Insights from Qatar | Evaluating Variations on Lump Sum Contracts
I have just returned from presenting our 2-Day Construction Claims Intensive Training Course in Qatar where one delegate raised a question in connection with lump-sum contracts and items included in the bills of quantities, but not shown on the drawings.
The question was ‘if something is included in the bill of quantities but not required, can the Engineer omit the price included in the bill of quantities for this item?’
Obviously, to provide an accurate answer, it would be necessary to study the contract documents, their order of precedence and the precise wording of the contract. If we assume however that the usual provisions apply whereby the Contractor is obliged to construct the works in accordance with the contract documents, but the bills of quantities are stated to comprise only an estimate of the works and may not be relied on, the answer is quite simple but often misunderstood.
Simply put, the bill of quantities in such circumstances is merely a breakdown of the Contract Price, which may be used to evaluate interim payment applications and variations and may not be regarded as being an accurate document. The scope of works may thus, only be derived from the drawings and specifications. If, therefore something is measured in the bill of quantities but not shown on the drawings or in the specifications, then it is not included within the Contract Price. The Engineer may not therefore omit something that is simply not there in the first place.
A good way to argue this case with such an engineer is to ask if you may be paid for items shown on the drawings but not in the bill of quantities. I am sure that in such a case, the Engineer will immediately refer to the conditions that state that the bills and quantities are not to be relied on and deny your request.
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Hi Andy,
Can you send the case studies to my email khairunnisaasdi1998@gmail.com
Hi Nina/Andy,
I am Duane, QS from a Fit Out contractor in Qatar.
I would like to ask some insights regarding one of our projects here in Qatar.
Scenario: Original contract was Lump Sum (under Public Works Authority Contract-General Conditions of Contract)
However, halfway through the project completion, the design was changed (approx 20-30%) of the total areas. Now, the consultant released a new modified BOQ as per the new design considering the original BOQ quantities as the basis of addition and omissions in which as a contractor, we didn’t agree as we will be in negative variation if we will agree on the new BOQ.
In addition, we raised the issue with the client and insist on defining the addition and omissions by IFT drawings VS the new IFC drawings which does makes common sense. As we all know that the original BOQ is totally inaccurate against the IFT drawings.
I have read the GCOC but there is no clause in which the both parties could agree on finalizing this issue.
Can u please provide your insights and recommendations on this.
Your valuable response will be highly appreciated.
Thanks,
Duane
Dear Andy,
Item is in BOQ but not shown on the Contract Drawing. It is required to complete the Work. Can the Contractor claim again the said item?
My project is lump sum, we have different types of apartments each having its own Contract Drawing Layout. However, on one of the apartment’s maid bath, the wash basin is not shown on the Drawing (Contract). We have Contract Schedule which is generally stating what type of sanitary wares to be use on maid’s bath and we also have the particular line item in the BOQ for the said sanitary wares (Apartment type is mentioned & the location of sanitary wares were also mentioned i.e. Maid’s Bath).
Is the Main Contractor entitled to claim additional supply cost for the said wash basin because it is not shown on the drawings?
Likewise, the MEP is awarded under provisional sum. The contract drawing issued to them doesn’t show the wash basin & any plumbing works to the wash basin. The MEP Contractor is responsible for installing the sanitary wares.
Is the MEP contractor entitled to claim additional cost for the installation of sanitary wares and are they entitled to claim additional cost to supply & installation of the wash basin?
Hope you can revert to me soon.
Thank you very much.
Best regards,
Jhinx
HI Jhinx,
Many thanks for you comment and interest. Andy will get back to you directly as soon as he can.
Kind Regards,
Tarryn
Hi Andy,
Please give some idea regarding an issue I across on the project.
I (Contractor) handled 5 subcontractors , I have for Electrical , Mechanical, Plumbing & Sanitary…
The issue is , I (Contractor) encountered in the BOQ (awarded) of 2 different subcon having
same material priced (e.g. Daily Tank). Lump Sum Contract
Subcon (Electrical) — Daily Tank included in the price of Genset.
Subcon (Plumbing) — Daily Tanks priced separately
Question:
1. Can I omit the daily tank in the contract either of the two subcon?
2. If Subcon reject to omit the daily tank, who’s subcon will do the work? Electrical or Plumbing??
Thanks. Can I hear your comment on this.
Edwin
Dear Nina/Andy,
Thank you for sharing your knowledge and valuable case studies.
I would appreciate, if you could send me case
koc.riza@hotmail.com
Regards
Hi Riza – thank you for your comment and interest in our case studies on this topic. I’ll send them across to you via email shortly. Regards, Nina.
