The Lump Sum Construction Contract – What Seems to Be the Problem

10/2/2015 The Lump Sum Construction Contract – What seems to be the problem? « Dr. Haris Deen

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The Lump Sum ConstructionContract – What seems to bethe problem?BY DR. HARIS DEEN | JANUARY 15, 2011

The lump sum contract associated with construction particularly in the MiddleEast has created untold misery to contract administrators and quantitysurveyors working in every sector of the construction industry. The problem iscaused by a misunderstanding of the concept of lump sum contracts and theapplication of the principles associated with such forms of procurement.

A lump sum contract is an agreement pursuant to which one party consents topay another party a set amount of money for completing the work or providingthe goods described in the agreement. Typically, lump sum contracts do notrequire contractors to provide a detailed breakdown of costs. Rather, thepayment of the total contract price is linked to the contractor completing all ofthe work specified in the contract. For example, a software installationcompany may enter into a lump sum contract for installing multiple dataprocessing systems in a building. Instead of receiving an individual fee foreach system installed, the company will receive one fixed amount after itfinishes installing all of the systems.

Lump sum contracts are regularly used for a variety of transactions, includingconstruction work, consulting projects, and architectural assignments. A lumpsum contract is easy to manage since payment is made only once. Generally,the lump sum contractor is paid a flat amount of amount of money after theparty receiving the services or goods is given the output. For instance, under alump sum arrangement, an architect firm is usually paid its total fee once ithas supplied all the deliverables acceptable to the Employer.

The construction industry often engages in lump sum contracting. In mostcases, the building owner signs a lump sum agreement with a generalcontractor. The general contractor then enters into separate agreements withsubcontractors.

The explanation so far seems simple. Then what seems to be the problem?

The problem arises out of two major factors:

The written contract;Understanding and interpretation of the written contract.

A lump sum contract is usually a written agreement, although an oralagreement may be binding in some cases. Once the contract has been signed,all parties are bound to adhere to its terms. A lump sum contract ordinarilydetails the fixed total amount to be paid to the contractor and the timeline forpayment. If the contract is for services, a comprehensive description of thescope of the services to be performed by the contractor should bedocumented. Contracts for goods should thoroughly detail the goods to be

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ABOUT HARIS DEEN, PH.D., MBA, B.SC.,FRICS, ACI ARB. (RETD.)

Born in 1936 in Sri Lanka, Dr Haris Deen hasover 50 years experience working in theconstruction industry. His work has takenhim accross the globe, working on marqueeprojects all over the world, including SriLanka, the United Kingdom, Saudi Arabia,Malaysia and the State of Qatar. Now anexpert in Contract Law, his current role is inQatar as Special Advisor to the President ofAshghal (Public Works Authority). Dr HarisDeen earned his PhD in 2000, and haswritten and published two books in the fieldof construction.

Dr Haris Deen would like to share some ofhis vast experience with you. Enjoy the site!

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provided, including the components, features, and characteristics that must bea part of the final deliverable.

However, all this is dictated by the terms contained in the various documentsbeing made part of the contract. Construction contracts using standard formslike the JCT, NEC, FIDIC etc., detail a hierarchy of documents that would bereferred to in the settlement of disagreements or disputes. Such documentsmay include the specifications and a bill of quantities amongst other things. Ifthe bill of quantity is listed as a contract document, it is possible for theEmployer to require the contractor to execute everything it has priced for inthe bill.

It must be noted that a bill of quantity can contain one or more of the followingitems in addition to the lump sum items:

1. Provisional Sums2. Items using Prime Cost Sums3. Provisionally described items4. Provisionally measured items5. Nominated SubContractor items6. Nominated Supplier items7. Contingencies

Despite described as a lump sum contract all the above items are subject toadjustments and additions to and deletions from the bill of quantities ispossible if the contract provides for variations, but no remeasurement ofquantities stated in the bill of quantities will be allowed.

As a rule, construction contractors are not entitled to receive more money thanthe contract specifies. Items required to complete the works must generally beprovided even if they have been omitted from the bill of quantities – (Williamsv Fitzmaurice (1858) 3 H&N 844). Michael O’Reilly points out that if there is nomechanism in the contract for receiving payment for these extra items, thecontractor will have to pay for them. This means that the contractor will haveto provide what is indispensably required to fulfil its obligations under thecontract.

If it is presumed that quantities do not form a term in lump sum contractsunless the contract states otherwise, the contractor will not be paid anyadditional payment if the quantities required to be executed are greater thanstated in the bill of quantity, (Portman and Fotheringham v Pildritch (1904),Priestly v Stone (1888), Re Ford and Bemrose (1902) CA, Sharpe v San PauloRailway Co (1873) LR 8 Ch App 597). It could therefore implied that thereverse is also true – being that if the quantities stated in such a bill ofquantity are greater than what is required to be executed (as long as the itemdescription is not changed) the contractor will be entitled to receive the fullpayment against that item.

Can the Employer or Engineer therefore, change the description of an item inthe bill of quantities where the quantity has been over measured and attemptto remeasure and obtain the lesser quantity? Unless the contract provides todo so, definitely not! Any attempts to do so would mean introducing anelement of remeasuring where the contract does not provide and this wouldbe in breach.

In the same context, what about an item contained in the bill of quantitieswhich is not required to be executed? Contractors always argue that being alump sum contract they are entitled to be paid for every item in the bill ofquantities regardless of requirement in the same manner that the Employer isentitled to insist upon the contractor to provide items required but missed outin the bill of quantities and that each balances with the other. In order to prove

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Mohammed Awad on January 16, 2011 at 12:56 pm.

This article spot the light on one of the most important issuesrelated to construction contracts i.e variations to lump sumconstruction contracts, we thank Dr. Haris for this article.

Reply

Troy Dias on January 19, 2011 at 7:54 am.

“In the same context, what about an item contained in the bill ofquantities which is not required to be executed? Contractors alwaysargue that being a lump sum contract they are entitled to be paidfor every item in the bill of quantities regardless of requirement inthe same manner that the Employer is entitled to insist upon thecontractor to provide items required but missed out in the bill ofquantities and that each balances with the other. In order to provethis point the contractor will need to establish that the price it hasput in for such an item is in actual fact to compensate for someitem missed out in the bill of quantity. The burden of such proof willrest with the contractor.”

I don’t agree with the above conclusion. I agree with you that theburden of proof lies with the Contractor but in this particularsituation he does not need to analyse whole contract bill to provehis case. In a lump sum contract, the specifications and drawingsare used to describe and identify the scope of works. BQ (orSchedule of Rates) does not use for this purpose and it is used tovalue variations and often times used for interim paymentvaluations.

Haris Deen on January 19, 2011 at 1:05 pm.

Thank you Troy, This is the type of comments I would like in orderto trigger a wider discussion. You don’t seem to disagree with methat the burden of proof of the contractor’s entitlement for paymentof a non executed item in a BOQ rests with him. Your onlycomplaint seems to be that the contract does not have to analysethe whole contract bill to prove his case. I did not say that he

this point the contractor will need to establish that the price it has put in forsuch an item is in actual fact to compensate for some item missed out in thebill of quantity. The burden of such proof will rest with the contractor.

Reference:

O’Rielly, Michael – Civil Engineering Construction Contracts

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should do so. The main point is that anyone should not be entitledto be unjustly enriched by claiming money for work he has notexecuted. If he can prove that this is money that he richlydeserves, then certainly he should be paid.

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Troy Dias on January 19, 2011 at 8:40 pm.

Thanks for your quick response. My point is in a lump sumcontracts, BQ does not use to describe or identify the scope ofWorks. The BQ is a tool we use in a lump sum contracts tocalculate the Tender / Contract Price. The scope of Works isdefined in the Specifications and Drawings. The Contractor’sobligation is to complete the Works in accordance with theSpecifications and Drawings. The BQ may contain items whichare not required to accomplish the Contractor’s obligationsunder the Contract.However, the Contractor should execute any works defined inthe Specifications (in most cases Specification takesprecedence over the Drawings) even though such works areexcluded from the BQ (and/or not shown on the Drawings).I consider that, after the award, the BQ is used only for thepurposes of valuation variations and interim payments, unlessBQ contains provisional items which are subjected toremeasure.Further, in lump sum (without quantities) contracts, BQ isreplaced by Schedule of Rates.In conclusion, I consider that, in a lump sum contract, youcan’t simply negate payment for any item in the BQ which arenot defined in the Specifications and/or shown Drawings, asthe BQ does not identify or describe the Scope of Works.

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Haris Deen on January 21, 2011 at 11:21 am.

You are quoting out of context Troy. My article is basedon a BOQ being a contract document. You are rightwhere the BOQ is not a part of the contract. In the MEall contracts I have come across (If I am wrongsomeone will correct me,) the BOQ is a contractdocument listed in the documents forming part of thecontract and the heirarchy for reference in the event ofa dispute. It is always stated that despite the heirarchy,all documents are complementary with each other. Thatmeans that the BOQ in this instance is part of the scopeand the Contractor will be required to execute all theitems in described in the BOQ if it wants to get paid. ITALL COMES DOWN TO WHAT THE CONTRACT STATESAND THAT IS HOW JUDGES AND ARBITRATORS DECIDEA CLAIM. I have not found any case where a judge orarbitrator (in the frist instance or on appeal)has alloweda claim that a contractor is not entitled for and refusedany claim that contractors are entitled to9compensation. Under the doctrine of restitution no oneis entitled to receive any payment for what he is notentitled for under a contract and the converse is alsotrue that the employer cannot escape from paying acontractor his rightful dues under a contract.

Martin on June 5, 2011 at 12:00 am.

I have a question along the lines of the QS doesntrepresent the specification in his BQ, the contractorprices his lump sum against the BQ not the spec a,leaving us as the employer with a bit part finish not as






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the specification, is this the resposilbility of the QS notrelating the priced BQ or the contractor who shouldhave priced in conjuncture with the spec and drawings.I noted your comment about the spec takes precidenceover the drawings.

Haris Deen on June 12, 2011 at 11:44 am.

Dear Martin,Your question is not very clear. However, I will try toanswer.

In the first place addressing the responsibility of the QS– The QS has a duty to provide accurate Bills ofQuantities. He cannot expect to shield himself under the‘Lump Sum’ pretence for his mistakes.

As far as the Contractor is concerned he must provideeverything that is indispensably required for completionof the Works whether it is shown on the drawings,specified in the specifications or measured in the BOQ.

Please read my article very carefully as it deals withdifferent aspects of a Lump Sum contract which willenlighten you more on this subject.

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Boon on June 25, 2015 at 5:52 am.

Agreed with Troy…

Dr. Haris Deen on July 29, 2015 at 10:16 pm.

I suggest the topic “Avoiding pitfalls in tendering forLump Sum Contracts”. In your introduction, you mightrefer to decided cases – Williams v Fitzmaurice and theSan Paolo case, which are landmark cases and buildyour theseis around them. Good Luck.

Abdulrahim Ostol on July 5, 2013 at 1:26 pm.

Dear Sir,

I am with the client side our contract with the main contractor is alump sum although in our General Conditions of contract ClauseVariation Order, we have addition and deletion. We deleted items inthe BQ which is not required hence the Contractor insisted it is aLUMP SUM price and he is entitle to claim the same value signed inthe letter of award and noticed to proceed.

Kindly advised as a Client or Owner, do we have the right to claimthe negative Variation order, hence contractor also claim that thereare some concealed and unforeseen items during tender.

It is clear in our General Conditions of Contract that the Contractorbefore tendering he has the right to verify the site conditions, itsdrawings, specifications, bill of quantities and to satisfy himself andhe has no right in the future to claim any additional cost, what evermissed to price under this contract. However, the client has theright to increase or delete items during construction period notexceeding 20% of the lump sum price.

Kindly Advised,


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Regards

Abdulrahim

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Dear Abdul Rahim,If the Contractor has priced an item that was not required tobe executed in any case, at the time of tender, then he wastaking a risk. If the item is not required and the Contractorinsists on payment for that item, he cannot be paid for whathe is not executing. Tell him that payment will be made onlyfor items he has executed and the final account will take intoaccount those items that he has not executed. You do nothave to do anything at the moment. Payment should be madeonly for items identified in the BOQ (if BOQ is part of theContract) on interim certificates.I cannot give a further clarification without knowing the fullfacts.

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Abdulrahim Ostol on December 20, 2014 at 8:11 pm.

Dear Sir,The missing amount from the items bill of quantities isrequired to be executed hence, the contractor missed tofulfill their obligation to checked properly the totalamount of the project before awarding, signing the BOQand signing the contract. After signing of all thedocuments then the contractor only started to claim themissing value which cost 1.7 Million SR. However, inthis case we insist to not to consider this claim by theContractor since it is their mistake and risk to finalizedhis BOQ to his satisfaction as per contract documentsand Contract is a lump sum, kindly advised if we areright to keep the same contract amount signed. Regardless of any approved V.O’s.

Regards

Dr. Haris Deen on May 2, 2015 at 5:20 pm.

Dear Abdul Rahim,You do not state the FORM or CONDITIONS OFCONTRACT. However, assuming the conditions to beFIDIC or the American Corp of Engineers Form. If it is aLump Sum Contract whatever the Form of Contract thecontractor must execute all works indispennsablyrequired for proper functioning of the works whetherincluded in the BOQ or not

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Craig on January 19, 2011 at 9:16 am.

Interesting that you state that this is mainly an issue in the ME. Ihave applied LS contarcts elsewhere with less conflict.

Interesting article.





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Haris Deen on January 19, 2011 at 12:58 pm.

Yes Craig, In the UK all contracts for building works using JCTForms are lump sum contracts with all substructure works,provisional sums, nominated subcontractor works and dayworksremeasured. We have not had any problems at all like the ones wehave here in the ME.

Kasun on February 17, 2011 at 12:29 pm.

Thank you for enlightening us.

Based on my understanding and experience I am strictly followingthe below points in all Lump sum contracts that I administrate

1 ) Drawings and specifications are key for defining the scope –YES I agree . However following scenarios are very interesting

case 1 :What if BOQ contains a item that is physically possible to do at thetender stage ( irrespective of whether it is related to works ofdrawings and specifications) but not shown in the drawings andspecifications ?My opinion – the contractor is required to do that item and it ispossible to instruct omissions on that item

case 2 :What if BOQ contains a item that is physically not present on site (or not required to do even at the tender stage ) and it is not shownin the drawings and specifications ?My opinion – the contractor is not required to do that item and it isnot possible to instruct omissions on that item. So no deduction onthe contract price is possible for this item.

