Practice Problem2002

THE HONG KONG INSTITUTE OF SURVEYORS
QUANTITY SURVEYING DIVISION

ASSESSMENT OF PROFESSIONAL COMPETENCE
FINAL ASSESSMENT – 19 & 20 SEPTEMBER 2002
INSTRUCTIONS TO CANDIDATES
** BRING THIS TO THE EXAMINATION HALL **
This Final Assessment will be held in accordance with the following rules :
1. Time and Place:
1.1 The timetable for the Final Assessment is :
From 10:00 hours to 14:00 hours on Thursday and Friday, 19 & 20 September 2002
at:
The Hong Kong International Trade and Exhibition Centre

1 Trademart Drive
Kowloon Bay
Kowloon
1.2 There will be two examination halls as follows:
a. 3/F, Grand Rotunda;

b. 6/F, Universal Plaza.
2. Checking in
2.1 You are advised to arrive at the examination hall 1 hour earlier to check in.
2.2 The examination hall and the seat number assigned to you will be notified to you at
the entrances to the examination halls. You are advised to check for the information at
the entrance to 3/F, Grand Rotunda or 6/F, Universal Plaza.
2.3 You shall be seated after 9:45 hours and there shall be no unauthorized
communications between candidates after 9:45 hours.
2.4 Question paper in sealed envelopes will be distributed to candidates after 9:45 hours.
You shall not open the envelope until such time when there is an announcement to do
so. You shall check that the seal is intact upon receipt of the envelope. Should you
find the seal broken or the envelope opened, you should raise your hand immediately
and call for an Invigilator’s attention for further action. You should not lower your
hand until an Invigilator comes to you. After distribution of the envelopes to all
candidates present, candidates will be required to conduct a mutual check to verify
that the envelopes have not been opened. Any candidate whose envelope is found to
have been opened before announcement, without prior report, will be dispelled from
the examination halls.
Instructions to Candidates02/pw
HKIS APC FINAL ASSESSMENT
2.5 Candidates arriving later than 9:45 hours will only receive their envelopes
after the current distribution process has been finished.
2.6 You will not be admitted to the examination halls if you arrive later than 10:30 hours.
3. Leaving the examination halls
3.1 You will not be allowed to leave the examination halls within the first half hour and
the last hour of the four hour examination period.
3.2 Excuse to the rest rooms will be allowed during the remaining period of time for a
maximum of 5 minutes each. You will be accompanied by an Invigilator. Telephone
calls will not be allowed except for emergency matter. The conversation shall be
conducted in front of and open to the Invigilator.
4. Collusion
You should note that co-operation with other candidates or consultation with, or
assistance from, other persons is NOT permitted. You are expressly reminded that
serious disciplinary action will result from any breach of the rule.
5. Answer sheets and folder
5.1 You MUST use the answer sheets in A4 size and folders provided by the Institute in
the examination halls for your answers. Answers should be written on one side only
of the answer sheets.
5.2 Answers shall be given in English.
6. Identity
You shall only write down your "Candidate Number" on the cover of the folder and
on every page of your answer sheets. The names, logo and other identity of you and
your office should NOT appear in your submission.
7. Stationery
Except for answer sheets and folders, you should provide ALL necessary stationery
for your own use in the Final Assessment.
8. Reference materials
You may bring into the examination hall some reference materials such as standard
forms of contracts, standard methods of measurement, standard office documents,
sample pre- and post contract documents, textbooks, published articles, etc.. However,
for administration purposes and to avoid causing disturbance to other candidates, the
overall size of all of the reference materials is restricted to two lever-arch files (not
exceeding two 350 mm x 300 mm x 80 mm by external dimensions). If the Invigilator
is in doubt of the size of the reference materials which you are intending to bring into
the examination halls, a physical measurement will be carried out to ensure fairness to
other candidates. Boxes will be put at the entrances to the examination halls for
checking of the external dimensions.
APC Final Assessment – Autumn 2002 Page 2 of 6

