The Lump Sum Construction Contract - What Seems To Be The Problem

10/2/2015
TheLumpSumConstructionContractWhatseemstobetheproblem?Dr.HarisDeen
DR. HARIS DEEN

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The Lump Sum Construction

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BYDR.HARISDEEN|JANUARY15,2011
ThelumpsumcontractassociatedwithconstructionparticularlyintheMiddle
Easthascreateduntoldmiserytocontractadministratorsandquantity
surveyorsworkingineverysectoroftheconstructionindustry.Theproblemis
ABOUT HARIS DEEN, PH.D., MBA, B.SC.,

FRICS, ACI ARB. (RETD.)
causedbyamisunderstandingoftheconceptoflumpsumcontractsandthe
applicationoftheprinciplesassociatedwithsuchformsofprocurement.
Alumpsumcontractisanagreementpursuanttowhichonepartyconsentsto
payanotherpartyasetamountofmoneyforcompletingtheworkorproviding
thegoodsdescribedintheagreement.Typically,lumpsumcontractsdonot
requirecontractorstoprovideadetailedbreakdownofcosts.Rather,the
paymentofthetotalcontractpriceislinkedtothecontractorcompletingallof
theworkspecifiedinthecontract.Forexample,asoftwareinstallation
companymayenterintoalumpsumcontractforinstallingmultipledata
processingsystemsinabuilding.Insteadofreceivinganindividualfeefor
eachsysteminstalled,thecompanywillreceiveonefixedamountafterit
finishesinstallingallofthesystems.
Lumpsumcontractsareregularlyusedforavarietyoftransactions,including
constructionwork,consultingprojects,andarchitecturalassignments.Alump
sumcontractiseasytomanagesincepaymentismadeonlyonce.Generally,
thelumpsumcontractorispaidaflatamountofamountofmoneyafterthe
partyreceivingtheservicesorgoodsisgiventheoutput.Forinstance,undera
lumpsumarrangement,anarchitectfirmisusuallypaiditstotalfeeonceit
hassuppliedallthedeliverablesacceptabletotheEmployer.
Bornin1936inSriLanka,DrHarisDeenhas
over 50 years experience working in the
construction industry. His work has taken
him accross the globe, working on marquee
projects all over the world, including Sri
Lanka, the United Kingdom, Saudi Arabia,
Malaysia and the State of Qatar. Now an
expert in Contract Law, his current role is in
Qatar as Special Advisor to the President of
Ashghal (Public Works Authority). Dr Haris
Deen earned his PhD in 2000, and has
written and published two books in the field
ofconstruction.
Dr Haris Deen would like to share some of
hisvastexperiencewithyou.Enjoythesite!
Theconstructionindustryoftenengagesinlumpsumcontracting.Inmost
cases,thebuildingownersignsalumpsumagreementwithageneral
contractor.Thegeneralcontractorthenentersintoseparateagreementswith
ADS
subcontractors.
Theexplanationsofarseemssimple.Thenwhatseemstobetheproblem?
RECENT POSTS
Theproblemarisesoutoftwomajorfactors:
RamadanthemonthofmercyPart4
Thewrittencontract
Understandingandinterpretationofthewrittencontract.
Alumpsumcontractisusuallyawrittenagreement,althoughanoral
Thepowerundertheniqab
agreementmaybebindinginsomecases.Oncethecontracthasbeensigned,
allpartiesareboundtoadheretoitsterms.Alumpsumcontractordinarily
detailsthefixedtotalamounttobepaidtothecontractorandthetimelinefor
payment.Ifthecontractisforservices,acomprehensivedescriptionofthe
scopeoftheservicestobeperformedbythecontractorshouldbe
documented.Contractsforgoodsshouldthoroughlydetailthegoodstobe
http://harisdeen.com/blog/legal/thelumpsumconstructioncontractwhatseemstobetheproblem/
ARCHIVE
August2013(2)
July2013(2)
March2013(1)
February2013(1)
January2013(1)
October2012(1)
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provided,includingthecomponents,features,andcharacteristicsthatmustbe
September
2012(2)
April2012(1)
November
2011(2)
October2011(2)
April2011(1)
March2011(2)
mayincludethespecificationsandabillofquantitiesamongstotherthings.If
February2011(2)
January2011(6)
thebillofquantityislistedasacontractdocument,itispossibleforthe
December2010(3)
November
2010(1)
apartofthefinaldeliverable.
However,allthisisdictatedbythetermscontainedinthevariousdocuments
beingmadepartofthecontract.Constructioncontractsusingstandardforms
liketheJCT,NEC,FIDICetc.,detailahierarchyofdocumentsthatwouldbe
referredtointhesettlementofdisagreementsordisputes.Suchdocuments
Employertorequirethecontractortoexecuteeverythingithaspricedforin
December2011(1)
June2011(2)
thebill.
Itmustbenotedthatabillofquantitycancontainoneormoreofthefollowing
itemsinadditiontothelumpsumitems:
1. ProvisionalSums
2. ItemsusingPrimeCostSums
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3. Provisionallydescribeditems
4. Provisionallymeasureditems
5. NominatedSubContractoritems
6. NominatedSupplieritems
7. Contingencies
Despitedescribedasalumpsumcontractalltheaboveitemsaresubjectto
adjustmentsandadditionstoanddeletionsfromthebillofquantitiesis
possibleifthecontractprovidesforvariations,butnoremeasurementof
quantitiesstatedinthebillofquantitieswillbeallowed.
Asarule,constructioncontractorsarenotentitledtoreceivemoremoneythan
thecontractspecifies.Itemsrequiredtocompletetheworksmustgenerallybe
providedeveniftheyhavebeenomittedfromthebillofquantities(Williams
vFitzmaurice(1858)3H&N844).MichaelOReillypointsoutthatifthereisno
mechanisminthecontractforreceivingpaymentfortheseextraitems,the
contractorwillhavetopayforthem.Thismeansthatthecontractorwillhave
toprovidewhatisindispensablyrequiredtofulfilitsobligationsunderthe
contract.
Ifitispresumedthatquantitiesdonotformaterminlumpsumcontracts
unlessthecontractstatesotherwise,thecontractorwillnotbepaidany
additionalpaymentifthequantitiesrequiredtobeexecutedaregreaterthan
statedinthebillofquantity,(PortmanandFotheringhamvPildritch(1904),
PriestlyvStone(1888),ReFordandBemrose(1902)CA,SharpevSanPaulo
RailwayCo(1873)LR8ChApp597).Itcouldthereforeimpliedthatthe
reverseisalsotruebeingthatifthequantitiesstatedinsuchabillof
quantityaregreaterthanwhatisrequiredtobeexecuted(aslongastheitem
descriptionisnotchanged)thecontractorwillbeentitledtoreceivethefull
paymentagainstthatitem.
CantheEmployerorEngineertherefore,changethedescriptionofanitemin
thebillofquantitieswherethequantityhasbeenovermeasuredandattempt
toremeasureandobtainthelesserquantity?Unlessthecontractprovidesto
doso,definitelynot!Anyattemptstodosowouldmeanintroducingan
elementofremeasuringwherethecontractdoesnotprovideandthiswould
beinbreach.
Inthesamecontext,whataboutanitemcontainedinthebillofquantities
whichisnotrequiredtobeexecuted?Contractorsalwaysarguethatbeinga
lumpsumcontracttheyareentitledtobepaidforeveryiteminthebillof
quantitiesregardlessofrequirementinthesamemannerthattheEmployeris
entitledtoinsistuponthecontractortoprovideitemsrequiredbutmissedout
inthebillofquantitiesandthateachbalanceswiththeother.Inordertoprove
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thispointthecontractorwillneedtoestablishthatthepriceithasputinfor
suchanitemisinactualfacttocompensateforsomeitemmissedoutinthe
billofquantity.Theburdenofsuchproofwillrestwiththecontractor.
Reference:
ORielly,MichaelCivilEngineeringConstructionContracts
146COMMENTSCONSTRUCTIONCONTRACTSLEGAL
SHAREONTWITTER,FACEBOOK,DELICIOUS,DIGG,REDDIT
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146 Comments
MohammedAwadonJanuary16,2011at12:56pm.
Thisarticlespotthelightononeofthemostimportantissues
relatedtoconstructioncontractsi.evariationstolumpsum
constructioncontracts,wethankDr.Harisforthisarticle.
Reply
TroyDiasonJanuary19,2011at7:54am.
Inthesamecontext,whataboutanitemcontainedinthebillof
quantitieswhichisnotrequiredtobeexecuted?Contractorsalways
arguethatbeingalumpsumcontracttheyareentitledtobepaid
foreveryiteminthebillofquantitiesregardlessofrequirementin
thesamemannerthattheEmployerisentitledtoinsistuponthe
contractortoprovideitemsrequiredbutmissedoutinthebillof
quantitiesandthateachbalanceswiththeother.Inordertoprove
thispointthecontractorwillneedtoestablishthatthepriceithas
putinforsuchanitemisinactualfacttocompensateforsome
itemmissedoutinthebillofquantity.Theburdenofsuchproofwill
restwiththecontractor.
Idontagreewiththeaboveconclusion.Iagreewithyouthatthe
burdenofprooflieswiththeContractorbutinthisparticular
situationhedoesnotneedtoanalysewholecontractbilltoprove
hiscase.Inalumpsumcontract,thespecificationsanddrawings
areusedtodescribeandidentifythescopeofworks.BQ(or
ScheduleofRates)doesnotuseforthispurposeanditisusedto
valuevariationsandoftentimesusedforinterimpayment
valuations.
Reply
HarisDeenonJanuary19,2011at1:05pm.
ThankyouTroy,ThisisthetypeofcommentsIwouldlikeinorder
totriggerawiderdiscussion.Youdontseemtodisagreewithme
thattheburdenofproofofthecontractorsentitlementforpayment
ofanonexecutediteminaBOQrestswithhim.Youronly
complaintseemstobethatthecontractdoesnothavetoanalyse
thewholecontractbilltoprovehiscase.Ididnotsaythathe
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shoulddoso.Themainpointisthatanyoneshouldnotbeentitled
tobeunjustlyenrichedbyclaimingmoneyforworkhehasnot
executed.Ifhecanprovethatthisismoneythatherichly
deserves,thencertainlyheshouldbepaid.
Reply
TroyDiasonJanuary19,2011at8:40pm.
Thanksforyourquickresponse.Mypointisinalumpsum
contracts,BQdoesnotusetodescribeoridentifythescopeof
Works.TheBQisatoolweuseinalumpsumcontractsto
calculatetheTender/ContractPrice.ThescopeofWorksis
definedintheSpecificationsandDrawings.TheContractors
obligationistocompletetheWorksinaccordancewiththe
SpecificationsandDrawings.TheBQmaycontainitemswhich
arenotrequiredtoaccomplishtheContractorsobligations
undertheContract.
However,theContractorshouldexecuteanyworksdefinedin
theSpecifications(inmostcasesSpecificationtakes
precedenceovertheDrawings)eventhoughsuchworksare
excludedfromtheBQ(and/ornotshownontheDrawings).
Iconsiderthat,aftertheaward,theBQisusedonlyforthe
purposesofvaluationvariationsandinterimpayments,unless
BQcontainsprovisionalitemswhicharesubjectedto
remeasure.
Further,inlumpsum(withoutquantities)contracts,BQis
replacedbyScheduleofRates.
Inconclusion,Iconsiderthat,inalumpsumcontract,you
cantsimplynegatepaymentforanyitemintheBQwhichare
notdefinedintheSpecificationsand/orshownDrawings,as
theBQdoesnotidentifyordescribetheScopeofWorks.
Reply
HarisDeenonJanuary21,2011at11:21am.
YouarequotingoutofcontextTroy.Myarticleisbased
onaBOQbeingacontractdocument.Youareright
wheretheBOQisnotapartofthecontract.IntheME
allcontractsIhavecomeacross(IfIamwrong
someonewillcorrectme,)theBOQisacontract
documentlistedinthedocumentsformingpartofthe
contractandtheheirarchyforreferenceintheeventof
adispute.Itisalwaysstatedthatdespitetheheirarchy,
alldocumentsarecomplementarywitheachother.That
meansthattheBOQinthisinstanceispartofthescope
andtheContractorwillberequiredtoexecuteallthe
itemsindescribedintheBOQifitwantstogetpaid.IT
ALLCOMESDOWNTOWHATTHECONTRACTSTATES
ANDTHATISHOWJUDGESANDARBITRATORSDECIDE
ACLAIM.Ihavenotfoundanycasewhereajudgeor
arbitrator(inthefristinstanceoronappeal)hasallowed
aclaimthatacontractorisnotentitledforandrefused
anyclaimthatcontractorsareentitledto9
compensation.Underthedoctrineofrestitutionnoone
isentitledtoreceiveanypaymentforwhatheisnot
entitledforunderacontractandtheconverseisalso
truethattheemployercannotescapefrompayinga
contractorhisrightfulduesunderacontract.
Reply
MartinonJune5,2011at12:00am.
IhaveaquestionalongthelinesoftheQSdoesnt
representthespecificationinhisBQ,thecontractor
priceshislumpsumagainsttheBQnotthespeca,
leavingusastheemployerwithabitpartfinishnotas
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thespecification,isthistheresposilbilityoftheQSnot
relatingthepricedBQorthecontractorwhoshould
havepricedinconjuncturewiththespecanddrawings.
Inotedyourcommentaboutthespectakesprecidence
overthedrawings.
Reply
HarisDeenonJune12,2011at11:44am.
DearMartin,
Yourquestionisnotveryclear.However,Iwilltryto
answer.
InthefirstplaceaddressingtheresponsibilityoftheQS
TheQShasadutytoprovideaccurateBillsof
Quantities.Hecannotexpecttoshieldhimselfunderthe
LumpSumpretenceforhismistakes.
AsfarastheContractorisconcernedhemustprovide
everythingthatisindispensablyrequiredforcompletion
oftheWorkswhetheritisshownonthedrawings,
specifiedinthespecificationsormeasuredintheBOQ.
Pleasereadmyarticleverycarefullyasitdealswith
differentaspectsofaLumpSumcontractwhichwill
enlightenyoumoreonthissubject.
BoononJune25,2015at5:52am.
AgreedwithTroy
Reply
Dr.HarisDeenonJuly29,2015at10:16pm.
IsuggestthetopicAvoidingpitfallsintenderingfor
LumpSumContracts.Inyourintroduction,youmight
refertodecidedcasesWilliamsvFitzmauriceandthe
SanPaolocase,whicharelandmarkcasesandbuild
yourtheseisaroundthem.GoodLuck.
AbdulrahimOstolonJuly5,2013at1:26pm.
DearSir,
Iamwiththeclientsideourcontractwiththemaincontractorisa
lumpsumalthoughinourGeneralConditionsofcontractClause
VariationOrder,wehaveadditionanddeletion.Wedeleteditemsin
theBQwhichisnotrequiredhencetheContractorinsisteditisa
LUMPSUMpriceandheisentitletoclaimthesamevaluesignedin
theletterofawardandnoticedtoproceed.
KindlyadvisedasaClientorOwner,dowehavetherighttoclaim
thenegativeVariationorder,hencecontractoralsoclaimthatthere
aresomeconcealedandunforeseenitemsduringtender.
ItisclearinourGeneralConditionsofContractthattheContractor
beforetenderinghehastherighttoverifythesiteconditions,its
drawings,specifications,billofquantitiesandtosatisfyhimselfand
hehasnorightinthefuturetoclaimanyadditionalcost,whatever
missedtopriceunderthiscontract.However,theclienthasthe
righttoincreaseordeleteitemsduringconstructionperiodnot
exceeding20%ofthelumpsumprice.
KindlyAdvised,
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Regards
Abdulrahim
Reply
DearAbdulRahim,
IftheContractorhaspricedanitemthatwasnotrequiredto
beexecutedinanycase,atthetimeoftender,thenhewas
takingarisk.IftheitemisnotrequiredandtheContractor
insistsonpaymentforthatitem,hecannotbepaidforwhat
heisnotexecuting.Tellhimthatpaymentwillbemadeonly
foritemshehasexecutedandthefinalaccountwilltakeinto
accountthoseitemsthathehasnotexecuted.Youdonot
havetodoanythingatthemoment.Paymentshouldbemade
onlyforitemsidentifiedintheBOQ(ifBOQispartofthe
Contract)oninterimcertificates.
Icannotgiveafurtherclarificationwithoutknowingthefull
facts.
Reply
AbdulrahimOstolonDecember20,2014at8:11pm.
DearSir,
Themissingamountfromtheitemsbillofquantitiesis
requiredtobeexecutedhence,thecontractormissedto
fulfilltheirobligationtocheckedproperlythetotal
amountoftheprojectbeforeawarding,signingtheBOQ
andsigningthecontract.Aftersigningofallthe
documentsthenthecontractoronlystartedtoclaimthe
missingvaluewhichcost1.7MillionSR.However,in
thiscaseweinsisttonottoconsiderthisclaimbythe
Contractorsinceitistheirmistakeandrisktofinalized
hisBOQtohissatisfactionaspercontractdocuments
andContractisalumpsum,kindlyadvisedifweare
righttokeepthesamecontractamountsigned.Regard
lessofanyapprovedV.Os.
Regards
Reply
Dr.HarisDeenonMay2,2015at5:20pm.
DearAbdulRahim,
YoudonotstatetheFORMorCONDITIONSOF
CONTRACT.However,assumingtheconditionstobe
FIDICortheAmericanCorpofEngineersForm.Ifitisa
LumpSumContractwhatevertheFormofContractthe
contractormustexecuteallworksindispennsably
requiredforproperfunctioningoftheworkswhether
includedintheBOQornot
CraigonJanuary19,2011at9:16am.
InterestingthatyoustatethatthisismainlyanissueintheME.I
haveappliedLScontarctselsewherewithlessconflict.
Interestingarticle.
Reply
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HarisDeenonJanuary19,2011at12:58pm.
YesCraig,IntheUKallcontractsforbuildingworksusingJCT
Formsarelumpsumcontractswithallsubstructureworks,
provisionalsums,nominatedsubcontractorworksanddayworks
remeasured.Wehavenothadanyproblemsatallliketheoneswe
havehereintheME.