2 ) Look for the BOQ general items . Check if there is an item thatallows the contractor to add items If he believes that due to anyreason those items are missing or quantities are not sufficient.IF there is such a provision usually it will be like this“The Contractor shall describe and price below the items necessaryfor the completion of the work as described in the specification orshown on the drawings and for which special provision is requiredand which are not covered by the rates in the Bill of Quanties”If so the below No 03 mechanism is applicable

3 ) I follow the following omission and addition concept to pricevariationsIf there is provision in the BOQ for the Contractor to insert hisitems for missing items ( refer Item 2 above )for exampleBoq quantity = 10 m ; rate = say 5 $ per magreed contract price = 10 * 5 + other items = 50 $ + 150 $ ( sayfor other items ) = 200 $

case 1 : drawing quantity = 12 mif no variation issued then contractor will do 12 m of workand the contract price = 200 $ – this is clearomission ( what the Contractor supposed to do ) = 12 * 5 = 60addition = 12 * 5 = 60the contract price change = (60)+ 60 = (0) ; new price = 200




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case 2 : drawing quantity = 12 mif variation is issued to increase the length to 17 mthenomission ( what the Contractor supposed to do ) = 12 * 5 = 60addition = 17 * 5 = 85the contract price change = (60)+ 85 = (+25) ; new price = 225

case 3 : drawing quantity = 12 mif the complete wall is eliminatedthenomission( what the Contractor supposed to do ) would be = 12 * 5= 60 ;addition = 0 ;the contract price change = (60)+ 0 = (60) ; new price = 140note that this disregards the issues of substantial changes to thecontract price etc ..

case 4 : if this wall is not shown on the drawing at all ; and it is notrequired for any other supportive works that are shown in thedrawingsthenomission( what the Contractor supposed to do ) would be = 0 * 5 =0 ;addition = 0 ;the contract price change = ( 0) + 0 = ( 0) ; new price = 200

Haris Deen on February 20, 2011 at 11:41 am.

Dear Kasun, thank you for your inquiry. From the facts contained inyour question, I am led to believe that you are a QS. If I am wrongI offer my apologies.

You have not indicated the conditions of contract that you arebasing your analysis on. Whatever, the procurement type,Lump Sum, Remeasured, Cost Plus etc., what is agreedbetween the parties and contained in the document willoverride any other consideration.

A Lump Sum contract is simply what it says it is. The Employerpromises to pay the Contractor a Lump Sum Price for whatthe Contractor has agreed and promised to execute. Whatconstitutes the scope which the Contractor has to do to be entitledto receive the lump sum will be contained in the documents orreasonably implied there from. If you read my article carefully youwill find cases I have cited supporting the settled law that in alump sum contract the Contractor has to execute whateveris indispensably essential for the proper completion of thejob as intended by the parties irrespective of whether thework required is shown on the drawings, specified in thedocuments or measured in the BOQ.

The argument usually is the place of the BOQ in the contract.Contractors insist that in a lump sum contract if an item ismeasured in the BOQ it does not matter whether the item isrequired or not they need to be paid the full contract sum, as thebasis of a lump sum contract.

This is only correct if the BOQ is not part of the contract.

Even where the BOQ is a contract document and complementarywith other documents Contractors put forward the same argument.This argument is founded on the basis that the Contractor will haveto execute work not measured in the BOQ or shown elsewhere but





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required without any additional payment as part of the lump sumcontract. Where the BOQ is a contract document it is meantto describe the scope for which a price has been submittedand this is settled law. The Contractor cannot be unjustlyenriched for work that he has not executed. The item notfully executed can be deleted by the Engineer from the BOQand the contract sum adjusted accordingly. Of course if theContractor can prove that he priced the item in question tocompensate for any missing items he would be entitled tobe paid this item as a variation. If such proof is available,then the Contractor will also have equitable legal remedies.

REMEMBER THAT IF THERE ARE NO SUPERFLUOUS ITEMS INA BOQ AND THE CONTRACTOR HAS TO EXECUTE ALL THEITEMS IRRESPECTIVE OF ANY DISCREPENCIES INQUANTITIES THE CONTRACTOR IS ENTITLED TO RECEIVE THEFULL LUMP SUM CONTRACT PRICE.

On an issue such as the above, my advice to Contractors and theirestimators is not to depend on the BOQ against the work to beexecuted in a lump sum contract. Be particularly aware of itemsdescribed and not required to be executed and for items that mighthave been missed out. Qualifications in a tender submission mightnot be acceptable, but a subtle tender query indicating asuperfluous item in a BOQ and suggesting that the Contractor willprice the item in compensation for any particular item missed out.It will stand in good stead if some item can be “concocted” if it isdifficult to find one during the time available for tendering.

Now, coming to the different measurement areas that you havestated in your query, please understand that you cannotintroduce remeasurement to a lump sum contract.

If an item in the BOQ is under measured it is the Contractors’ riskand he has to bear it. Similarly, if there is an item over measuredit is the Employer’s risk. Any attempts by the Engineer to make anyadjustments to such over measured quantities must be resisted.

The question sometimes arises where an item described in the BOQhas been changed to another description. For example, if the BOQindicates 10,000 m² of asphalt road paving and the Engineer wantsto change it to interlocking tiles, the variation order will describe anomission of 10,000 m² of asphalt paving and if the quantity that hasto actually executed is 10, 100 m² of interlocking tiles, theContractor is entitled to get paid for 10, 100 m² but calculated for10,000 m² (The quantity added must be equal to the quantitydeleted – the compensation for the additional 100 m² is based onprice adjustment).

In conclusion, I must stress that you cannot introduce remeasurement to a lump sum contract, unless the contractcontains provisional items or quantities.

I hope that this clarifies the position and if you are still unsatisfied,please fell free to comment.

Gishan Nadeera on September 11, 2012 at 8:51 am.

Dear Dr.HarisThanks for the information you provided. I just want to knowas you stated, my question is based on Lump Sum Contractswhere B.O.Q is not part of the contract documents.

There is one project I’m handling and the lumpsum is agreedbetween client and the contractor, and the drawings,




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specification or B.O.Q is not part of the contract documents asthey not stamped and signed by the both parties.

This Building is 21 floor residential tower in Pearl Qatar andcontractor knew initialy the designed no of units was subjectto change later. Contractor executed the work.1.Now contractor is claiming that for the work which isrequired by UDC which was not shown initially in thedrawings, specs or B.O.Q.2. And also he is claiming some mechanical items which isincreased due to the changes of no of units.

As per your comment if the B.O.Q is not part of the contract,contractor has to do all the work which is essential tocomplete the project and I belive the above factors cancatogorise the essential work. Therefore contractor not entitlefor any variations. Please correct me if I’m wrong.

My next question is initial stage installation of the marble andgranite was contractors scope and later client gave that scopeto a different contractor.In this situation does client have the right to omit the lumpsum amount?

Thanks

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Dr. Haris Deen on September 25, 2012 at 10:17 pm.

Dear Gishan,Sorry for the delay in responding. In any lump sumcontract, irrespective of the documents forming part ofthe contract, the contract is awarded on the basis ofexecuting a known scope of works. He can price anyrisks for unknowns within that scope.

According to your question, the contractor ‘knew thatthe initially designed number of units were subject tochange later’. You do not however say to what extentdid the contractor ‘know what will be changed’. It isunreasonable to expect the contractor to execute workthat he did not know what to expect at the time ofsubmitting his tender. Without investigating all thedocuments forming part of the contract it is not possibleto give any authoritative response. However do notexpect the contractor to accede to do everything thatthe employer asks for except such work is within thescope that the contractor offered to do within thecontract sum.

Troy Dias on March 20, 2011 at 11:53 am.

Whist I still maintain my opinion that BQ should not use to identifythe Scope of Works, in the same context I further disagree with youthat BQ quantity should be used for the purpose of valuingvariations.

Generally, in relation to the valuation of variations, standard formsinclude two important provisions; (a) variations should bemeasured and (b) valued using rates and prices contained in theContract (if applicable). Thus, in both omissions and additions,quantities should be measured using the Contract Drawings and the






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revised Drawings. On the same token and in extreme cases, youcould deduct more than the Contract Price in case of a variation.For example in a curtain walling contract (lump sum price of 5million) with BQ includes only one item for curtain walling (1,000m2 and 5,000 per m2) and CA instructed to change the curtainwalling to cladding (rate = 5,050 per m2). In this case, if themeasured quantity is only 1,050 m2, then actually the ContractPrice will be increased by 52,500 as the omitted value exceeds theContract Price.

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Haris Deen on March 27, 2011 at 8:17 am.

Thank you Troy,What the contract states will override any other considerations. Ifthe contract makes the BOQ a contract document, then it will bepart of the scope. Nevertheless, if the contract is a Lump Sumcontract, the remeasurable elements are only those mentioned inthe BOQ as being remeasurable and that includes provisionalsums, provisional items, prime cost sums, and contingencies.

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Troy Dias on March 27, 2011 at 2:35 pm.

Thanks Dr. Deen for your response. My point is about valuation ofvariations (i.e. we should measure both omissions and additions,and BQ quanitities should not be used for this purpose).

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Kelvin Ho on April 3, 2015 at 4:17 am.

What is the scenarios if the following situation happened:The Owner and Contractor has signed a Mechanical and Electricalsupply and install contract for an service apartment.The building works has completed and the Owner decided to convertthe nature of the building to commercial usage such as officebuilding.This will result in less works for the contractor.Will possible claim the contractor raise for such change.Please advise.

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Dear Kelvin,You don’t tell me anything about the Form or Conditions ofcontract. However, in a lump sum contract it might be possiblto claim recovery of overheaads and loss of profits dependingon the extent of the ommission Under FIDC The client candelete or add works upto 15% of the contract value in Qatar itis 20% and in KSA also it is 20%

Saman Welagedara on March 27, 2011 at 9:22 pm.

I suggest , in a variation, ommissions or additions to beremeasured . But, if any item to be removed completely, then theommited value to be limited to BOQ value of that perticular item. It









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is not fare to ask contractor to bear any money which he is notpriced for.

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Troy Dias on March 27, 2011 at 9:28 pm.

Dear Dr. Deen,I think I didn’t express my points clearly in relation to lump sumcontracts. Since FIDIC forms are not meant for lump sum contracts,I consider JCT forms (in particular with and without quantitiesforms) are more appropriate to use for the clarification of theissues.

In JCT with quantities, quantities forms part of the Contract, thus,any error in the quantities and/or description becomes a variation.However, when it comes to value variations assuming there isn’tany error in the Bill Quantity, you can use the BQ quantity for bothomissions and additions. In this form, in the event an item includedin the BQ but such work is not required for the Works (i.e. not inthe Drawings or Specification) can be omitted as it is considered asan error in the BQ.

On the other form, quantities do not form part of the Contract andthe Contracts Bills are merely considered as “Schedule of Rates”(sometimes we include the Contract Bills as a Contract Document,however, it is still considered as “Schedule of Rates”). In this form,variations are valued using the Drawings. However, even if theContract Bill is listed as a Contract Document, in this situation wedon’t use BQ quantities for omissions or additions. In the eventprovisional quantities are included in the Contract, we shall omit theBQ quantity and measure the quantity from the Drawings foradditions. Further, you can’t omit an item included in the ContractBills (or Schedule of Rates) which is not included in the Drawings orSpecification.

Please note that I don’t have copies of both forms with me to quoterelevant clauses but I appreciate your advice on the above issues ifpossible please email me the relevant clauses of those documents.

I think the main problem the problem is (especially in MiddleEastern countries), we attempt to convert FIDIC forms (which arefor remeasurement contracts) in to lump sum contracts (with orwithout quantities) without amending the essential clauses. Ipersonnel don’t like to use this approach but I think it is time for MEto use JCT forms for lump sum contracts.

Foong on March 31, 2011 at 8:05 pm.

Dear Dr. Deen, i’m a bit confused as for a lump sum contract basedon drawing and specifications but with the BoQ to be part of thecontract document and that the quantities do not form part of thecontract,(i) whether the description of items provided in the BoQ alsoconsidered part of the specification that we have to provide, i.ematerial specs stated in the BoQ.





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(ii) or in the absence of specs provided in the drawings, whethercan we argued that pricing of the project is based on whateverspecs proposed by us, in which we deemed is within the pricingrange.

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Haris Deen on April 5, 2011 at 2:15 pm.

Dear Foong,Thank you for your query, I apologise for the delay in respondingbecause your message was lodged in my hotmail folder which Irarely open.

I respond to your queries in the same order that you have indicatedas follows:(i) If the Contract (you have not mentioned the Form of Contract)states that the BOQ is a part of the Contract but not the Quantitiescontained therein, then the contract is flawed. The BOQ is what it is“a Bill of Quantities”. Therefore, in my view to exclude thequantities contained in a document while making the documentitself part of the contract, in my opinion is flawed. The principleassociated with the BOQ was established in the case of LondonSteam Saw Mills Ltd v Lorden (1900) where it was held that thequantities in the BOQ in a LS contract are not measurable except inthe case of variations. (This was based on GC Works 1 Form ofContract). As far as descriptions and specifications contained in theBOQ are concerned it was established in the following cases thatwhat is stated in the Conditions will over ride what is statedelsewhere. (Gleesons Contractors Ltd v Hillingdon Borough Council(1970) – JCT 1963 Form and Gold v Fotheringham Ltd (1958) – GCWks. 1 Form).

(ii) In a LS Contract the Contractor will be required to do what is“indispensably essential” to complete the works – Williams vFitzmaurice – However, the phrase “indispensably essential” issubjective and can be misused. Therefore it is established that whatis indispensably essential for a palace will be different for a factorybuilding, office building or warehouse. Taking the case cited aboveit concerns flooring. Therefore the flooring which was not includedin the BOQ which was a contract document can be of the minimumrequirement for the type of building. On the other point: No theContractor cannot claim something he has assumed in pricing suchan item if he has not indicated what he has assumed whensubmitting his tender.

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Bruce Parry on May 10, 2011 at 11:32 am.