9. Bags
9.1 Ladies are allowed to bring into the examination hall hand-bags or carrying bags or
purses of reasonably small sizes to contain their personal belongings. Except for this,
all other kinds of bags, rack-sacks or similar containers are not allowed to be brought
to the examination desk and shall be deposited outside or inside the examination halls
at a place designated by the Invigilator.
9.2 Any kind of mobile phones, pagers, calculators, computers, palm PC, pocket PC and
other mechanical, electrical or electronic means which has communication facilities is
not allowed to be brought into the examination hall. Calculators without
communication facilities are permissible. All mobile phones and pagers must be
switched off before being left at the designated storage place.
10. Number of questions
10.1 The number of main questions are as follows:
a. First day – Two main questions shall be answered. Question 1 will be a

compulsory question of 20% marks. The other question shall be chosen from
either Question 2 or Question 3 of 30% marks each.
b. Second day – One compulsory main question of 50% marks.
10.2 Within each main question, there will be a varying number of sub-questions which are
all compulsory.
10.3 The passing mark is 60%.
10.4 Each main question is related to the same project. The sub-questions are posed at
different times of the project. Submissions should be based on information provided
or likely to be available at the time of answering each sub-question, irrespective of the
contents of later sub-questions. Different main questions are not necessarily related.
10.5 You should check that all pages of the question paper are received. Should any page
be missing, you should contact the Invigilator immediately.
11. Time allocation
11.1 You should allocate time properly to answer all the sub-questions. You must not
devote too much time to one sub-question at the expense of the other.
11.2 You should note the marks allocated for the sub-questions and allocate your time
accordingly.
11.3 You must answer all of the specified number of main questions and all of the sub-
questions. Leaving some sub-questions unanswered will very likely result in failure in
the Final Assessment.

12. Standard Form of Contracts
12.1 Due to the variety of standard forms of contracts being used in Hong Kong
particularly for quasi-government bodies, when answers are making reference to a
‘traditional’ standard form of contract, the standard form of contract shall be chosen
from the following for the same question or sub-question:
a. Agreement & Schedule of Conditions of Building Contract for use in the Hong
Kong Special Administrative Region, First RICS (HK Branch) Edition (1986)
incorporating up to Second amendments published July 1999, with or without
quantities;
b. Sub-Contract for use where the Sub-Contractor is nominated under the
Standard Form of Building Contract for Hong Kong, First RICS (HK Branch)
Edition (1986) incorporating up to Second amendments published February
2000;
c. General Conditions of Contract for Building Works 1999 Edition published by
the Government of the Hong Kong Special Administrative Region;
d. General Conditions of Contract for Civil Engineering Works 1999 Edition
published by the Government of the Hong Kong Special Administrative Region;
e. Government of Hong Kong Sub-Contract Articles and Agreement and
Conditions for Building Works, 1988 Edition;
f. Government of Hong Kong Sub-Contract Articles and Agreement and
Conditions for Civil Engineering Works, 1988 Edition.
12.2 You are advised to bring a set of the above documents to the examination hall.
12.3 You shall clearly state in your answers the standard form of contract you are referring
to.
12.4 You may refer to different standard forms when answering different questions or sub-
questions.
12.5 You do not have to submit copies of the above standard forms of contracts with your
answers.
12.6 When the questions are dealing with non-traditional forms of contracts, you are not
restricted to the above standard forms of contracts.
13. Standard Method of Measurement
13.1 When answers are making reference to standard method of measurement, the standard
method of measurement shall be chosen from one of the following for the same
question or sub-question:
a. Hong Kong Standard Method of Measurement of Building Works Third

Edition Metric February, 1979;
b. Standard Method of Measurement for Civil Engineering Works, 1992 Edition,
published by the Hong Kong Government.
13.2 You are advised to bring both documents to the examination hall.
13.3 You shall clearly state in your answers which standard method of measurement you
are referring to.
13.4 You may refer to different standard method of measurement when answering different
questions or sub-questions.

