Provisional Sum As Delay Event

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Contracts, Claims & Claims Assessment
Provisional Sum As Delay Event ( 29 posts )
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Samer Zawaydeh
Civil Engineering
Member since Aug 2008
21.4 years planning
Jordan
RE: Provisional sum as delay event

Dear Richard,
I highly appreciate the point that you are making. Yes all my background is in Civil
Engineering; Design, Construction and Management. For the past 10 years I have been in the
pre-construction phase preparing the design and documents preparation and the post
award; actually building the projects.
1,339 Posts
The conditions of contracts in Jordan are based on FIDIC. Several BOQs are prepared as
you discribed with a X amount for X works. This is part of the scope. It is not detailed, but
defined. The time necessary to complete this scope has to be part of the Schedule,
otherwise the Schedule wouldnt be complete. The Contractor will define the start and end
dates and the Engineer will approve it. Subsequently, if the design drawings (activity needed
to complete the works) is delayed, then the Contractor has to issue a notice to the Engineer.
Once the design drawings (and BOQs) are issued, the Contractor will do the necessary
execution drawings for approval and submit a revised impacted schedule (if necessary).
Unless the Conditions of Contract states clearly that the X works will be given extra time to
complete, it is considered within the duration of the contract.
Dear Shahul,
It is great that you have an approved program. You can start with the delay event which
should be at the start of the project. You have several Electrical systems. You need to
identify what has changed and when, and what was the effect of the 1st, 2nd and 3rd fix.
You need to read the provisional sum clause and check what has changed. Usually, the design
is not complete at the time of signing the contract, but the BOQ item cost is fixed.
Therefore, if the new scope did not change, but the new design is calling for more material
that will cost more; then you need to ask for a Change Order.
With kind regards,
Samer
26 Feb 2010, 14:52
#9
Shahul Badhusha
Building Works
Member since Nov 2008
2.2 years planning
United Arab Emirates
427 Posts

Alright let me explain my situation .I have a consented pro-gramme of works in which time
and cost alloted for the provisional sum items and it is defined in BOQ too. Contractor
slipped out the project completion date due to exceptionally change in Electrical design in
accordance with statutory authorities by Engineer/Consultant .They have came up with

provisional sum as one of their delay event .In this scenario does the delay event which is
provisional sum could be entitled?
26 Feb 2010, 13:37
#8
Richard Spedding
Railway Construction
Member since Mar 2007
28.1 years planning
West Midlands

Hi Samer.
I appreciate what you say but in the UK it is not unknown, and ineed common, for clients and
project managers to include a provisional sum for, say 15000 for signage, with no
drawings or other information. It is not possible to include a period in the programme for
this - it may be provided by a specialist with a 26 week delivery period, or it may be basic
signage available at 2 or three weeks notice. Therefore the scope of the work is undefined,
and it has been accepted that it impossible to allow for this in the programme. I believe it
isa way for the clientto mae the contractor aware that something may be called for, and to
include he value in the contract.
108 Posts
If the client then issues an instruction to expend this provisional sum 6 weeks from the end
of the contract, and it is a specialist installation, the contractor is entitled to an EOT.
I appreciate that it is quite different in Civil Engineering. Dont shoot the messenger, am
highlighting that buildingcan be much different from your experiene in Civil Engineering. I
dont write the contracts or tenders, I just have to build the building for the client, and
pick up the pieces that are left.
26 Feb 2010, 11:49
#7
Samer Zawaydeh
Civil Engineering
21.4 years planning
Jordan

Dear Richard,
If Provisional sum is specified in a Contract, then the Contractor must account for the time
that is required to complete the works.
1,339 Posts
Lets say that you have 50,000$ for X works. The Contractor must include in his program of
works the activities (including resources and material) to complete works worth $50,000. If
it is part of the project, then it is part of the scope, cost, time.
If you are saying that you have come accross a Contract with a provisional sum of
unidentified nature, then this should have not be spelled out in the original contract.
Because you cant logically complete something of an unidentified nature, especially in
construction. It should be issued later when it is specified as a change order for extra
works.
With kind regards,
Samer
26 Feb 2010, 11:30
#6
Richard Spedding
28.1 years planning
West Midlands
108 Posts

In building works the answer is that it depends. (And it also depends upon the form of
contract)
If the provisional sum is defined in the tender, as in the quantum is known, then the
contractor is deemed to have allowed for the works in his contract. If the instruction to
expend the provisional sum has been given at the correct time in accordance with the
contractors Schedule of Information, then no delay is claimable.