I am interested in the continued applicability of Williams vFitzmaurice (1858) under English Law I assume that the doctrine ofindipensability has not been amended by statute or superiordecision.

I have a situation where the supplier of power plant equipmentexcluded civil works BUT only the supplier can provide the civilworks design for foundations etc. for the supplied power plantequipment i.e. the designs are indispensable.As the supply subcontract is lump sum and under English law itwould appear that the indispensable rule applies and that thesubcontractor cannot refuse to provide the necessary designs.






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Haris Deen on May 11, 2011 at 9:38 am.

Dear Bruce,Without looking at the Conditions upon which the contract wasawarded I cannot commit to any authoritative answer. However:

1. The facts supplied by you indicate that the contract was forsupply only, the civil works being excluded. If this is the case, thenthe supplier is obligated only to supply the goods in good order,free of defects under the lump sum.

2. If on the other hand the contract states that the supply includesinstallation, then it would have been upto the supplier to inquirewhere and how the equipment should be installed in order toascertain his responsibilities, in which case he would been told theextent of his involvement in the installation process. In thissituation if the supplier went ahead without inquiring as to thenature and method of installation it can be fairly reasonablyassumed that he knew of the requirement and Williams vFitzmaurice will apply.

3. It is normal practice to provide information as to civil workswhere supply contracts for mechanical and electrical installations,Also normally civil works or builders works are providedseparately. Going by the norms of the industry it is unreasonable toinsist upon the supplier to provide the foundations when it is not hisresponsibility.

Having said all the above, I must once again reiterate that it will alldepend on what the contract states. You need to check the contract,and see where your case will fit in.

Good Luck

A Fallon on June 7, 2011 at 11:59 am.

In Saudi Arabia they have a tendency to execute lump sumcontracts while attaching supporting successful contractor’s as bidquantities and unit prices for payment purposes or to evaluatechanges by use of the unit prices. Being a lump sum contract I donot understand why incorporating the supporting BOQ and or biddata.I had a case where the contractor had an EPC project. Theengineering portion was to be completed by contractor based onconceptual plans FEED. During the detail design client did minormodification affecting quantities. For instance Building locationswere modified which could not be construed as a change becausethe client had considered the buildings in the original FEED conceptand the length of utility between buildings would be paid under theAs Bid unit prices by increasing or decreasing the affectedquantities after procurement and construction and payment.Contractor went along with client and completed design withoutformal request for a deviation as they felt they would becompensated later under the actual quantity and unit prices.Contractor orders parts and materials and months later when theconstruction work is due to start for some portions of the work,Client decides to delete some major equipments and associatedimprovements from the scope of work and requested a credit forthe deleted work.





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Client now wants to delete and be credited for the quantitiesassociated with the approved design engineering completed bycontractor. When the client changed the building locations it hadactually increased the distance between buildings considerably butnow refused to accept credit for the AsBID BOQ quantities.Contractor is now being requested to give a credit that exceededtheir bid. Client says contractor should have requested a changedeviation months before when the design deviation occurred inorder for their concern to be valid. Another issue the client raised isthat the contract is a lump sum and that even though the AsBidBOQ was inserted in the contract it meant nothing to the contract.However, Client used the BOQ as the basis to develop and approvemonthly payment invoices throughout 70% of the work but whenthe contractor attempted to give a credit for the deleted work itemsbased on this AsBid BOQ and Payment cash flow schedule thatreflected the actual work items, client refused to accept thecontractor credit based on this basis.

Attaching BOQs to Lump Sum price contracts without validation ofquantities and prices and proper Summary of Negotiations beforeenterlng into a Contract is a mistake. It is better to sign a contractwith just one number.

Haris Deen on June 12, 2011 at 12:51 pm.

Dear Fallon,As I understand from your explanation, the contract is a design andbuild (D&B) contract based on a concept provided by the Client andthe bid documents included amongst other things the contractor’sBOQ. You do not mention the type of contract used. I assume that itwould be FIDIC.

Your explanation also suggests that the Client made changes duringthe detail design stage which “affected the quantities”.

Before dealing with the rest of the explanation, later on you alsostate that the contract was based on “Lump Sum” (LS), suggestingthat the LS was fixed prior to the detaile design stage. If this is thecase this is an important issue in deciding any claim.

Now going back to the second paragraph of your query, you statethat the building locations were modified “which could not beconsidered as a change” but continue to assert that the minormodifications to the quantities occured. If that is the case, thescope has not changed and the contractor cannot expect to getanything more than the LS price (if he has executed the Works tothe complete satisfaction of the Client) and the Client also cannotdeduct anything from the LS.

Assuming that the case is as stated above, the contractor is withinhis rights to order the parts and materials as stated by you in thethird paragraph. If the Client decides at this stage that he needs tovary the scope, of course under FIDIC he is within his rights to doso. In such an event the contractor must be compensated for thematerials that he has ordered and brought on site at the time of theClient’s decision to vary the scope. At the same time the Client willbe entitled to obtain credit for the deleted works and, since thecontractor has submitted a priced BOQ with his bid documentswhich are now part of the contract, this can be used to determinethe extent of the deletion.What you state iin your fourth paragraph is confusing. You aresaying that the distances between the buildings has increased dueto the change and the Client “is refusing to give credit”!! Why




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should the Clinet give any credit? If at all the Client should pay thecontractor for any extra work involved by change in scope.Furthermore, the contractor should have protected his rights byrequesting a change order when the Client instructed the change.However, this should not prevent the contractor from claiming hisrights, because by conduct the Clinet has accepted the scopechange, irrespective of whether the contractor requested thechange order or not.

A priced BOQ attached to bid documents does not constitute orindicate scope of what is required to be done. The BOQ is only adocument that is indicative and used for controlling payments andvariations. Please read my article carefully.

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Cagdas Evren Bayrak on June 16, 2011 at 12:19 pm.

Dear Mr. Deen,

With all due respect, I am also of the opinion that, submissionof BOQ’s during tender phase gives Tenderers the impressionthat (even clearly its purpose is stated) the BOQ iscontractual, and it is hard to explain people that, they aresupposed to do everything written in their contract as “lumpsum” but get paid on BOQ items basis. It has, and it will,mislead people to think that their responsibilities are boundwith what is stated in the BOQ.I think that, in lump sum contracts the payments /remuneration shall ne through a “Schedule of Prices”. If still aBOQ is desired for valuations, etc., it might be requestedafter the Tender is awarded, i.e. from the Contractor, not theTenderers. I seriously hesitate on using “Lump Sum Contractwith Bill of Quantities” even though it’s widely used,especially in the Gulf region.

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Dr. Haris Deen on June 20, 2011 at 12:23 pm.

Dear Cagdas,

Thank you for the comments. However, pleaseremember, the problem is not with using the “LumpSum” contract form but with the conditions attached toit. Also how the contract itself is interpreted andadministered. There is no way that one can genaralisewhat is contained in a contract. We can though statewhat needs to be included in a contract to define thescope. To this extent the BOQ should not be used todefine the scope. However, once again I stress thatwhat is stated in the contract will override any otherconsiderations, and if the contract states that the BOQis to be considered a contract document, then that willbe the case.

Lakshminarayanan on August 15, 2011 at 2:41 pm.

Dear Sir, Kindly clarify the following query!.I am involved in a bespoke contract agreed after tendering processinitiated by Client. The Client issued bid documents with tenderdrawings, detailed scope and BoQ. The BoQ contains several lineitems and various plants related to electrical, civil and mechanical.







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Some Civil works items are indicated as Lumpsum items, for e.g.excavation, demolition and cartaway, Duct banks, Building watersupply system etc. In the tender phase, the building was to beconstructed at certain surface level and post award it was decidedthat in order to meet with local authoritys requirement, thesubstation level had to be increased by almost 1.5 meters (upwards). Due to this change, Contractor incurred additional expenseto bring in extra fill from outside. When a claim was submittedstating that as per tender phase estimation, no (less) fill materialwas considered and due to change during detailed design the newcost is not foreseen and therefore must be compensated. Clientargues that in such event to consider this claim, then Contractorshall calculate the reduction of excavation quantity (please notethat both back fill as well excavation was Lumpsum item as perBoQ). Also, tender drawings indicated duct banks on 4 locations, butduring detailed design phase it was commonly agreed to make theduct banks in 3 locations. Now, Client wants Contractor to calculatethe reduction in length and consider as varied quantity. Kindlyadvise what should be Contractor’s action now?

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Amr Saleh on November 4, 2011 at 8:40 am.

There are other types of contracts that I have encountered wherethe schedule of prices includes several lump sum items, forexample a Contract for constructing a university campus, with L.Sitem for the lecture rooms building, L.S item for the gym building,L.S item for the administration building, etc

How can we categorize this contract, what if there is an error andone building is mentioned twice in the schedule of the prices ?

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Syed Sharf Desnavi on November 17, 2011 at 11:52 am.

Dear Sir,

My project is 6 reservoir Contract is EPC as per General Conditionof Contract Qatar. In the BoQ Included some reservoir as optionalitem now client has decided to delete the optional item from BoQ.My Question is can we deduct the prelims amount.

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Dr. Haris Deen on November 17, 2011 at 1:20 pm.

Dear Seyed Sherif.

No. You cannot deduct or adjust the preliminary items unless thedeleted works actually reduces the contract period. The preliminaryitems are priced over the period of contract and not in respect ofwork to be executed.

Syed Sharf Desnavi on February 25, 2012 at 3:22 pm.

Thanks Dr. Deen for your valuable response.Just I want to give full details same as mention in the EPC








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contract for this project

The project is primarily composed of construction of 7no newreservoir and optional item of demolition old reservoirs andreplaces them with new reservoir in case requiested by client

1) Brief scope of work; (optional) in case requested by clientdemolition and replace by new reservoir including all work

2) Notes on pricing; All BOQ item including optional item shallbe accounted for in the total tender offer/price appears on theform tender and the Grand summary page of the BOQ.

3) Time for completion;a) New reservoir and associated work shall be completedwithin 20 month from the effective date of contractb) Optional reservoir and associated work shall be completedwithin 22Month from the effective date of contract

Client decide to delete optional item from contract .what isyour advice for below primary itemsIn the preliminaryContract administration; costs to superintendenceadministration coordinationAll costs reports documentation through the constructionperiodAsbuilt DocumentationLaboratory tests

Regards,syed sharf desnavi

Renard Baudrillard on December 13, 2011 at 1:22 pm.

Dr. Deen,

I would appreciate your clarifying the following in your response toKasun on 20 February 2011:

You state that “The Contractor cannot be unjustly enriched for workthat he has not executed. The item not fully executed can bedeleted by the Engineer from the BOQ and the contract sumadjusted accordingly.”

I am assuming that by “fully executed” you mean executed at alland not partially executed given your subsequent comments. For ifthe item is to be deemed superfluous, it must mean that it is notexecutable – a qualitative question – and not partially executable –a quantitative question.

But this is where I think most of the disagreement arises in LScontract administration in the Middle East. At what point does areduction in scope (amenable to omission by the Engineer) end andremeasurement begin?

If there is an item in the BOQ (that is stipulated to be a contractdoc) for laying 20,000 sq. m of interlock tile and the Contractorends up executing 10,000 sq. m because site conditions end updiffering from drawings based upon which the tender was prepared,is this a reduction in scope? Suppose the Contractor executes




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19,000 sq. m for the same reason?

As I see it, the issue is an equitable one – is the Contractor unjustlyenriched? For there is no hard and fast rule.

In the first scenario, where the quantity was halved, I believe thegeneral sense is that paying the contractor for the full quantitywould be a windfall and the contractor must raise a defense tounjust enrichment in the form you prescribed – arguing that thevalue was shifted from an unquantified item.

In the second scenario, where the actual quantity was 5% less thanthe BOQ quantity, any omission would be tantamount toremeasurement, which generally speaking is not contractuallypermitted under typical LS contracts.

If I am incorrect, that is if in adjudicating these types ofdisagreements some “common” law has emerged – what is thetest?

If I am correct, that is if determining whether we’re confronted witha valid reduction in scope versus a remeasurement turns on theissue of unjust enrichment, then I believe a more thoroughexamination of this legal concept must be more broadlydisseminated to the Middle Eastern CA community.

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Munavvar on January 24, 2012 at 5:47 pm.

Dear Mr. Haris Deen,Very ice to read your article. Very interesting. Can you clarifysomething. Specially the case is for middle east. Lump sumcontract. Like plaster to block work for receiving water proof behindretaining wall. I did not price it during tender, but I was asked tosay it is included as it is a rule that no item can be excluded, so Idid so. Now the site requirement is plaster is not required andwater proof can be done without it. Now does the engineer have theright to deduct the price of plaster taking the rate of normal plasterfrom the BOQ. The drawing shows that plaster should be done toreceive water proof. The Engineer says since it has been shown indrawing but not done at site since it was not required it shall bededucted. I would agree if I had priced it but it has not been pricedand I stated its included in my price. What is your opinion.Thanks

Darren Cain on February 23, 2012 at 11:36 am.

Thanks for your article. Very informative. What about the situationwhere a lump sum (bespoke) Contract contains a handwrittennotation that the “BOQ is guaranteed and forms part of theSubcontract”?

Do you consider the construction of such a statement to mean thatat the end of the Project the contract price will be adjusted (up ordown) following a reameasure of the “asbuilt” Project?





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Many thanks

Darren (from Australia)

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Dr. Haris Deen on February 27, 2012 at 9:36 pm.

Dear Darren,

Thank you very much visiting my blog all the way from Australia.On your questions, please also keep track of the Q&A sectionbecause there are authoritative answers therein.

Now coming to your specific question regarding the statement thatthe “BOQ is guaranteed and forms part of the Subcontract” is veryinteresting. I believe that this a document produced by the MainContractor for the subcontractors to price. The idea of providingsuch a qualification is to ensure that tendering subcontractors allprice at the same level and the same document and thereforecomparison is easy. However, by doing so what the MainContractor is in fact saying is that he is warranting thequantities contained in the BOQ as accurate, any inaccuracytherefore will amount to misrepresentation (Wood, R.D;Claims under GC Works 1).