Kindly share that case study with me as well please;
arsathahamed@yahoo.com
Hi Ahamed – thank you for your comment and interest in our case studies. I’d be happy to share them with you and will send via email shortly. Regards, Nina.
Hi Andy,
Please send me case studies to better understand and reflect to our projects.
Also, I heard from our organisation that you will conduct construction claim workshop on last of week of May 2018.
Thanks & Regards,
Hi Jeric – Thanks for your comment. We’ll be holding our 2-Day Construction Claims Workshop in Dubai at the beginning of May, on the 1st & 2nd. Details can be found here on our website if you’re interested in joining us: https://www.constructionclaimsclass.com/construction-claims/. I’ll send the case studies across via email shortly. Regards, Nina (GM).
Dear Sir,
Can you please also send me the case studies.
Thank you.
Hi Cesar – sure, I’ll send them via email shortly. Thanks for commenting! Regards, Nina.
Dear Andy
Thank you for sharing with us your knowledge and valuable case studies.
I appreciate if you could send me the case studies that you are referring to.
Regards
Hi Ismail – thanks for your comment. I’ll share the case studies with you via email shortly. Regards, Nina.
Dear Nina/Andy,
Though I have gained enough hands on experience in Measure and Pay Contracts,
I do not have such experience in Lump Sum Contracts. As I know, there is no specific COC for Lump Sum Contracts for which mostly FIDIC Red Book is used with required amendments in Particular Conditions of Contract.
Therefore it is essential to study the related Contract documents in commenting on Lump Sum Contracts.
As such, I am grateful, if you would kindly arrange to send me relevant case studies.
Thank you.
Hi Basil – thanks for your comment. The case studies mentioned here are the same that we already sent across earlier, hopefully you received them. Best regards, Nina.
Hi Nina/Andy
Interesting.Please if you can send me the case studies.
1) If the item is mentioned in the BOQ but not mentioned in the drawings and the specification is generic (item is mentioned ) can the cost be omitted.
2) Another case in point is if it is mentioned in specifications/Drawings and the authority does not require and the contractor has not provided the item since it is not required by authority(eg NRV)does the employer have the right to deduct the item.
Can the contractor claim that he already purchased the item and because it is not required he has not installed the item and does the the employer have the right to claim money for omission.
Regards
Ahsan
Hi Ahsan
Generally, if the item is included in the bills of quantities, but not shown on the drawings and the specification just describes the quality of the work if it is required by the drawings, then it would not be deemed to be included in the lump sum price. Of course, if the item does not exist, a wise contractor would not have priced the bill of quantities items at the time of tender.
In your second case, it does not matter if the authority (I assume local authority here such as a municipality) does not require something. If the Employer includes it in the design, he wants it and it is deemed to be included in the lump sum price. If the contractor does not provide it the Employer is entitled to deduct the price of the work.
I hope this helps.
Dear Nina/Andy,
I am grateful, if you kindly arrange to send me any available case studies, if you don’t mind.
Further to above, I am facing the following two cases at the moment.
Condition of Contract: FIDIC Pink Book MDB Harmonised Edition June 2010
1.Sub-Clause 4.2 – Performance Security
According to this Sub-Clause, “The Contractor shall obtain (at his cost) a
Performance Security ———-”
———–
What is the actual interpretation of “at his cost”? Does it mean that, the
Contractor is not entitled to get this cost reimbursed?
If so BOQ item should not be available to price it. But for this case, a BOQ
item has been provided. Therefore this cost is included in the Accepted
Contract Amount. But the payment to this item has been rejected mentioning
the phrase “at his cost”. If such BOQ item was not available, the Contractor
would incorporate this cost in other BOQ items and get it recovered.
2. Breach of Contract
The Contract is dead silent of this. As I think, it is because, this is “Non-
Contractual”.
Are “Non-Contractual” cases also to be tackled as per Clause 20 – Claims,
Disputes and Arbitration or Clause 3.5 – Determinations?
Thank you.
Hi Engineer Basil
“At his cost’ means that the Contractor will pay for this performance security. This is deemed to be included in the lump sum price and the Contractor will be reimbursed through the payment of the Contract Price.
Breach of contract applies when one party does not perform their obligations. In most cases, FIDIC sets out the rights and remedies for the breach i.e. extension of time, payment of costs etc. You would need to go to law to seek damages for a breach if no remedy is stated. The principle is that the injured party should be put back in the position that it would have been had the breach not occurred and this is usually a matter of financial compensation.
I hope this helps.
Kindly send me the case studies this is an interesting topic
Hi Tahir – Pleased that you’re enjoying the blog, I’ll issue the case studies via email shortly. Regards, Nina.