If the provisional sum is undefined, then the contractor cannot have allowed for it in his
tender, and delay is claimable if the contractor can prove cause and effect.
26 Feb 2010, 08:29
#5
Shahul Badhusha
Building Works
2.2 years planning

Many thanks Raviraj Sab & Samer
427 Posts
24 Feb 2010, 08:59
#4
Samer Zawaydeh
Civil Engineering
21.4 years planning

Dear Shahul,
Jordan
All project deliverables are transformed into activities in a Schedule. Any activity can delay
the Finish Date if it is not completed, and if it becomes critical.
1,339 Posts
Your model has to be correct, and conforms to the Condition of Contract, etc.
With kind regards,
Samer
23 Feb 2010, 19:40
#3
Raviraj Bhedase
Civil Engineering
Member since May 2007
10.8 years planning
yes,
Provisional sum works are part and parcel of Clause 14 program. If instructions are delayed
by client, then he has right to claim that.
1,010 Posts
23 Feb 2010, 10:12
#2
Shahul Badhusha
Provisional sum as delay event
Building Works
2.2 years planning
Hi to all
427 Posts
23 Feb 2010, 10:08
Could provisional sum which is dragging the project finish date used as delay event?
#1
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Shahul Badhusha
Building Works
2.2 years planning

Its a modified FIDIC for plant projects
427 Posts
11 Mar 2010, 11:08
#19
Samer Zawaydeh
Civil Engineering
21.4 years planning

Dear Shahul,
Jordan
What type of Conditions of Contract do you have?
1,339 Posts
With kind regards,

Samer
05 Mar 2010, 07:19
#18
Shahul Badhusha
Building Works
2.2 years planning

Thanks samer i will go through it
427 Posts
05 Mar 2010, 07:07
#17
Samer Zawaydeh
Civil Engineering
21.4 years planning
Jordan
1,339 Posts

Dear Shahul,
For your further information;
FIDIC Silver book (EPC contracts) clearly states the following in Clause 4.11:
"... Unless otherwise states in the Contract, the Contract Price covers all the Contractors
oligations under the Contract (including those under Provisional sums, if any) and all things
necessary for the proper design, execution and completion of the Works and the remedying
of any defects."
With kind regards,
Samer
02 Mar 2010, 10:49
#16
Shahul Badhusha
Building Works
2.2 years planning

Many thanks to all ,I am Pleased with your inputs
427 Posts
01 Mar 2010, 15:24
#15
Rafael Davila
Civil Engineering
10.3 years planning
Puerto Rico
To all,
We call Provisional Sum an Allowance and is a very common practice. It is part of the
scope of work and part of the Contract. Government uses this for purpose of funds
allocation. The most common allowances are for fees for work to be done or subcontracted
by utilities such as the Electric Power Authority. Also other portions of work to be done by
the contractor are included.
1,272 Posts
We are required to consider within the CPM our scheduling of the Allowance based on a
reasonable estimate of the activities with the available data at time of bidding. In the
schedule we include an activity for the release of the allowance by the Owner, an activity of
his responsibility similar to the evaluation of submittals. The schedule is evaluated and after
approval the Owner is accepting the assumptions.
Latter on when the Allowance is released the contract amount and duration is adjusted if
need be. If it results the assumptions were wrong an adjustment to the schedule is in order
and applicable EOT plus adjustments in costs will be granted, or at times disputed in court,
though very rarely.
In this way the Owner and the Contractor are always aware that an Allowance is pending
and that it might affect the schedule.
If it becomes critical then it puts some pressure on the Owner as it might be delaying other
defined activities under the contract. The Contractor is entitled to make plans with the
reasonable assumptions, it might even create available float for the use of the Contractor.
So it is included on our schedules but does not relieve the Owner of his responsibilities.
Best regards,
Rafael
26 Feb 2010, 20:44
#14
Samer Zawaydeh
Civil Engineering
21.4 years planning
Jordan
1,339 Posts