Reply
KasunonFebruary17,2011at12:29pm.
Thankyouforenlighteningus.
BasedonmyunderstandingandexperienceIamstrictlyfollowing
thebelowpointsinallLumpsumcontractsthatIadministrate
1)Drawingsandspecificationsarekeyfordefiningthescope
YESIagree.Howeverfollowingscenariosareveryinteresting
case1:
WhatifBOQcontainsaitemthatisphysicallypossibletodoatthe
tenderstage(irrespectiveofwhetheritisrelatedtoworksof
drawingsandspecifications)butnotshowninthedrawingsand
specifications?
Myopinionthecontractorisrequiredtodothatitemanditis
possibletoinstructomissionsonthatitem
case2:
WhatifBOQcontainsaitemthatisphysicallynotpresentonsite(
ornotrequiredtodoevenatthetenderstage)anditisnotshown
inthedrawingsandspecifications?
Myopinionthecontractorisnotrequiredtodothatitemanditis
notpossibletoinstructomissionsonthatitem.Sonodeductionon
thecontractpriceispossibleforthisitem.
2)LookfortheBOQgeneralitems.Checkifthereisanitemthat
allowsthecontractortoadditemsIfhebelievesthatduetoany
reasonthoseitemsaremissingorquantitiesarenotsufficient.
IFthereissuchaprovisionusuallyitwillbelikethis
TheContractorshalldescribeandpricebelowtheitemsnecessary
forthecompletionoftheworkasdescribedinthespecificationor
shownonthedrawingsandforwhichspecialprovisionisrequired
andwhicharenotcoveredbytheratesintheBillofQuanties
IfsothebelowNo03mechanismisapplicable
3)Ifollowthefollowingomissionandadditionconcepttoprice
variations
IfthereisprovisionintheBOQfortheContractortoinserthis
itemsformissingitems(referItem2above)
forexample
Boqquantity=10mrate=say5$perm
agreedcontractprice=10*5+otheritems=50$+150$(say
forotheritems)=200$
case1:drawingquantity=12m
ifnovariationissuedthencontractorwilldo12mofwork
andthecontractprice=200$thisisclear
omission(whattheContractorsupposedtodo)=12*5=60
addition=12*5=60
thecontractpricechange=(60)+60=(0)newprice=200
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ifvariationisissuedtoincreasethelengthto17m
then
omission(whattheContractorsupposedtodo)=12*5=60
addition=17*5=85
thecontractpricechange=(60)+85=(+25)newprice=225
ifthecompletewalliseliminated
then
omission(whattheContractorsupposedtodo)wouldbe=12*5
=60
addition=0
notethatthisdisregardstheissuesofsubstantialchangestothe
contractpriceetc..
case4:ifthiswallisnotshownonthedrawingatallanditisnot
requiredforanyothersupportiveworksthatareshowninthe
drawings
then
omission(whattheContractorsupposedtodo)wouldbe=0*5=
0
addition=0
Reply
HarisDeenonFebruary20,2011at11:41am.
DearKasun,thankyouforyourinquiry.Fromthefactscontainedin
yourquestion,IamledtobelievethatyouareaQS.IfIamwrong
Ioffermyapologies.
Youhavenotindicatedtheconditionsofcontractthatyouare
basingyouranalysison.Whatever,theprocurementtype,
LumpSum,Remeasured,CostPlusetc.,whatisagreed
betweenthepartiesandcontainedinthedocumentwill
overrideanyotherconsideration.
ALumpSumcontractissimplywhatitsaysitis.TheEmployer
promisestopaytheContractoraLumpSumPriceforwhat
theContractorhasagreedandpromisedtoexecute.What
constitutesthescopewhichtheContractorhastodotobeentitled
toreceivethelumpsumwillbecontainedinthedocumentsor
reasonablyimpliedtherefrom.Ifyoureadmyarticlecarefullyyou
willfindcasesIhavecitedsupportingthesettledlawthatina
lumpsumcontracttheContractorhastoexecutewhatever
isindispensablyessentialforthepropercompletionofthe
jobasintendedbythepartiesirrespectiveofwhetherthe
workrequiredisshownonthedrawings,specifiedinthe
documentsormeasuredintheBOQ.
TheargumentusuallyistheplaceoftheBOQinthecontract.
Contractorsinsistthatinalumpsumcontractifanitemis
measuredintheBOQitdoesnotmatterwhethertheitemis
requiredornottheyneedtobepaidthefullcontractsum,asthe
basisofalumpsumcontract.
ThisisonlycorrectiftheBOQisnotpartofthecontract.
EvenwheretheBOQisacontractdocumentandcomplementary
withotherdocumentsContractorsputforwardthesameargument.
ThisargumentisfoundedonthebasisthattheContractorwillhave
toexecuteworknotmeasuredintheBOQorshownelsewherebut
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requiredwithoutanyadditionalpaymentaspartofthelumpsum
contract.WheretheBOQisacontractdocumentitismeant
todescribethescopeforwhichapricehasbeensubmitted
andthisissettledlaw.TheContractorcannotbeunjustly
enrichedforworkthathehasnotexecuted.Theitemnot
fullyexecutedcanbedeletedbytheEngineerfromtheBOQ
andthecontractsumadjustedaccordingly.Ofcourseifthe
Contractorcanprovethathepricedtheiteminquestionto
compensateforanymissingitemshewouldbeentitledto
bepaidthisitemasavariation.Ifsuchproofisavailable,
thentheContractorwillalsohaveequitablelegalremedies.
REMEMBERTHATIFTHEREARENOSUPERFLUOUSITEMSIN
ABOQANDTHECONTRACTORHASTOEXECUTEALLTHE
ITEMSIRRESPECTIVEOFANYDISCREPENCIESIN
QUANTITIESTHECONTRACTORISENTITLEDTORECEIVETHE
FULLLUMPSUMCONTRACTPRICE.
Onanissuesuchastheabove,myadvicetoContractorsandtheir
estimatorsisnottodependontheBOQagainsttheworktobe
executedinalumpsumcontract.Beparticularlyawareofitems
describedandnotrequiredtobeexecutedandforitemsthatmight
havebeenmissedout.Qualificationsinatendersubmissionmight
notbeacceptable,butasubtletenderqueryindicatinga
superfluousiteminaBOQandsuggestingthattheContractorwill
pricetheitemincompensationforanyparticularitemmissedout.
Itwillstandingoodsteadifsomeitemcanbeconcoctedifitis
difficulttofindoneduringthetimeavailablefortendering.
Now,comingtothedifferentmeasurementareasthatyouhave
statedinyourquery,pleaseunderstandthatyoucannot
introduceremeasurementtoalumpsumcontract.
IfanitemintheBOQisundermeasureditistheContractorsrisk
andhehastobearit.Similarly,ifthereisanitemovermeasured
itistheEmployersrisk.AnyattemptsbytheEngineertomakeany
adjustmentstosuchovermeasuredquantitiesmustberesisted.
ThequestionsometimesariseswhereanitemdescribedintheBOQ
hasbeenchangedtoanotherdescription.Forexample,iftheBOQ
indicates10,000mofasphaltroadpavingandtheEngineerwants
tochangeittointerlockingtiles,thevariationorderwilldescribean
omissionof10,000mofasphaltpavingandifthequantitythathas
toactuallyexecutedis10,100mofinterlockingtiles,the
Contractorisentitledtogetpaidfor10,100mbutcalculatedfor
10,000m(Thequantityaddedmustbeequaltothequantity
deletedthecompensationfortheadditional100misbasedon
priceadjustment).
Inconclusion,Imuststressthatyoucannotintroducere
measurementtoalumpsumcontract,unlessthecontract
containsprovisionalitemsorquantities.
Ihopethatthisclarifiesthepositionandifyouarestillunsatisfied,
pleasefellfreetocomment.
Reply
GishanNadeeraonSeptember11,2012at8:51am.
DearDr.Haris
Thanksfortheinformationyouprovided.Ijustwanttoknow
asyoustated,myquestionisbasedonLumpSumContracts
whereB.O.Qisnotpartofthecontractdocuments.
ThereisoneprojectImhandlingandthelumpsumisagreed
betweenclientandthecontractor,andthedrawings,
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specificationorB.O.Qisnotpartofthecontractdocumentsas
theynotstampedandsignedbythebothparties.
ThisBuildingis21floorresidentialtowerinPearlQatarand
contractorknewinitialythedesignednoofunitswassubject
tochangelater.Contractorexecutedthework.
1.Nowcontractorisclaimingthatfortheworkwhichis
requiredbyUDCwhichwasnotshowninitiallyinthe
drawings,specsorB.O.Q.
2.Andalsoheisclaimingsomemechanicalitemswhichis
increasedduetothechangesofnoofunits.
AsperyourcommentiftheB.O.Qisnotpartofthecontract,
contractorhastodoalltheworkwhichisessentialto
completetheprojectandIbelivetheabovefactorscan
catogorisetheessentialwork.Thereforecontractornotentitle
foranyvariations.PleasecorrectmeifImwrong.
Mynextquestionisinitialstageinstallationofthemarbleand
granitewascontractorsscopeandlaterclientgavethatscope
toadifferentcontractor.
Inthissituationdoesclienthavetherighttoomitthelump
sumamount?
Thanks
Reply
Dr.HarisDeenonSeptember25,2012at10:17pm.
DearGishan,
Sorryforthedelayinresponding.Inanylumpsum
contract,irrespectiveofthedocumentsformingpartof
thecontract,thecontractisawardedonthebasisof
executingaknownscopeofworks.Hecanpriceany
risksforunknownswithinthatscope.
Accordingtoyourquestion,thecontractorknewthat
theinitiallydesignednumberofunitsweresubjectto
changelater.Youdonothoweversaytowhatextent
didthecontractorknowwhatwillbechanged.Itis
unreasonabletoexpectthecontractortoexecutework
thathedidnotknowwhattoexpectatthetimeof
submittinghistender.Withoutinvestigatingallthe
documentsformingpartofthecontractitisnotpossible
togiveanyauthoritativeresponse.Howeverdonot
expectthecontractortoaccedetodoeverythingthat
theemployerasksforexceptsuchworkiswithinthe
scopethatthecontractorofferedtodowithinthe
contractsum.
Reply
TroyDiasonMarch20,2011at11:53am.
WhistIstillmaintainmyopinionthatBQshouldnotusetoidentify
theScopeofWorks,inthesamecontextIfurtherdisagreewithyou
thatBQquantityshouldbeusedforthepurposeofvaluing
variations.
Generally,inrelationtothevaluationofvariations,standardforms
includetwoimportantprovisions(a)variationsshouldbe
measuredand(b)valuedusingratesandpricescontainedinthe
Contract(ifapplicable).Thus,inbothomissionsandadditions,
quantitiesshouldbemeasuredusingtheContractDrawingsandthe
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revisedDrawings.Onthesametokenandinextremecases,you
coulddeductmorethantheContractPriceincaseofavariation.
Forexampleinacurtainwallingcontract(lumpsumpriceof5
million)withBQincludesonlyoneitemforcurtainwalling(1,000
m2and5,000perm2)andCAinstructedtochangethecurtain
wallingtocladding(rate=5,050perm2).Inthiscase,ifthe
measuredquantityisonly1,050m2,thenactuallytheContract
Pricewillbeincreasedby52,500astheomittedvalueexceedsthe
ContractPrice.
Reply
HarisDeenonMarch27,2011at8:17am.
ThankyouTroy,
Whatthecontractstateswilloverrideanyotherconsiderations.If
thecontractmakestheBOQacontractdocument,thenitwillbe
partofthescope.Nevertheless,ifthecontractisaLumpSum
contract,theremeasurableelementsareonlythosementionedin
theBOQasbeingremeasurableandthatincludesprovisional
sums,provisionalitems,primecostsums,andcontingencies.
Reply
TroyDiasonMarch27,2011at2:35pm.
ThanksDr.Deenforyourresponse.Mypointisaboutvaluationof
variations(i.e.weshouldmeasurebothomissionsandadditions,
andBQquanititiesshouldnotbeusedforthispurpose).
Reply
KelvinHoonApril3,2015at4:17am.
Whatisthescenariosifthefollowingsituationhappened:
TheOwnerandContractorhassignedaMechanicalandElectrical
supplyandinstallcontractforanserviceapartment.
ThebuildingworkshascompletedandtheOwnerdecidedtoconvert
thenatureofthebuildingtocommercialusagesuchasoffice
building.
Thiswillresultinlessworksforthecontractor.
Willpossibleclaimthecontractorraiseforsuchchange.
Pleaseadvise.
Reply
DearKelvin,
YoudonttellmeanythingabouttheFormorConditionsof
contract.However,inalumpsumcontractitmightbepossibl
toclaimrecoveryofoverheaadsandlossofprofitsdepending
ontheextentoftheommissionUnderFIDCTheclientcan
deleteoraddworksupto15%ofthecontractvalueinQatarit
is20%andinKSAalsoitis20%
Reply
SamanWelagedaraonMarch27,2011at9:22pm.
Isuggest,inavariation,ommissionsoradditionstobe
remeasured.But,ifanyitemtoberemovedcompletely,thenthe
ommitedvaluetobelimitedtoBOQvalueofthatperticularitem.It
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isnotfaretoaskcontractortobearanymoneywhichheisnot
pricedfor.
Reply
TroyDiasonMarch27,2011at9:28pm.
DearDr.Deen,
IthinkIdidntexpressmypointsclearlyinrelationtolumpsum
contracts.SinceFIDICformsarenotmeantforlumpsumcontracts,
IconsiderJCTforms(inparticularwithandwithoutquantities
forms)aremoreappropriatetousefortheclarificationofthe
issues.
InJCTwithquantities,quantitiesformspartoftheContract,thus,
anyerrorinthequantitiesand/ordescriptionbecomesavariation.
However,whenitcomestovaluevariationsassumingthereisnt
anyerrorintheBillQuantity,youcanusetheBQquantityforboth
omissionsandadditions.Inthisform,intheeventanitemincluded
intheBQbutsuchworkisnotrequiredfortheWorks(i.e.notin
theDrawingsorSpecification)canbeomittedasitisconsideredas
anerrorintheBQ.
Ontheotherform,quantitiesdonotformpartoftheContractand
theContractsBillsaremerelyconsideredasScheduleofRates
(sometimesweincludetheContractBillsasaContractDocument,
however,itisstillconsideredasScheduleofRates).Inthisform,
variationsarevaluedusingtheDrawings.However,evenifthe
ContractBillislistedasaContractDocument,inthissituationwe
dontuseBQquantitiesforomissionsoradditions.Intheevent
provisionalquantitiesareincludedintheContract,weshallomitthe
BQquantityandmeasurethequantityfromtheDrawingsfor
additions.Further,youcantomitanitemincludedintheContract
Bills(orScheduleofRates)whichisnotincludedintheDrawingsor
Specification.
PleasenotethatIdonthavecopiesofbothformswithmetoquote
relevantclausesbutIappreciateyouradviceontheaboveissuesif
possiblepleaseemailmetherelevantclausesofthosedocuments.
Ithinkthemainproblemtheproblemis(especiallyinMiddle
Easterncountries),weattempttoconvertFIDICforms(whichare
forremeasurementcontracts)intolumpsumcontracts(withor
withoutquantities)withoutamendingtheessentialclauses.I
personneldontliketousethisapproachbutIthinkitistimeforME
touseJCTformsforlumpsumcontracts.
Reply
FoongonMarch31,2011at8:05pm.
DearDr.Deen,imabitconfusedasforalumpsumcontractbased
ondrawingandspecificationsbutwiththeBoQtobepartofthe
contractdocumentandthatthequantitiesdonotformpartofthe
contract,
(i)whetherthedescriptionofitemsprovidedintheBoQalso
consideredpartofthespecificationthatwehavetoprovide,i.e
materialspecsstatedintheBoQ.
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(ii)orintheabsenceofspecsprovidedinthedrawings,whether
canwearguedthatpricingoftheprojectisbasedonwhatever
specsproposedbyus,inwhichwedeemediswithinthepricing
range.
Reply
HarisDeenonApril5,2011at2:15pm.
DearFoong,
Thankyouforyourquery,Iapologiseforthedelayinresponding
becauseyourmessagewaslodgedinmyhotmailfolderwhichI
rarelyopen.
Irespondtoyourqueriesinthesameorderthatyouhaveindicated
asfollows:
(i)IftheContract(youhavenotmentionedtheFormofContract)
statesthattheBOQisapartoftheContractbutnottheQuantities
containedtherein,thenthecontractisflawed.TheBOQiswhatitis
aBillofQuantities.Therefore,inmyviewtoexcludethe
quantitiescontainedinadocumentwhilemakingthedocument
itselfpartofthecontract,inmyopinionisflawed.Theprinciple
associatedwiththeBOQwasestablishedinthecaseofLondon
SteamSawMillsLtdvLorden(1900)whereitwasheldthatthe
quantitiesintheBOQinaLScontractarenotmeasurableexceptin
thecaseofvariations.(ThiswasbasedonGCWorks1Formof
Contract).Asfarasdescriptionsandspecificationscontainedinthe
BOQareconcerneditwasestablishedinthefollowingcasesthat
whatisstatedintheConditionswilloverridewhatisstated
elsewhere.(GleesonsContractorsLtdvHillingdonBoroughCouncil
(1970)JCT1963FormandGoldvFotheringhamLtd(1958)GC
Wks.1Form).
(ii)InaLSContracttheContractorwillberequiredtodowhatis
indispensablyessentialtocompletetheworksWilliamsv
FitzmauriceHowever,thephraseindispensablyessentialis
subjectiveandcanbemisused.Thereforeitisestablishedthatwhat
isindispensablyessentialforapalacewillbedifferentforafactory
building,officebuildingorwarehouse.Takingthecasecitedabove
itconcernsflooring.Thereforetheflooringwhichwasnotincluded
intheBOQwhichwasacontractdocumentcanbeoftheminimum
requirementforthetypeofbuilding.Ontheotherpoint:Nothe
Contractorcannotclaimsomethinghehasassumedinpricingsuch
anitemifhehasnotindicatedwhathehasassumedwhen
submittinghistender.