13.5 You do not have to submit copies of the above standard method of measurement with
your answers.
14. Office Documents
You are allowed to bring into the examination halls your office standards or past
documents for reference.
15. Cut and paste
15.1 In principle, you are required to write all your answers. However, you are allowed to
cut and paste extracts from your office standards or past documents into the answers
to simulate your real life normal office practice particularly when you are running out
of time. It is important that the extracts should not bear the name, logo or other
identity of your office. Some offices will have style and format which may easily be
recognizable by the assessors as to the identity of the offices. This may affect the
marking of the assessors favourably or unfavourably at your own risk. It should be
noted that too many extracts from others without your own original words and ideas
will not enhance your marks.
15.2 You are allowed and indeed encouraged to mark on the question paper and return it
with the answers if you feel that this is the most expedient way to answer a particular
sub-question and this is the usual practice when you are dealing with your real life
office work, e.g. checking quotations.
16. Objective
The objective of the Final Assessment is not to set an examination type of question,
but to enable candidates to draw up considered answers to a series of problems which
might appear in a normal working situation, and which will involve the candidates to
exercise professional judgment.
17. Length of answers
17.1 When you are required to draft a reply in the form of a letter or fax, you should bear
in mind the length to be expected in real life situation, and do not write unnecessarily
long letter or fax.
17.2 Answers must be concise, precise and to the point.
18. Supporting documents
18.1 In support of your front answers, you may need to prepare backup information, such
as calculations, notes, assumptions, references, etc., which in real life office situation
may not be enclosed with or attached to the outgoing letter or fax, but will be kept as
internal reference. For the Final Assessment, you should include such backup
information in your answer submissions in a systematic manner to demonstrate the
logic of your thinking.
18.2 The questions themselves may not give sufficient background information of the case
at issue. In real life office situation, you would investigate the issues further before you
could answer the questions. For the Final Assessment, you are free to assume and
simulate the background of the case by way of providing records of telephone
conversations, faxes, letters, etc. Such assumptions and simulations should be done in
such a way to show that you are knowledgeable rather than to evade from the questions.

18.3 You should include with your submission all supporting documents as described above
used in determining your conclusions and recommendations. All supporting documents
will be taken into account in the assessment. However, care should be exercised to
ensure that the supporting documents do not contain, without explanation, information
contrary to those put forward in the front answers. Do not spend too much time on the
supporting documents if the front answers are self sufficient.
19. Capacity to answer
19.1 If you are required to assume a position in some questions, you shall answer in that
position.
19.2 If you are free to choose between different optional positions, you are free to choose
the position that you think best to answer the question irrespective of your own real
type of employment. Therefore, you may pretend to be a Contractor QS though you
actually are a Consultant QS.
19.3 You do not have to adopt the same position when answering different main questions.
19.4 It should be noted that there may not be absolutely right or wrong answers. Whether
you are answering as a Consultant QS or Contractor QS, your answers should be given
in a professional, fair and reasonable manner with sound argument.
20. Answering the questions
20.1 It is important to understand the questions and to give sound, well thought out
responses. You should identify the real and core issues, beware of pitfalls, consider
possible alternative interpretations and answers, consider side effects and options, and
give solid professional advice which will move the matters forward.
20.2 Answer like "I don't know, I will have to consult my boss" will not suffice.
20.3 Answers should be presented in a structured manner. They must have introduction,
main response and conclusion. Letters and memo should have proper salutation and
ending. Response should be set out in appropriate paragraphs. If would be easier for
the reader to comprehend if points are presented with itemized reference numbers
instead of being packed in one long paragraph. On the other hand, bullet points with
keywords only without elaboration may not be adequate to convey the message.
20.4 Conclusion and recommendation are always essential. Qualifications may also be
desirable.
21 Practice notes
Dispatched with these Instructions to Candidates is a set of practice notes which may
be helpful to candidates. The practice notes should not be treated as part of these
Instructions nor part of the formal rules and regulations.
- End -

FINAL ASSESSMENT – AUTUMN 2002
PRACTICE PROBLEM
Thursday, 19th September, 2002
hkisQSDAPC2002Qa1 Page 1 of 12
PRACTICE PROBLEM
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QUESTIONS FOR THE FIRST DAY - 10:00 am to 2:00 pm, Thursday, 19 September, 2002
NOTES TO CANDIDATES
A. Headings to questions are for ease of identification only and do not form part of
the questions.
B. The number of main questions is as follows:
(1) First day – Two main questions out of three shall be answered. Question 1
is a compulsory question worth 20 marks. The other question shall be
chosen from either Question 2 or Question 3 each worth 30 marks.
(2) Second day – One compulsory main question worth 50 marks.
C. Within each main question, there are different numbers of sub-questions which
are all compulsory.
D. The total mark is 100. The overall pass mark is 60. Marks will be assessed in
fractions of one unit.
E. Refer also to INSTRUCTIONS TO CANDIDATES which were issued to you in

