Quantity Surveyor's role in Sampling
The importance of 'sampling' in Quantity Surveying might not be immediately obvious. To fully appreciate this, one
must recognize the profession's need for a broad knowledge base. This includes areas such as contracts, engineering,
project management, accountancy, construction law, economics, and statistics, among others.
One instance where sampling is evident is when obtaining three (or more) quotations to validate rates or prices in
construction projects, which is a standard sampling method.
Consider the case of evaluating three quotations. A Quantity Surveyor assesses the feasibility and reasonableness of
each option—be it for work, materials, or equipment—considering the impact on the overall project. In undertaking
this task, a Quantity Surveyor functions not only as a statistician but also as an economist and an accountant,
integrating these diverse skill sets to make informed decisions.
The role of a Quantity Surveyor in applying statistical methods, such as sampling, goes beyond just determining rates
from quotations.
Quantity Surveyors are key in preparing and reviewing most types of construction claims that regularly occur in
projects, bringing essential expertise in quantum, contractual, and legal aspects. Although their role in formal
proceedings like arbitration and litigation may be limited, their skills are vital for facilitating negotiations and amicable
settlements, with parties often preferring the assistance of their in-house Quantity Surveyors.
This article aims to discuss the critical role of sampling in quantity surveying, particularly in resolving construction
claims and disputes, by demonstrating how various sampling methods can be applied effectively in this field.
Understanding Sampling and Extrapolation: Their Purpose and Use
In the process of obtaining three quotations, a Quantity Surveyor selects them based on specific criteria that reflect
broader market conditions. The Quantity Surveyor then analyses these quotations to identify trends or averages. From
this analysis, they make inferences about the general pricing trends in the industry. This is the stage where the concept
of extrapolation is applied. Therefore, extrapolation is essentially the inference that a statistician (in this case a
Quantity Surveyor) makes about a broader data pool based on the insights obtained from a sample.
In a perfect world, where time and cost are not constraints, sampling and extrapolation might not be necessary, as
using the total data from a distribution would be the most accurate method for informing decision-making. However,
in the construction industry, these limitations are very real and significant. Often, neither contracting party has the
luxury of time, nor the financial and resource capacity to analyse a full data set for a claim or dispute. This presents
practical challenges, making sampling and extrapolation essential tools for making informed decisions under these
practical limitations.
For instance, it is common in construction contracts that when submitting a cost claim (example; prolongation cost
claims), the claimant is required to provide all actual costs along with corresponding evidence, such as invoices,
receipts, payslips, etc. On the other hand, the defendant, upon receiving this submission, must thoroughly review
these documents to verify the information. This process can sometimes mean days or months of work.
In the 2021 case Building Design Partnership Ltd v Standard Life Assurance Ltd [2021] EWCA Civ 1793, the UK Court of
Appeal held that extrapolating claims was a proportionate approach to address the 3,604 unexamined variations,
considering the need for proportionality in legal proceedings.
Further, the court noted that a detailed examination of these claims would have resulted in over 60 lever arch files,
emphasizing the efficiency and practicality of the approach. The ruling affirmed that, in suitable cases, claimants could
base claims on extrapolation, highlighting its validity for managing complex evidence while keeping time and costs
proportionate.
Previous cases referred to in regard to this matter are: (1) Amey LG Ltd. v. Cumbria County Council [2016] EWHC 2856
(TCC), and (2) Imperial Chemical Industries Ltd v. Merit Merrell Technology Ltd [2017] EWHC 1763 (TCC). Readers are
encouraged to read these.
Drawing from the author's experience and cases like the ones mentioned above, sampling allows involved parties to
reduce the cost and time needed to substantiate evidence. However, it is crucial to ensure that the sample accurately
represents the entire population.
Sampling methods and practical applications
Sampling is the process of drawing information about a population (all members of a specified group) from a sample
(a representative portion of the entire group). The information we seek about the population typically concerns the
value of a parameter, such as the mean (average).