Reply
BruceParryonMay10,2011at11:32am.
IaminterestedinthecontinuedapplicabilityofWilliamsv
Fitzmaurice(1858)underEnglishLawIassumethatthedoctrineof
indipensabilityhasnotbeenamendedbystatuteorsuperior
decision.
Ihaveasituationwherethesupplierofpowerplantequipment
excludedcivilworksBUTonlythesuppliercanprovidethecivil
worksdesignforfoundationsetc.forthesuppliedpowerplant
equipmenti.e.thedesignsareindispensable.
AsthesupplysubcontractislumpsumandunderEnglishlawit
wouldappearthattheindispensableruleappliesandthatthe
subcontractorcannotrefusetoprovidethenecessarydesigns.
Reply
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HarisDeenonMay11,2011at9:38am.
DearBruce,
WithoutlookingattheConditionsuponwhichthecontractwas
awardedIcannotcommittoanyauthoritativeanswer.However:
1.Thefactssuppliedbyyouindicatethatthecontractwasfor
supplyonly,thecivilworksbeingexcluded.Ifthisisthecase,then
thesupplierisobligatedonlytosupplythegoodsingoodorder,
freeofdefectsunderthelumpsum.
2.Ifontheotherhandthecontractstatesthatthesupplyincludes
installation,thenitwouldhavebeenuptothesuppliertoinquire
whereandhowtheequipmentshouldbeinstalledinorderto
ascertainhisresponsibilities,inwhichcasehewouldbeentoldthe
extentofhisinvolvementintheinstallationprocess.Inthis
situationifthesupplierwentaheadwithoutinquiringastothe
natureandmethodofinstallationitcanbefairlyreasonably
assumedthatheknewoftherequirementandWilliamsv
Fitzmauricewillapply.
3.Itisnormalpracticetoprovideinformationastocivilworks
wheresupplycontractsformechanicalandelectricalinstallations,
Alsonormallycivilworksorbuildersworksareprovided
separately.Goingbythenormsoftheindustryitisunreasonableto
insistuponthesuppliertoprovidethefoundationswhenitisnothis
responsibility.
Havingsaidalltheabove,Imustonceagainreiteratethatitwillall
dependonwhatthecontractstates.Youneedtocheckthecontract,
andseewhereyourcasewillfitin.
GoodLuck
Reply
AFallononJune7,2011at11:59am.
InSaudiArabiatheyhaveatendencytoexecutelumpsum
contractswhileattachingsupportingsuccessfulcontractorsasbid
quantitiesandunitpricesforpaymentpurposesortoevaluate
changesbyuseoftheunitprices.BeingalumpsumcontractIdo
notunderstandwhyincorporatingthesupportingBOQandorbid
data.
IhadacasewherethecontractorhadanEPCproject.The
engineeringportionwastobecompletedbycontractorbasedon
conceptualplansFEED.Duringthedetaildesignclientdidminor
modificationaffectingquantities.ForinstanceBuildinglocations
weremodifiedwhichcouldnotbeconstruedasachangebecause
theclienthadconsideredthebuildingsintheoriginalFEEDconcept
andthelengthofutilitybetweenbuildingswouldbepaidunderthe
AsBidunitpricesbyincreasingordecreasingtheaffected
quantitiesafterprocurementandconstructionandpayment.
Contractorwentalongwithclientandcompleteddesignwithout
formalrequestforadeviationastheyfelttheywouldbe
compensatedlaterundertheactualquantityandunitprices.
Contractororderspartsandmaterialsandmonthslaterwhenthe
constructionworkisduetostartforsomeportionsofthework,
Clientdecidestodeletesomemajorequipmentsandassociated
improvementsfromthescopeofworkandrequestedacreditfor
thedeletedwork.
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Clientnowwantstodeleteandbecreditedforthequantities
associatedwiththeapproveddesignengineeringcompletedby
contractor.Whentheclientchangedthebuildinglocationsithad
actuallyincreasedthedistancebetweenbuildingsconsiderablybut
nowrefusedtoacceptcreditfortheAsBIDBOQquantities.
Contractorisnowbeingrequestedtogiveacreditthatexceeded
theirbid.Clientsayscontractorshouldhaverequestedachange
deviationmonthsbeforewhenthedesigndeviationoccurredin
orderfortheirconcerntobevalid.Anotherissuetheclientraisedis
thatthecontractisalumpsumandthateventhoughtheAsBid
BOQwasinsertedinthecontractitmeantnothingtothecontract.
However,ClientusedtheBOQasthebasistodevelopandapprove
monthlypaymentinvoicesthroughout70%oftheworkbutwhen
thecontractorattemptedtogiveacreditforthedeletedworkitems
basedonthisAsBidBOQandPaymentcashflowschedulethat
reflectedtheactualworkitems,clientrefusedtoacceptthe
contractorcreditbasedonthisbasis.
AttachingBOQstoLumpSumpricecontractswithoutvalidationof
quantitiesandpricesandproperSummaryofNegotiationsbefore
enterlngintoaContractisamistake.Itisbettertosignacontract
withjustonenumber.
Reply
HarisDeenonJune12,2011at12:51pm.
DearFallon,
AsIunderstandfromyourexplanation,thecontractisadesignand
build(D&B)contractbasedonaconceptprovidedbytheClientand
thebiddocumentsincludedamongstotherthingsthecontractors
BOQ.Youdonotmentionthetypeofcontractused.Iassumethatit
wouldbeFIDIC.
YourexplanationalsosuggeststhattheClientmadechangesduring
thedetaildesignstagewhichaffectedthequantities.
Beforedealingwiththerestoftheexplanation,lateronyoualso
statethatthecontractwasbasedonLumpSum(LS),suggesting
thattheLSwasfixedpriortothedetailedesignstage.Ifthisisthe
casethisisanimportantissueindecidinganyclaim.
Nowgoingbacktothesecondparagraphofyourquery,youstate
thatthebuildinglocationsweremodifiedwhichcouldnotbe
consideredasachangebutcontinuetoassertthattheminor
modificationstothequantitiesoccured.Ifthatisthecase,the
scopehasnotchangedandthecontractorcannotexpecttoget
anythingmorethantheLSprice(ifhehasexecutedtheWorksto
thecompletesatisfactionoftheClient)andtheClientalsocannot
deductanythingfromtheLS.
Assumingthatthecaseisasstatedabove,thecontractoriswithin
hisrightstoorderthepartsandmaterialsasstatedbyyouinthe
thirdparagraph.IftheClientdecidesatthisstagethatheneedsto
varythescope,ofcourseunderFIDICheiswithinhisrightstodo
so.Insuchaneventthecontractormustbecompensatedforthe
materialsthathehasorderedandbroughtonsiteatthetimeofthe
Clientsdecisiontovarythescope.AtthesametimetheClientwill
beentitledtoobtaincreditforthedeletedworksand,sincethe
contractorhassubmittedapricedBOQwithhisbiddocuments
whicharenowpartofthecontract,thiscanbeusedtodetermine
theextentofthedeletion.
Whatyoustateiinyourfourthparagraphisconfusing.Youare
sayingthatthedistancesbetweenthebuildingshasincreaseddue
tothechangeandtheClientisrefusingtogivecredit!!Why
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shouldtheClinetgiveanycredit?IfatalltheClientshouldpaythe
contractorforanyextraworkinvolvedbychangeinscope.
Furthermore,thecontractorshouldhaveprotectedhisrightsby
requestingachangeorderwhentheClientinstructedthechange.
However,thisshouldnotpreventthecontractorfromclaiminghis
rights,becausebyconducttheClinethasacceptedthescope
change,irrespectiveofwhetherthecontractorrequestedthe
changeorderornot.
ApricedBOQattachedtobiddocumentsdoesnotconstituteor
indicatescopeofwhatisrequiredtobedone.TheBOQisonlya
documentthatisindicativeandusedforcontrollingpaymentsand
variations.Pleasereadmyarticlecarefully.
Reply
CagdasEvrenBayrakonJune16,2011at12:19pm.
DearMr.Deen,
Withallduerespect,Iamalsooftheopinionthat,submission
ofBOQsduringtenderphasegivesTendererstheimpression
that(evenclearlyitspurposeisstated)theBOQis
contractual,anditishardtoexplainpeoplethat,theyare
supposedtodoeverythingwrittenintheircontractaslump
sumbutgetpaidonBOQitemsbasis.Ithas,anditwill,
misleadpeopletothinkthattheirresponsibilitiesarebound
withwhatisstatedintheBOQ.
Ithinkthat,inlumpsumcontractsthepayments/
remunerationshallnethroughaScheduleofPrices.Ifstilla
BOQisdesiredforvaluations,etc.,itmightberequested
aftertheTenderisawarded,i.e.fromtheContractor,notthe
Tenderers.IseriouslyhesitateonusingLumpSumContract
withBillofQuantitieseventhoughitswidelyused,
especiallyintheGulfregion.
Reply
Dr.HarisDeenonJune20,2011at12:23pm.
DearCagdas,
Thankyouforthecomments.However,please
remember,theproblemisnotwithusingtheLump
Sumcontractformbutwiththeconditionsattachedto
it.Alsohowthecontractitselfisinterpretedand
administered.Thereisnowaythatonecangenaralise
whatiscontainedinacontract.Wecanthoughstate
whatneedstobeincludedinacontracttodefinethe
scope.TothisextenttheBOQshouldnotbeusedto
definethescope.However,onceagainIstressthat
whatisstatedinthecontractwilloverrideanyother
considerations,andifthecontractstatesthattheBOQ
istobeconsideredacontractdocument,thenthatwill
bethecase.
Reply
LakshminarayananonAugust15,2011at2:41pm.
DearSir,Kindlyclarifythefollowingquery!.
Iaminvolvedinabespokecontractagreedaftertenderingprocess
initiatedbyClient.TheClientissuedbiddocumentswithtender
drawings,detailedscopeandBoQ.TheBoQcontainsseveralline
itemsandvariousplantsrelatedtoelectrical,civilandmechanical.
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SomeCivilworksitemsareindicatedasLumpsumitems,fore.g.
excavation,demolitionandcartaway,Ductbanks,Buildingwater
supplysystemetc.Inthetenderphase,thebuildingwastobe
constructedatcertainsurfacelevelandpostawarditwasdecided
thatinordertomeetwithlocalauthoritysrequirement,the
substationlevelhadtobeincreasedbyalmost1.5meters(up
wards).Duetothischange,Contractorincurredadditionalexpense
tobringinextrafillfromoutside.Whenaclaimwassubmitted
statingthataspertenderphaseestimation,no(less)fillmaterial
wasconsideredandduetochangeduringdetaileddesignthenew
costisnotforeseenandthereforemustbecompensated.Client
arguesthatinsucheventtoconsiderthisclaim,thenContractor
shallcalculatethereductionofexcavationquantity(pleasenote
thatbothbackfillaswellexcavationwasLumpsumitemasper
BoQ).Also,tenderdrawingsindicatedductbankson4locations,but
duringdetaileddesignphaseitwascommonlyagreedtomakethe
ductbanksin3locations.Now,ClientwantsContractortocalculate
thereductioninlengthandconsiderasvariedquantity.Kindly
advisewhatshouldbeContractorsactionnow?
Reply
AmrSalehonNovember4,2011at8:40am.
ThereareothertypesofcontractsthatIhaveencounteredwhere
thescheduleofpricesincludesseverallumpsumitems,for
exampleaContractforconstructingauniversitycampus,withL.S
itemforthelectureroomsbuilding,L.Sitemforthegymbuilding,
L.Sitemfortheadministrationbuilding,etc
Howcanwecategorizethiscontract,whatifthereisanerrorand
onebuildingismentionedtwiceinthescheduleoftheprices?
Reply
SyedSharfDesnavionNovember17,2011at11:52am.
DearSir,
Myprojectis6reservoirContractisEPCasperGeneralCondition
ofContractQatar.IntheBoQIncludedsomereservoirasoptional
itemnowclienthasdecidedtodeletetheoptionalitemfromBoQ.
MyQuestioniscanwededucttheprelimsamount.
Reply
Dr.HarisDeenonNovember17,2011at1:20pm.
DearSeyedSherif.
No.Youcannotdeductoradjustthepreliminaryitemsunlessthe
deletedworksactuallyreducesthecontractperiod.Thepreliminary
itemsarepricedovertheperiodofcontractandnotinrespectof
worktobeexecuted.
Reply
SyedSharfDesnavionFebruary25,2012at3:22pm.
ThanksDr.Deenforyourvaluableresponse.
JustIwanttogivefulldetailssameasmentionintheEPC
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contractforthisproject
Theprojectisprimarilycomposedofconstructionof7nonew
reservoirandoptionalitemofdemolitionoldreservoirsand
replacesthemwithnewreservoirincaserequiestedbyclient
1)Briefscopeofwork(optional)incaserequestedbyclient
demolitionandreplacebynewreservoirincludingallwork
2)NotesonpricingAllBOQitemincludingoptionalitemshall
beaccountedforinthetotaltenderoffer/priceappearsonthe
formtenderandtheGrandsummarypageoftheBOQ.
3)Timeforcompletion
a)Newreservoirandassociatedworkshallbecompleted
within20monthfromtheeffectivedateofcontract
b)Optionalreservoirandassociatedworkshallbecompleted
within22
Monthfromtheeffectivedateofcontract
Clientdecidetodeleteoptionalitemfromcontract.whatis
youradviceforbelowprimaryitems
Inthepreliminary
Contractadministrationcoststosuperintendence
administrationcoordination
Allcostsreportsdocumentationthroughtheconstruction
period
AsbuiltDocumentation
Laboratorytests
Regards,
syedsharfdesnavi
Reply
RenardBaudrillardonDecember13,2011at1:22pm.
Dr.Deen,
Iwouldappreciateyourclarifyingthefollowinginyourresponseto
Kasunon20February2011:
YoustatethatTheContractorcannotbeunjustlyenrichedforwork
thathehasnotexecuted.Theitemnotfullyexecutedcanbe
deletedbytheEngineerfromtheBOQandthecontractsum
adjustedaccordingly.
Iamassumingthatbyfullyexecutedyoumeanexecutedatall
andnotpartiallyexecutedgivenyoursubsequentcomments.Forif
theitemistobedeemedsuperfluous,itmustmeanthatitisnot
executableaqualitativequestionandnotpartiallyexecutable
aquantitativequestion.
ButthisiswhereIthinkmostofthedisagreementarisesinLS
contractadministrationintheMiddleEast.Atwhatpointdoesa
reductioninscope(amenabletoomissionbytheEngineer)endand
remeasurementbegin?
IfthereisanitemintheBOQ(thatisstipulatedtobeacontract
doc)forlaying20,000sq.mofinterlocktileandtheContractor
endsupexecuting10,000sq.mbecausesiteconditionsendup
differingfromdrawingsbaseduponwhichthetenderwasprepared,
isthisareductioninscope?SupposetheContractorexecutes
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19,000sq.mforthesamereason?
AsIseeit,theissueisanequitableoneistheContractorunjustly
enriched?Forthereisnohardandfastrule.
Inthefirstscenario,wherethequantitywashalved,Ibelievethe
generalsenseisthatpayingthecontractorforthefullquantity
wouldbeawindfallandthecontractormustraiseadefenseto
unjustenrichmentintheformyouprescribedarguingthatthe
valuewasshiftedfromanunquantifieditem.
Inthesecondscenario,wheretheactualquantitywas5%lessthan
theBOQquantity,anyomissionwouldbetantamountto
remeasurement,whichgenerallyspeakingisnotcontractually
permittedundertypicalLScontracts.
IfIamincorrect,thatisifinadjudicatingthesetypesof
disagreementssomecommonlawhasemergedwhatisthe
test?
IfIamcorrect,thatisifdeterminingwhetherwereconfrontedwith
avalidreductioninscopeversusaremeasurementturnsonthe
issueofunjustenrichment,thenIbelieveamorethorough
examinationofthislegalconceptmustbemorebroadly
disseminatedtotheMiddleEasternCAcommunity.
Reply
MunavvaronJanuary24,2012at5:47pm.
DearMr.HarisDeen,
Veryicetoreadyourarticle.Veryinteresting.Canyouclarify
something.Speciallythecaseisformiddleeast.Lumpsum
contract.Likeplastertoblockworkforreceivingwaterproofbehind
retainingwall.Ididnotpriceitduringtender,butIwasaskedto
sayitisincludedasitisarulethatnoitemcanbeexcluded,soI
didso.Nowthesiterequirementisplasterisnotrequiredand
waterproofcanbedonewithoutit.Nowdoestheengineerhavethe
righttodeductthepriceofplastertakingtherateofnormalplaster
fromtheBOQ.Thedrawingshowsthatplastershouldbedoneto
receivewaterproof.TheEngineersayssinceithasbeenshownin
drawingbutnotdoneatsitesinceitwasnotrequireditshallbe
deducted.IwouldagreeifIhadpriceditbutithasnotbeenpriced
andIstateditsincludedinmyprice.Whatisyouropinion.
Thanks
Reply
DarrenCainonFebruary23,2012at11:36am.
Thanksforyourarticle.Veryinformative.Whataboutthesituation
wherealumpsum(bespoke)Contractcontainsahandwritten
notationthattheBOQisguaranteedandformspartofthe
Subcontract?
Doyouconsidertheconstructionofsuchastatementtomeanthat
attheendoftheProjectthecontractpricewillbeadjusted(upor
down)followingareameasureoftheasbuiltProject?
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Manythanks
Darren(fromAustralia)
Reply
Dr.HarisDeenonFebruary27,2012at9:36pm.
DearDarren,
ThankyouverymuchvisitingmyblogallthewayfromAustralia.
Onyourquestions,pleasealsokeeptrackoftheQ&Asection
becausethereareauthoritativeanswerstherein.