I appreciate if you could send me copies of the case studies – the above articles are most informative. Thanks in advance.
Dear Andy,
In the same context of the above subject, and in similar Contract Conditions, there is an item in the BOQ which is unreliable, not shown on the drawings, and the specifications were generic. The Contractor refuses to deliver this item because it is not shown on the drawings and specifications were generic, the Engineer wants to deduct the Item Price from the Total Lump Sum Amount, then the Employer requested the Contractor to deliver this item because he needs it.
what will be the situation in this case?
If you please, can you deliver me a copy of the two case studies?
Thanks
Best Regards
M. Sharaf
Hi Moussa – thanks for your comment, Andy will provide his advice soon. In the meantime, I’ll share the case studies with you via email. Regards, Nina.
Dear Andy
Dear Nina,
This is a kind reminder to reply to my enquiry above if you please.
Thank you for sending me the case studies.
Appreciated,
Best regards
Moussa Sharaf
Hi Moussa – apologies for the delay in response to your comment. As you can see, we get quite a bit of activity and comments on the blog and Andy sometimes struggles to keep up. He has also been travelling to deliver in-house training courses recently and has been away from his laptop. I’ve passed your comment onto him and he should reply within the next couple of days. Regards, Nina.
Thank you Nina.
Appreciated.
Hi Mousa
In reply to your post of 8 February, my apologies for the delay in responding. I take this to be the case:
The BoQ is stated to be estimated
The Item is not shown on drawings
The item is not specifically mentioned in the specification as to its location
The Contractor does not have to supply the item as it is not included in the lump sum price as defined by the drawings and specification
The Engineer may not deduct the price for something that is not included in the lump sum price
If the Employer wants this item, it would be subject of a variation and the lump sum price would need to be adjusted
I hope this helps.
Thank you Andy for your reply. Your point of view is noted.
Hi Nina / Andy,
Please send me copies of the case studies – the above and related articles are most informative!
Thank you!
Lucas Botha
Hi Lucas – great to hear from you. Of course, I’ll send the case studies via email shortly. Best, Nina.
Hi Akila,
Thank you for the information. This nicely illustrates the problems when the BoQ is not an accurate representation of the contract drawings. This is the scenario:
Tiles shown on Contract drawings – 300m2
Tiles shown in BoQ – 400m2 @ (say) $10/m2 = $4,000
Tiles provided after variation – 350m2
Rate of changed specification of tiles by variation (say) $12.00/m2
For this illustration, I am going to assume the following:
The contract contains the provisions that the BoQ is an estimate and is only to be used for the evaluation of variations and work in progress and is lower in the order of priority of documents than the drawings (FIDIC S/C 1.5).
That the contract provides that variations shall be evaluated based on the rates and prices contained in the contract (FIDIC S/C 13.3 & 12/3).
The Contract provides that variations shall be evaluated by measurement and evaluation at the rate OR price specified, so in this scenario, we have two options i.e. the rate OR the price.
Option 1. Evaluation by Rate.
Omit 300 m2 @ $10/m2 = $3,000
Add 350 m2 @ $12/m2 = $4,200
Nett addition to lump sum price = $1,200
Option 2. Evaluation by Price.
Omit tiling in BoQ = $4,000
Add 350 m2 @ $12/m2 = $4,200
Nett addition to lump sum price = $200
With regard to Option 2, it could be argued that because the BoQ is stated as not being accurate, but the contractor is obliged to price the tiling here, he has shown the total price for the 350m2 include in the drawings against this BoQ item. Therefore, the real rate for the tiling included in the lump sum price is $4,000 / 350m2 = $13.33/m2. Using this in the calculation would result in the same $200 addition as shown in Option 2.
Obviously, the contractor and engineer will look at things from the most favourable perspective for them, so this is a good illustration of how getting things wrong at tender stage will often result in later contentions.
Akila,
Thank you for your kind comment on our Claims Class blogs.
Sorry, but the information is somewhat confusing and appears contradictory. If you will provide me with the following information, I will do my best to advise you:
1. What quantity is shown on the contract drawings?
2. What quantity is shown on the contract bill of quantities?
3. What is the actual quantity installed after the variation?
Regards
Andy
quantity in contract drawings =300
quantity in contract bill of quantities=400
actual quantity installed after the variation?=350 ( 300 earlier and now and 50 additional
Thank you
Hi Andy..
I am big fan of your blog and thanks for sharing your ample of knowledge with us.