Dear Richard,
The conditions that you mentioned has to do with modifying the unit cost. They are
different now. Of course, when the quantities change, the durations changes as well. Hence,
you can submit an impacted schedule with showing the effect of the extra quantities.
With kind regards,
Samer
26 Feb 2010, 19:41
#13
Richard Spedding
28.1 years planning
West Midlands

No worries Mike, glad to have your input.
It is almost 30 years since I did a FIDIC contract, so excuse me if I am a bit rusty.
108 Posts
It appears that the claim is due to an exceptional increase in electrical works, as a result of
changes in the Engineers design, in conjunction with statutory authority requirements. In
the past if quantities changed by an exceptional amount (which used to be considered to be
either + or - 15% or of that order) then the time available for that element of the works
could be varied. If it happened that that element of the works was on the critical path of
the project, then an EOT would be granted. If not then at the least the rate for the element
of the work was subject to review.
In any case, if the quantity or quality of the works change due to statutory authority
changed requirements, then that is a clear varaition, I believe.
26 Feb 2010, 19:34
#12
Samer Zawaydeh
Civil Engineering
21.4 years planning
Jordan
1,339 Posts

Dear Mike,
Please find below what is stated in the Condition of Contract per FIDIC 1999 RED BOOK
about the Provisional Sums, clause 13.5:
"
Each Provisional Sum shall only be used, in whole or in part, in accodance with the Engineers
instructions, and the Contract Price shall be adjusted accordingly. The total sum paid to the
Contractor shall include only such amounts, for the work, supplier or services to which the
Provisional Sum relates, as the Engineer shall have instructed. For each Provisional Sum, the
Engineer may instruct:
(a) work to be executed (including Plant, Materials or services to be supplied) by the
Contractor and valued under Sub-Clause 13.3 [Variation Procedure]; and/or
(b) Plant, Materials or services to be purchases by the Contractor, from a nominated
Subcontractor (as defined in clause 5 [Nominated Subcontractors]) or otherwise; and for
which there shall be included in the Contract Price;
(i) the actual amounts paid (or due to be paid) by the Contractor, and
(ii) a sum for overhead charges and profit, calculated as a percentage of the actual amounts
by applying the relevant percentage rate (if any) stated in teh appropriate Schedule. If
there is no such rate, the percentage rate stated in the Appendix to Tender shall be
applied.
The Contractor shall, when required by the Engineer, produce quotations, invoices,
vouchers and accounts or receipts in substantiation.
"
I agree with you to some extent. It all depends on the wording of the Condition of Contract.
But I would have to state that usually the provisional sum item are small amounts. And in
most cases are not critical activities.
But Contractually, if the contract is issued without the provisional sum amount included in
the total price, then it will be dealt with as a variation order as per the recommendations in
clause (a) above. If on the other hand, the total amount of the Contract includes the
provisional sum, then it is included within the duration of the Contact. Unless it clearly
states otherwise.
If the provisional sum amount is changed, then the Contractor can ask for a variation order
as well.
With kind regards,
Samer
26 Feb 2010, 19:32
#11
Mike Testro
Moderator
Forensic Claims Analysis
Member since Dec 2005
33.4 years planning
(Richard - please excuse me for butting in at this point)

Hi Samer
Suffolk
1,720 Posts
"This is part of the scope. It is not detailed, but defined."

Please check what you Standard Method of Measurement says about Provisional sums.
In my copy of CESSM3 (1991) Provisional sums are to be inserted for "Contingency" Items.
If these "Contingency" items can be identified in the drawings and specification - ie an
estimated volume of soft excavation - then it is reasonable to allow for the estimated
volume of work in the programme.
If there is no cross reference between the Provisional sum and the drawings and
specification then it would be unreasonable for the contractor to make any sort of allowance
in his programme.
If he has made an allowance then the start date and duration must remain provisional until
the precise nature of the "contingency" is known and an instruction has been recieved to
expend the provisional sum.
It would need precise wordimg in the contract to put all the onus on the contractor for the
risk of unknown work items - and even if there were such words they would be open to a
contra-proferentum challenge.
Best regards
Mike Testro
26 Feb 2010, 17:05
#10
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Samer Zawaydeh
Civil Engineering
21.4 years planning
Jordan