advance.
QUESTION 1 CONDITIONS OF CONTRACT (total 20 marks)
You are working for a Consultant Quantity Surveying Firm, QS Ltd. You just took over
a project from a colleague who has now left your firm. The colleague has sent a draft
tender document to the Client “Kindian Development Company Ltd.” for “the Main
Contract for the Multi-functional Complex Development at NKIL 999Z, Mongkok,
Kowloon”. There will be a number of Nominated Sub-Contracts and Supply Contracts.
The draft has specified the following particulars to be inserted in the Appendix to the
“Agreement & Schedule of Conditions of Building Contract for use in the Hong Kong
Special Administrative Region” drawn up by The Hong Kong Institute of Architects,
The Royal Institution of Chartered Surveyors (Hong Kong Branch) and The Society of
Builders, Hong Kong, First RICS (HK Branch) Edition 1986 (with quantities)
incorporating up to Second amendments published in July, 1999:
PRACTICE PROBLEM
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APPENDIX
Clause
Defects Liability Period [if none other 15, 16 12 months
stated is six months from the day named and 30
in the Certificate of Practical
Completion of the Works]
Date for Possession 21 7 days from Architect notice to
commence
Date for Completion 21 900 days
Liquidated and Ascertained Damages 22 at the rate of HK$ <to be drafted>
per day
Period of delay: 26(1)(c)
(a) by reason of sub-paragraphs (i), 3 months
(ii) or (iii) [if none stated is three
months]
(b) by reason of sub-paragraphs (iv), 3 months
(v), (vi) or (vii) [if none stated is
one month]
Prime cost sums for which the Main 27(g) Not applicable
Contractor desires to tender
Period of Interim Certificates [if none 30(1) 1 month
stated is one month]
Period for Honouring Certificates [if 30(1) 14 days
none stated is fourteen days from
presentation]
Percentage of Certified Value Retained* 30(3) 10%
Limit of Retention Fund** 30(3) HK$5% of Contract Sum plus the
Retention Fund held in respect of
Nominated Sub-Contractors
Period of Final Measurement and 30(5) 12 months
Valuation [if none stated is six months
from the day named in the Certificate of
Practical Completion of the Works]
Amount of Surety Bond 31 HK$ 10% of Contract Sum to the
nearest thousand dollars
Percentage Labour Content [if none 36(3) Not Applicable %
stated is twenty-five per cent]
* The percentage inserted should not normally exceed 10 per cent.
** The amount inserted should not normally exceed 5 per cent of the Contract Sum.
Write down a reminder for yourself in respect of item 1.1 below and draft a reply to the
Client who has raised the queries in items 1.2 to 1.8 below on the draft Appendix and
Conditions of Contract:
1.1 Appendix to Conditions of Contract (2 marks)
Suggest how the wordings entered in the right hand column can be improved to
reduce ambiguities.
PRACTICE PROBLEM
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1.2 Defects Liability Period (2 marks)
Why has “12 months” been specified instead of “6 months” as stated on the
Standard Form? State 2 items of work which may require liability for defects
beyond the 12-month defects liability period and suggest a contractual
arrangement to accommodate this.
1.3 Liquidated and Ascertained Damages (2 marks)
It is understood that liquidated and ascertained damages should be “a genuine pre-

estimate of loss”. What constitutes the losses to be included in the estimate of
liquidated and ascertained damages?
1.4 Period for Honouring Certificates (2 marks)
If the Employer is late in honouring a payment certificate, can the Main

Contractor claim interest in this connection?
1.5 Surety Bond (3 marks)
Can the Employer call the Surety bond if a Nominated Sub-Contractor goes into
liquidation? Give 3 additional measures that can be taken to safeguard the
interest of the Employer from default by the Nominated Sub-Contractors?
1.6 Notice for Extension of Time (3 marks)
It is common to include a Special Condition of Contract requiring the contractors

to submit notices of delay within a specified time as a condition precedent to
consideration of their claim for extension of time. What is the purpose of the
inclusion of such a term? What would be the practical difficulties encountered
when implementing such a term from the respective point of view of both contract
parties?
1.7 Neutral events (2 marks)
It is understood that the extension of time clause is for the protection of the
Employer. The Employer wishes to delete as many neutral events as possible from
Clause 23 of the Conditions of Contract. What would be the implications?
1.8 Lack of explicit terms (4 marks)
It seems that the Conditions of Contract do not have explicit provisions for
granting extension of time for the following events:
(a) Late possession of the Site;