Nowcomingtoyourspecificquestionregardingthestatementthat
theBOQisguaranteedandformspartoftheSubcontractisvery
interesting.IbelievethatthisadocumentproducedbytheMain
Contractorforthesubcontractorstoprice.Theideaofproviding
suchaqualificationistoensurethattenderingsubcontractorsall
priceatthesamelevelandthesamedocumentandtherefore
comparisoniseasy.However,bydoingsowhattheMain
Contractorisinfactsayingisthatheiswarrantingthe
quantitiescontainedintheBOQasaccurate,anyinaccuracy
thereforewillamounttomisrepresentation(Wood,R.D
ClaimsunderGCWorks1).
ThepositionoftheBOQinaLumpSumContractisthesameinsofar
asthescopeisconcerned.Thequantitiesarenottoberemeasured
andtheSubcontractor(inyourcase)willhavetobepaidforallthe
worksdescribedthereinaslongashehasexecutedthem(of
coursesubjecttoadjustmentofprovisionalsums,provisional
items,primecostsumsandcontingencies)
Ifthequantitieswarrantedaregrosslyincorrectthenthe
Subcontractorwillhaveaclaimformisrepresentationunderthe
commonlawofAustralia.
Itisthereforeclearthat,irrespectiveofwhatthe
qualificationsare,noremeasurementiswarrantedinalump
sumcontractwherethereisnochangeinthescope.
Havingstatedtheabove,Iwouldhastentoaddthatwhatisstated
intheContractreadasawholewilloverrideanyother
considerations.
Reply
GusonMarch7,2012at4:41pm.
Thankyouforyourarticleandinformation:
IalwaysworkedwithFIDICremeasuredcontractsandrecently
cameacrossalumpsumone.ForEarthwork:TheBoQcallsfor
excavationuptoacertaindepthbuttheactualexcavationdepth
camethreetimestheBoQdepthandthecorrespondingquantity.
Thiswillalsoaffectthebackfillquantity,basementwalls,
waterproofing,etc
Howcanweclaimtheadditionalquantities?
thanks
Reply
Dr.HarisDeenonMarch8,2012at9:34am.
Theresponsetothisquestiondependsonwhatthecontractstates.
IstheBOQacontractdocument?Ifso,doesthecontractstatethat
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thequantitiesstatedthereinaretobetakenasaccuratequantities?
InaLumpSumContractthequantitiesarenottoberemeasured
whatevercircumstance.ThisisaContractorsrisk.Howeverifthe
EmployerwarrantsthatthequantitiesintheBOQaretobetakem
asaccuratequantities,thenthecontractorwillhaveaclaimfor
grossundermeasurementsasabreachofwarranty.
Reply
DalienonMarch26,2012at6:49pm.
Dearall,
Thanksforalltheabovevaluableexchangeofideasand
explanations.
However,myquestionisrelatingaparticularcasewhichIcouldnot
findintheabovemessages.
AnEPCMlumpsumcontractsignedonthebasisofalltherisksare
transferredontocontractorside.Thecontractoralsoisrequiredto
complywithallownerspecificationsandrequestapprovalforany
deviation.
Thecontractoractuallysufferinganextracostduetoincreaseof
quantitiesofsteelstructureandcivilworks.
Thereisnocontractualmechanismthroughthecontract,
(apparently)thatwouldallowcontractortorecoverhislosses.
Thequestion
is,canthecontractorbyanymeanrecoverhislosses?
Thanks
Dalien
Reply
DearDalien,
Inthefirstplacewithoutreadingallthedocumentsformingpartof
thecontract,Icannotgiveyouanauthoritativeresponse.
However,ifasyoustate,theContractorenteredintoacontract
acceptingalltherisks,thenitcanbefairlyassumedthathe(the
Contractor)pricedalltherisksassociatedwithwhateverisrequired
toexecutethecontractedscope.Afteracceptingtheconditionsand
signingthecontractfreely,hecannotnowcomplainthatheis
incurringlosses.Thatistehnameofthegame.
However,iftheadditionalworkswhicharenotpartofthe
contractedworkareinstructed,theContractorwillhaveaclaimfor
theseadditionalscopeworksandcanbesuccessfulinhisclaim.
Reply
DalienonMarch27,2012at10:47am.
DearDr.HarisDeen,
Thankyouforyourquickresponse.
IwishIcouldgiveyoumoredetailsbutthiswilltaketimeandthe
subjectisveryurgentandhot.
However,isitpossibletohaveyouropiniononthefactthat,these
increasedquantitiesareactuallyrepresentingmorethan35%of
contractorbidones?Ofcoursecontractorhadahugemistake
duringbidding,butsincethismistakeisconsideredas(huge),what
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considerationitcanbegiventoit?Moreover,ifcontractorpretends
thatclientwasdeeplyinvolvedduringbiddingperiodinthedetailed
bidclarifications,thenhecouldnoticeprobablythecontractor
mistake,butbysayingnothing,doesthatgiveavalidcreditto
contractorforclaimingadjustmentofcontractprice?
Thanksagain
Reply
StevenonMarch30,2012at6:46am.
DrDeen
Ihavetwoquestions:
1)Isthereanypracticalorsubstantivedifferencebetweena
contractexpressedasalumpsummeasureandvaluecontractto
ascheduleofratescontractwherebothcontractscontainwhatis
oftenthecasecalledaScheduleofRatesBillofQuantities.
Doesitdependonwhetherthequantitieshavebeenprovidedbythe
clientorthetakeoffsarethecontractorsown?
2)Iamreviewingacivilcontractwhichprovdesthattheprincipal
doesnotgiveanyrepresentationorwarrantyconcerningthe
completenesofthescheduleofratesortheaccuracyofthe
estimatedquantitiesshowninthescheduleofrates.Howevera
limitofaccuracydoesapplytothecontractrates.Itisalumpsum
andSoRcontract,buttheonlylumpsumcomponentwillbefixed
preliminariesandallothercostswillbeprovidedasratesinaBoQ.
ThePrincipalhassuppliedthequantities.DoIneedtomakeitclear
thatthisisaSoRcontractasopposedotalumpsum?Orasper
above,canIcallitalumpsummeasureandvalue?Ifalumpsum
m&vdoesthismeanthatthecontractortakesrisksonitems
notwithstandingthatalimitofaccruacywillapplyonallrates?DoI
needtomakeitclearthatthequanitiesarePrincipalsuppliedand
theBoQformspartofthecontract?
Ihopethisisnttooconfusing.
Thankyou
Steven(Australia)
Reply
Dr.HarisDeenonApril4,2012at10:15am.
ThankyouStevenforcontactingallthewayfromDownUnder.
1.MyunderstandingofaLumpSumcontractofwhatevernature
isthatfortheLumpSumstatedinthecontractthecontractoris
requiredtocompletetheworksprovidingwhateverisindispensably
requiredforitsconstruction(Ref:WilliamsvFitzmaurice).However
aLumpSummeasureandvaluecanonlymeanmeasuringthe
executedworksforinterimpayments.Anyinterpretationotherwise
wouldmeanintroducingaremeasureelementtoaLumpSum
contract.Ascheduleofratesisaveryusefulinstrumentinthe
evaluationofvariationsandifincludedshouldbeusedonlyforthat
purpose.OfcoursehavingsaidthisImustclarifythatwhat
isstatedintheconditionsorparticularconditionsofthe
contractwilloverrideanyotherconsiderations.
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2.ThesecondquestionrelatestoaLumpSumScheduleofRates
Contract.ThiscanonlymeanthattheLumpSumcontractpriceis
somewhatfixedasanupperlimit,somethinglikeaGuranteed
Maximum,althoughnotthesamedependingonwhatthecontract
says.Thequantitiesarenotwarranteedtobeaccuratebut
estimatedquantitiestoberemeasured.Theonlylumpsumpartas
youmentionisthePreliminariesBOQ.Thisisperfectlyinorder,but
mustbeclearlydefinedinthecontractconditionsastohow
thisshouldbeadministered.
Thecontractorsriskisonlyinrelationtothelumpsumportions
andnottotheremeasuredportions.Againwhatisstatedinthe
conditionsorparticularconditionsofthecontractwill
overrideanyotherconsiderations.
Reply
NaveenonApril4,2012at11:15am.
DrDeen
IamworkingintheMiddleEastPublicSectorasaQ.S.Thecontract
IamreferringtoisaJCTLumsumcontractwithoutquantities.The
TendererwasgiventheScheduleofItemforthecontractorucan
sayablankBillofQuantitiesandthespecifications.TheTendereris
supposedtocalculatequantitiesfromthedrawingsandinserthis
rateasperthespecifications.
DuringTenderevaluation,itisfoundthatthelowestTendererhas
calculatedquantitiesonthelowersideascomparedtoother
Tenderers&alsoascomparedtothequantitiescalculatedbyusfor
Budgetestimate.
TheTendererwasofferedaopportunitytoexplainthedeviationin
quantitiesbuthasfailedtojustfythesame.
ShouldhedisqualifiedwhichIfirmlybelieveorshouldhisbidbe
acceptedsincethecontractisaspertheLumpsumcontract&is
basedonDrawingsandspecifications?
Reply
Dr.HarisDeenonSeptember26,2012at9:32am.
DearNaveen,
Thankyouforyourquery.TheprocedurestatedintheJCTfor
correctionofarithmeticalerrorsinatenderistheuniversally
acceptedprinciple.
Ineverytender,whetherundertheJCT,FIDICoranyother
ConditionofContract,thebasicprincipleisthatwhatisstatedin
theFormofTender(FOT)isthetendersum,howevercomputedor
calculated.Ifthissumisdifferentwhenanyarithmeticcheckis
madeontheBOQorothercomputation,anderrorsnoted,whether
sucherrorsmakeadifferenceinthebottomlinetotal,thatis
carriedtotheFOTornot,theerrormustbeintimatedtothe
tendererandhemustbeaskedwhetherheispreparedtostandby
histenderorwithdrawsame.
FIDICdoesnotindicateanymethodologyfordealingwith
arithmeticerrorsinthismanner,becauseFIDICisintendedfor
internationaluseandtheprinciplesinvolvedwilldependedonthe
cultureandpoliciesofthecountryorclientoptingtouseFIDIC.For
example,inmostcountriesoftheMiddleEast,wherethearithmetic
checkrevealsalesseramountinthebottomlinetotalthanthat
statedintheFOT,thenthetendererisaskedtoreducehisbidto
thatamount.Ontheotherhandifthebottomlinefigureishigher
thatwhatisstatedintheFOT,thetendererisaskedtoacceptthe
FOTsumwithcorrectionstotheBOQ.
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Youwillthereforeseethatthereisnohardandfastrule.Iwould
however,supporttheJCTmethodology.
Reply
GusonApril5,2012at1:10pm.
DearDr.Deen:
IworkforaGeneralContractorandrecentlyIsubmittedavalue
Engineeringproposaltoreplaceconcreteretainingwalls(stone
claddedfinish)withEarthretainingsystem(geogridwallswhere
stonecladdingisnotrequired).OurcontractFIDIC87,statesthat
savingsaresplit50/50betweenEmployerandcontractor.Whenthe
numberswereworkedoutfortheproposal,stonecalddingwasnot
included.AftertheapprovalwasgrantedfromtheEmployer
throughavariationorder,wetriedtoclaimthesavingonthestone
cladding.TheEngineer(whoalsomissedthestonecladdingwhile
reviewingourproposal)isrefusingstatingthatstonecladdingisnot
includedinthevalueengineeringstructuralsystemandthus
unwillingtosharethesavingwithus.Pleaseprovidesome
feedbacklonwhetherornotstonecladdingsavingshallbeshared
50/50.
Thankyou.
Reply
GaryJonesonApril11,2012at10:03am.
DearSir,onealumpsumcontractisinplace,howwouldyou
expecttherelationshiptobebetweenbothpartiesi.e.ownerand
contractor.Forexampleshouldtheowneractivelytryandwork
withthecontractortoensurethatthecontactpriceisdoable,since
weoftenseetheownertryingtocontrolthecontractorsuchthatit
almostendsuplikeareimbursableconditionwithalumpsum
contract.BasicallywhatIamtryingtosayishowmuchshouldwe
allowtheownertogetinvolvedwiththeactualworksduringEPC?
Reply
DearGary,
Whateverthenatureoftheprocurementstrategyis,whetherlump
sumorremeasuredorsomethingelse,projectmanagersalways
liketoworkasateamwitheverybodyinvolvinginproject
executiontowardsacommongoal.
HoweverfromyourquestionamItounderstandthattheEmployer
isinterferingtothedetrimentoftheproject?Inanyevent,thereis
nowaythattheContractorcanpreventtheEmployersinvolvement
tooverseeorensurethathisrequirementsaremet.Ifsuch
involvementcausesvariationaorcausestheContractortoincur
coststhatwerenotforeseenthentheEmployermustpaythe
Contractorthesecosts.
WhentheContractorsubmitshistender,itishisresponsibilityto
ensurethattheContractPriceisdoable.Similarly,iftheContract
PricewassolowthatwouldcauseproblemsfortheContractorand
knowingthisfullwell,theEmployerhasawardedtheContract,then
theEmployermustsuffertheconsequencesasmuchasthe
Contractor.ThereisnosuchresponsibilityontheEmployerto
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supportaContractorwhosubmitsalowtender.
TheContractorcannotpreventtheOwnersinvolvementtoany
degree.
Reply
DineshSubasingheonApril18,2012at10:49am.
DearSir,
1.IfthecontractisLumpSumallthevariationscanbere
measured?,whichareapartfromtheprovsionalsumandoptional
items.
2.InthesamelumpsumprojectConsultantusedtorevisedthe
contractsumwhenissuingthevariationorder,hencestillisitvalid
toremeasure?
Kindlyhelpmeonthis.
Thanks
Dinesh
Reply
Dr.HarisDeenonApril23,2012at12:09pm.
DearDinesh,
Yes,variationsirrespectiveofthenatureofthecontractlump
sumorremeasured,usuallyaretreatedasremeasuredunlessthe
EngineerandtheContractoragreealumpsumpricepriorto
executionofthevariation.
IfyouarereferringtotheQatarGeneralConditions,thenClause51
givestherighttotheEngineertoissueinstructionsthatwillvary
theContractPricewithoutvitiatingorinvalidatingtheContract.
Therefore,thepracticeofindicatingachangeinthecontractprice
inaVOisusuallyacceptableandgoodpractice.
Reply
Dr.HarisDeenonJune19,2012at1:06pm.
DearDinesh,
YesVariationsirrespectiveofthenatureofthecontractlumpsum
orremeasured,usuallyistreatedasremeasuredunlessthe
EngineerandtheContractoragreealumpsumpricepriorto
executionofthevariation.
IfyouarereferingtotheQatarGeneralConditions,thenClause51
givestherighttotheEngineertoissueinstructionsthatwillvary
theContractPricewithoutvitiatingorinvalidatingtheContract.
Therefoe,thepracticeofindicatingachangeinthecontractpricein
aVOisusuallyacceptableandgoodpractice.
Reply
NaveenonApril23,2012at12:52pm.
DearDrDeen
IhaveobservedthatcorrectionofarithmeticalerrorsofTender
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bidsduringTenderEvaluationaredealtwithdifferentlyinLumpsum
JCT&FIDICBuildingcontracts.
ThecontractIamreferringtoisthecontractwithoutquantities
whereinthedrawingsandspecificationsformthebasisofthe
contractandtheTendererisgivenaBlankBillofQuantitywith
scheduleofitemsandratesandquantitytobefilledin.
InFIDICtheSORarearithmeticallycheckedandifanyerrorsin
SORtheFormofTendersumiscorrectedandtheTendererhasto
abidebythenewFormofTendersum.IftheTendererdoesnot
agreetocorrecttheerrorsthebidisdisqualified.
ButinJCTasperSeries2,PracticeNote6,thebidsubmittedbythe
lowestTenderershallbeopenedandcheckedarithmetically.There
aretwoalternativestodealwitharithmeticalerrors.
Firstoptionisthatthearithmeticalerrorsshouldbepointedoutto
thelowestTendererandhehasoptiontostandbytheoriginalForm
ofTendersumorelsewithdraw.Thatisnocorrectioninpriceis
permitted.IftheTendererelectstostandbyhistenderthenthe
totalamountoferrorisexpressedaspercentageofthecorrect
totaloftheBOQ.
Inthe2ndoption,correctionofTenderpriceispermitted.Inboth
casesopportunityisgiventothelowestTenderertostandbyhis
originalFormofTendersumbutthisisnotthecaseinFIDIC
whereinnoopportunityisgiventothelowestTenderertostandby
hisoriginalTenderbidpricei.eFormofTendersum.
Howisitthattherearetwosodivergentwaysofdealingwith
arithmeticalerrorsinbuildingcontracts?Whichdoufeelisthe
correctwaytogoaboutdealingwitharithmeticalerrorsinTender
bidsforLumpsumbuildingcontractsbasedondrawingsand
specifications?IsitcorrecttoaltertheFormofTendersumfor
arithmeticalerrorsinLumpsumBuildingJCTcontractswithout
quantities?
Reply
GusonApril24,2012at12:17pm.
DearDr.Deen:
IworkforaGeneralContractorandrecentlyIsubmittedavalue
Engineeringproposaltoreplaceconcreteretainingwalls(stone
claddedfinish)withEarthretainingsystem(geogridwallswhere
stonecladdingisnotrequired).OurcontractFIDIC87,statesthat
savingsaresplit50/50betweenEmployerandcontractor.Whenthe
numberswereworkedoutfortheproposal,stonecalddingwasnot
included.AftertheapprovalwasgrantedfromtheEmployer
throughavariationorder,wetriedtoclaimthesavingonthestone
cladding.TheEngineer(whoalsomissedthestonecladdingwhile
reviewingourproposal)isrefusingstatingthatstonecladdingisnot
includedinthevalueengineeringstructuralsystemandthus
unwillingtosharethesavingwithus.Pleaseprovidesome
feedbacklonwhetherornotstonecladdingsavingshallbeshared
50/50.
Thankyou.
Reply
DearGhassan,
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Thankyouforyourquery.IbelievethatIhavealreadyresponded
tothisquery.However,anyVEproposalunderFIDICshouldtake
intoaccountallthatisremovedordeletedinreplacementofthe
alternativework.Inyourcasethestonecladdingwaspartofthe
workspricedfor.Therefore,irrespectiveofwhetheryouandthe
consultant,inadvertentlyfailedtotakeintoaccountthestone
claddingduringtheVEassessment,doesnotmatter.Incalculating
thefinalanalysiseverythingthatconstitutesthedeletedwork
shouldbetakenintoaccountandsimilarlyeverythingthat
constitutesthereplacementworksmustalsobetakenintoaccount.
