envelope can usually be measured well before finishes can, and those are the elements that carry the largest share of exposure. Waiting for full information means the budget stays assumption-based through the stages where decisions are actually taken. Measuring what is drawable now, and stating clearly what remains assumed, gives a client something they can act on.

What should I ask my cost consultant about their quantities?

Ask which lines are measured, which are assumed, and what each assumption is worth if it turns out to be wrong. A consultant working from measurement will answer without hesitation. Where the answer is a general statement about benchmarks or experience, you are holding a rate-based estimate presented as a cost plan. The question is not confrontational; it simply asks the document to show its working, which is what makes it useful when the scheme changes.

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