(b) Late issue of consent by the Building Authority to the commencement of
construction of work designed by the Architect;
(c) Late completion of work within the Site by the Electricity Supply Company.
How would you comment on the above statement and do you consider that there
are legitimate grounds to grant extension of time?
PRACTICE PROBLEM
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QUESTION 2 INSURANCES (total 30marks)
Further to Question 1, draft a reply to the Client who has the following further queries
on the draft tender documents:
2.1 Need for insurances (3 marks)
With the presence of the indemnity Clause 18 in the Conditions of Contract, why
then is there a need for insurance Clauses 19 and 20 which effectively require the
Employer to bear the costs of the insurance premium?
2.2 Scope of cover (2 marks)
What are the differences between the scope of insurance cover required by Clause
20 and that provided by Section 1 of the usual Contractors’ All Risks Insurance
Policy?
2.3 Insurance excesses (3 marks)
What is the purpose of specifying limits for insurance excesses in the tender
documents and the implications of specifying higher or lower limits?
2.4 Period of insurance (3 marks)
Why is the Insurance of the Works policy required to be in effect until 14 days
after Practical Completion while the Third Party Liability Insurance policy is
required to be in effect until the end of the Defects Liability Period?
2.5 Cross liability clause (2 marks)
What is the purpose of specifying a “cross liability clause” and which type of
insurance is this clause applicable to?
2.6 Insurance for people on site (4 marks)
Which are the empowering clauses in the Conditions of Contract and its
corresponding Standard Form of Nominated Sub-Contract imposing obligations
upon the Main Contractor and a Nominated Sub-Contractor to respectively effect
an employees’ compensation insurance?
Under which insurance policies are the Resident Architect employed by the
Architect covered for his/her death or injury caused by accident on site?
PRACTICE PROBLEM
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2.7 Mortgagee Clause (2 marks)
What is the purpose of specifying a “mortgagee clause” and which type of

insurance is this clause applicable to?
PRACTICE PROBLEM
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Following your reply, tenders were invited and the Main Contract has been awarded
with the following further particulars:
1 Main Contractor Honest Building Contractors Co., Ltd.

2 Contract Sum HK$378,000,000.00
3 Date for Possession 26th July, 2002
4 Value of Prime Cost Sums HK$180,000,000.00
5 Contingency Sum HK$18,000,000.00
6 Materials supplied direct by 3 No. chillers, with a total value of
Employer HK$2,500,000.00
2.8 Comments on Contractors’ All Risks Insurance Policy (8 marks)
Draft a letter to appropriate parties to comment on the following Schedule to the

Contractors’ All Risks Insurance Policy submitted by the Main Contractor:
SCHEDULE
POLICY NO.: CAR-1234567
INSURER: XYZ Insurance Company Limited
INSURED:
Contractors: Honest Building Contracting Co., Ltd. as Main

Contractor and/or its Sub-Contractors of all tiers
Employer: Kindian Development Company Ltd.
CONTRACT: Main Contract for the Multi Functional Complex
SITE: NKIL 9992, Mongkok, Kowloon
CONTRACT SUM: HK$378,000,000.00
PERIOD OF INSURANCE (all dates inclusive):
Construction Period From 26/7/2002 to 9/1/2005

(plus 14 days after practical completion)
Maintenance Period To 9/1/2006
PREMIUM: HK$1,088,240.00 subject to adjustment in accordance with

General Condition 5.6
PRACTICE PROBLEM
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INSURED PROPERTY
SECTION I (A)
Item 1 The permanent and temporary works constructed erected or in the course of
construction or erection in performance of the Contract and all other
property for which the insured Contractor is responsible under the Contract
whilst on the Site and subject to its value being included in the Sum Insured
however excluding constructional plant and temporary buildings.
Item 2 Specialist Works to be carried out by Specialist Contractors employed direct

by the Employer.
Item 3 Materials supplied by the Employer.
Item 4 Removal of debris: costs and expenses necessarily incurred by the Insured
with the consent of the Insurer in dismantling and removing debris of the
portions of the property insured under Items 1 to 3 destroyed or damaged by
any peril hereby insured against.
Item 5 Professional fees: costs and expenses in respect of architects’, surveyors’

and consulting engineers’ fees necessarily incurred in the reinstatement of
the Insured Property consequent upon its loss or damage but not for
preparing any claim it being understood that the amount payable hereunder
shall not exceed the scale charges of the appropriate professional body.
SECTION I (B)
Item 6 Constructional plant and temporary buildings.
SUM INSURED
SECTION I (A) Item 1 HK$ 360,000,000.00

Item 2 HK$ -
Item 3 HK$ -
Item 4 HK$ -
Item 5 HK$ 5,000,000
SECTION I (B) Item 6 HK$10,000,000.00 (Maximum value items: 3