Youshouldasktheconsultant,iftheintentionwasthedeletiononly
ofthesaidworks,thenwouldhehavenottakenthestonecladding
intoaccounttomakethesaving?
Reply
MuhammadonApril24,2012at1:54pm.
DearDr.Deen,
Niceandinterestingtoreadyourarticle.Iamnewintoproject
management.Ihaveaquerywhichislittlebitdifferentand
awkward.
Inoneofmyprojects(whichisLumpsumContract),Ihavechanged
theoriginalstructuralsteeltoPreengineeredBuildingwiththe
consentoftheClient.Attheendoftheday,thequantityofsteelas
perthereviseddesignwas40%lowerthanwhatwasintheoriginal
design.
Theclientdemandsforanegativevariatontobedeductedfromthe
otherpositivevairations.Istheclientright?OrIameligibleforthe
quantitiesasperoriginaldesign.
Reply
DearMuhammad,
IamflatteredthatProjectManagersalsovisitmyblog.Keepdoing
so,becauseverysoonIwillbewritingonProjectManagementas
well.
ComingtoyourquestionyouhavenotstatedtheFormofContract
uponwhichyourcontractwasawarded.Howevermyresponseisas
follows:
1.Irrespectiveoftheformofcontract,whatyouhavesuggestedis
achangeinthescopeandinalumpsumcontractachangeinscope
willbetreatedasavariation.Thenetresult(additionordeletion)
canbedecidedonremeasurebasis(asthisisascopechange)or
asalumpsumadjustment.Sincetheproposaltochangethescope
camefromyouascontractor,thentheEmployerhastherightto
askforareductionasinyourcase,orifthechangeitselfresultsin
anincrease,theEmployercanrefusetopaytheincrease,
dependingonwhatyouascontractoragreewiththeEmployer.On
theotherhandifthescopechangewasinstructedbytheEngineer
andresultsinanadditionorreductionbeyondthepermitted20%in
aggregateunderQatariLaw26,thenyouascontractorwillbe
entitledfornewratesontheworkwhichexceedsbeyond20%.That
means,iftheaggregatevalueofthevariedworks,sayworksoutto
50%ofthecontractsum,thenupto20%ofthisvaluetheEngineer
willapplythecontractrates.Thenext30%willhavetobeagreed
withthecontractor.
2.IftheFormofContractusedistheFIDICRedBook,itcouldhave
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beenpossibleforyoutohaveofferedthisasavalueengineering
proposal.Inwhichcaseifapprovedyouwouldhavebeenableto
sharethesavingsat50%toeachparty.Thatwouldbeonlyafter
deductingyourdesignandothercosts.
Reply
MusaAALNATOORonMay15,2012at5:47pm.
DearDrHarisDeen,
IhopeyouremembermeasoneofyourstudentsinClaims
SeminarinQatarlastApril,Iwillappreciateifyouadviseme
aboutthefollowingcase:
IamacontractorwithLScontract,BOQisnotmentionedasa
contractdocument,butthereisaBOQsignedandstampedbythe
twoparties(againitisnotmentionedanywherethatitisacontract
document)Iamnewtothecompanynowtheclientisaskingto
changesomeitemslikeAluminiumworkstouPVC,theywanttobuy
materialsthemselvesandletmefix,inadditionhedelayeddecision
inmanysubmittals(delaydocumented).Canyouhelpmeindealing
withthis?
Reply
DearMusaAAlnatoor
TheBQifincluded,whetherstatedaspartofthecontractornot,
shouldneverthelessbeacceptedasacontractdocumentfor
referenceasbothpartieshavestampedandacceptedtheBQas
suchbysigningandstampingthedocument.However,theBQ
shouldnotbeusedtodecidethescopeofworktobeexecuted
because,asyousaythatitisnotmentionedasformingpartofthe
contract.
Itisusual(andacceptedpractice)intheconstructionindustryto
usetheBQ(ifprovided)forpricingvariations.Itisperfectlyin
orderfortheclienttovarythematerialsfordifferentorinyour
casecheapermaterialstoeffectsavings.However,byprocuring
theuPVCmaterialshimselftheclienthasdeniedthecontractor
(yourselves)fromanytradediscountorprofitsthatyoumighthave
madefromtheprocurementofthematerials.Therefore,inmy
opinion,youareentitlestoreceiveprofitsonthecostofthe
materials.IamafraidthatIcannothelpyouanyfurtheronthis
matterwithoutknowingallthefactsbyinvestigatingallthe
documentswithinthecontract.
Reply
MouradKRICHENonJune5,2012at3:16pm.
DearDr.Deen,
Ihadreallyappreciatedthehotdebatethatyouhadinitiated
concerningthevariationsinLumpSumContracts.
Ihadalsonoticedthatonseveraloccasions,youhadinsistedupon
theprinciplethatALLDEPENDSONWHATITISSTIPULATEDINTHE
CONTRACTCONCLUDEDBETWEENPARTIES.
Actually,Idonotfullyagreewithyouatthisrespect.Partiesmay
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concludeonanagreementandsignithowever,courtsmaynot
considersomeofitstermsand/orconditionsalthoughpartieshad
previouslyacceptedthem.Inotherwords,Iwanttosaythata
Contractdoesnotmakethelaw(norjustice).AnEmployercannot,
fromonehand,offertohisContractoranagreementonalumpsum
basis,thenfromtheotherhandheentitleshimselfinthesame
agreementtoreviewup/downthelumpsumamountsubjecttothe
variationsthathemayorderduringtheperformanceofthe
Contract.ThisisunquestionablyanUNFAIRDEAL,andcourtsmay
decideunexpectedawardsatthisrespect.Surely,theissueismore
critical(fromtheContractorsside)whenitcomestovariations
reducingtheamountoftheLumpSumhowever,wemustkeepin
mindthatevenforthecaseofvariationsresultinginaincreasein
thelumpsumamount,notallContractorsaremotivatedtoperform
them(oneofthereasonsisrelatedtotheirverybusyworkload
plan).
Iwouldhighlyrecommendthatallpartiestoanagreementmust
givehighconsiderationtothewaytheydraftthatagreementin
suchamannertomakeitbasedonaclearFAIRoffertoallof
them.
Inconclusion,IwanttosatthatEmployersbeingtoosmartinthe
waytheydrafttheiragreementsmaynotalwaysworkoutasthey
wouldhavewished.
MouradKRICHEN
Contracts&ProcurementEngineer
Reply
DearMourad,
ThankyouforyourcommentsonmyarticlesontheLumpSum
contractprincipleanddocumentation.Youdonothoweversupport
youropinionwithauthority.Youareadvisedtoreadmyarticleson
thelaissezfairedoctrineintheformationofcontracts.
ThisdoctrinehasbeensuccinctlyexplainedbytheBritishJudgeSir
GeorgeJesselMRinthecaseofPrintingandNumericalRegistering
vSimpson(1875)LR19Eq462thus:
Ifthereisonethingwhichmorethananotherpublicpolicy
requiresitisthatmenoffullageandcompetent
understandingshallhavetheutmostlibertyofcontracting,
andthattheircontractsenteredintofreelyandvoluntarily
shallbeheldsacredandshallbeenforcedbyCourtsof
Justice
FurthermoreLordPearsoninTrolloppe&CollsLtdvNorthWest
MetropolitanRegionalHospitalBoard[1973]stated:
Thebasicprincipleisthatthecourtdoesnotmakea
contractfortheparties.Thecourtwillnotevenimprovethe
contractwhichthepartieshavemadeforthemselves,
howeverdesirabletheimprovementsmightbe.
Thereforeyoucanseethatalldocumentsformingpartofthe
contractwillbeenforcedbythecourts,unlessthecontracthas
beenenteredintounderduress.
Reply
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RobertHDrouinonJuly7,2012at8:20pm.
DearDr.Deen,
Thankyoufortheveryinterestingandhelpfulblog!
AsIdiscoveredyoursitewhilesearchingadvisesanddefinitions,I
wouldlikeyouropiniononacontractualandlegalmatter:
WehaveaLumpSumconstructioncontractwerewemustindicate
ourmanpower,amongstotherquantitiesinformationanditemised
details,whichwedid,throughtheoverallestimatedmanhoursand
histogramsbytrade.Thereisnowherementionofmanhoursin
thewholedocument,butonlymanpower.
Inthedefinitionofterms,neithermanhournormanpowerare
shown.
AlthoughtheClientsaidthisisnotnecessaryinhiscontrol
system,heisrequiringthatweproduceourmanhoursperitemof
theconstructionscopeofwork.AsweareonaLumpSum,wefear
thattheClientmaycomebackduringtheprojecttotryand
compensatesomechangeorderswithhoursthatwehavegainedin
productiveitems(incaseofsubstancialclaimandiftheoverall
productivitywasgood,ithappenedthatthejusticewouldonly
compensatefortheactualdifferencebetweenthebiddedhoursand
actualhoursspent,whichwouldgeneratealargelossforthe
contractor).
Whataretherisksandnegativeimpactthatmayoccurifwe
presentourdetailedmanhoursperitem?
Couldyoupleasegivemeyouropiniononthematter?
Thankingyouinanticipationandbestregards,
RobertDrouin,
P.Eng,MBA
Reply
DearRobert,
Sorryforthedelayinresponding.Firstly,Iwasresearchingforany
casestosupportmyresponse,butIcouldnotfindanyspecific
ones.However,followingtherulingsinSanPaoloandWilliamsv
Fitzmaurice,anylumpsumcontractisexecutedonthebasisthat
thecontractorhastoexecuteallthatindispensablyrequiredto
completeaknownscopeofworks.Extendingthisprincipleitis
reasonabletosuggestthathowthecontractorhaspricedthebidin
alumpsumcontractisamatterforthebidderandshouldnotaffect
thepaymentterms.Havingsaidthis,Imustclarifythatproject
managersoftenrequirethebreakdownoftheratesinthemanner
youhavestated.Thisispurelyforthepurposeofevaluating
variationsandshouldnotbeusedforvaluingtheutilisationof
resourcesinexecutionoftheWorks.ThisisthebestIcando
withoutaccesstoallthedocumentsformingpartofthecontract.
Reply
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MichaelonSeptember11,2012at7:34pm.
DrDeen,
Ihavereadyourarticleandthecommentswithinterest.
IhaveaqueryhoweverregardingJCTintermediateBuilding
Contract2005.
Wehavearefurbishmentprojectwheretheclienthasprovided
drawings,specificationandascheduleofworkswithdescriptions
andprovisionalquantitiesfornearlyalltheitemsontheproject.
Thesequantitieshavetheninmanycasesbeendrasticallyreduced
(upto80%)asalotoftheworkswerenotrequired.TheclientsQS
isvaluingtheitemsonaproratabasisleavinguswithamassive
underrecovery.
Therearenodetailedbillsandsomeitemsdonothavequantitiesat
all.
Shouldthecontractbeconsideredlumpsuminsuchcircumstances
andistheclientallowedtodeductthevalueoftheextensiveworks
thatwerenotrequiredinsuchamanner.
Whatisyourview
Regards
Michael
Reply
KhristineonNovember14,2012at4:01pm.
Goodday!
Iwouldliketoaskregardingthemanpowerissue.
Weadvisethecontractortoexecutesomeadditionaljobsthenthey
willclaimitthroughtimesheetbasis.WhenIreceivedtheir
variationorder,theyhaveincludedintheirclaimtheProject
Manager.Myquestionis,aretheyallowedtoclaimfortheProject
Manager?TheseadditionaljobisnotpartoftheLumpSum
Contract.Thisismyfirsttimetoencounteravariationincludingthe
ProjectManager.
Thanks.
Rgds,
tine
Reply
NasirSaleemonMarch5,2013at10:05am.
InourLumpSumContractitismentionedthatthehaulagedistance
fordumpingtheexcavatedmaterialfromtheConstructionSiteto
theDumpSite(tip)(tobeprovidedbytheClient)is45km.
TheClienthoweverprovidedaDumpSitewhichisabout22kmfrom
theConstructionSiteandheisclaimingsavings(reductionto
Contractprice)basedonthis.IstheClientsrequestforsavingsin
thisinstancevalidconsideringthatthisisaLumpSumContract?
Reply
DearNasirSaleem,
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InaLumpSumcontracttherisksaresharedbybothsidesandas
suchifthehaulagedistancewasmorethanwhatisstatedinthe
contracttheEngineerwillusetheargumentthatthiswasalump
sumcontractandnoextrachargewillbeconsidered.Usingthe
samelogicandargument,theEngineercannotdeductanythingfor
thereductioninthehaulagedistance.
Dr.HarisDeen
Reply
IhabKhairyonMarch6,2013at12:26pm.
Dearsir,
IamEng.Ihabkhairy,13yearsQSexperience,andihaveone
question:
Ifthecontractorarereceivedasiteworkinstructionforadditional
works,andtheprojectisLumpsumproject,sotheadditonal
quantityshouldbemeasuredfromtheshopdrawings,butiam
askingabouttheomissionquantities,thecontractorshouldbe
measureditfromtenderdrawings?oromittheBOQquantitiesfor
sameitem?pleaseclarify
Reply
DearIhabKhairy,
Theitemtobedeductedisnotremeasured,Itiscompletely
deductedfromtheContractaccordingtotheBOQBecauseyoudo
notmeasurelumpsumitems.Howeverfortheadditionssincethe
scopeisdifferentyoumustmeasuretheworktobeexecutedfrom
theIFCdrawingsandpricetheitemaccordingly.Thequantitymay
beequalto,lessthanormorethanwhatwasdeleted.Itdoesnot
matter.
Dr.HarisDeen
Reply
ZeidonMarch25,2013at11:12pm.
DearDr.Deen,
Ihaveaquestionregardingvariationsinlumpsumcontract.
FirsttheconsultantisfollowingtheBOQ,Drawings&specs.for
everysingleitem.
wegotavariationwithasimilaritemsthatexistsintheBOQ,are
weentitledtoquotethesameunitratesforthenewvariation
knowingthatthetenderingstagedonebeforesixmonths.
ThankYou&Regards,
Zeid
Reply
DearZeid,
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10/2/2015
Togiveyouaproperanswer,IneedtoknowtheConditionsof
Contractuponwhichyourqueryisbasedandthecountryinorderto
connectitwiththelaw,
Generallyallconditionsofcontractstipulatethatvariationsof
similarnaturetowhatisprovidedintheBOQasanitenwillbe
pricedattherateorpriceintheBOQorScheduleofPrices.The
factthatitisalumpsumcontractdoesnotmatteraswhatisstated
intheconditionsofcontractwilloverrideanyotherconsideration.
Dr.HarisDeen
Reply
MountasseronApril16,2013at11:25am.
Suchcontractthecontractorsobligationisdefinedinwideterms.
Hisobligationistocompletethewholeoftheworks.Theworks
havenotbeendescribedingreatdetailedaswouldbeinabillof
quantities.Theshorterandsimplerthedescriptionoftheworkto
becarriedout,themoredifficultitwillbeforthecontractorto
contendthatworkisextra(Uff,2009).Theadditionalworkforthe
foundationswillnotentitlethecontractortoanextensionoftime
becauseitispartofthewidelydefinedscopeofworksand
thereforeincludedintheoriginaltimeforcompletion.Such
necessaryworksarenotextras,fortheyareimpliedlyincludedin
thelumpsum(FurstandRamsey,2006).Thisisclearly
demonstratedinSharpevSanPauloRailwayCompanywherethe
contractorhadagreedtobuildarailwaybetweenfixedterminifora
lumpsum.Includedinthelumpsumwasexcavationofjustover
twomillioncubicyardswhichwascalculatedbytheengineer.It
turnedoutthatactualvolumeofexcavationwasinfactjustover
fourmillioncubicyards.Thecontractorsclaimedtheywereentitled
toagreatdealmoreduetotheunderstatedengineers
specification.Howeverthecourtofappealheldthatthecontractors
couldnotclaimfortheadditionalexcavation.AsperSirW.M.
James,L.J.:
Inthiscasethecontractorsundertooktomaketherailway,notto
docertainworksbuttheyundertooktocompletethewholeline,
witheverythingthatwasrequisiteforthepurposeofcompletion,
fromthebeginningtotheendandtheyundertooktodoitfora
lumpsum
Thatistheriskthatthecontractortakesonawidelydefinedscope
ofworkandhemustjudgeforhimselfandbesatisfiedthathehas
allowedforallthatwouldbenecessarytocompletetheworks.
Thisisquotedarticlefromotheressaybutuseful,
greatjob
thanxD.Haris
Mountasser
Reply
ArchanaMayadunneonMay12,2013at4:53pm.
Imhavingthisissueinpricingthistenderforadesign&build
contract.AsthecontractBOQcannotbechanged,whenatender
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drawingrevised,whatwillbetheprocessonincludingthoseinBOQ
forpricing?
AndwhatifipricethegivenBOQfromClientwithoutaltering
anythinginBOQandpriceproperlymyalternativeoffer?imlittle
confusedhere.Kindlyrequestanyonetohelpmeout.
IminQatar&66538470ismymobilenumber.Irequestearly
adviceasihavetosubmitthetenderwithinanothertwoweeks.
Thanks&Regards,
Mayadunne
Reply
ReyonMay19,2013at12:44pm.
SirHarris,
IhaveaquestionpertainingtoArt.16ofLawNo.8of1986
amendedbyLawNo.26of2005restrictstherightoftheengineer
toincreaseordecreasetheworksbymorethan20%ofthe
contractsum.
Myquestionsare?
WehaveaprojecthereinQatarusingQatarGCOCLumpsum
contract.noninthecontractmentionedthatinexceeding20%of
variationcontractorhasthemandatoryrighttomakehisownBOQ
(meaningdeletedtheexistingBOQandprepareaccordingtohis
rate,e.gductworkswasquotedas1lotsincethereisan
additionalfloorrequiredbyclienttheyreplacedthe1lottom2)i
toldthemtouseorpricedtheductworkwiththesameunit1lot.