The position of the BOQ in a Lump Sum Contract is the same insofaras the scope is concerned. The quantities are not to be remeasuredand the Subcontractor (in your case) will have to be paid for all theworks described therein as long as he has executed them (ofcourse subject to adjustment of provisional sums, provisionalitems, prime cost sums and contingencies)

If the quantities warranted are grossly incorrect then theSubcontractor will have a claim for misrepresentation under thecommon law of Australia.

It is therefore clear that, irrespective of what thequalifications are, no remeasurement is warranted in a lumpsum contract where there is no change in the scope.

Having stated the above, I would hasten to add that what is statedin the Contract read as a whole will override any otherconsiderations.

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Gus on March 7, 2012 at 4:41 pm.

Thank you for your article and information:I always worked with FIDIC remeasured contracts and recentlycame across a lump sum one. For Earthwork : The BoQ calls forexcavation up to a certain depth but the actual excavation depthcame three times the BoQ depth and the corresponding quantity.This will also affect the backfill quantity, basement walls,waterproofing, etc…How can we claim the additional quantities?thanks

Dr. Haris Deen on March 8, 2012 at 9:34 am.

The response to this question depends on what the contract states.Is the BOQ a contract document? If so, does the contract state that




http://harisdeen.com/blog/faq





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the quantities stated therein are to be taken as accurate quantities?

In a Lump Sum Contract the quantities are not to be remeasuredwhatever circumstance. This is a Contractor’s risk. However if theEmployer warrants that the quantities in the BOQ are to be takemas accurate quantities, then the contractor will have a claim forgross undermeasurements as a breach of warranty.

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Dalien on March 26, 2012 at 6:49 pm.

Dear all,Thanks for all the above valuable exchange of ideas andexplanations.However, my question is relating a particular case which I could notfind in the above messages.An EPCM lump sum contract signed on the basis of all the risks aretransferred onto contractor side. The contractor also is required tocomply with all owner specifications and request approval for anydeviation.The contractor actually suffering an extra cost due to increase ofquantities of steel structure and civil works.There is no contractual mechanism through the contract,(apparently) that would allow contractor to recover his losses.The questionis, can the contractor by any mean recover his losses?ThanksDalien

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Dear Dalien,In the first place without reading all the documents forming part ofthe contract, I cannot give you an authoritative response.

However, if as you state, the Contractor entered into a contractaccepting all the risks, then it can be fairly assumed that he (theContractor) priced all the risks associated with whatever is requiredto execute the contracted scope. After accepting the conditions andsigning the contract freely, he cannot now complain that he isincurring losses. That is teh name of the game.

However, if the additional works which are not part of thecontracted work are instructed, the Contractor will have a claim forthese additional scope works and can be successful in his claim.

Dalien on March 27, 2012 at 10:47 am.

Dear Dr. Haris Deen ,Thank you for your quick response.I wish I could give you more details but this will take time and thesubject is very urgent and hot.However, is it possible to have your opinion on the fact that, theseincreased quantities are actually representing more than 35% ofcontractor bid ones? Of course contractor had a huge mistakeduring bidding, but since this mistake is considered as (huge), what







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consideration it can be given to it? Moreover, if contractor pretendsthat client was deeply involved during bidding period in the detailedbid clarifications, then he could notice probably the contractormistake, but by saying nothing, does that give a valid credit tocontractor for claiming adjustment of contract price?

Thanks again

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Steven on March 30, 2012 at 6:46 am.

Dr Deen

I have two questions:

1) Is there any practical or substantive difference between acontract expressed as a “lump sum measure and value” contract toa “schedule of rates contract” where both contracts contain what isoften the case called a “Schedule of Rates – Bill of Quantities”.Does it depend on whether the quantities have been provided by theclient or the takeoffs are the contractor’s own?

2) I am reviewing a civil contract which provdes that the principaldoes not give any representation or warranty concerning thecompletenes of the schedule of rates or the accuracy of theestimated quantities shown in the schedule of rates. However alimit of accuracy does apply to the contract rates. It is a lump sumand SoR contract, but the only lump sum component will be fixedpreliminaries and all other costs will be provided as rates in a BoQ.The Principal has supplied the quantities. Do I need to make it clearthat this is a SoR contract as opposed ot a lump sum? Or as perabove, can I call it a lump sum measure and value? If a lump summ&v – does this mean that the contractor takes risks on itemsnotwithstanding that a limit of accruacy will apply on all rates? Do Ineed to make it clear that the quanities are Principal supplied andthe BoQ forms part of the contract?

I hope this isn’t too confusing.

Thank youSteven (Australia)

Dr. Haris Deen on April 4, 2012 at 10:15 am.

Thank you Steven for contacting all the way from ‘Down Under’.

1. My understanding of a “Lump Sum” contract of whatever natureis that for the “Lump Sum” stated in the contract the contractor isrequired to complete the works providing whatever is indispensablyrequired for its construction (Ref: Williams v Fitzmaurice). Howevera “Lump Sum” measure and value can only mean measuring theexecuted works for interim payments. Any interpretation otherwisewould mean introducing a ‘remeasure element’ to a “Lump Sum’contract. A schedule of rates is a very useful instrument in theevaluation of variations and if included should be used only for thatpurpose. Of course having said this I must clarify that whatis stated in the conditions or particular conditions of thecontract will override any other considerations.






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2. The second question relates to a Lump Sum Schedule of RatesContract. This can only mean that the Lump Sum contract price issomewhat fixed as an upper limit, something like a GuranteedMaximum, although not the same depending on what the contractsays. The quantities are not warranteed to be accurate butestimated quantities to be remeasured. The only lump sum part asyou mention is the Preliminaries BOQ. This is perfectly in order, butmust be clearly defined in the contract conditions as to howthis should be administered.The contractor’s risk is only in relation to the lump sum portionsand not to the remeasured portions. Again what is stated in theconditions or particular conditions of the contract willoverride any other considerations.

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Naveen on April 4, 2012 at 11:15 am.

Dr Deen

I am working in the Middle East Public Sector as a Q.S. The contractI am referring to is a JCT Lum sum contract without quantities .TheTenderer was given the Schedule of Item for the contract or u cansay a blank Bill of Quantities and the specifications.The Tenderer issupposed to calculate quantities from the drawings and insert hisrate as per the specifications.

During Tender evaluation,it is found that the lowest Tenderer hascalculated quantities on the lower side as compared to otherTenderers & also as compared to the quantities calculated by us forBudget estimate.The Tenderer was offered a opportunity to explain the deviation inquantities but has failed to justfy the same.Should he disqualified which I firmly believe or should his bid beaccepted since the contract is as per the Lump sum contract & isbased on Drawings and specifications?

Dr. Haris Deen on September 26, 2012 at 9:32 am.

Dear Naveen,Thank you for your query. The procedure stated in the JCT forcorrection of arithmetical errors in a tender is the universallyaccepted principle.In every tender, whether under the JCT, FIDIC or any otherCondition of Contract, the basic principle is that what is stated inthe Form of Tender (FOT) is the tender sum, however computed orcalculated. If this sum is different when any arithmetic check ismade on the BOQ or other computation, and errors noted, whethersuch errors make a difference in the bottom line total, that iscarried to the FOT or not, the error must be intimated to thetenderer and he must be asked whether he is prepared to stand byhis tender or withdraw same.FIDIC does not indicate any methodology for dealing witharithmetic errors in this manner, because FIDIC is intended forinternational use and the principles involved will depended on theculture and policies of the country or client opting to use FIDIC. Forexample, in most countries of the Middle East, where the arithmeticcheck reveals a lesser amount in the bottom line total than thatstated in the FOT, then the tenderer is asked to reduce his bid tothat amount. On the other hand if the bottom line figure is higherthat what is stated in the FOT, the tenderer is asked to accept theFOT sum with corrections to the BOQ.






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You will therefore see that there is no hard and fast rule. I wouldhowever, support the JCT methodology.

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Gus on April 5, 2012 at 1:10 pm.

Dear Dr. Deen:I work for a General Contractor and recently I submitted a valueEngineering proposal to replace concrete retaining walls (stonecladded finish) with Earth retaining system (geogrid walls wherestone cladding is not required). Our contract FIDIC 87, states thatsavings are split 50/50 between Employer and contractor. When thenumbers were worked out for the proposal, stone caldding was notincluded. After the approval was granted from the Employerthrough a variation order, we tried to claim the saving on the stonecladding. The Engineer (who also missed the stone cladding whilereviewing our proposal) is refusing stating that stone cladding is notincluded in the value engineering structural system and thusunwilling to share the saving with us. Please provide somefeedbackl on whether or not stone cladding saving shall be shared50/50.Thank you.

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Gary Jones on April 11, 2012 at 10:03 am.

Dear Sir, one a lump sum contract is in place, how would youexpect the relationship to be between both parties i.e. owner andcontractor. For example should the owner actively try and workwith the contractor to ensure that the contact price is doable, sincewe often see the owner trying to control the contractor such that italmost ends up like a reimbursable condition with a lump sumcontract. Basically what I am trying to say is how much should weallow the owner to get involved with the actual works during EPC?


Dear Gary,Whatever the nature of the procurement strategy is, whether lumpsum or remeasured or something else, project managers alwayslike to work as a team with everybody involving in projectexecution towards a common goal.

However from your question am I to understand that the Employeris interfering to the detriment of the project? In any event, there isno way that the Contractor can prevent the Employer’s involvementto oversee or ensure that his requirements are met. If suchinvolvement causes variationa or causes the Contractor to incurcosts that were not foreseen then the Employer must pay theContractor these costs.

When the Contractor submits his tender, it is his responsibility toensure that the Contract Price is “doable”. Similarly, if the ContractPrice was so low that would cause problems for the Contractor andknowing this full well, the Employer has awarded the Contract, thenthe Employer must suffer the consequences as much as theContractor. There is no such responsibility on the Employer to







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support a Contractor who submits a low tender.

The Contractor cannot prevent the Owner’s involvement to anydegree.

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Dinesh Subasinghe on April 18, 2012 at 10:49 am.

Dear Sir,

1.If the contract is Lump Sum all the variations can be remeasured?, which are apart from the provsional sum and optionalitems.2.In the same lump sum project Consultant used to revised thecontract sum when issuing the variation order, hence still is it validto remeasure?

Kindly help me on this.

ThanksDinesh

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Dr. Haris Deen on April 23, 2012 at 12:09 pm.

Dear Dinesh,

Yes, variations irrespective of the nature of the contract – lumpsum or remeasured, usually are treated as remeasured unless theEngineer and the Contractor agree a lump sum price prior toexecution of the variation.

If you are referring to the Qatar General Conditions, then Clause 51gives the right to the Engineer to issue instructions that will varythe Contract Price without vitiating or invalidating the Contract.Therefore, the practice of indicating a change in the contract pricein a VO is usually acceptable and good practice.

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Dr. Haris Deen on June 19, 2012 at 1:06 pm.

Dear Dinesh,Yes Variations irrespective of the nature of the contract – lump sumor remeasured, usually is treated as remeasured unless theEngineer and the Contractor agree a lump sum price prior toexecution of the variation.

If you are refering to the Qatar General Conditions, then Clause 51gives the right to the Engineer to issue instructions that will varythe Contract Price without vitiating or invalidating the Contract.Therefoe, the practice of indicating a change in the contract price ina VO is usually acceptable and good practice.

Naveen on April 23, 2012 at 12:52 pm.

Dear Dr Deen

I have observed that correction of arithmetical errors of Tender









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bids during Tender Evaluation are dealt with differently in LumpsumJCT & FIDIC Building contracts.The contract I am referring to is the contract without quantitieswherein the drawings and specifications form the basis of thecontract and the Tenderer is given a Blank Bill of Quantity withschedule of items and rates and quantity to be filled in .In FIDIC the SOR are arithmetically checked and if any errors inSOR the Form of Tender sum is corrected and the Tenderer has toabide by the new Form of Tender sum. If the Tenderer does notagree to correct the errors the bid is disqualified.

But in JCT as per Series 2 ,Practice Note 6, the bid submitted by thelowest Tenderer shall be opened and checked arithmetically.Thereare two alternatives to deal with arithmetical errors.First option is that the arithmetical errors should be pointed out tothe lowest Tenderer and he has option to stand by the original Formof Tender sum or else withdraw.That is no correction in price ispermitted.If the Tenderer elects to stand by his tender then thetotal amount of error is expressed as percentage of the correcttotal of the BOQ.In the 2nd option, correction of Tender price is permitted.In bothcases opportunity is given to the lowest Tenderer to stand by hisoriginal Form of Tender sum but this is not the case in FIDICwherein no opportunity is given to the lowest Tenderer to stand byhis original Tender bid price i.e Form of Tender sum.

How is it that there are two so divergent ways of dealing witharithmetical errors in building contracts? Which do u feel is thecorrect way to go about dealing with arithmetical errors in Tenderbids for Lump sum building contracts based on drawings andspecifications? Is it correct to alter the Form of Tender sum forarithmetical errors in Lump sum Building JCT contracts withoutquantities?

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Gus on April 24, 2012 at 12:17 pm.

Dear Dr. Deen:I work for a General Contractor and recently I submitted a valueEngineering proposal to replace concrete retaining walls (stonecladded finish) with Earth retaining system (geogrid walls wherestone cladding is not required). Our contract FIDIC 87, states thatsavings are split 50/50 between Employer and contractor. When thenumbers were worked out for the proposal, stone caldding was notincluded. After the approval was granted from the Employerthrough a variation order, we tried to claim the saving on the stonecladding. The Engineer (who also missed the stone cladding whilereviewing our proposal) is refusing stating that stone cladding is notincluded in the value engineering structural system and thusunwilling to share the saving with us. Please provide somefeedbackl on whether or not stone cladding saving shall be shared50/50.Thank you.


Dear Ghassan,






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Thank you for your query. I believe that I have already respondedto this query. However, any VE proposal under FIDIC should takeinto account all that is removed or deleted in replacement of thealternative work. In your case the stone cladding was part of theworks priced for. Therefore, irrespective of whether you and theconsultant, inadvertently failed to take into account the stonecladding during the VE assessment, does not matter. In calculatingthe final analysis everything that constitutes the deleted workshould be taken into account and similarly everything thatconstitutes the replacement works must also be taken into account.You should ask the consultant, if the intention was the deletion onlyof the said works, then would he have not taken the stone claddinginto account to make the saving?