Nos. of Tower Cranes @HK1,800,000.00)
SECTION II
LIMIT OF INDEMNITY HK$20,000,000.00 any one occurrence and in
aggregate for the Period of Insurance
PRACTICE PROBLEM
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EXCESS CLAUSE
SECTION I
In respect of each and every occurrence of loss or damage indemnifiable under this
Section the Insurer shall not be liable for the first
(1) HK$200,000.00 of such loss of or damage to the Works caused by water,

storm, tempest, earthquake, subsidence, collapse, vibration or the weakening
or removal of support.
(2) HK$200,000.00 of such loss of or damage to the Works caused by theft,

burglary, robbery or any attempt thereat.
(3) HK$500,000 of such loss of or damage to the Works caused by fire.
(4) HK$40,000.00 of such loss of or damage to the Works caused by any other
occurrence other than (1) to (3) above.
(5) HK$20,000.00 or 50% of loss (whichever is the greater) of such loss of or

damage to scaffolding, shuttering, formwork, timbering, screens fencing and
hoardings.
(6) (a) HK$20,000.00 or 20% of loss (whichever is the greater) of such loss of
or damage to each tower crane.
(b) HK$5,000.00 or 20% of loss (whichever is the greater) of such loss of or

damage to any one item of constructional plant and temporary buildings
other than (6)(a) above.
SECTION II
In respect of each and every occurrence of loss of or damage to property belonging to

third parties the Insurer shall not be liable for the first: HK$25,000.00.
This Policy is subject to the following warranties, endorsements, extensions of cover

or special conditions printed on or attached hereto:
A11 Cross Liability Clause
Signed for and on behalf of

the Insurer on 15th August, 2002
(signed)
Authorized signature
PRACTICE PROBLEM
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2.9 Comments on Employees’ Compensation Insurance Policy (3 marks)
Draft a letter to appropriate parties to comment on the following Schedule to the

Employees’ Compensation Insurance Policy submitted by the Main Contractor.
SCHEDULE
POLICY NO. ECC-1234567
INSURER XYZ Insurance Company Limited
LEGISLATION Employees’ Compensation Ordinance
THE INSURED Honest Building Contractors Co., Ltd. as Main Contractor
and/or its Sub-Contractors of all tiers but excluding
Nominated, Separate and Specialist Contractors
THE INSURED’S Construction
BUSINESS
POLICY LIMIT HK$200,000,000.00 any one event
OF INDEMNITY
GEOGRAPHICAL The Hong Kong Special Administrative Region
AREA
PERIOD OF From 1/4/2002 to 31/3/2003 (both dates inclusive)
INSURANCE plus NIL months of Defects Liability Period and any
subsequent period for which the Insured shall pay and the
Insurer shall agree to accept a renewal premium.
Item No. Occupation of Employees Est. No. of
Estimated Total Annual
EmployeesEarnings on which the Deposit
Premium is based
1. Head office staff 40 $10,000,000
2. All other workers engaged on $100,000,000
construction works within (Estimated annual contract
the Geographical Area value)
This Policy is subject to the following clauses / warranties / endorsements /
memorandum printed hereunder and/or attached hereto:
WD - Exclusion of indemnity for employee of Nominated Sub-Contractors,

W204 and W348 - Extension of indemnity for employees in the employ of sub-
contractors
Deposit Premium
….. (items omitted and not to be commented)
Signed for and on behalf of