Isitamandatorylawthe20%limitforvariationevenitisnot
mentionedinParticularconditionsofContract&canyouelaborate
thislaw.
IorderedthecontractortousetheBOQrateasreferenceratefor
thoseitemthesameintheBOQandusenewratefornewitems
substantiatedwithquotatiuontobeagreedbybothparties.
Caniquantifytheexcessto20%forallnewitemsonlywiththe
newrate&usethesamerateforallitemsalreadyintheBOQ?
Hopeyoucanreplythesoonestpossibletime.
Thankyouinadvance,
ReyofQATAR
Reply
AdminonMay22,2013at6:20pm.
DearRey,
Thankyouverymuchforyourquery.Therearetwoissues
connectedwithyourquestion.
Firstly,LawNo.26isintendedtoprotectContractors,particularlyin
respectoflumpsumcontracts.Pleaserememberthatthe20%
increaseordecreaseisfromthetotalcontractsumandnotfrom
individualitems.AlsoitdoesnotmeanthattheEngineercannot
increaseordecreasethescopeofcontractbeyond20%eitherway.
Hecan,buttheEngineermustcompensatethecontratorforlossof
profitiftherewasadecreaseanddifferentratesiftherewasan
increase.
Inyourcase,Iwouldnotallowthecontractortoremeasurethe
ductingonm2basiswhenhehassubmittedaLotprice.Hemust
bemadetoprovideaproperbreakdownofthelotpricetoobtain
arate.KeepinginmindthatLaw26appliesonlywhenthe
omissionsoradditionsareinexcessof20%ofthetotalcontract
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sumnotonindividulaitems,itisnotacceptabletoremeasure
anypartoftheworkinalumpsumcontract.Youmayrequesta
BOQonlyforthechangeswhiledeletingtheomittedworkswholly
fromthecontractBOQ.
Newratesareonlyfortheworkinexcessof20%andnotforall
thework,althoughchanged.
Where,BOQratesareapplicabletheycanbeusedonlyupto20%
andnewratesfortheworkinexcessof20%.
Reply
LeonardNzeduruonMay31,2013at8:54pm.
DearHaris,
IsignedaLumpSumContracttorehabilitateahospitalinOctober,
2011.Thecontractisin3phasesastheclientdidnotwanttoclose
theentirefacilityduringtherehabilitation.
TheBOQprovisionforplumbing,tilesandafewotheraspectswere
exhaustedinphase1astheother2phaseshasbeeninusesince
therehabilitationcommenced.Whopaysfortheprovisionofthese
itemsaswearecurrentlyrehabilitatingphase2.
ThankyouasIawaityourreply,
Leonard,Abuja!
Reply
EmmanuelTinkasiimireonJune11,2013at1:02am.
Iamsupervisingaconsultantwhoisexecutingalumpsumcontract
forthedesignandsupervisionofa12storeyofficeblock.TheToR
indicatedanestimatedcurrentandprojectedbuiltareaof
10,000sq.mbuthasincreasedto50,000sq.m.afterthedesign.All
theotheritemsinthestatementofrequirementshaveremained
unchanged.PaymentsarepeggedondeliverableslikeInception
Report,ConceptualDesigns,SchemeDesign,FinalDesignReport,
Tenderaction,Supervisione.t.c,butinpercentages.Wouldyou
thinkthattheconsultantisentitledtoacorrespondingincreasein
feesasheisinsisting?
Reply
VicktoronJune16,2013at3:17pm.
Hi
Ifaniteminboqis500m2forpaintingandifinrealityasa
contractorIhavedone5000m2amIentitledtogetcompensation
claimsforthesame.Weroperatingalumpsumcontractinoman.
AlsoIhadquotedhigherpricefirGrcbuttheclientcitingthesame
modifieditandchangeditwithnewrates.Alsowhilesigning
contracttheclientsaidwerreducing50%Oftheblockwork
quantityaswearereducingtheno.Ofwalls.Butthequantityitself
waswrongandIexecutedthefullbuttheyrclearingthesame50
less.Whatisurtakeonthese3issues.1painting2grc3block.
Regards
Reply
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VicktoronJune16,2013at3:23pm.
Dearsir
Anotherinstancehappenedtome.Missingitemsinboqbut
specifiedindrawing.Whatistheheirarchyinalumpsumcontract.
ShouldIexecutesomethingwhichIhavenotquotedfor.
Reply
HarshaonJune24,2013at2:26pm.
DearSir,
pleasedescribewhathappenintheLumpSumContractoneboq
itemmentioned50mCableLength,butatthetimeofexecutionsqty
ofcableis125m.ifcontractorcanvariationsorder?
pleasenoteattimeofquotingnotprovidethecablepathorsite
layout.
BR
Harsha
Reply
SimonMattimoeonAugust20,2013at1:59pm.
Dr.HarrisDean,
WearecurrentlyworkingonaLumpSumContract.
Wearebacktobackwithoursubcontractors.
TheclientissuedstageDinformationincludingaschematic.The
StageDestimationdidnotshowanyearthingcablesizes.Wemade
anallowanceof95mm.Thetotalallowancefortheearthing
installationwas40,000includingearthbars,cablesand
terminationsThisisclearlyidentifiedintheContractpricing
schedule.
TheclientissuedStageEinformation.ThenewstageEinformation
uponwhichthecontractisbasedshowedallearthingcablesas
300mmontheschematicinsmallwritingattheedgeofthepage.
Thesubcontractorsestimatorappearstohavemissedthechange
fromthe95mmcabletothe300mmcable.
Theclientnowwishestoreducehis300mmcabletolowersizes.
Theclientisseekingmoniesforthisreduction.
Eachmeterthatwegivebackbasedona300mmcablemeansthat
wearegivingbackmorethanwehadincludedwithinthebid.
Withinourquantifiedscheduleofrateswhichformsanappendixto
thecontract(althoughcontainingerrors)clearlystates95mm.
Howevertheschematicsfromthedesignerclearlyshow300mm
cable.
Isthereanargumenttoonlyomitthe95mmcablethatwas
included?Isthereacaseforwhatdidntgoincantcomeout?
Normallyunderalumpsumcontractwewouldvaluethevariations
ontheirownmerit.Ifwedothisonthisoccasionwewillgiveback
morethanwhatwehaveallowedaswellasstillhavingtobuythe
smallerearthcables,earthbarsandterminationswithMoney.
Wewishtopresentacaseonbehalfofoursubcontractortoavoid
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anypossibilityofpunishingthemfurtherandultimatelyensurethat
theydontgooutofbusiness!
Reply
DearSimon,
Iamafraidthatanyargumentthatyoupresentinsupportyour
subcontractorislikelytofail,unlessyouhaverequested
clarificationofcablesizesatthetenderstageand95mmwas
confirmed.Orifyouhadstatedthatintheabsenceofcablesizes
youhadpricedtheearthingcablesfor95mm,thenyoucanfighta
case.Itappearsfromyourcommentthatneitheroftheabovehas
happened,thereforeitwouldappearthatyoumighthavedifficulties
here.However,youmayuseyourquatifiedscheduleasabasisand
putforwardanargument,usinganypricingnotesthatyoursub
contractormighthave,andsupportedbypricesfromrecognised
cablesuppliersthatthepricesof95mmand300mmcablesare
obviouslydifferent,thenanarbitratormightsupportyourcaseasa
genuinemistake,dependingonthenatureoftheargumentthatyou
arepreparedtoput.Goodluck
Reply
AmaronAugust29,2013at3:35pm.
OncontractawarditwasrealizedProvisionalsumsitemand
amountarementionedinBoQ,butthereinnoclausewithin
bespokecontractconditionsforProvisionalsum.Shallthisitembe
treatedaslumpsumfixedprice.
Whatexternaldocumentwouldlawfullysubstantiatedforthe
ProvisionalsumdefinitiontotheClient/Consultant?
Reply
DearAmar,
No,Ifthesumshavebeenstatedasprovisionalsumsinthe
contractBOQandtheBOQisacontractdocument,thenthese
cannotbetreatedaslumpsumfixedprice.PleaserefertoFIDIC
RedBookSubClause13.5
Reply
SanchoonOctober12,2013at1:30pm.
DearHarris,
ThisisanotherissueIencounteredrecentlyasaContract
AdministratorinoneprojectIamhandlinginMENAregion.Iamin
theClientside.
Thelumpsumcontractattached2documentsScopeofWorks&
BOQ.Manyclausesinthecontractalwaysmentionedaboutthe
ScopeofWorks,butBOQhasnevermentionedinanyofthe
clauses.InoneofthenotesintheScopeofWorks,itstatesthatIn
caseofdiscrepancies,thisScopeofWorkstakesprecedenceover
theBOQ..Thefactisthattherearemanydiscrepanciesbetween
theBOQ&theScopeofWorks,BOQfavorstheContractor,Scopeof
WorksfavorstheClient.
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TheProblem:ThoughallpagesintheContractwereallsignedby
bothparties,theScopeofWorks(asannextothecontract)was
onlysignedbytheClient(nosignaturefromContractor).Whilein
theBOQbothpartieshavesigned.
MyQuestion:Betweenthese2conflictingdocuments,whichshould
governed?
Pleaseneedyouropinion.
Thanks
Sancho
Reply
Dr.HarisDeenonOctober12,2013at3:18pm.
DearSancho,
Basedonthefollowingdecidedcases:
WilliamsvFitzmaurice(1858)157ER709
WalkervRandwickMunicipalCouncil(1929)SR(NSW)84andthe
famousSanPaolocase,nosingledocumentdecidesthescope.
UnlessIhaveaccesstoallthedocumentssubmittedduringthe
tenderIcannotgiveaproperopinion.TheBOQdoesnotdecidethe
scope.Thecontractorwillberequiredtodoeverythingrequiredfor
thecompletionoftheintendedprojectswiththeminimum
requirements,unlessanythingelseisspecified.
Dr.HarisDeen
Reply
DearDr.Harris,
Thanksforreply.TheContractorrefusetodosomeitemsof
workmentionedintheScopeofWorksastheycannotfound
intheBOQ.Thus,theContractorstandsfirmonBOQasitis
signedbybothparties,whileintheScopeofWorksonlythe
Clientsignedit.TheprojectisnotcompletedasContractor
refusetoexecuteunlessitistreatedasvariationorder,say
RoadwayMarkings&SignsisstatedintheScopeofWorks
butisnotfoundintheBOQ.
Regards,
Sancho
Reply
DearDr.Harris,
Ihaveanotherinquiry.Ifanyofthepagesoritsappendicesofthe
contractnotsignedbyoneparty(sayonlyClientsigned),canitstill
bebinding?Orthatparticularpageincompletelysignedcanbe
consideredineffectiveorstillbinding?
OurcontractordisputetheClientasoneclauseispushedbythe
clienttothecontractortocomply.ButContractorrejectedasthat
particularclausepageisnotsignedbyhim,onlytheclientsigned
it.
Pleaseadvise.
Regards,
Sancho
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10/2/2015
Reply
DearDr.Harris,
Anotherissueregardinglumpsumcontractwhereinconstructionof
temporaryfacilitystructuresareincludedinthecontractscopeof
workstobeimplementedbytheContractor.
Myquestioniswhowillbetheownerofthesetemporarystructures
aftercompletionoftheproject,isittheClientorContractor?
consideringthatitisstatedinthescopeandBOQtobeprovidedby
theContractor.Forexample,thetemporarysecurityfencingofthe
camp,istheContractorhavetherighttotakeitbackafter
completionoftheproject?Ofcoursehewillusethisonetotheir
nextproject.
Reply
VladimironFebruary14,2014at11:32am.
DearDr.Haris,
IwouldappreciatesomehelponLumpSumcontractissue.
OnaLumpSumFixedpricecontractwherePricingScheduleusedto
evaluatevariationsandforinterimpayment,significantmistakein
quantitieswasnoted.Iwillexplain.
PricingSchedulewaspreparedbytheConsultant,buttheTrade
Contractorwastoremeasureallquantitiesandadd/omitanywork
asrequiredandinlinewithtenderdrawingsandspecification.
PricingScheduleincludedfor110doors.
Duringthetenderperiodaddendumdrawingswereissuedand
clearlyshowedonly40doorsrequired.
TheTradecontractordidntadjustqtyofthedoorsandpricedfor
110doorsinsteadof40.Atthesametimesomeotherquantities
wereadjustedbytheTradeContractor.LumpSumFixedPrice
agreementwassigned.
CantheConsultantreducecontractsumaccordingly?Orshallthe
TradeContractorbepaidfor110doorevensoonly40door
installed?
Regards
Vladimir
Reply
Dr.HarisDeenonFebruary14,2014at7:31pm.
DearVladimir,
Yourcaseisatypicallumpsumcontractandyouhaveexplained
yourproblemcorrectlymakingiteasierformetoexpressan
opinion.LetustakeahypotheticalsituationwhereyourQShas
indicated40doorsinthePricingScheduleinsteadof110doorsand
110doorsareactuallyrequired,wouldyouthenagreetopaythe
TradeContractorfortheadditional70doors?ofcoursenot.Youwill
obviouslyadducetheargumentthatthisisaLumpSumContract
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andtheriskiswiththeContractor.Thesameappliesinthereverse
caseasyours.Youwillbeinbreachifyoutrytoreducetheno.of
doorsnow.IfyourQSmadethemistakehemustbearthe
consequencesandtheriskiswiththeOwner.
Reply
AlexandraonOctober19,2014at5:34pm.
GoodafternoonDr.Deen,
Iamnewtotheconstructionindustryandhavebeen
followingyourarticleswithgreatinterest.Iamslightly
confusedaboutthiscomment.Ifthecontractorcanclaimfor
the110doorseventhoughonly40wereinstalled,wouldnt
thisbethesameasclaimingforworksnotexecutedand
therefore,unjustifiedenrichment?
Reply
DearAlexandra,
IbelievethatIrespondedtoyourquery.Itdependson
thestateoftheBOQastowhetheritiscontract
document.If110doorshavebeenmeasuredbutonly
40doorsareneeded,thencertainlythecontractor
wouldhavenoticedthisatthetimeoftender.Ifthe
contractorcanprovesthatthecostof70additional
doorswillcompensatehimforitemsmissedoutfrom
theBOQwhichheisrequiredtoprovideundertheLS
contract,thenhewillbeentitlledfortheadditional70
doors.Thecontractoriscertainlynotentitledfor
paymentwherehehasnotexcutedworkandconversely
theEmployerisnotentitledtogetthecontractortodo
workwithoutanypayment
Reply
FaizullahonMarch16,2014at6:02pm.
DearSir,
WehaveaprobleminoneofourContractwhichisbasedonQatar
GeneralConditionsofContract.Itislumpsumproject.The
ContractorandEmployeragreedoncostandtimeofavariation
workandVOsignedbybothofthem.Lateronitwasrealizedthat
ContractorhaswronglyvaluedtheworksandeventheConsultant
didnotcheckandhencevariationorderisnowclosed.Myquestion
isIsthereanywaytoreopenthisvariationorder?
thanksandregards,
Reply
DearFaizullah,
Thankyouforyourquery.UnfortunatelytheGeneralConditionsdo
notprovideforanycorrectionsofaVOafteragreement.Also
rememberthattheVOisissuedonlyafterbothpartieshavesigned
it,TheContractorshouldhavenoticedthisbeforesigningtheVO.
Havingsaidthis,ifyoucanproveagenuinemistaketheConsultant
andEngineermightactreasonablytocorrecttheVO.However,
theyareatlibertytorejectaswellsinceitistheContractors
responsibilitytoensurecorrectpricingoftheVO.
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10/2/2015
Dr.HarisDeen
Reply
FaizullahonMarch19,2014at9:09am.
Dearsir,
Thanksforyourresponse.
Theerrorisofsuchamagnitudethatweareevenplanningtotake
helpofcivillawi.elawno22of2004whichsaysthaterrorsareto
becorrected.Pleaseadviseinlightoflaw.
Thankandbestregards
Faizullah
Reply
Dr.HarisDeenonMarch19,2014at12:50pm.
DearFaizullah,
YesyoumighttryunderArticles130to133whichstatesasfollows:
Article130
1.Whereacontractingpartycommitsamistakewithoutwhichhe
wouldhavenotgivenhisconsenttothetermsofthecontract,such
contractingpartymaydemandvoidanceofthecontractiftheother
contractingpartycommitsthesamemistake,orknowsofits
occurrence,orcouldeasilyhavedetectedsuchmistake.
2.However,voidanceofacontractinrespectofgiftsmaybe
requestedwithouttakingintoaccounttheothercontractingpartys
participationinthemistakeorhisknowledgethereof.
Article131
Theeffectofthemistakeshallbeenforcedevenwhereitappliesto
theruleoflawconcerninganymatterofthecontract.
Article132
Apartywhoseconsentwastheresultofamistakemaynotinsist
onsuchmistakeinamannercontrarytotheprinciplesofgood
faith.Theotherpartymay,inparticular,insistonorpleadtothe
conclusionoftheintendedcontract,providedthatsubstantialharm
isnotcaused.
Article133
Thevalidityofthecontractshallnotbeaffectedbymere
arithmeticalorwritingmistakes.Theseerrorsmust,however,be
simplycorrectedbymutualagreementbetweentheparties.
Howeveritdependsonhowyousubmityourclaim.Thestatements
areimportanttoestablishmistakefrombothsidesormalicious
intentfromtheEngineer.
Reply
FaizullahonMarch19,2014at1:07pm.
DearSir
Thanksforyourhelp.Mylastquestionisthattheproofof
malaciousintentofengineerwouldbedifficultbutitcan
easilybeprovedthatEngineerwasnegligentinassessingor
valuingthevariedworks.
Regards
Reply
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10/2/2015
DavidConJuly27,2014at10:54am.