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Muhammad on April 24, 2012 at 1:54 pm.

Dear Dr. Deen,

Nice and interesting to read your article. I am new into projectmanagement. I have a query which is little bit different andawkward.In one of my projects (which is Lumpsum Contract), I have changedthe original structural steel to Pre engineered Building with theconsent of the Client. At the end of the day, the quantity of steel asper the revised design was 40% lower than what was in the originaldesign.The client demands for a negative variaton to be deducted from theother positive vairations. Is the client right? Or I am eligible for thequantities as per original design.


Dear Muhammad,I am flattered that Project Managers also visit my blog. Keep doingso, because very soon I will be writing on Project Management aswell.

Coming to your question you have not stated the Form of Contractupon which your contract was awarded. However my response is asfollows:

1. Irrespective of the form of contract, what you have suggested isa change in the scope and in a lump sum contract a change in scopewill be treated as a variation. The net result (addition or deletion)can be decided on remeasure basis (as this is a scope change) oras a lump sum adjustment. Since the proposal to change the scopecame from you as contractor, then the Employer has the right toask for a reduction as in your case, or if the change itself results inan increase, the Employer can refuse to pay the increase,depending on what you as contractor agree with the Employer. Onthe other hand if the scope change was instructed by the Engineerand results in an addition or reduction beyond the permitted 20% inaggregate – under Qatari Law 26, then you as contractor will beentitled for new rates on the work which exceeds beyond 20%. Thatmeans, if the aggregate value of the varied works, say works out to50% of the contract sum, then upto 20% of this value the Engineerwill apply the contract rates. The next 30% will have to be agreedwith the contractor.

2. If the Form of Contract used is the FIDIC Red Book, it could have






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been possible for you to have offered this as a value engineeringproposal. In which case if approved you would have been able toshare the savings at 50% to each party. That would be only afterdeducting your design and other costs.

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Musa A ALNATOOR on May 15, 2012 at 5:47 pm.

Dear Dr Haris Deen,

I hope you remember me as one of your students in “ClaimsSeminar in Qatar” last April, I will appreciate if you advise meabout the following case:

I am a contractor with LS contract, BOQ is not mentioned as acontract document , but there is a BOQ signed and stamped by thetwo parties (again it is not mentioned anywhere that it is a contractdocument) – I am new to the company now the client is asking tochange some items like Aluminium works to uPVC, they want to buymaterials themselves and let me fix, in addition he delayed decisionin many submittals (delay documented). Can you help me in dealingwith this?

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Dear Musa A AlnatoorThe BQ if included, whether stated as part of the contract or not,should nevertheless be accepted as a contract document forreference as both parties have stamped and accepted the BQ assuch by signing and stamping the document. However, the BQshould not be used to decide the scope of work to be executedbecause, as you say that it is not mentioned as forming part of thecontract.It is usual (and accepted practice) in the construction industry touse the BQ (if provided) for pricing variations. It is perfectly inorder for the client to vary the materials for different or in yourcase cheaper materials to effect savings. However, by procuringthe uPVC materials himself the client has denied the contractor(yourselves) from any trade discount or profits that you might havemade from the procurement of the materials. Therefore, in myopinion, you are entitles to receive profits on the cost of thematerials. I am afraid that I cannot help you any further on thismatter without knowing all the facts by investigating all thedocuments within the contract.

Mourad KRICHEN on June 5, 2012 at 3:16 pm.

Dear Dr. Deen,

I had really appreciated the ‘hot debate’ that you had initiatedconcerning the variations in Lump Sum Contracts.

I had also noticed that on several occasions, you had insisted uponthe principle that ‘ALL DEPENDS ON WHAT IT IS STIPULATED IN THECONTRACT CONCLUDED BETWEEN PARTIES’.

Actually, I do not fully agree with you at this respect. Parties may







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conclude on an agreement and sign it; however, courts may notconsider some of its terms and/or conditions although parties hadpreviously accepted them. In other words, I want to say that aContract does not make the law (nor justice). An Employer can not,from one hand, offer to his Contractor an agreement on a lump sumbasis, then from the other hand he entitles himself in the sameagreement to ‘review’ up/down the lump sum amount subject to thevariations that he may order during the performance of theContract. This is unquestionably an UNFAIR DEAL, and courts maydecide unexpected awards at this respect. Surely, the issue is morecritical (from the Contractor’s side) when it comes to variationsreducing the amount of the Lump Sum; however, we must keep inmind that even for the case of variations resulting in a increase inthe lump sum amount, not all Contractors are motivated to performthem (one of the reasons is related to their very busy workloadplan).

I would highly recommend that all parties to an agreement mustgive high consideration to the way they draft that agreement insuch a manner to make it based on a clear FAIR offer to all ofthem.

In conclusion, I want to sat that Employers being ‘too’ smart in theway they draft their agreements may not always work out as theywould have wished.

Mourad KRICHENContracts & Procurement Engineer

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Dear Mourad,

Thank you for your comments on my articles on the Lump Sumcontract principle and documentation. You do not however supportyour opinion with authority. You are advised to read my articles onthe laissez faire doctrine in the formation of contracts.

This doctrine has been succinctly explained by the British Judge SirGeorge Jessel MR in the case of Printing and Numerical Registeringv Simpson (1875) LR 19 Eq 462 thus:

“If there is one thing which more than another public policyrequires it is that men of full age and competentunderstanding shall have the utmost liberty of contracting,and that their contracts entered into freely and voluntarilyshall be held sacred and shall be enforced by Courts ofJustice”

Furthermore Lord Pearson in Trolloppe & Colls Ltd v NorthWestMetropolitan Regional Hospital Board [1973] stated:

“The basic principle is that the court does not make acontract for the parties. The court will not even improve thecontract which the parties have made for themselves,however desirable the improvements might be.”

Therefore you can see that all documents forming part of thecontract will be enforced by the courts, unless the contract hasbeen entered into under duress.






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Robert H Drouin on July 7, 2012 at 8:20 pm.

Dear Dr. Deen,

Thank you for the very interesting and helpful blog !

As I discovered your site while searching advises and definitions, Iwould like your opinion on a contractual and legal matter:

We have a Lump Sum construction contract were we must indicateour manpower, amongst other quantities information and itemiseddetails, which we did, through the overall estimated manhours andhistograms by trade. There is no where mention of manhours inthe whole document, but only manpower.

In the definition of terms, neither “manhour” nor “manpower” areshown.

Although the Client said this is not necessary in his controlsystem,he is requiring that we produce our manhours per item ofthe construction scope of work. As we are on a Lump Sum, we fearthat the Client may come back during the project to try andcompensate some change orders with hours that we have gained inproductive items (in case of substancial claim and if the overallproductivity was good, it happened that the justice would onlycompensate for the actual difference between the bidded hours andactual hours spent, which would generate a large loss for thecontractor).

What are the risks and negative impact that may occur if wepresent our detailed manhours per item?

Could you please give me your opinion on the matter?

Thanking you in anticipation and best regards,

Robert Drouin,P. Eng, MBA

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Dear Robert,Sorry for the delay in responding. Firstly, I was researching for anycases to support my response, but I could not find any specificones. However, following the rulings in San Paolo and Williams vFitzmaurice, any lump sum contract is executed on the basis thatthe contractor has to execute all that indispensably required tocomplete a known scope of works. Extending this principle it isreasonable to suggest that how the contractor has priced the bid ina lump sum contract is a matter for the bidder and should not affectthe payment terms. Having said this, I must clarify that projectmanagers often require the breakdown of the rates in the manneryou have stated. This is purely for the purpose of evaluatingvariations and should not be used for valuing the utilisation ofresources in execution of the Works. This is the best I can dowithout access to all the documents forming part of the contract.






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Michael on September 11, 2012 at 7:34 pm.

Dr Deen,I have read your article and the comments with interest.I have a query however regarding JCT intermediate BuildingContract 2005.We have a refurbishment project where the client has provideddrawings, specification and a schedule of works with descriptionsand provisional quantities for nearly all the items on the project.These quantities have then in many cases been drastically reduced(up to 80%) as a lot of the works were not required. The clients QSis valuing the items on a prorata basis leaving us with a massiveunder recovery.There are no detailed bills and some items do not have quantities atall.Should the contract be considered lump sum in such circumstancesand is the client allowed to deduct the value of the extensive worksthat were not required in such a manner.What is your viewRegardsMichael

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Khristine on November 14, 2012 at 4:01 pm.

Good day!

I would like to ask regarding the manpower issue.We advise the contractor to execute some additional jobs then theywill claim it through time sheet basis. When I received theirvariation order, they have included in their claim the ProjectManager. My question is, are they allowed to claim for the ProjectManager? These additional job is not part of the Lump SumContract. This is my first time to encounter a variation including theProject Manager.

Thanks.

Rgds,tine

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Nasir Saleem on March 5, 2013 at 10:05 am.

In our Lump Sum Contract it is mentioned that the haulage distancefor dumping the excavated material from the Construction Site tothe Dump Site (tip) (to be provided by the Client) is 45km.

The Client however provided a Dump Site which is about 22km fromthe Construction Site and he is claiming savings (reduction toContract price) based on this. Is the Client’s request for savings inthis instance valid considering that this is a Lump Sum Contract?


Dear Nasir Saleem,






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In a Lump Sum contract the risks are shared by both sides and assuch if the haulage distance was more than what is stated in thecontract the Engineer will use the argument that this was a lumpsum contract and no extra charge will be considered. Using thesame logic and argument, the Engineer cannot deduct anything forthe reduction in the haulage distance.Dr. Haris Deen

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Ihab Khairy on March 6, 2013 at 12:26 pm.

Dear sir,

I am Eng. Ihab khairy, 13 years QS experience, and i have onequestion:

If the contractor are received a site work instruction for additionalworks, and the project is Lumpsum project, so the additonalquantity should be measured from the shop drawings, but i amasking about the omission quantities, the contractor should bemeasured it from tender drawings? or omit the BOQ quantities forsame item? please clarify

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Dear Ihab Khairy,The item to be deducted is not remeasured, It is completelydeducted from the Contract according to the BOQ – Because you donot measure lump sum items. However for the additions – since thescope is different you must measure the work to be executed fromthe IFC drawings and price the item accordingly. The quantity maybe equal to, less than or more than what was deleted. It does notmatter.Dr. Haris Deen

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Zeid on March 25, 2013 at 11:12 pm.

Dear Dr. Deen,

I have a question regarding variations in lump sum contract.

First the consultant is following the BOQ, Drawings & specs. forevery single item.

we got a variation with a similar items that exists in the BOQ, arewe entitled to quote the same unit rates for the new variationknowing that the tendering stage done before six months.

Thank You & Regards,

Zeid


Dear Zeid,







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To give you a proper answer, I need to know the Conditions ofContract upon which your query is based and the country in order toconnect it with the law,

Generally all conditions of contract stipulate that variations ofsimilar nature to what is provided in the BOQ as an iten will bepriced at the rate or price in the BOQ or Schedule of Prices. Thefact that it is a lump sum contract does not matter as what is statedin the conditions of contract will override any other consideration.Dr. Haris Deen

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Mountasser on April 16, 2013 at 11:25 am.

“Such contract the contractor’s obligation is defined in wide terms.His obligation is to complete the whole of the works. The workshave not been described in great detailed as would be in a bill ofquantities. “The shorter and simpler the description of the work tobe carried out, the more difficult it will be for the contractor tocontend that work is extra” (Uff, 2009). The additional work for thefoundations will not entitle the contractor to an extension of timebecause it is part of the widely defined scope of works andtherefore included in the original time for completion. “Suchnecessary works are not extras, for they are impliedly included inthe lump sum” (Furst and Ramsey, 2006). This is clearlydemonstrated in Sharpe v San Paulo Railway Company where thecontractor had agreed to build a railway between fixed termini for alump sum. Included in the lump sum was excavation of just overtwo million cubic yards which was calculated by the engineer. Itturned out that actual volume of excavation was in fact just overfour million cubic yards. The contractors claimed they were entitledto a great deal more due to the understated engineer’sspecification. However the court of appeal held that the contractorscould not claim for the additional excavation. As per Sir W.M.James, L.J.:In this case the contractors undertook to make the railway, not todo certain works; but they undertook to complete the whole line,with everything that was requisite for the purpose of completion,from the beginning to the end; and they undertook to do it for alump sum …”That is the risk that the contractor takes on a widely defined scopeof work and he must judge for himself and be satisfied that he hasallowed for all that would be necessary to complete the works.”

This is quoted article from other essay but useful,

great job

thanx D. Haris

Mountasser

Archana Mayadunne on May 12, 2013 at 4:53 pm.

I’m having this issue in pricing this tender for a design & buildcontract. As the contract BOQ cannot be changed, when a tender





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drawing revised, what will be the process on including those in BOQfor pricing?And what if i price the given BOQ from Client without alteringanything in BOQ and price properly my alternative offer? i’m littleconfused here. Kindly request anyone to help me out.I’m in Qatar & 66538470 is my mobile number. I request earlyadvice as i have to submit the tender within another two weeks.

Thanks & Regards,Mayadunne

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Rey on May 19, 2013 at 12:44 pm.

Sir Harris,I have a question pertaining to “Art. 16 of Law No. 8 of 1986amended by Law No. 26 of 2005 restricts the right of the engineerto increase or decrease the works by more than 20% of thecontract sum”.My questions are?– We have a project here in Qatar using Qatar GCOC Lump sumcontract. non in the contract mentioned that in exceeding 20% ofvariation contractor has the mandatory right to make his own BOQ(meaning deleted the existing BOQ and prepare according to hisrate, e.g duct works was quoted as “1 lot” since there is anadditional floor required by client they replaced the 1 lot to m2) itold them to use or priced the ductwork with thesame unit 1 lot.– Is it a mandatory law the 20% limit for variation even it is notmentioned in Particular conditions of Contract & can you elaboratethis law.– I ordered the contractor to use the BOQ rate as reference rate forthose item the same in the BOQ and use new rate for new itemssubstantiated with quotatiuon to be agreed by both parties.– Can i quantify the excess to 20% for all new items only with thenew rate & use the same rate for all items already in the BOQ?Hope you can reply the soonest possible time.

Thank you in advance,Rey of QATAR

Admin on May 22, 2013 at 6:20 pm.