When preparing a prolongation cost claim, the typical starting point is the ledger, where all costs are recorded. To
substantiate all the costs within a ledger, one often needs to submit evidence in many lever arch files, including
invoices, receipts, etc. From a practical standpoint, this may not be feasible given the limited time, costs, and
resources. Therefore, this leads to the requirement of taking a representative sample, substantiating that sample, and
extrapolating the results to draw a conclusion.
Some common sampling methods are as follows:
- Simple random sampling is a method where every element has an equal chance of being selected. Applied to ledger cost assessment, it means each entry in a ledger has an equal probability of selection. Although this method ensures high representativeness, it can be challenging to implement in large ledgers due to its randomness.
- Systematic sampling involves selecting samples at regular intervals from an ordered list. In ledger cost assessment, the interval is determined by dividing the total number of ledger entries by the desired sample size. For instance, if systematic sampling is applied, one might select every 15th entry in the ledger.
- Stratified sampling is employed when the population is divided into distinct 'strata' or layers, with samples taken from each stratum. For ledger cost assessment, this means organizing ledger entries into specific categories. By assigning each cost entry to a relevant category, this method ensures comprehensive coverage of all types of expenses.
The methods described above each have their advantages and disadvantages, and it is essential for Quantity Surveyors
to be adept in selecting the most appropriate sampling method based on the specifics of each case. There may be a
temptation to select a sample based on a biased perspective, a practice known as sample-selection bias. It's crucial for
Quantity Surveyors to maintain objectivity and fairness in their sampling to ensure the integrity and reliability of the
claim analysis.
Furthermore, determining the right sample size is critical. A small sample might not capture the full spectrum of costs,
leading to inaccurate assessments, while an excessively large sample could be unnecessarily resource-intensive.
While this article cannot cover all aspects of sampling, it is important to highlight some key concepts, such as the
sampling error. Sampling error refers to the discrepancy or error that arises when a sample, such as a selected set of
cost entries from a ledger, does not perfectly represent the entire population, which in this case is all the entries in
the ledger. Since the analysis typically involves studying only a part of the population (the sample), there's always a
possibility that the characteristics of the sample (like the average cost, variance, or proportions of different types of
expenses) might slightly differ from those of the entire ledger.
Another key concept in sampling is the confidence interval. This provides a range within which the true value of a
population parameter, such as the mean, is likely to fall, based on the sample data. For instance, in ledger analysis,
calculating a confidence interval for the average daily or monthly cost of a project from a sample of ledger entries
offers a range that is likely to encompass the true daily or monthly average cost.
Drawing on the author's expertise and referencing cases like the aforementioned, it becomes clear that effective
sampling significantly boosts the efficiency and validity of cost claims. It provides a robust foundation for resolving
claims and disputes, as well as for negotiations and settlements. While this article has not exhausted every aspect of
sampling, it has underscored its importance in the modern construction landscape. Here, making informed decisions
under constraints is not just a necessity but an art form that Quantity Surveyors should master.
About the author:
Our founder and director, Isuru Fernando is a seasoned quantity surveyor with experience in the
construction and engineering industries. Hailing from a diverse international projects portfolio that spans across the
UAE, the UK, KSA, Qatar, South Africa, Japan, and Sri Lanka. His experience runs the gamut from contractors to
developers and consultants.
As a Chartered Quantity Surveyor (MRICS), Member of the CIArb (MCIArb), and an RICS Registered Expert Witness, his
professional recognitions are a testament to his expertise and commitment to excellence. His academic accolades
include a BSc in Quantity Surveying (UK), and an LLM in Construction Law and Arbitration (UK).
PAX:
We offer cost, commercial, and contract management services, covering both the pre-contract and post-contract stages. For a FREE consultation, please reach out to us at contactus@paxconsultancy.com, or you can write directly to Isuru at isuru.f@paxconsultancy.com.