Dr.Deen
Ihavereadyourarticleandthenumerouscontributionsand
exampleswithinterest.Thisisanongoingbasisfordisputeinthe
ME.TomymindEmployersintheregionaretryingtoachievethe
advantagesofremeasurementandtheadvantagesofalumpsum
contractinthesamecontract,withouttheriskassociatedwith
eithermodel.WherequantitiesanditemsnotallowedforintheBill
arerequired,theyrefertothelumpsumbasisofthepriceand
expecttheContractortohaveallowedforsuchinhisprice.Where
theybelievethatthequantitiesintheBillareoverstated(normally
preparedbytheEmployer),therefertotheDoctrineofRestitution
(orunjustenrichment)claimingthattheContractorcannotbepaid
forworknotexecuted.
IftheDoctrinecanbeusedinthewaysuggested,theunjust
enrichmentcouldbethesimpleoverstatementofquantitiesinthe
BillpreparedbytheEmployerandtheEmployeristhenentitledto
remeasurewhenitisfinanciallyadvantageoustohim,onthebasis
thattheworkwasnotexecuted,whichhappensfrequentlyinthe
ME.Idontbelievethatthisinterpretationofthedoctrineiscorrect.
MyviewisthatiftheEmployerwishestovarythescopeofthe
Contract,theratesintheBillshouldbeusedtoevaluatethevalue
ofsuchachangeandnofurther.Thischange,however,mustbe
basedonachangetothedrawingsandspecificationsonwhichthe
tenderwasbased.IfyourcontentionthattheBillisapartofthe
scopedefinition(andIdontagreewiththatstatement),the
Employercouldchangethescopesimplybychangingordefining
thequantityofanitemrequired,therebyeffectingare
measurement,apracticethatisnotuncommonintheME.Inmy
view,thebasisofalumpsumcontractisthattherecanbenore
measurement,constructiveorotherwise.Theincorrectstatementof
aquantityintheBilldoesnotunjustlyenrichtheContractorgiven
thatheisrequiredtocheckthequantitiesandestablishitemsnot
includedintheBillandincludeforsuchinthelumpsum
Regards
Reply
YouareabsolutelyrightDavid.EmployersintheMEregionare
gettingawaywithmurderandconsultantsarenobetter.Ihad
suggestedtoseveralcontractorstotestthisincourtsandtheyhave
notdaredtodosoforfearoflosingcontracts.However,prudent
contractorspricethisasarisk.Thatmaybethereasonwhysome
contractorsmakemassiveprofitswhilethelessfortunateoneslose
money.Hopewisercounselwillprevailandsomecontractorhas
thecouragetotestitincourts.
Reply
DavidonSeptember17,2014at10:08am.
Dr.Deen,
Gooddaytoyou,
Iwillbegratefulifyoucanprovideyouropinionforthefollowing
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disputeitemaraisefromtheLumpSumContractOmissionItem.
Wehaveconsiderthefollowing:
1)ContractordidnotmakeanyadjustmentintheTender
AdjustmentScheduleduringthetenderstage.
ScenarioOne
1)PricingSchedule(BQ)5nosxQR200k=QR1mil
2)ContractDrawing(Actual)3nos
Fortheomissionitems,doyouomit3nosxQR200k=QR600kfrom
theContractor?
ScenarioTwo
1)PricingSchedule(BQ)5nosxQR200k=QR1mil
2)ContractDrawing(Actual)8nos
Fortheomissionitems,doyouomit8nosxQR200k=QR1.6mil
fromtheContractor?
Pleaseadvise:
1)Ifthereisalimitduringtheomission(cappedatBQamount)
Reply
DearDavid,
Icannotgiveyouauthoritativeresponsestohypotheticalquestions.
Themethodologyusedforadjustmentofitemssuchaswhatyou
havementioneddependsonwhetherthecontractisalumpsum
contractoraremeasuredcontract.
Ifthecontractisalumpsumcontractcontainingtheitemsthatyou
havementionedthereisnoadjustmentwhetherthequantity
increasesordecreases.YOUCANNOTINTRODUCEANELEMENTOF
REMEASURETOALUMPSUMCONTRACTUNLESSTHECONTRACT
SAYSSO.
Ifthecontractismeasureandvaluecontractthenthedecreasein
anitemisvaluedasanomissionatthecontractrateandsimilarly
anincreaseinanitemisalsomeasuredandaddedtothecontract
valueatthecontractrates.
Dr.HarisDeen
Reply
S.FareedonOctober20,2014at11:45am.
DearDr.Harris,
CanyoupleaseadvisemeinaLumpSumContract(BasedonFIDIC
1999FirstEdition),cantheContractorrefusetocarryouta
ProvisionalSumitemofwork.Ifyes,doestheContractorrequireto
givereasonsjustifyingwhyheisunabletocarryoutthePS.
Thanks
Fareed
Reply
Yes,ifthecontractordoesnothavetheexpertiseorfacilitytocarry
outworkrequiredtobeexecutedunderaprovisionalsumhecan
refusetoundertakesuchwork.However,whenthecontractor
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enteredintothecontractheknewthattherewereprovisionalsums
withinthecontractsumandhavingcontractedtodosohewillhave
difficultysucceedinginarefusal.
Reply
DavidConNovember13,2014at5:06pm.
DrDeen
IamnotsurethatIagreewithyourresponse.Ifitisa
provisionalsum,itisbydefinitionanamountallowedinthe
contractdocument,thusitconstitutespartoftheworktobe
carriedout.Ifitisnotinthecontract,thenthework
constitutesanormalVariation.
Iftheworkcoveredbytheprovisionalsumisnotproperly
describedortheEmployerwishestousetheamountforwork
notdescribedinthecontract(bothofwhichhappen
frequently),theContractorcouldrefusetoundertakethe
workifitisnotrequiredtocompletethescopeofwork
definedinthecontract.
IbelievethatitwouldbedifficultforaContractortorefuseto
undertakeworkcoveredbyaprovisionalsumbasedon
expertiseorfacilitygiventhatmostofprovisionalsumwork
is,inanyevent,undertakenbyspecialistsubcontractors.
Regards
Reply
DearDavid,
Idontbelievethatyoureadmyresponsefully,Also
thequestionappearedtobehypothetical.
Anyway,myconsideredopinionhavingtaughtquantity
surveyingandcontractadministrationandbeing
familiarwithmostconditionsofcontract,Icansafely
saythatprovisionalsumsareprovidedinaBOQfora
varietyofreasons.IhavealsofoundsomeQSsusing
allkindsofeuphemismtoputcontingenciesinas
provisionalsums.However,allcontractsprovidefor
dealingwithprovisionalsums,thattheycanbedeleted
entirelyfromthecontractsumorusedinpartorfullas
instructedbytheEngineer.Iftheprovisioanlsummis
forspecificspecialistwork,thentheEmployerwill
obtainquotationsforsuchworkgivinganopportunity
forthecontractoralsotosubmitaprice.Some
contractorswhohavetheexpertiseintherelevant
workssubmitaprice,someobtainpricesfromsub
contractorsandothersdonotsubmitprices.
IfyouhadreadmyresponsefullyyouwillrealisethatI
alsoqualifiedmyanswerbystatingthatthecontractor
havingbeengiventheopportunityofknowingwhathe
waspricingforincludingprovisionalsumsinthetender
mighthavedifficultyinrefusingtoexecutesuchwork.
Butrememberthattheproviiosalsumhasbeen
includedinthetenderBOQbytheEmployerandasI
explainedearlieritisonlyaprovisionforknownor
unknownworkatthetimeoftender.Therefore,any
courtwillsupportacontractorrefusingtoundertake
workthathedoesnothavetheexpertiseorresources
toexecuteandthathedidnotknowatthetimeof
tenderwhattypeofworkistobeexecutedagainstsuch
provisionalsum.Thatisthereasonthatcontractsdefine
provisionalsumsinamannerofflexibility.
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10/2/2015
Reply
DavidConNovember20,2014at7:17am.
Dr.Deen
Ireadyourresponsecorrectly,perhapsyoushouldread
myresponsemorecarefully.Thequestionwaswhether
acontractorcanrefusetocarryoutworkcoveredbya
provisionalsum.ThemethodsusedtoimplementaPS
andwhatyoumayormaynothavetaughtstudentsare
notatissue.
APSisanamountallowedinthecontractforworkand
thustheContractorwillknowofitsexistence,additional
workpostcontractsigningisaVariationregardlessof
whatsemanticsyoumaychoose.Intheeventthatthe
workisnotdescribedordescribedsoinadequatelythat
theContractorcannotbeexpectedtounderstandthe
natureofworkincluded,theworkcoveredbythePS
wouldbepartofthescopeoftheworkandthusthe
Contractorcouldnotrefusetoundertakesuch.
Regards
RickonOctober20,2014at6:06pm.
Hello,
Iwillbegratefulifyoucangiveyouropinionwithregardstomy
currentcontractualissuesonaLumpsumcontractproject.
ContractorisconsideringfilingaChangefortheunforeseen
utilitieswhichtheysaidisnotincludedintenderdrawings.My
argumentisasexperiencedcontractortheyshouldhave
anticipatedandthisisdeterminableespeciallytheareaaffectedisa
residentialanunforeseenutilitymightbelikeifyouareina
middleofthedesertandyoufoundatelephonelinesetc..Theonly
catchwhatIthinkreasonthecontractorissoeagertofilefora
Changeisthatthereissomethinginthecontractwhichitstates
thatConnectionofhousesrelatedtoexistingutilitiesnotshownon
theContractDrawingsorDocumentsandunforeseenutilitiesthat
arenotshownontheContractDrawings,providedthatthecostof
theseisreasonable,intheaggregatewithinUS$38,457,000.
Thanksinadvance.
Reply
DearRick,
Themerefactthatutilitiesfoundundergroundhavenotbeenshown
onthedrawingsdoesnotmakethemunforeseen.Ifthecontractor
isexecutingworkinagreenfieldareaandhefindsaliveelectric
cableundergroundthisiscertrainlyunforeseenandunforeseeable
inanygreenfieldsite.Ifthecontractorwasworkinginanare
whichwasheavilybombedduringWWIIthenhemustcertainly
expectunexplodedbombsundergroundirrespectiveofwhetherthey
areindicatedonthedrawingornot.Similarlyifthecontractorwas
workinginanareawhichhadbuildingsprevioushemustforesee
suchobstructionwhethertheyareshownonanydrawingornot.
45/57
10/2/2015
Reply
WahyuNurhayantionNovember13,2014at3:03pm.
DearDr.Deen,
Tobeginwith,Iwanttothankyouforthisinterestingarticle.
Ihaveaquerryrelatedtovariationinalumpsumcontract.
IamadministeringadesignbuildcontractwhichusingFIDICyellow
bookandbasedonlumpsumcontractprice.Thecaseisthatthe
Employerhasanobligationtoprovidefreeissuematerialinthe
formoflinepipewithspecificdiameterandwallthicknessstatedin
theEmployersRequirements.However,itturnsoutthatthe
Employercannotprovidethelinepipewiththedetermined
specification.Theactualfreeissuematerialsarelinepipeswiththe
samediameterbutlesserwallthickness.Sincethereductionofwall
thicknessofthelinepipeswillaffectthethicknessofothermaterials
providedbythecontractor,suchaselbowandhotbends,canthe
employerrequestadeductionincontractpricetoaccommodatethe
reductionofthethicknessoftheelbowsandhotbendsprocuredby
thecontractor?
Tobehonest,Idoubtthetheemployercandeductthecontract
pricesincebasedonthecontract,theemployershallprovidethe
freeissuematerialsunderhisownrisksandcosts.Therefore,
shouldtheemployerfailedtoprovidethefreeissuematerialsin
accordancewiththeoriginalspecification,suchriskscannotbe
transferredtothecontractor.However,itmaystilldebatablesince
ifwhathappenisthecontrarythenthecontractorwillpursuean
additionalcostforthespecificationchange.
Wouldyoukindlygiveaninsightregardingthisproblem?
Thankyouverymuch.
Reply
AhmedShehadehonDecember23,2014at6:58pm.
PlsWeneedyourinputinthefollowingcrucialmatter.
DoyouthinkthattheOmissioninLumpsumcontractshouldbe
doneinaccordancetotheQtysallocatedintheBOQorQtysasper
drawings?DoyouthinkthattheEmployeranyamountexceeding
theallocatedamountintheCostPlan?
OurClientisoptedtoomititemfromourscope,thisiteminthe
BOQis75m2whereasthedrawingsis2000m2,theninyourpoint
ofviewtheomittedamountshouldbe2000*unitpriceOr75*unit
price
InmypointofviewthetheClientisnotinapositiontodelate
morethantheallocatedamountintheBOQ,sincehavingthis
approachfromtheClientend,wewillendupwithminusContract
Value.
Plsadviseyourcommentsaccordingly.
46/57
10/2/2015
Regards
Ahmed
Reply
DearMrAhmedSahadeh,
Theycandeductonly75m2becausethatisallthereisintheprice
However,theyinsistonthecontractorexecutin2000m2asinthe
drawingifthereisnochangeinthedescriptionordrawingina
lumpsumcontraact.
Reply
GlennonFebruary3,2015at4:06pm.
Ihaveasmalllumpsumprojectthatwaspricedbyacontractor.
Thescopeofworklisted10itemsofworkbutdidnotaskfora
breakdownofeachitemduringthebiddingprocess.Duringthe
constructionphaseoftheprojectoneitemwasremovedfromthe
scopeandthecontractorwasinformduringconstructionthiswould
beremoved.Nowhehasappliedforfullpaymentofthelumpsum
contractweareaskingforacreditontheitemnotcompletedand
heisconcludingitwasalumpsumpricesonocreditisrequired.
Wefeelthattheitemwasremovedandcreditshouldbeagreed
upon.
Reply
DearGlen,
Thecontractorcannotgetpaidforworkthathehasnoexecuted.
TheContractshouldprovideforadditions,ommissions,etc,which
youmaybeabletouse.Pleasecheckthecontract
Reply
KorupoluonMarch2,2015at8:12pm.
Iamworkingasanestimatorinaconstructioncompany.iwouldbe
thankfultoyouifyoucouldanswerthefollowing.
Wehavegotonebuildingprojectonlumpsumbasis,inthatwe
havenoofbills(differentBuildings)inonebillunitrateforthe
sameitemisdifferentfromotherbills.
Consultantaskinguswhytheunitrateisdifferentinthisbillwhile
comparingtootherbills,heaskingustheexplanation.
Inmyopinionitisverydifficulttopricethesameunitrateforthe
sameiteminallthebills.
Pleaseadviseusisthereanycontractualproblemsifunitrateis
differentforthesameitemindifferentbills.
Regards,
VRKorupolu
Reply
47/57
10/2/2015
DearKorupolu,
InaLumpSumcontractitdoesnotmatterhowthecontractor
pricedhisBOQ.Anyerrorishisrisk.Thereisnocontractual
problem
Reply
GhalebSweedanonMay2,2015at10:00am.
DearDr.Haris
Ihavealumpsumcontractforacoreandshellconstructionproject
inksawhereintheBOQispartofthecontractdocumentsbesides
thedrawings,thespecifications,workscope,andthecontract
agreementthecontractagreementstipulatesthatalldocumentsof
thecontractarecomplementarywitheachotherfurthermore,the
BOQhasadisclaimeritemstatingthatincaseofconflictamong
thecontractdocuments,themoststringentonewillbebindingand
applicable.Thegeneralconditionsofthecontractarecopiedfrom
FIDICandtranslatedtoArabicandtherearenospecialconditions
consideredforthiscontract.We,asthemaincontractorofthe
project,haveundergoneexcessivenumberofchangerequests
(104)duringconstructionthathavecauseddelaysonthetimefor
completionoftheproject.
NowthatIhavebriefedyouabouttheproject,Iwouldappreciate
yourearliestresponsetothefollowingcasewhichweareup
againstwiththeclientandconsultantbeingononeside:
TheclienthasrequestedareplacementforanitemintheBOQ,
whichhasaquantityof1457m2of4040cmgraniteflooringin
groundflooragainstonly450m2shownoncontractdrawings,with
adifferentsizeofwaterjetpatternofmarbleandgranitematerial
forthesameareaandlocationhowever,insistingondeletingthe
totalamountcorrespondingtothequantityoftheBOQ(1457m2)
andpayonly450m2withanewrateasavariation.Whatisyour
judgementonsuchcase?Andhowshouldwedealwiththismatter
towardstheclientandconsultantwhoarenotcertifyingour
variation?
regards
GhalebSweedan
AlYamamaCompany
Reply
DearMrGhalebSweeda,
TheContractBOQsuppliedfortenderingcontained1457m2oftiling
whenitshouldhavebeen145m2.Iftherewasnochangethenthe
Employerwillhavetopaythecontractorthetotalpriceinthe
LmmpSumquotedfor1457m2againstthequantityof145m2ashe
cannotintroduceanelementofremeasureinalumpsum
conntract.ThereverseisalsotrueiftheBOQcontainedaquantity
of145m2insteadof1457m2theEmployercaninsisttheContractor
toexecutethewholeofthe1457m2atthelumpsumpricequoted
for145m2.
Reply
48/57
10/2/2015
GhalebSweedanonMay3,2015at10:04am.
DearDr.Haris
thankyouforyourquickreply,butyouhavenotactually
answeredmyquestion.
theclientischangingthetypeofflooringwithcompletely
differenttypeofmaterialsandacceptingtochangetherate
butrefusingtopayforthetotalquantityoftheBOQ(1457
m2)andwillingtopayforonlythequantityestimatedfrom
thedrawings(450m2)withthenewrate.Thevariationthat
wesubmittedtotheclientwasasfollows:
1457m2x543SR/m2=791,151SR
791,151(450m2x543)=546,801SR
546,801SR+(450m2xNewRate850SR/m2)=929,301SR
butclientdidnotacceptandrevisedtothefollowing:
(450m2x850SR/m2)(1457m2x543SR/m2)=408,651
SR
meaningthatwiththischangetheclientsaved408,651SR
fromourLScontract.howcouldthisbepossible?
ifyouwerethecontractor,howwouldyoudealwiththis
change.
appreciateinadvanceyourresponsetothismatter.
thanks
GhalebSweedan
Reply
GhalebSweedanonMay9,2015at5:18pm.
DearDr.Haris
iwouldreallyappreciateitifyouwillpleaseanswermy
question.
thanksandregards
Reply
DearMrSweedan,
IamsorryforthedelayinreplyingasIhadother
pressingbusinesstoattendto.
