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Scope of Work

Sergon Building Consultants were engaged by an Insurer to provide a detailed Scope of Works for reinstatement of a home that had sustained extensive fire damage during the devastating Blue Mountains bush fires in 2013.

Overview
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Sergon Quantity Surveyors were also engaged by the Insurers, requesting they provide a detailed reinstatement Cost Estimate based on the Scope of Work, allowing Insurers to consider their claim management options.

Using First Principal Estimating techniques, Sergon Quantity Surveyors reviewed the Scope of Works, inspection report and plans for the home, which was described as an average quality, single storey residential dwelling of 356m² gross floor area.

The Detailed Cost Estimate (DCE), which included all fire damaged external infrastructure and necessary Bushfire Attack Level upgrades, was calculated at $808,876 (inc. GST), with an additional allowance of $7,500 for professional fees.

  • The Challenge

    Insurers passed the Sergon Building Consultants Detailed Scope of Works to their trusted panel builder requesting a reinstatement quotation. A challenge arose when the Insurers trusted panel builder provided them with a reinstatement quotation in the amount of $1,110,725, a difference in excess of $300,000 when compared to the Quantity Surveyors cost estimate. Insurers asked the Builder to review their quotation. However, the Builder returned to Insurers confirming that the quoted price was both accurate and represented value for money. Insurers contacted Sergon Quantity Surveyors questioning why the DCE was so low compared to the panel builder’s quotation.

  • The Solution

    Sergon Quantity Surveyors agreed to complete an additional service for Insurers known as a ‘Verify Quote Cost’ (VQC). Quantity Surveyors contacted the Builder and obtained the quotation in a detailed trade format and then analysed the Builder’s resubmitted quotation to compare quoted costs against known industry standards and Sergon’s DCE.

    This helped Quantity Surveyors to identify any price discrepancies and check calculations. Our Quantity Surveyors soon discovered that in their opinion the Builder’s quotation included multiple calculation errors. Additionally they demonstrated that the Builder had doubled up on the costs of some items, quoted different values on Prime Cost items and had on occasion, inflated some rates in excess of Industry Standard Pricing.

    Sergon Quantity Surveyors submitted an easy to read report of their findings to Insurers. The report demonstrated that the Builder’s initial quotation was neither accurate nor did it represent value for money. More importantly, the report demonstrated that reinstatement was able to be completed by the panel Builder at a much lower price than quoted, while still allowing the builder to make a reasonable profit from the construction job.

    Armed with the Sergon Quantity Surveyors VQC report, Insurers challenged the builder on the price. The builder readily agreed to a significant reduction of their quoted costs and submitted a revised quotation. On this occasion, the Insured ultimately requested a cash settlement so Insurers proposed using the revised builder’s quotation as the basis for a cash settlement calculation. The Insured agreed that the quotation was reasonable for the Scope, and agreed to settlement as proposed.

    The final claim settlement value represented a saving to Insurers at in excess of $100,000.

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