Dear Rey,Thank you very much for your query. There are two issuesconnected with your question.Firstly, Law No. 26 is intended to protect Contractors, particularly inrespect of lump sum contracts. Please remember that the 20%increase or decrease is from the total contract sum and not fromindividual items. Also it does not mean that the Engineer cannotincrease or decrease the scope of contract beyond 20% either way.He can, but the Engineer must compensate the contrator for loss ofprofit if there was a decrease and different rates if there was anincrease.

In your case,I would not allow the contractor to remeasure theducting on m2 basis when he has submitted a “Lot” price. He mustbe made to provide a proper breakdown of the “lot” price to obtaina rate. Keeping in mind that Law 26 applies only when theomissions or additions are in excess of 20% of the total contract





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sum – not on individula items, it is not acceptable to remeasureany part of the work in alump sum contract. You may request aBOQ only for the changes while deleting the omitted works whollyfrom the contract BOQ.New rates are only for the work in excess of 20% and not for allthe work, although changed.Where, BOQ rates are applicable they can be used only upto 20%and new rates for the work in excess of 20%.

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Leonard Nzeduru on May 31, 2013 at 8:54 pm.

Dear Haris,I signed a Lump Sum Contract to rehabilitate a hospital in October,2011. The contract is in 3 phases as the client did not want to closethe entire facility during the rehabilitation.

The BOQ provision for plumbing, tiles and a few other aspects wereexhausted in phase 1 as the other 2 phases has been in use sincethe rehabilitation commenced. Who pays for the provision of theseitems as we are currently rehabilitating phase 2.

Thank you as I await your reply,Leonard, Abuja!

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Emmanuel Tinkasiimire on June 11, 2013 at 1:02 am.

Iam supervising a consultant who is executing a lump sum contractfor the design and supervision of a 12 storey office block. The ToRindicated an estimated current and projected built area of10,000sq.m but has increased to 50,000sq.m. after the design. Allthe other items in the statement of requirements have remainedunchanged. Payments are pegged on deliverables like; InceptionReport, Conceptual Designs, Scheme Design, Final Design Report,Tender action, Supervision e.t.c, but in percentages. Would youthink that the consultant is entitled to a corresponding increase infees as he is insisting?

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Vicktor on June 16, 2013 at 3:17 pm.

HiIf an item in boq is 500m2 for painting and if in reality as acontractor I have done 5000m2 am I entitled to get compensationclaims for the same. We r operating a lumpsum contract in oman.Also I had quoted higher price fir Grc but the client citing the samemodified it and changed it with new rates. Also while signingcontract the client said we r reducing 50% Of the blockworkquantity as we are reducing the no. Of walls. But the quantity itselfwas wrong and I executed the full but they r clearing the same 50less. What is ur take on these 3 issues. 1 painting 2grc 3 block.Regards





http://evgroup.in/



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Vicktor on June 16, 2013 at 3:23 pm.

Dear sirAnother instance happened to me. Missing items in boq butspecified in drawing. What is the heirarchy in a lumpsum contract.Should I execute something which I have not quoted for.

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Harsha on June 24, 2013 at 2:26 pm.

Dear Sir,

please describe what happen in the Lump Sum Contract one boqitem mentioned 50m Cable Length, but at the time of executions qtyof cable is 125m. if contractor can variations order?please note at time of quoting not provide the cable path or sitelayout.

BRHarsha

Simon Mattimoe on August 20, 2013 at 1:59 pm.

Dr. Harris Dean,We are currently working on a Lump Sum Contract.We are “back to back” with our sub contractors.The client issued stage D information including a schematic. TheStage D estimation did not show any earthing cable sizes. We madean allowance of 95mm. The total allowance for the earthinginstallation was £40,000 including earth bars, cables andterminations This is clearly identified in the Contract pricingschedule.The client issued Stage E information. The new stage E informationupon which the contract is based showed all earthing cables as300mm on the schematic in small writing at the edge of the page.The sub contractors estimator appears to have missed the changefrom the 95mm cable to the 300mm cable.The client now wishes to reduce his 300mm cable to lower sizes.The client is seeking monies for this reduction.Each meter that we give back based on a 300mm cable means thatwe are giving back more than we had included within the bid.Within our quantified schedule of rates which forms an appendix tothe contract (although containing errors) clearly states 95mm.However the schematics from the designer clearly show 300mmcable.Is there an argument to only omit the 95mm cable that wasincluded? Is there a case for “what didn’t go in can’t come out”?Normally under a lump sum contract we would value the variationson their own merit. If we do this on this occasion we will give backmore than what we have allowed as well as still having to buy thesmaller earth cables, earth bars and terminations with £ Money.We wish to present a case on behalf of our sub contractor to avoid


http://evgroup.in/




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any possibility of punishing them further and ultimately ensure thatthey don’t go out of business!

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Dear Simon,I am afraid that any argument that you present in support yoursubcontractor is likely to fail, unless you have requestedclarification of cable sizes at the tender stage and 95 mm wasconfirmed. Or if you had stated that in the absence of cable sizesyou had priced the earthing cables for 95 mm, then you can fight acase. It appears from your comment that neither of the above hashappened, therefore it would appear that you might have difficultieshere. However, you may use your quatified schedule as a basis andput forward an argument, using any pricing notes that your subcontractor might have, and supported by prices from recognisedcable suppliers that the prices of 95mm and 300 mm cables areobviously different, then an arbitrator might support your case as agenuine mistake, depending on the nature of the argument that youare prepared to put. Good luck

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Amar on August 29, 2013 at 3:35 pm.

On contract award it was realized ‘Provisional sums’ item andamount are mentioned in BoQ, but there in no clause withinbespoke contract conditions for Provisional sum. Shall this item betreated as lumpsumfixed price.What external document would lawfully substantiated for the“Provisional sum” definition to the Client/Consultant?

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Dear Amar,No, If the sums have been stated as provisional sums in thecontract BOQ and the BOQ is a contract document, then thesecannot be treated as lumpsum fixed price. Please refer to FIDICRed Book SubClause 13.5

Sancho on October 12, 2013 at 1:30 pm.

Dear Harris,This is another issue I encountered recently as a ContractAdministrator in one project I am handling in MENA region. I am inthe Client side.

The lump sum contract attached 2 documents – Scope of Works &BOQ. Many clauses in the contract always mentioned about theScope of Works, but BOQ has never mentioned in any of theclauses. In one of the notes in the Scope of Works, it states that “Incase of discrepancies, this Scope of Works takes precedence overthe BOQ.”. The fact is that there are many discrepancies betweenthe BOQ & the Scope of Works, BOQ favors the Contractor, Scope ofWorks favors the Client.









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The Problem: Though all pages in the Contract were all signed byboth parties, the Scope of Works (as annex to the contract) wasonly signed by the Client (no signature from Contractor). While inthe BOQ both parties have signed.

My Question: Between these 2 conflicting documents, which shouldgoverned?

Please need your opinion.ThanksSancho

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Dr. Haris Deen on October 12, 2013 at 3:18 pm.

Dear Sancho,Based on the following decided cases:Williams v Fitzmaurice (1858) 157 ER 709Walker v Randwick Municipal Council (1929) SR (NSW) 84 and thefamous San Paolo case, no single document decides the scope.Unless I have access to all the documents submitted during thetender I cannot give a proper opinion. The BOQ does not decide thescope. The contractor will be required to do everything required forthe completion of the intended projects with the minimumrequirements, unless anything else is specified.Dr. Haris Deen

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Dear Dr. Harris,Thanks for reply. The Contractor refuse to do some items ofwork mentioned in the Scope of Works as they cannot foundin the BOQ. Thus, the Contractor stands firm on BOQ as it issigned by both parties, while in the Scope of Works only theClient signed it. The project is not completed as Contractorrefuse to execute unless it is treated as variation order, say“Roadway Markings & Signs” is stated in the Scope of Worksbut is not found in the BOQ.Regards,Sancho


Dear Dr. Harris,

I have another inquiry. If any of the pages or its appendices of thecontract not signed by one party (say only Client signed), can it stillbe binding? Or that particular page incompletely signed can beconsidered ineffective or still binding?

Our contractor dispute the Client as one clause is pushed by theclient to the contractor to comply. But Contractor rejected as thatparticular clause page is not signed by him, only the client signedit.

Please advise.

Regards,Sancho







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Dear Dr. Harris,

Another issue regarding lump sum contract wherein construction oftemporary facility structures are included in the contract scope ofworks to be implemented by the Contractor.

My question is who will be the owner of these temporary structuresafter completion of the project, is it the Client or Contractor?considering that it is stated in the scope and BOQ to be provided bythe Contractor. For example, the temporary security fencing of thecamp, is the Contractor have the right to take it back aftercompletion of the project? Of course he will use this one to theirnext project.

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Vladimir on February 14, 2014 at 11:32 am.

Dear Dr. Haris,

I would appreciate some help on Lump Sum contract issue.

On a Lump Sum Fixed price contract where Pricing Schedule used toevaluate variations and for interim payment, significant mistake inquantities was noted. I will explain.

Pricing Schedule was prepared by the Consultant, but the TradeContractor was to remeasure all quantities and add/omit any workas required and in line with tender drawings and specification.Pricing Schedule included for 110 doors.During the tender period addendum drawings were issued andclearly showed only 40 doors required.The Trade contractor didn’t adjust qty of the doors and priced for110 doors instead of 40. At the same time some other quantitieswere adjusted by the Trade Contractor. Lump Sum Fixed Priceagreement was signed.

Can the Consultant reduce contract sum accordingly? Or shall theTrade Contractor be paid for 110 door even so only 40 doorinstalled?

RegardsVladimir

Dr. Haris Deen on February 14, 2014 at 7:31 pm.

Dear Vladimir,Your case is a typical lump sum contract and you have explainedyour problem correctly making it easier for me to express anopinion. Let us take a hypothetical situation where your QS hasindicated 40 doors in the Pricing Schedule instead of 110 doors and110 doors are actually required, would you then agree to pay theTrade Contractor for the additional 70 doors? of course not. You willobviously adduce the argument that this is a Lump Sum Contract







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and the risk is with the Contractor. The same applies in the reversecase as yours. You will be in breach if you try to reduce the no. ofdoors now. If your QS made the mistake he must bear theconsequences and the risk is with the Owner.

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Alexandra on October 19, 2014 at 5:34 pm.

Good afternoon Dr. Deen,

I am new to the construction industry and have beenfollowing your articles with great interest. I am slightlyconfused about this comment. If the contractor can claim forthe 110 doors even though only 40 were installed, wouldn’tthis be the same as claiming for works not executed andtherefore, unjustified enrichment?

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Dear Alexandra,I believe that I responded to your query. It depends onthe state of the BOQ as to whether it is contractdocument. If 110 doors have been measured but only40 doors are needed, then certainly the contractorwould have noticed this at the time of tender. If thecontractor can proves that the cost of 70 additionaldoors will compensate him for items missed out fromthe BOQ which he is required to provide under the LScontract, then he will be entitlled for the additional 70doors. The contractor is certainly not entitled forpayment where he has not excuted work and converselythe Employer is not entitled to get the contractor to dowork without any payment

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Faizullah on March 16, 2014 at 6:02 pm.

Dear Sir,

We have a problem in one of our Contract which is based on QatarGeneral Conditions of Contract. It is lump sum project. TheContractor and Employer agreed on cost and time of a variationwork and VO signed by both of them. Later on it was realized thatContractor has wrongly valued the works and even the Consultantdid not check and hence variation order is now closed. My questionis ” Is there any way to reopen this variation order”?

thanks and regards,


Dear Faizullah,Thank you for your query. Unfortunately the General Conditions donot provide for any corrections of a VO after agreement. Alsoremember that the VO is issued only after both parties have signedit, The Contractor should have noticed this before signing the VO.Having said this, if you can prove a genuine mistake the Consultantand Engineer might act reasonably to correct the VO. However,they are at liberty to reject as well since it is the Contractor’sresponsibility to ensure correct pricing of the VO.









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Dr. Haris Deen

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Faizullah on March 19, 2014 at 9:09 am.

Dear sir,

Thanks for your response.The error is of such a magnitude that we are even planning to takehelp of civil law i.e law no 22 of 2004 which says that errors are tobe corrected. Please advise in light of law.

Thank and best regards

Faizullah

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Dr. Haris Deen on March 19, 2014 at 12:50 pm.

Dear Faizullah,Yes you might try under Articles 130 to 133 which states as follows:Article 1301. Where a contracting party commits a mistake without which hewould have not given his consent to the terms of the contract, suchcontracting party may demand voidance of the contract if the othercontracting party commits the same mistake, or knows of itsoccurrence, or could easily have detected such mistake.2. However, voidance of a contract in respect of gifts may berequested without taking into account the other contracting party’sparticipation in the mistake or his knowledge thereof.Article 131The effect of the mistake shall be enforced even where it applies tothe rule of law concerning any matter of the contract.

Article 132A party whose consent was the result of a mistake may not insiston such mistake in a manner contrary to the principles of goodfaith. The other party may, in particular, insist on or plead to theconclusion of the intended contract, provided that substantial harmis not caused.Article 133The validity of the contract shall not be affected by merearithmetical or writing mistakes. These errors must, however, besimply corrected by mutual agreement between the parties.However it depends on how you submit your claim. The statementsare important to establish mistake from both sides or maliciousintent from the Engineer.

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Faizullah on March 19, 2014 at 1:07 pm.

Dear Sir

Thanks for your help. My last question is that the proof ofmalacious intent of engineer would be difficult but it caneasily be proved that Engineer was negligent in assessing orvaluing the varied works.Regards








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David C on July 27, 2014 at 10:54 am.

Dr. Deen

I have read your article and the numerous contributions andexamples with interest. This is an ongoing basis for dispute in theME. To my mind Employers in the region are trying to achieve theadvantages of remeasurement and the advantages of a lump sumcontract in the same contract, without the risk associated witheither model. Where quantities and items not allowed for in the Billare required, they refer to the lump sum basis of the price andexpect the Contractor to have allowed for such in his price. Wherethey believe that the quantities in the Bill are overstated (normallyprepared by the Employer), the refer to the Doctrine of Restitution(or unjust enrichment) claiming that the Contractor cannot be paidfor work not executed.