ABC Insurance Brokers Ltd. on 15th March, 2002
(signed)
Authorized signature
PRACTICE PROBLEM
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QUESTION 3 MAINTENANCE WORKS (total 30 marks)
You are a Senior Quantity Surveyor within the Estate Management Department of an
educational organisation with a large portfolio of buildings all over Hong Kong. The
organisation has appointed an external Management Consultant to help formulate
measures to reduce the operating costs of the organisation. Draft a memo in response
to the following queries raised by the Management Consultant:
3.1 Term Contracts (3 marks)
What is meant by “Term Contract”? What are the circumstances under which you
would adopt Term Contracts in preference to the use of in-house labour and/or
other contract arrangements?
3.2 Schedule of Rates (3 marks)
Illustrate by worked example to show how tenders for a Term Contract are priced
based on a printed/pre-priced Schedule of Rates without quantities?
3.3 Pitfalls (3 marks)
What are the pitfalls of using a printed/pre-priced Schedule of Rates as the basis
for tendering and pricing?
3.4 Tender evaluation (3 marks)
Illustrate by worked example to show how the priority of tender prices submitted
pursuant to item 3.2 are evaluated by (a) percentage weightings, (b) approximate
quantities, and (c) approximate values?
3.5 Disclosure of tender evaluation criteria (3 marks)
What are the pros and cons in disclosing in the tender documents the
weightings/approximate quantities/approximate values to be used for tender
evaluation?
3.6 Staffing requirements (3 marks)
The Estate Management Department staff cost is presently $4 million per year.
Set out your estimate of the numbers and grades of staff in the department. Give
3 suggestions, whether by way of contractual arrangement or project
management, to reduce the staff cost without reducing the level of remuneration
to individual members of staff, the volume of routine maintenance work nor the
quality of monitoring the work.
PRACTICE PROBLEM
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A stand-alone contract is to be placed for major renovations, costing over $10 million,
to the external walls of a multi-storey staff quarters building instead of using the
existing Term Contracts.
3.7 Major renovation (12 marks)
Describe in the form of a memo to your staff the special characteristics of the
following matters for this type of work when compared to a new works project and
explain how you would deal with them in the tender documents:
(a) Possession of Site;
(b) Existing hidden defects;
(c) Insurances;
(d) Inclement weather;
(e) Completion time and liquidated damages;
(f) Method of measurement and billing of items.
** END OF PAPER **
PRACTICE PROBLEM
Friday, 20th September, 2002
hkisQSDAPC2002Qb Page 1 of 4
PRACTICE PROBLEM
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QUESTIONS FOR THE SECOND DAY - 10:00 am to 2:00 pm, Friday, 20 September, 2002
NOTES TO CANDIDATES
A. Headings to questions are for ease of identification only and do not form part of
the questions.
B. The number of main questions is as follows:
(1) First day – Two main questions out of three shall be answered. Question
1 is a compulsory question worth 20 marks. The other question shall be
chosen from either Question 2 or Question 3, each worth 30 marks.
(2) Second day – One compulsory main question worth 50 marks.
C. Within each main question, there are different numbers of sub-questions which
are all compulsory.
D. The total mark is 100. The overall pass mark is 60. Marks will be assessed in
fractions of one unit.
E. Refer also to INSTRUCTIONS TO CANDIDATES which were issued to you in

advance.
QUESTION 4 FULL PROJECT (total 50 marks)
4.1 QS Services (10 marks)
You are working for a Consultant Quantity Surveying Firm, QS Ltd. Your firm
has received an e-mail from an overseas contractor, Global Contractors Ltd.
(GCL), who do not have much experience in Hong Kong but would like to tender
for a design and build contract for a goods storage and distribution centre on a
piece of land at Castle Peak, in the north western part of the New Territories. GCL
obtained the name of your firm from the HKIS’s web site. GCL would like to
know the services that your firm can provide to assist it at different stages of the
project. Draft an e-mail to reply. The length of the e-mail should be equal to about
one typed page.
4.2 Preliminary indication of costs (5 marks)
GCL has appointed your firm initially to assist it in tendering for the contract.
GCL has prepared a schematic design. The proposed design includes 8 No. 100 x
50 m two-storey godowns, plus a 20 x 20 m seven-storey office building, of which
one floor is a canteen/recreation area, on a site of 100,000 m2. One lift will be
provided to the office building. GCL has asked you to prepare a preliminary
indication of costs for its reference. GCL would be contented if the estimate is
given on a cost per m2 basis. The costs of goods storage and material handling
equipment are to be excluded. Please prepare the estimate and a covering letter.
PRACTICE PROBLEM
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4.3 Alternative schemes (5 marks)
GCL would also like to know the cost implication if the godowns are changed to
either (a) 4 No. 100 x 100 m two-storey godowns, or (b) 8 No. 67 x 50 m three-
storey godowns. Please write to advise.
4.4 Programme (5 marks)
GCL has decided to keep the original scheme and requested you to prepare a cash
in-flow table based on the following programme:
(a) Phase 1 (4 No. godowns and the office building) – 3 months design
commencing after award of contract + 10 months construction;
(b) Phase 2 (4 No. godowns) - commencing 6 months after Phase 1
commencement, 1 month for design adjustments (based on feedback from
end-users of the first 4 No. godowns) + 10 months construction;
(c) Godown construction – 8 months each;
(d) Office building construction – 10 months;
(e) Final external works – 2 months after completion of godown construction;
(f) Possession of whole site upon Phase 1 construction.
Before preparing the cash in-flow table, draft a simple bar chart programme to
represent the above. The programme only needs to be good enough for the
purpose of compiling the cash in-flow table.
4.5 Cash flow (5 marks)
Based on your estimate and your bar chart programme, prepare the cash in-flow
table as requested by GCL and a covering letter. Set out the monthly income
horizontally. Consideration should be given to the time lag between work done
and receipt of payment.
4.6 Costs of preliminaries (10 marks)
You have told GCL that the costs of preliminaries which can be deemed to be
included in your cost estimate prepared on a cost per m2 basis is equivalent to
10% of the total of the cost estimate. You have advised that this percentage is
based on statistics on competitive tendering. GCL would like to have a more
detailed build-up of the costs of preliminaries for each of the two phases of the
Works so as to compare this with the competitive percentage and to assist in
judging the resources which can be afforded while remaining competitive. Draft a
reply.
PRACTICE PROBLEM
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4.7 Prolongation (10 marks)
GCL has won the contract and is proceeding with it. During the course of
construction of the structure of the godowns for Phase 1, because the Employer
wanted to incorporate some potential users’ feedback, design revisions were
required and the construction of Phase 1 has been delayed by 2 months. Phase 2
has not been significantly affected. The contract is still in progress and although
the actual costs of prolongation are not fully committed yet, the Employer would
consider agreeing to the prolongation cost reimbursement based on a reasonable
estimate. GCL has advised that it has used your estimated preliminaries costs in
submitting its tender and therefore would like you to use the same data to
calculate the prolongation costs. Draft a claim for prolongation costs.
** END OF PAPER **