Dear Mai,
The provisional sums are used in the BOQ for this exact reason. That is, details are not
available at the time of preparing the Contact Documents. The Estimator (with the approval
of the Owner) specifies a specific amount (not to be exceeded) as a provisional sum.
1,339 Posts
The whole question of this thread is to determine if it is a delay event or not when you
know exactly what you have to do. The answer is that is depends. If the cost is within the
amount specified and the scope did not change (For example:Aluminum works, contained only
Aluminum), then you need to complete all the works within the original contact duration.
With kind regards,
Samer
21 Mar 2010, 17:28
#29
Shahul Badhusha
Building Works
2.2 years planning

Thanks samer .Let me check it up
427 Posts
21 Mar 2010, 15:37
#28
mai t.
Civil Engineering
8.8 years planning
Dear Samir :
What am agreeing that the P.S. usually not detailed in BoQ but the changing should be
effected in completion date and the value (cost / time ) to be studied for time should be
reflecting into CP to figure out the much of time contractor shall be entitled for ,
26 Posts
regards.
21 Mar 2010, 11:15
#27
Samer Zawaydeh
Civil Engineering
21.4 years planning

Dear Mai,
Jordan
What exactly are you agreeing to?
1,339 Posts
Each Contract has Conditions of Contract and a BOQ. In case you have a Provisional Sum
item, it is part of the Contract and you have to complete it within the Contract duration.
The amount of the provisional sum is the cost. If that amount exceeds the amount stated in
the BOQ, then you have a "Change Order-cost" and only then. If on the other hand the
desciption (scope) of the Provisional Sum has changed depending on the request of the
owner, then you have a "Change order-scope", and you can submit your analysis for its
impact and ask for revised money and time.
With kind regards,
Samer
21 Mar 2010, 10:49
#26
mai t.
Civil Engineering
8.8 years planning
P.S. It isnt under main contractor duties to give programme but should be under the
subcontractor duties to issue the pro. which will be assigned by employer to give time frame
and should be acceptable through the main contractor even the main contractor should give
dates as finish or start milestones might the works required civil attendance of some site
clearance and all together have implication cost and time in case of omission or addition .
So I agree with u might be non- acknowledgeable but the impact must be.
26 Posts
21 Mar 2010, 10:15
My dear Richard :
#25
Samer Zawaydeh
Civil Engineering
21.4 years planning
Jordan

Dear Shahul,
The RED book (1999) is expected to be updated this year. So, we will see if they have any
new revisions to this clause.
1,339 Posts
With kind regards,

Samer
13 Mar 2010, 19:32
#24
Shahul Badhusha
Building Works
2.2 years planning
#23
Samer Zawaydeh
Civil Engineering
21.4 years planning
Jordan
1,339 Posts
Many thanks Samer

In that case ,it is RED book
427 Posts
13 Mar 2010, 12:44

Dear Shahul,
If the Design is provided by the Client and the Contractor is doing the Contractor then it is
the RED Book.
If the Design is done by the Contractor and the Construction is done by the Contractor it is
the SILVER Book.

If you have a Design, Build and Operate job, then you use the GOLD Book.
For simple repetitive jobs of low value, use the GREEN Book.
For Dredging and Reclamation works, use the BLUE Book.
Maybe I missed one. Not sure.
With kind regards,
Samer
12 Mar 2010, 16:12
#22
Shahul Badhusha
Building Works
2.2 years planning
Hi Samer
I am not sure about that in specific?
427 Posts
12 Mar 2010, 10:00
#21
Samer Zawaydeh
Civil Engineering
21.4 years planning

Dear Shahul,
Jordan
Which Book under FIDIC?
1,339 Posts
With kind regards,

Samer
11 Mar 2010, 12:42
#20
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RE: Provisional sum as delay event

RE: Provisional sum as delay event

accordance with statutory authorities by Engineer/Consultant .They have came up with

RE: Provisional sum as delay event

RE: Provisional sum as delay event

RE: Provisional sum as delay event

contractors Schedule of Information, then no delay is claimable.

RE: Provisional sum as delay event

United Arab Emirates

24 Feb 2010, 08:59

RE: Provisional sum as delay event

United Arab Emirates

23 Feb 2010, 10:12

RE: Provisional sum as delay event