Comingtoyouquestionthecorrectwayistodeletethe
wholeoftheBOQquantityof1475m2.Ifyoudelete
theactualquantityof450m2thenyouwillbe
introducinganelementofremeasuretoaLumpSum
contractwhichisnottheintention.Ifontheotherhand
ifyoudeleteonly450m2whathappenstothe1025m2
leftinthecontractwhichyouwillnotbeexecuting?
Surelyyoudonotexpecttogetpaidforworkthatyou
willnotbeexecuting?
ThisisaContractorsriskthatheshouldhavetaken
intoaccountwhensubmittinghistender.Thatiswhyit
isveryimportanttochecktheBOQinaLumpSum
Contractatthetimeofpricingatender.Iamsorrythat
Icannotbeofanymoreassistancetoyou
Reply
thankyouDr.Harisbutwhatiftheyhavenot
introducedsuchchange,wewouldhavegottenthe
wholetotalpriceofthe1457m2asintheContractBOQ
eventhoughtheactualquantitythatwouldbecarried
outasshownoncontractdrawingsis450M2.
wouldntyouagree?
awaitingyourearliestresponse.
49/57
10/2/2015
thanksandregards
GhalebSweedan
AhmedShehadehonMay2,2015at7:02pm.
Goodday,
Ineedyourinputinregardtothebelowcase,
theEmployerhasoptedtoUpgradeandchangetheBranded
ApartmentandHotelbalconyTilingfromPorcelaintoReconstituted
Stone.However,andafterdeepstudytothisissue,theContractor
hasreachedandconcludedthatadditionalCostisassociatedwith
suchupgradeofbalconyTilingasinstructedbytheEmployer.In
contrary,theCostConsultantandbasedonhisinitialassessmentto
oursubmittedVariationinthisregardhasadvisedthataCost
SavingfortheEmployersbenefitsisassociated,disregardingthat
theContractorwillincuracertainlossbyimplementingtheCost
Consultantwayofmeasurements,whichisinourpointofviewis
nottenable,butinfact,willcauseadirectdamagetoContractor,
sinceitisverystrangetoupgradetheMaterialtypeandthenask
theContractortosubmitaCostSaving.
TheContractorunderstandingtothecurrentcaseinhand,thatthe
MaximumOmission(deduction)tobeapplieddueto
suchupgradeforthebalconysTilling,isthemountallocatedinthe
CostPlan,whichinfact,theContractorhassatisfiedhimselfwith,
andreflectsthesameamountthatweallowedforduringtheTender
processtoexecutethisWorks,andarenotentitledtoreceivemore
moneythanthecontractspecifiesforthesamescopeofworks,
irrespectivetoanyinconsistenciesintheqtys.
Typically,itispresumedthattheallowedamounts/sumsinthe
BOQdoformaterminourlumpsumcontract,anditspositionhas
relevantinsofarincomplementingtheotherdocumentsformthe
Contract,wheretheContractorwillnotbepaidanyadditional
paymentifthequantitiesrequiredtobeexecutedaregreaterthan
statedinthebillofquantity&thereforeimpliedthatthereverseis
alsotruebeingthatifthequantitiesstatedinsuchaCostPlanare
greaterthanwhatisrequiredtobeexecutedthecontractorwillbe
entitledtoreceivethefullpaymentagainstthatitem.Therefore,
anychangesintheitemdescription(changeofMaterialsSepc)will
notallowtheEngineer/CostConsultantforremeasuringthe
ContractorsscopeofWorks,sincethecontractavertedso,andthe
Contractorcodifiesthatthemaximumamountofdeletion/deduction
shallbethesumallowedintheContractforcarryingoutthis
particulartask.
Tothisend,theContractorhasusedbelowcriteriatocalculatethe
CostImplicationsfortheupgradeintheBalconiesTilling.
1.TillingqtysintheCostPlan(CombinationofCeramictiles
withSaudigranitebandincludingallnecessaryfixings,fittings,
accessoriesandallrelatedwork)=2083M2
2.UnitPriceforthesameintheCostPlan=92.27JOD/m2.
3.TotalallocatedlumpsumamountforthesameintheCost
Plan=192,615JODitemB4/9/2Maximumamountofdeletion.
4.TotalCeramicindrawingswhichalteredtoStone=
2,520.66M2.
50/57
10/2/2015
5.UnitRateforCompacStoneasperJordanMarketand
submittedbytheContractoris=99.52JOD/m2
6.Therefore,totalCostforCopmcStone=250,856JOD.
7.TotalCostImpact=250,856192,615=58,241JOD.
Whereasinfact,andasindicatedinM/sNEAsassessmenttotal
deductionis231,876.570JOD,whilstthetotalallocatedamountin
theCostPlanforthesameitemis192,615JOD,notingthatandas
permyviewpointnoContractualreferenceandclausecanallow
themtodeductandomitanyadditionalamountbeyondandabove
theallocatedamountforthesameitemintheCostPlan,whereour
LumpsumContractisnotsubjecttoanyremeasurement.
Reply
Dr.Haris
lookingforwardtoreceivingyourresponseonmyearlierquestionif
youwill.
thanks
Reply
MohamedRizwanonMay10,2015at9:35am.
DearSir,
ImfacingaProbleminmyProjectitisaLumpsumAgreedProject.
Ineedtomakeclearaboutthevariationvaluationonbellow
conditions.
01.wehaveagreedtoexecuteaworkonalumpsumcontractbut
inourBOQtheActualQuantityismuchmorethantheexistingqyt.
nowtheEngineerdoesnotneedthatitemandhehaschangedthe
detailthereforetowhichqtyineedtogivethedeletiontothereal
qtyortheBOQqyt?
02.SameasabovecasetheBOQquantityislesserthantheActual
QuantityEngineerdontwantustodothatinthiscasetowhichqtyi
needtogivetheomissiontotheagreedlumsumBOQqtyortothe
realexistingqtywhichishigherthantheBOQ?
couldyoupleaseprovidemethesolutionsbasedonFIDICorany
otherconditionsofcontract.
Reply
WaelonJune13,2015at4:11pm.
Omittinganitemisnotrelatedtotheactualquantities.infact,
actualquantitiescomesfromtheremeasurementwhichcontradict
thelumpsumrequirements
Reply
51/57
10/2/2015
SamehAfifyonJuly29,2015at3:25pm.
DearSir,
Ihavequeryregardingthevalueengineeringinalumpsum
contractandtheBOQispartofcontractdocuments.wehave
specialconditionwhichallowthecontractortomakeavalue
engineeringwhichstatsthecostsavingamountshallbeshared
betweentheclientandcontractor80%to20%.
Iwanttoknowhowtocalculatethesaving.weatherbasedonthe
BOQrateorthecostwhichisthe(BOQratecontractorsProffit).
Thanks
Reply
Yes,useBOQrateswhereapplicable.The80%/20%splitincludes
overheadsandprofitsaswell
Reply
SamehAfifyonAugust3,2015at8:10am.
Thanksforthereply.youranswerislogic.Mycaseisthatthe
contractorisclaimingthatthecontractclausementions
,whilethecostsavingamountwillbeshareduponthe
basicsof80%fortheEmployerand20%fortheContractor.
sincetheBOQunitrateincludesthe(cost+proffit),therefore
thesharingtocalculatedbasedonthecostonly.
thanksalot.
Reply
SamehAfifyonAugust3,2015at8:20am.
DearSir,
BasedonalumpsumcontractwithBOQ.therewasoneitem
mentionedinthetenderdrawingsandBOQ,whileduringthe
tenderingprocessitwascancelledbythedesignerandallthe
tendererwereofficiallyinformedthroughofficialcircular.
unfortunatelythisitemwasremovedfromIFCdrawingsbutnot
removedfromtheBOQ,moreoverthecontractorpricedthisitem
andhistenderwasaccepted.
nowduringconstruction,thecontractorisclaimingtogetpaidof
thisitemsincetheprojectislumpsum,althoughhewillnotexecute
itasperIFCdrawings.
takingintoconsiderationthatasperthecontracttheclientcanomit
oradd25%ofthecontractamount.
Bestregards,
Reply
Dr.HarisDeenonAugust3,2015at11:30am.
DearSameh,
TheContractorinyourcaseistryingiton.Idonotknowthe
ConditionsofContractthatyouareusing.However,allcontracts
providefordealingwithvariations.Variationscanbeadditionsor
omissionsfromthecontract.Inyourcaseyouhavegoodgrounds
foromittingtheitemfromthecontract,sinceitisclearlyanerror
toretainitasitwasdeletedduringtender.Furthermore,howcan
thecontractorclaimforsomethingthatheisnotexecuting?Evenin
aLumpSumcontracttherearelimits.
52/57
10/2/2015
Reply
PaulonAugust26,2015at12:50pm.
DearSir,
InaLSdesignandbuild,yellowfidic,contractthescopeofthe
contractchangefromopenspacedesigninaofficebuildingwitha
fitoutdesignandthecontractorwasinstructedtofollowthefitout
plans.
Becausetheinitialdesignwasonlyaconceptwecannotquantify
exactlythemininusandplusesoftheexecutedworksandissuea
variationorder.
Whotoestablishtheadditionworksneededbasedontheconceprt
designlayouts,partoftheER.s?Thecontractorinsiststodothe
openspacedesignfirstandtocomparewiththefitoutexecuted
Pleaseadvice
Thankyou.
Reply
DearPaul,
Thestructuralworksarenotremeasurableastheyarelumpsum
contractworks.Therearenoomissions.
Thefitoutsareclearlyadditionalworksandhastobemeasured
andvaluedforpayment.
However,whenyoustartexecutingthefitouts,ifyouhaveto
makechangestothestructuralworkthatwasexecutedunderthels
contract,thenyouwilldeleteonlysuchworksthatareaffectedand
addbackanybuildersworkthatworkberequiredtomakegoodthe
affectedpart.
Reply
EurekaMzunguonSeptember1,2015at10:25am.
DearDrDeen
Ihavereadyourarticlewithkeeninterestanditisthesituationin
whichIamthatpromptedmetocometothisforumandImustsay
IhavelearntIgreatdeal.HoweverpleasebearwithmebecauseI
amgoingaskaquestionsimilartowhatmycolleagueshave
alreadyaskedbutlikeyouhavesaideverythingsituationrequiresa
particularresponseaccordingtothetypeofcontractinuse.My
questionDrDeenis:
IamaProjectManagerforalocalcompanyinBotswana.Weare
involvedinaprojectwithalumpsumcontractwithBOQforming
partofthecontract.Thecontractinvolvestheconstruction1nr
SinglestoreyClassroomblock,4nrwaterbornetoiletsand5nrLA2
Houses.WeareusingtheFIDICRed1999Editionasourconditions
ofcontract.Anyclausesrelatingtothissituationhavenotbeen
revisedtheyareastheyareintheFIDICRedBook1999.Inthe
BOQonlythesubstructureitemshavebeenputasprovisional
quantitiesandhavesincebeentreatedassuch.Nowthesituation
thatwehaveistheEmployerissuedavariationordertochangethe
specificationoffacebrickstobeusedfromFBSfacebricktoFBX
Facebrick.TheFBXfacebrickswerepricedonlyunderthe
constructionofLA2HousesatarateofP590.00/m2andtheFBS
53/57
10/2/2015
facebrickwaspricedundertheClassroomblockand4nrtoilet
blocksattherateofP300.00/m2.Whenwesubmittedourvariation
claimweusedtherateofP590.00fortheFBXfacebricksinthe
Classromblockandthe4nrtoiletblocksourbasisbeingrateofa
similaritemunderthesamecontract.HowevertheEmployernow
isrefusingtopayforthisastheamountshaveincreased
significantly.Hehasoptedtoremeasurethesuperstructureand
appliedtheremeasuredquantities.Theremeasuredquantities
havedecreasedfrom1864m2to854m2clearlychangingbymore
than10%.Thishassignificantlyreducedthevariationclaimandwe
wouldliketocontestit.
1.0Inyourownunderstandingistheemployerrighttoremeasure
thesuperstructurewhichwefeelitispartofthefirmquantities
whereremeasurementisnotsupposedtobeintroduced?
2.0AndwhatisourremedyunderFIDICConditionsofContract
1999Edition.
3.0DoweapplyClause12.3(a)(i)EvaluationofMeasuredWorks
andsubmitanewratebesidestheP590.00asthequantitieshave
changedbymorethat10%?
4.0WhatisyouinterpretationofthisClausein3.0above?
5.0Dowehaveanycaselawthatcansupportthisscenario?
6.0Wefeelthefairwayofdoingthisistoomit1864xP300.000
=P559,200.00andadd1864xP590.00=P1,099,760.00andthe
differenceP540,560.00isthemoneyduetous.Orcanwerevise
ourratebasedonthenewqtyof854m2?
Yourpromptresponseonthematterwillbehighlyappreciatedand
willgoagreatdealinsolvingourcase.
Thankyou
EurekaMzungu
Reply
EurekaMzunguonSeptember1,2015at10:42am.
DrDeen
Canyoupleaserespondtomycase.Thankyou
Eureka
Reply
DearEureka,
Youdonotstatewhetherthecontractisalumpsumcontract.
However,byreadingtheexplanationyouhaveprovided,itseems
tobealumpsumcontract,basedonthebillofquantitiesbeinga
contractdocument.
Beforeansweringyourquestionsspecifically,Iwouldliketoclarify
thefollowing:
(a)Youcannotintroducetheelementofremeasureinalumpsum
contract.TheContractortakesalltherisks.TheBOQisadocument
suppliedbytheEmployeraspreparedbyaquantitysurveyoron
behalfoftheemployer.IftherearemistakesintheBOQitcanbe
bothways,thehigherquantityasinyourcase(thentheriskisthe
employers),ontheotherhandifthequantityislowerthan
requiredtoexecutetheriskisthecontractors.Pleaseaskyour
employerwhetherheispreparedtoremeasurewherethequantity
islowertogivethebenefittothecontractor.Iamsurethathewill
saynoandtakerefugeinthefactthatitisalumpsumcontractnit
subjecttoremeasure.
(b)Thecontractorwhenpricingacontractdoesnothavethe
opportunitytochangeanyquantities,todosowouldmean
54/57
10/2/2015
submittinganalternativetender.Thatwillalsomeanchangingthe
conditionsforonetendererfromothers.Therefore,thetenderer
pricesthetenderonthebasisofswingsandroundaboutsbywhich
wherehewillloseinoneitemforquantitymistakeshewillgain
fromanother.
Havingthisasthebackground,theanswerstoyourquestionsare
asfollows:
1.0.Nothesuperstructureworksarenotremeasurable.Onlythe
provisionalquantityitemsinthesubstructureareremeasurable.
However,ifthereareprovisionalsumsandprovisionalitems
includedinthesuperstructureelement,thenonlythesearere
measurable.HOWEVER,IFTHECONTRACTISNOTALUMPSUM
CONTRACTANDFIDICREDBOOKCLAUSE12.1ISRETAINED
WITHOUTAMENDMENT,THENALLTHEWORKSEXECUTEDARETO
BEMEASUREDANDVALUED.
2.0FIDIC1999editionClause56(1)hassimilarconditions
requiringtheEngineerTOASCERTIANBYADMEASUREMENYOR
OTHERMEANSTHEVALUEINACCORDANCEWITHTHECONTRACT
OFWORKDONEOROMITTEDASPROVIDEDFORUNDERCLAUSES
51AND58(1).THISREFERSONLYTOVALUATIONOFVARIATIONS
ANDNOTFORCONTRACTWORKS.
3.0IfFIDICRedbookhasbeenusedwithoutparticularconditions
andwithoutstatingthatthecontractisalumpsumcontractatthe
timeoftender,thenClause12.3(a)isapplicable.
4.0.Pleaseseemyanswertoitem1.0above
5.0.Thecaselawisonlyinrespectoflumpsumcontractsand
thesearegiveninmyarticle
6.0.Thecontractorwillhavearighttorequestarevaluation
accordingtoClause12(a)(I)to(iv)ifthechangesareexceeding
25%.
Havingsaidalltheabove,Imustadviceyouthatasaproject
manager,youmustactinafairandreasonablemanner.Inmy52
yearsexperienceasacontractsadministrator,Ihavealwaysacted
inafairandreasonablemannertobothsides.Itisnotinanybodys
interesttohurtthecontractororhiscashflow.Similarly,itisnot
fairtosupportthecontractorwhereitisunreasonableandwill
affecttheemployer.
Goodluckwithyourproblemandletmeknowhowyougeton.
Reply
EurekaMzunguonSeptember2,2015at3:35pm.
DrDeen
Thankyoufortheresponseandithasbeenofhelp.Ihave
writtentheEmployermostofthecontentisbasedonthe
responsesyouhavegivenhereandofcoursewithreference
tothecontract.TheEmployersQSisinagreementwithour
arguments.Wearewaitingfortheresponseashehasto
consultotherEmployersProjectteammembers.Thankyou
fortheinsight.
Eureka
Reply
DrDeen
Howdoyourelatethemyquestionwhichyourespondedveryto
SubClause12.2aandboftheFIDICRedBook1999Edition.
55/57
10/2/2015
Regards
EurekaMzungu
Reply
DrDeen
Howdoyourelatetomyquestionwhichyourespondedverywell
lasttimetoSubClause12.2aandboftheFIDICRedBook1999
Edition.
Regards
EurekaMzungu
Reply
MusaonOctober1,2015at9:53am.
DearDr.Deen
Iamfromtheclientside,thecontractisadesign&Builtcontract
anditwastransferredtoourdepartmentfromotherauthoritiesby
anovationagreementwiththecontractoranditisunder
constructionstage.Thecontractorisclaimingthatthecontractisa
Lumpsumcontractbasedonastatementmentionedinhisproposal
undertheMeasurementandPaymentclausestatesPaymentsare
onlumpSumbasisbasedontheattachedBOQ.myquestionis:is
thisstatementSufficienttoprovethatthecontractisaLumpsum
contract?notingthatitisnotmentionedinanyotherpartofthe
contract.
yourreplyishighlyappreciated
bestregards,
Musa
Reply
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