If the Doctrine can be used in the way suggested, the unjustenrichment could be the simple overstatement of quantities in theBill prepared by the Employer and the Employer is then entitled toremeasure when it is financially advantageous to him, on the basisthat the work was not executed, which happens frequently in theME. I don’t believe that this interpretation of the doctrine is correct.My view is that if the Employer wishes to vary the scope of theContract, the rates in the Bill should be used to evaluate the valueof such a change and no further. This change, however, must bebased on a change to the drawings and specifications on which thetender was based. If your contention that the Bill is a part of thescope definition (and I don’t agree with that statement), theEmployer could change the scope simply by changing or definingthe quantity of an item required, thereby effecting a remeasurement, a practice that is not uncommon in the ME. In myview, the basis of a lump sum contract is that there can be no remeasurement, constructive or otherwise. The incorrect statement ofa quantity in the Bill does not unjustly enrich the Contractor giventhat he is required to check the quantities and establish items notincluded in the Bill and include for such in the lump sum

Regards

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You are absolutely right David. Employers in the ME region aregetting away with “murder” and consultants are no better. I hadsuggested to several contractors to test this in courts and they havenot dared to do so for fear of losing contracts. However, prudentcontractors price this as a risk. That may be the reason why somecontractors make massive profits while the less fortunate ones losemoney. Hope wiser counsel will prevail and some contractor hasthe courage to test it in courts.

David on September 17, 2014 at 10:08 am.

Dr. Deen,

Good day to you,

I will be grateful if you can provide your opinion for the following






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dispute item araise from the Lump Sum Contract Omission Item.

We have consider the following:1) Contractor did not make any adjustment in the TenderAdjustment Schedule during the tender stage.

Scenario One1) Pricing Schedule (BQ) – 5nos x QR200k = QR1mil2) Contract Drawing (Actual) – 3nosFor the omission items, do you omit 3nos x QR200k = QR600k fromthe Contractor?

Scenario Two1) Pricing Schedule (BQ) – 5nos x QR200k = QR1mil2) Contract Drawing (Actual) – 8nosFor the omission items, do you omit 8nos x QR200k = QR1.6milfrom the Contractor?

Please advise :1) If there is a limit during the omission (capped at BQ amount)

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Dear David,I cannot give you authoritative responses to hypothetical questions.The methodology used for adjustment of items such as what youhave mentioned depends on whether the contract is a lump sumcontract or a remeasured contract.

If the contract is a lump sum contract containing the items that youhave mentioned there is no adjustment whether the quantityincreases or decreases. YOU CANNOT INTRODUCE AN ELEMENT OFREMEASURE TO A LUMP SUM CONTRACT UNLESS THE CONTRACTSAYS SO.If the contract is measure and value contract then the decrease inan item is valued as an omission at the contract rate and similarlyan increase in an item is also measured and added to the contractvalue at the contract rates.Dr. Haris Deen

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S. Fareed on October 20, 2014 at 11:45 am.

Dear Dr. Harris,

Can you please advise me in a Lump Sum Contract (Based on FIDIC1999 First Edition), can the Contractor refuse to carry out aProvisional Sum item of work. If yes, does the Contractor require togive reasons justifying why he is unable to carry out the PS.

Thanks

Fareed


Yes, if the contractor does not have the expertise or facility to carryout work required to be executed under a provisional sum he canrefuse to undertake such work. However, when the contractor








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entered into the contract he knew that there were provisional sumswithin the contract sum and having contracted to do so he will havedifficulty succeeding in a refusal.

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David C on November 13, 2014 at 5:06 pm.

Dr Deen

I am not sure that I agree with your response. If it is aprovisional sum, it is by definition an amount allowed in thecontract document, thus it constitutes part of the work to becarried out. If it is not in the contract, then the workconstitutes a normal Variation.

If the work covered by the provisional sum is not properlydescribed or the Employer wishes to use the amount for worknot described in the contract (both of which happenfrequently), the Contractor could refuse to undertake thework if it is not required to complete the scope of workdefined in the contract.

I believe that it would be difficult for a Contractor to refuse toundertake work covered by a provisional sum based onexpertise or facility given that most of provisional sum workis, in any event, undertaken by specialist subcontractors.

Regards


Dear David,I don’t believe that you read my response fully, Alsothe question appeared to be hypothetical.Anyway, my considered opinion having taught quantitysurveying and contract administration and beingfamiliar with most conditions of contract, I can safelysay that provisional sums are provided in a BOQ for avariety of reasons. I have also found some QS’s usingall kinds of euphemism to put contingencies in asprovisional sums. However, all contracts provide fordealing with provisional sums, that they can be deletedentirely from the contract sum or used in part or full asinstructed by the Engineer. If the provisioanl summ isfor specific specialist work, then the Employer willobtain quotations for such work giving an opportunityfor the contractor also to submit a price. Somecontractors who have the expertise in the relevantworks submit a price, some obtain prices from subcontractors and others do not submit prices.If you had read my response fully you will realise that Ialso qualified my answer by stating that the contractorhaving been given the opportunity of knowing what hewas pricing for including provisional sums in the tendermight have difficulty in refusing to execute such work.But remember that the proviiosal sum has beenincluded in the tender BOQ by the Employer and as Iexplained earlier it is only a provision for known orunknown work at the time of tender. Therefore, anycourt will support a contractor refusing to undertakework that he does not have the expertise or resourcesto execute and that he did not know at the time oftender what type of work is to be executed against suchprovisional sum. That is the reason that contracts defineprovisional sums in a manner of flexibility.






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David C on November 20, 2014 at 7:17 am.

Dr. Deen

I read your response correctly, perhaps you should readmy response more carefully. The question was whethera contractor can refuse to carry out work covered by aprovisional sum. The methods used to implement a PSand what you may or may not have taught students arenot at issue.

A PS is an amount allowed in the contract for work andthus the Contractor will know of its existence, additionalwork post contract signing is a Variation regardless ofwhat semantics you may choose. In the event that thework is not described or described so inadequately thatthe Contractor cannot be expected to understand thenature of work included, the work covered by the PSwould be part of the scope of the work and thus theContractor could not refuse to undertake such.

Regards

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Rick on October 20, 2014 at 6:06 pm.

Hello,

I will be grateful if you can give your opinion with regards to mycurrent contractual issues on a Lumpsum contract project.

Contractor is considering filing a Change for the “unforeseen”utilities which they said is not included in tender drawings. Myargument is as “experienced” contractor they should haveanticipated and this is determinable especially the area affected is aresidential… an “unforeseen” utility might be like if you are in amiddle of the desert and you found a telephone lines etc.. The onlycatch what I think reason the contractor is so eager to file for aChange is that there is something in the contract which it statesthat…Connection of houses related to existing utilities not shown onthe Contract Drawings or Documents and unforeseen utilities thatare not shown on the Contract Drawings, provided that the cost ofthese is reasonable, in the aggregate within US$ 38,457,000.

Thanks in advance.


Dear Rick,The mere fact that utilities found underground have not been shownon the drawings does not make them unforeseen. If the contractoris executing work in a green field area and he finds a live electriccable underground this is certrainly unforeseen and unforeseeablein any green field site. If the contractor was working in an arewhich was heavily bombed during WWII then he must certainlyexpect unexploded bombs underground irrespective of whether theyare indicated on the drawing or not. Similarly if the contractor wasworking in an area which had buildings previous he must foreseesuch obstruction whether they are shown on any drawing or not.






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Wahyu Nurhayanti on November 13, 2014 at 3:03 pm.

Dear Dr. Deen,

To begin with, I want to thank you for this interesting article.

I have a querry related to variation in a lumpsum contract.

I am administering a designbuild contract which using FIDIC yellowbook and based on lumpsum contract price. The case is that theEmployer has an obligation to provide freeissue material in theform of linepipe with specific diameter and wall thickness stated inthe Employer’s Requirements. However, it turns out that theEmployer cannot provide the linepipe with the determinedspecification. The actual freeissue materials are linepipes with thesame diameter but lesser wall thickness. Since the reduction of wallthickness of the linepipes will affect the thickness of other materialsprovided by the contractor,such as elbow and hot bends, can theemployer request a deduction in contract price to accommodate thereduction of the thickness of the elbows and hot bends procured bythe contractor?

To be honest, I doubt the the employer can deduct the contractprice since based on the contract, the employer shall provide thefreeissue materials under his own risks and costs. Therefore,should the employer failed to provide the freeissue materials inaccordance with the original specification, such risks cannot betransferred to the contractor. However, it may still debatable sinceif what happen is the contrary then the contractor will pursue anadditional cost for the specification change.

Would you kindly give an insight regarding this problem?

Thank you very much.

Ahmed Shehadeh on December 23, 2014 at 6:58 pm.

Pls We need your input in the following crucial matter.

Do you think that the Omission in Lump sum contract should bedone in accordance to the Qty’s allocated in the BOQ or Qty’s as perdrawings ? Do you think that the Employer any amount exceedingthe allocated amount in the Cost Plan ?

Our Client is opted to omit item from our scope , this item in theBOQ is 75 m2 whereas the drawings is 2000m2, then in your pointof view the omitted amount should be 2000* unit price Or 75 * unitprice

In my point of view the ; the Client is not in a position to delatemore than the allocated amount in the BOQ, since having thisapproach from the Client end , we will end up with minus ContractValue.

Pls advise your comments accordingly.





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RegardsAhmed

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Dear Mr Ahmed Sahadeh,They can deduct only 75m2 because that is all there is in the priceHowever, they insist on the contractor executin 2000 m2 as in thedrawing if there is no change in the description or drawing in alump sum contraact.

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Glenn on February 3, 2015 at 4:06 pm.

I have a small lump sum project that was priced by a contractor.The scope of work listed 10 items of work but did not ask for abreak down of each item during the bidding process. During theconstruction phase of the project one item was removed from thescope and the contractor was inform during construction this wouldbe removed. Now he has applied for full payment of the lump sumcontract we are asking for a credit on the item not completed andhe is concluding it was a lump sum price so no credit is required.We feel that the item was removed and credit should be agreedupon.

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Dear Glen,The contractor cannot get paid for work that he has no executed.The Contract should provide for additions, ommissions, etc, whichyou may be able to use. Please check the contract

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Korupolu on March 2, 2015 at 8:12 pm.

I am working as an estimator in a construction company. i would bethankful to you if you could answer the following.

We have got one building project on lump sum basis, in that wehave no of bills (different Buildings) in one bill unit rate for thesame item is different from other bills.

Consultant asking us why the unit rate is different in this bill whilecomparing to other bills, he asking us the explanation.

In my opinion it is very difficult to price the same unit rate for thesame item in all the bills.

Please advise us is there any contractual problems if unit rate isdifferent for the same item in different bills.

Regards,

VR Korupolu










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Dear Korupolu,In a Lump Sum contract it does not matter how the contractorpriced his BOQ. Any error is his risk. There is no contractualproblem

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Ghaleb Sweedan on May 2, 2015 at 10:00 am.

Dear Dr. Haris

I have a lump sum contract for a core and shell construction projectin ksa wherein the BOQ is part of the contract documents besidesthe drawings, the specifications, work scope, and the contractagreement; the contract agreement stipulates that all documents ofthe contract are complementary with each other; furthermore, theBOQ has a disclaimer item stating that “in case of conflict amongthe contract documents, the most stringent one will be binding andapplicable”. The general conditions of the contract are copied fromFIDIC and translated to Arabic and there are no special conditionsconsidered for this contract. We, as the main contractor of theproject, have undergone excessive number of change requests(104) during construction that have caused delays on the time forcompletion of the project.

Now that I have briefed you about the project, I would appreciateyour earliest response to the following case which we are upagainst with the client and consultant being on one side:The client has requested a replacement for an item in the BOQ,which has a quantity of 1457 m2 of 40×40 cm granite flooring inground floor against only 450 m2 shown on contract drawings, witha different size of water jet pattern of marble and granite materialfor the same area and location; however, insisting on deleting thetotal amount corresponding to the quantity of the BOQ (1457 m2)and pay only 450 m2 with a new rate as a variation. What is yourjudgement on such case? And how should we deal with this mattertowards the client and consultant who are not certifying ourvariation?regardsGhaleb SweedanAlYamama Company

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Dear Mr Ghaleb Sweeda,The Contract BOQ supplied for tendering contained 1457 m2 of tilingwhen it should have been 145 m2. If there was no change then theEmployer will have to pay the contractor the total price in theLmmp Sum quoted for 1457 m2 against the quantity of 145m2 as hecannot introduce an element of remeasure in a lump sumconntract. The reverse is also true if the BOQ contained a quantityof 145 m2 instead of 1457m2 the Employer can insist the Contractorto execute the whole of the 1457 m2 at the lump sum price quotedfor 145 m2.








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Ghaleb Sweedan on May 3, 2015 at 10:04 am.

Dear Dr. Haristhank you for your quick reply, but you have not actuallyanswered my question.the client is changing the type of flooring with completelydifferent type of materials and accepting to change the ratebut refusing to pay for the total quantity of the BOQ (1457m2) and willing to pay for only the quantity estimated fromthe drawings (450 m2) with the new rate. The variation thatwe submitted to the client was as follows:1457 m2 x 543 SR/m2 = 791,151 SR791,151 (450 m2 x 543) = 546,801 SR546,801 SR +(450 m2 x New Rate 850 SR/m2) = 929,301 SRbut client did not accept and revised to the following:(450 m2 x 850 SR/m2) – (1457 m2 x 543 SR/m2) = 408,651SRmeaning that with this change the client saved 408,651 SRfrom our LS contract. how could this be possible?if you were the contractor, how would you deal with thischange.appreciate in advance your response to this matter.thanksGhaleb Sweedan

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Ghaleb Sweedan on May 9, 2015 at 5:18 pm.