Need some comments regarding the following matter. Consider a lump sum Contract variation. In the Contract drawings the wall tiling area is shown and the Boq qty for the particular area is clearly stated and it is 400 m2. Now same drawing is in as built drawing with clear additional area of 50 m2. Now the specification has been changed too. And also the contractor noticed that the area referred 400 m2 is actually 300 m2. Now the Contractor has to handle the quantity as well as the quality change of variation.
As per my suggestion, to derive the new rate we should consider the actual drawing qty that is 300 m2 (Consider that the rate is agreed to adjust as a percentage of existing rate). But since this is an lump sum Contract Remeasuring is not applicable and 400 m2 is agreed as the unchanged quantity where it is in both drawings. Therefore the varied amount can be considered as (400+50)* (new rate) – (400)*(old rate) …
FYI
Hi Andy,
Can you send me a copy of the mentioned case studies please
Thanks
Hi Thanush – thanks for your comment. Sure, I’ll send a copy of the case studies via email shortly. Regards, Nina.
Dear Andy,
I would highly appreciate if you could share to me the case study.
Many thanks,
R. Catalan
Hi R. Catalan – thanks for your comment. I’ll share the case studies with you via email shortly. Regards, Nina.
I appreciate if you could send me the case study.
Thanks for your valuable topic.
Hi – My name is Ezdiani. I would also appreciate if you could share the case studies as I am also facing this situation with my client. Thank you in advance.
Hi Ezdiani – thank you for your comment, I’ll send the case studies to you via email shortly. Regards, Nina.
Hi,
I was wondering if you would be able to share the case study. The topic is of interest to me.
Regards
kaushik
Hi Kaushik – I’ll send the case studies via email shortly. Please check your junk / spam folder if you don’t see them in your inbox. Regards, Nina.
Hi Andy,
Good article. Is it possible if you could send me the case studies? Regards, Pari.
Hi Pari – I’ll send the case studies via email shortly. Please check your junk / spam folder if you don’t see them in your inbox. Regards, Nina.
Hi Andy,
I was wondering if you could send me the case study.
thanks
Robert
Hi Robert – sorry for the delay, I’ve been on holiday. I’ve just sent the case studies to you. Regards, Nina.
Please I am interested in your mentioned case studies. My email address is akindele.kassim@yahoocom
Hi Kassim – Sure, I’ll send them to your email address shortly. Regards, Nina.
Thanks for your post.
Please I am interested in your mentioned case studies
My email I.D is laideyusuf1@gmail.com
Hi Nurudeen – thanks for your comment and interest in our case studies. I’ll send them across via email. Regards, Nina (GM – Claims Class).
Kindly send me a copy of the case studies. Grateful.
It would be great if you can share the relevant cases with me.
Thanks a lot.
The topic you raised is very interesting and amusing.
Best Regards,
Kingsley
Dear Andy,
Thank you very much – this blog helped me in formulating contractual correspondences related to LS contract.
Regards
Manavalan
Hi Manavalan – thanks for your comment and great to hear that the blog helped you to write correspondence documents. Please help us to share our claims and contractual knowledge by telling your colleagues about Claims Class and our blog. Thanks!
Hi Nina,
I would be really grateful to you if you could send me the case studies that Mr. Andy is referring to.
Best Regards,
Md Faisal
Dear Andy,
This blog clarifies many disputed matters associated with construction contract. Could you kindly provide me copies of the case studies that you have mentioned in this article.
Thank you,
Kapila
Could youd please send me a copy of that case ?
My emal : didi.hp@gmail.com.
Best regard,
didi hasan putra
Dear Sir,
Namaste!!!
I would be grateful if you could send me the case studies that you are referring to.
Email ID: gautam.darpan@hotmail.com
Thanking You,
Darpan Gautam
Nepal
It would be great if you can share your case studies my e mail is
tahirk_1@hotmail.com
Thanks
Hi Andy
I’m interested in your mentioned case studies. If possible would like to have a copy emailed to me please. Thank you.
Best Regards,
Duane
Hi Andy,
could you please, send me a copy of the cases study?
Appreciated
Regards
M. Sharaf
Hello Andy,
Just stumbled across your blog while trying to get a better understanding of a similar problem.
Would really appreciate if you could share the case studies with me.
Kind regards
Kindlly provide me a copy of case studies on the subject.
Regards,
Manavalan
Dear Mr Andy,
I would like to know more about this.
Would you kindly provide the published case studies relevant to the subject referred above.
thanking you and kind regards
Chrystalleni Christodoulidou
I read your answer to the attendees query on the Claims Class Blog. The issue is very interesting and I would also be grateful if you could send me a copy of the case studies you referred to.
Best regards,
Ismail Awad
Andy
Could you please forward me the case studies.