Practice Problem2002

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THE HONG KONG INSTITUTE OF SURVEYORS

QUANTITY SURVEYING DIVISION

1. Time and Place:

1.1 The timetable for the Final Assessment is :

The Hong Kong International Trade and Exhibition Centre

1.2 There will be two examination halls as follows:

a. 3/F, Grand Rotunda;

3. Leaving the examination halls

5. Answer sheets and folder

5.2 Answers shall be given in English.

APC Final Assessment – Autumn 2002 Page 2 of 6

10. Number of questions

10.1 The number of main questions are as follows:

a. First day – Two main questions shall be answered. Question 1 will be a

b. Second day – One compulsory main question of 50% marks.

10.3 The passing mark is 60%.

APC Final Assessment – Autumn 2002 Page 3 of 6

12. Standard Form of Contracts

13. Standard Method of Measurement

a. Hong Kong Standard Method of Measurement of Building Works Third

APC Final Assessment – Autumn 2002 Page 4 of 6

14. Office Documents

15. Cut and paste

17. Length of answers

17.2 Answers must be concise, precise and to the point.

18. Supporting documents

APC Final Assessment – Autumn 2002 Page 5 of 6

19. Capacity to answer

20. Answering the questions

APC Final Assessment – Autumn 2002 Page 6 of 6

ASSESSMENT OF PROFESSIONAL COMPETENCE

FINAL ASSESSMENT – AUTUMN 2002

Thursday, 19th September, 2002

B. The number of main questions is as follows:

(2) Second day – One compulsory main question worth 50 marks.

E. Refer also to INSTRUCTIONS TO CANDIDATES which were issued to you in

QUESTION 1 CONDITIONS OF CONTRACT (total 20 marks)

1.1 Appendix to Conditions of Contract (2 marks)

1.2 Defects Liability Period (2 marks)

1.3 Liquidated and Ascertained Damages (2 marks)

It is understood that liquidated and ascertained damages should be “a genuine pre-

1.4 Period for Honouring Certificates (2 marks)

If the Employer is late in honouring a payment certificate, can the Main

1.5 Surety Bond (3 marks)

1.6 Notice for Extension of Time (3 marks)

It is common to include a Special Condition of Contract requiring the contractors

1.7 Neutral events (2 marks)

1.8 Lack of explicit terms (4 marks)

(a) Late possession of the Site;

QUESTION 2 INSURANCES (total 30marks)

2.1 Need for insurances (3 marks)

2.2 Scope of cover (2 marks)

2.3 Insurance excesses (3 marks)

2.4 Period of insurance (3 marks)

2.5 Cross liability clause (2 marks)

2.6 Insurance for people on site (4 marks)

2.7 Mortgagee Clause (2 marks)

What is the purpose of specifying a “mortgagee clause” and which type of

1 Main Contractor Honest Building Contractors Co., Ltd.

2.8 Comments on Contractors’ All Risks Insurance Policy (8 marks)

Draft a letter to appropriate parties to comment on the following Schedule to the

POLICY NO.: CAR-1234567

INSURER: XYZ Insurance Company Limited