Dear Dr. Harisi would really appreciate it if you will please answer myquestion.thanks and regards

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Dear Mr Sweedan,I am sorry for the delay in replying as I had otherpressing business to attend to.Coming to you question the correct way is to delete thewhole of the BOQ quantity of 1475 m2 . If you deletethe actual quantity of 450m2 then you will beintroducing an element of remeasure to a Lump Sumcontract which is not the intention. If on the other handif you delete only 450m2 what happens to the 1025m2left in the contract which you will not be executing?Surely you do not expect to get paid for work that youwill not be executing?This is a Contractor’s risk that he should have takeninto account when submitting his tender. That is why itis very important to check the BOQ in a Lump SumContract at the time of pricing a tender. I am sorry thatI cannot be of any more assistance to you


thank you Dr. Haris; but what if they have notintroduced such change, we would have gotten thewhole total price of the 1457 m2 as in the Contract BOQeven though the actual quantity that would be carriedout as shown on contract drawings is 450 M2.wouldn’t you agree?

awaiting your earliest response.







thanks and regards

Ghaleb Sweedan

Ahmed Shehadeh on May 2, 2015 at 7:02 pm.

Good day,I need your input in regard to the below case,the Employer has opted to Upgrade and change the BrandedApartment and Hotel balcony Tiling from Porcelain to ReconstitutedStone. However , and after deep study to this issue , the Contractorhas reached and concluded that additional Cost is associated withsuch upgrade of balcony Tiling as instructed by the Employer. Incontrary, the Cost Consultant and based on his initial assessment toour submitted Variation in this regard has advised that a CostSaving for the Employer’s benefits is associated, disregarding thatthe Contractor will incur a certain loss by implementing the CostConsultant way of measurements , which is in our point of view isnot tenable, but in fact , will cause a direct damage to Contractor, since it is very strange toupgrade the Material type and then askthe Contractor to submit a Cost Saving. The Contractor understanding to the current case in hand, that theMaximum Omission ( deduction ) to be applied due tosuch upgrade for the balcony’s Tilling, is the mount allocated in theCost Plan , which in fact, the Contractor has satisfied himself with,and reflects the same amount that we allowed for during the Tenderprocess to execute this Works, and are not entitled to receive moremoney than the contract specifies for the same scope of works,irrespective to any inconsistencies in the qty’s. Typically, it is presumed that the allowed amounts / sums in theBOQ do form a term in our lump sum contract, and its position hasrelevant insofar in complementing the other documents form theContract , where the Contractor will not be paid any additionalpayment if the quantities required to be executed are greater thanstated in the bill of quantity & therefore implied that the reverse isalso true – being that if the quantities stated in such a Cost Plan aregreater than what is required to be executed the contractor will beentitled to receive the full payment against that item. Therefore,any changes in the item description ( change of Materials Sepc) willnot allow the Engineer/ Cost Consultant for remeasuring theContractor’s scope of Works, since the contract averted so , and theContractor codifies that the maximum amount of deletion/deductionshall be the sum allowed in the Contract for carrying out thisparticular task. To this end , the Contractor has used below criteria to calculate theCost Implications for the upgrade in the Balconies Tilling.1. Tilling qty’s in the Cost Plan (Combination of Ceramic tileswith Saudi granite band including all necessary fixings, fittings,accessories and all related work) = 2083 M22. Unit Price for the same in the Cost Plan = 92.27 JOD/m2. 3. Total allocated lump sum amount for the same in the CostPlan = 192,615 JOD item B4/9/2 —— Maximum amount of deletion. 4. Total Ceramic in drawings which altered to Stone =2,520.66 M2.



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5. Unit Rate for Compac Stone as per Jordan Market andsubmitted by the Contractor is = 99.52 JOD/m26. Therefore , total Cost for Copmc Stone = 250,856 JOD.7. Total Cost Impact = 250,856 – 192,615= 58,241 JOD.Whereas in fact , and as indicated in M/s NEA’s assessment totaldeduction is 231,876.570 JOD , whilst the total allocated amount inthe Cost Plan for the same item is 192,615 JOD , noting that and asper my viewpoint no Contractual reference and clause can allowthem to deduct and omit any additional amount beyond and abovethe allocated amount for the same item in the Cost Plan , where ourLump sum Contract is not subject to any remeasurement.

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Dr. Haris

looking forward to receiving your response on my earlier question ifyou will.

thanks

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Mohamed Rizwan on May 10, 2015 at 9:35 am.

Dear Sir,I’m facing a Problem in my Project it is a Lump sum Agreed Project.I need to make clear about the variation valuation on bellowconditions.

01. we have agreed to execute a work on a lump sum contract butin our BOQ the Actual Quantity is much more than the existing qyt.now the Engineer does not need that item and he has changed thedetail therefore to which qty i need to give the deletion to the realqty or the BOQ qyt?

02. Same as above case the BOQ quantity is lesser than the ActualQuantity Engineer dont want us to do that in this case to which qty ineed to give the omission to the agreed lumsum BOQ qty or to thereal existing qty which is higher than the BOQ?

could you please provide me the solutions based on FIDIC or anyother conditions of contract.

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Wael on June 13, 2015 at 4:11 pm.

Omitting an item is not related to the actual quantities. in fact ,actual quantities comes from the remeasurement which contradictthe lump sum requirements







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Sameh Afify on July 29, 2015 at 3:25 pm.

Dear Sir,I have query regarding the value engineering in a lump sumcontract and the BOQ is part of contract documents. we havespecial condition which allow the contractor to make a valueengineering which stats the cost saving amount shall be sharedbetween the client and contractor 80% to 20%.I want to know how to calculate the saving. weather based on theBOQ rate or the cost which is the (BOQ rate – contractor’s Proffit).Thanks

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Yes, use BOQ rates where applicable. The 80%/20% split includesoverheads and profits as well

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Sameh Afify on August 3, 2015 at 8:10 am.

Thanks for the reply. your answer is logic. My case is that thecontractor is claiming that the contract clause mentions“…,while the cost saving amount will be shared upon thebasics of 80% for the Employer and 20% for the Contractor”.since the BOQ unit rate includes the (cost + proffit), thereforethe sharing to calculated based on the cost only.thanks alot.

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Sameh Afify on August 3, 2015 at 8:20 am.

Dear Sir,

Based on a lump sum contract with BOQ. there was one itemmentioned in the tender drawings and BOQ, while during thetendering process it was cancelled by the designer and all thetenderer were officially informed through official circular.unfortunately this item was removed from IFC drawings but notremoved from the BOQ, moreover the contractor priced this itemand his tender was accepted.now during construction, the contractor is claiming to get paid ofthis item since the project is lumpsum, although he will not executeit as per IFC drawings.taking into consideration that as per the contract the client can omitor add 25% of the contract amount.

Best regards,

Dr. Haris Deen on August 3, 2015 at 11:30 am.

Dear Sameh,The Contractor in your case is trying it on. I do not know theConditions of Contract that you are using. However, all contractsprovide for dealing with variations. Variations can be additions oromissions from the contract. In your case you have good groundsfor omitting the item from the contract, since it is clearly an errorto retain it as it was deleted during tender. Furthermore, how canthe contractor claim for something that he is not executing? Even ina Lump Sum contract there are limits.









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Paul on August 26, 2015 at 12:50 pm.

Dear Sir,In a LS design and build , yellow fidic, contract the scope of thecontract change from open space design in a office building with afitout design and the contractor was instructed to follow the fitoutplans.Because the initial design was only a concept we cannot quantifyexactly the mininus and pluses of the executed works and issue avariation order.Who to establish the addition works needed based on the conceprtdesign layouts, part of the ER.s? The contractor insists to do theopen space design first and to compare with the fit out executedPlease adviceThank you.

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Dear Paul,The structural works are not remeasurable as they are lump sumcontract works. There are no omissions.The fit outs are clearly additional works and has to be measuredand valued for payment.However, when you start executing the fit outs, if you have tomake changes to the structural work that was executed under the lscontract, then you will delete only such works that are affected andadd back any builders work that work be required to make good theaffected part.

Eureka Mzungu on September 1, 2015 at 10:25 am.

Dear Dr DeenI have read your article with keen interest and it is the situation inwhich I am that prompted me to come to this forum and I must sayI have learnt I great deal. However please bear with me because Iam going ask a question similar to what my colleagues havealready asked but like you have said everything situation requires aparticular response according to the type of contract in use. Myquestion Dr Deen is:

I am a Project Manager for a local company in Botswana. We areinvolved in a project with a lump sum contract with BOQ formingpart of the contract. The contract involves the construction 1nrSingle storey Classroom block, 4nr water borne toilets and 5nr LA2Houses. We are using the FIDIC Red 1999 Edition as our conditionsof contract. Any clauses relating to this situation have not beenrevised they are as they are in the FIDIC Red Book 1999. In theBOQ only the substructure items have been put as provisionalquantities and have since been treated as such. Now the situationthat we have is the Employer issued a variation order to change thespecification of face bricks to be used from FBS face brick to FBXFace brick. The FBX face bricks were priced only under theconstruction of LA2 Houses at a rate of P590.00/m2 and the FBS







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face brick was priced under the Classroom block and 4nr toiletblocks at the rate of P300.00/m2. When we submitted our variationclaim we used the rate of P590.00 for the FBX face bricks in theClassrom block and the 4nr toilet blocks our basis being rate of asimilar item under the same contract. However the Employer nowis refusing to pay for this as the amounts have increasedsignificantly. He has opted to remeasure the superstructure andapplied the remeasured quantities. The remeasured quantitieshave decreased from 1864m2 to 854m2 clearly changing by morethan 10%. This has significantly reduced the variation claim and wewould like to contest it.

1.0 In your own understanding is the employer right to remeasurethe superstructure which we feel it is part of the firm quantitieswhere remeasurement is not supposed to be introduced?2.0 And what is our remedy under FIDIC Conditions of Contract1999 Edition.3.0 Do we apply Clause 12.3(a) (i) Evaluation of Measured Worksand submit a new rate besides the P590.00 as the quantities havechanged by more that 10%?4.0 What is you interpretation of this Clause in 3.0 above?5.0 Do we have any case law that can support this scenario?6.0 We feel the fair way of doing this is to omit 1864 x P300.000=P559,200.00 and add 1864 x P590.00 =P1,099,760.00 and thedifference P540,560.00 is the money due to us. Or can we reviseour rate based on the new qty of 854m2?

Your prompt response on the matter will be highly appreciated andwill go a great deal in solving our case.Thank youEureka Mzungu

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Eureka Mzungu on September 1, 2015 at 10:42 am.

Dr DeenCan you please respond to my case. Thank youEureka


Dear Eureka,You do not state whether the contract is a lump sum contract.However, by reading the explanation you have provided, it seemsto be a lump sum contract, based on the bill of quantities being acontract document.Before answering your questions specifically, I would like to clarifythe following:(a) You cannot introduce the element of remeasure in a lump sumcontract. The Contractor takes all the risks. The BOQ is a documentsupplied by the Employer as prepared by a quantity surveyor onbehalf of the employer. If there are mistakes in the BOQ – it can beboth ways, the higher quantity as in your case (then the risk is theemployer’s), on the other hand if the quantity is lower thanrequired to execute the risk is the contractor’s. Please ask youremployer whether he is prepared to remeasure where the quantityis lower to give the benefit to the contractor. I am sure that he willsay no and take refuge in the fact that it is a lump sum contract nitsubject to remeasure.

(b) The contractor when pricing a contract does not have theopportunity to change any quantities, to do so would mean






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submitting an alternative tender. That will also mean changing theconditions for one tenderer from others. Therefore, the tendererprices the tender on the basis of ‘swings and roundabouts’ by whichwhere he will lose in one item for quantity mistakes he will gainfrom another.

Having this as the background, the answers to your questions areas follows:1.0. No the superstructure works are not remeasurable. Only theprovisional quantity items in the substructure are remeasurable.However, if there are provisional sums and provisional itemsincluded in the superstructure element, then only these are remeasurable. HOWEVER, IF THE CONTRACT IS NOT A LUMP SUMCONTRACT AND FIDIC RED BOOK CLAUSE 12.1 IS RETAINEDWITHOUT AMENDMENT, THEN ALL THE WORKS EXECUTED ARE TOBE MEASURED AND VALUED.

2.0 FIDIC 1999 edition Clause 56 (1) has similar conditionsrequiring the Engineer TO ASCERTIAN BY ADMEASUREMENY OROTHER MEANS THE VALUE IN ACCORDANCE WITH THE CONTRACTOF WORK DONE OR OMITTED AS PROVIDED FOR UNDER CLAUSES51 AND 58 (1). THIS REFERS ONLY TO VALUATION OF VARIATIONSAND NOT FOR CONTRACT WORKS.

3.0 If FIDIC Red book has been used without particular conditionsand without stating that the contract is a lump sum contract at thetime of tender, then Clause 12.3 (a) is applicable.

4.0. Please see my answer to item 1.0 above5.0. The case law is only in respect of lump sum contracts andthese are given in my article6.0. The contractor will have a right to request a revaluationaccording to Clause 12 (a) (I) to (iv) if the changes are exceeding25%.

Having said all the above, I must advice you that as a projectmanager, you must act in a fair and reasonable manner. In my 52years experience as a contracts administrator, I have always actedin a fair and reasonable manner to both sides. It is not in anybody’sinterest to hurt the contractor or his cash flow. Similarly, it is notfair to support the contractor where it is unreasonable and willaffect the employer.Good luck with your problem and let me know how you get on.

Reply

Eureka Mzungu on September 2, 2015 at 3:35 pm.

Dr DeenThank you for the response and it has been of help. I havewritten the Employer most of the content is based on theresponses you have given here and of course with referenceto the contract. The Employers QS is in agreement with ourarguments. We are waiting for the response as he has toconsult other Employer’s Project team members. Thank youfor the insight.Eureka


Dr DeenHow do you relate the my question which you responded very toSub Clause 12.2 a and b of the FIDIC Red Book 1999 Edition.





Reply

RegardsEureka Mzungu

Reply


Dr DeenHow do you relate to my question which you responded very welllast time to Sub Clause 12.2 a and b of the FIDIC Red Book 1999Edition.RegardsEureka Mzungu

Reply

Musa on October 1, 2015 at 9:53 am.

Dear Dr. Deen

I am from the client side, the contract is a design & Built contractand it was transferred to our department from other authorities bya novation agreement with the contractor and it is underconstruction stage. The contractor is claiming that the contract is aLump sum contract based on a statement mentioned in his proposalunder the Measurement and Payment clause states” Payments areon lump Sum basis based on the attached BOQ”. my question is: isthis statement Sufficient to prove that the contract is a Lump sumcontract? noting that it is not mentioned in any other part of thecontract.

your reply is highly appreciated

best regards,

Musa

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