Regards
Paul
Dear Andy,
Your answer is perfect on the above subject. Can I have the case study?
Thanks a lot,
AG Sab
Dear Mr. Andy,
I would appreciate a copy of this case study sent to my email.
Regards
Imran
Hi there,
Will be great if you could send me the case studies.
Thank you
Cheers,
Mei Sun
i would also appreciate a copy of interesting case studies sent to my email. Thanks in advance.
Mohammed Azimooddin
Dear Andy,
I enjoyed reading your blog. I would be extremely grateful to receive the case study mentioned in your blog.
Many Thanks,
Suraj
Hi Andy,
I’ve enjoyed reading the items in your blog, it has many helpful insights.
I would be thankful if you could forward a copy of the case studies to me.
Thanks,
Chris
Dear Andy
I came across this blog recently but the article posted by you is very relevant and a common feature encountered now as many of the Employers are moving away from re-measured contracts to lumpsum contracts.
I would be very thankful if you can email the relevant case studies to me.
T/R
Arvind
Dear Andy,
Thanks for such wonderful and enlightening articles. I am interested in the aforesaid case studies. Can you please arrange to mail me the same at mmundhada@gmail.com
Thanks in anticipation.
Regards,
Manoj
Dear Andy,
I am working as a QS in consultancy for Ashgal Project in Qatar.
In the beginning the project was re-measurable contract with B.O.Q but after 3 years due to the additional work the project extended for 3 years more with almost double the contract price and the project became Lump sum with B.O.Q.
Do you have any case study related to contract changed from re-measurable to lump-sum please email me.
I will be very thankful to you.
Thanks
&
regards
Abdul
+97430251736
I would like to express my interest on mentioned case studies,can you send a copy of this case study to my email. baneeshclt@gmail.com
thank you,
Baneesh
Dear Mr. Andy,
My self Velmurugan, working in a consultant firm in Abu Dhabi, UAE
The subject question/answer is really interesting, i was just searching the same question asked by my project manager today. Can you please provide me the case studies which may be useful for our discussion to conclude this issue.
Dear Andy,
I would appreciate a copy of this case study is sent to my email.
Thank You
Hi Velmurugan – thank you for both comments and requests for the case studies. I have just sent them to you via email. Hope they help.
Dear Andy,
I would appreciate a copy of this case study is sent to my email.
thank you
rohana
Hi Rohana – Of course, we’ll send the case studies to you shortly. Thank you for reading the Claims Class Blog!
This makes very interesting reading. I would also be grateful if you could send me a copy of the case studies mentioned.
Many thanks,
Matthew Harris
Hi Dennis,
Thanks for reading our Blog and for interest in these case studies. I’ll send them to you shortly.
Hi.
Thanks for the great information you have shared. Kindly send to me also the case study mentioned above it will be a big help for us to settle our current situation.
Thanks & regards,
Dennis
I am really interested in your case studies. If you can please have a copy email to me.
Thank You in advance
Rohana
Commercial Manager
Hi
Kindly request if you could sent me those above mention case studies in my email.
They will be very helpful on my current situation.
Thank you very much for reading these and i look forward receiving from you soon.
Kind Regards
Mario
Hi
Please could I also receive the mentioned case studies. Would be extremely helpful with a current situation. Thank you so much!
Regards, Teigh.
Hi Teigh – Thank you for your interest in these case studies, we will send them to you shortly. Nina.
Please neglect my earlier comments
I would also appreciate a copy of interesting case studies sent to my email.
Thanks in advance.
Azim K
Hi Mohammed – Thank you for your comments and for reading our humble Blog. We will send you the relevant case studies shortly. Thanks, Nina.
I am presently working on a project with similar case.
I will appreciate it very much if you will share to me those case studies.
Hi Danilo – Thanks for your comments, I’ll send the case studies through to you shortly.
Dear Mr. Hewitt
Please send me the case studies, is it OK if I use those in my University Dissertation ?
Thilak
Hi Thilak – We will send you the case studies shortly. I believe you are allowed to make reference to other people’s work in university dissertations provided that you quote the authors and acknowledge that the work is not your own. I would have no issue if you used the case studies if they were used in this context.
Great read! Would very much appreciate some case studies of the lump sum contract to reference in a University Assignment I am currently working on =D
Hi Karl – Thanks for your comments. We’ll send you the case studies shortly!
All, Thank you for your comments. It is always good when we get responses to our blogs. At the risk of promoting ourselves, our distance learning course includes case studies such as these, which are based on real situations and not theoretical ones.
Andy,
I have come across this scenario in various instances.
My email is john.nolan03@gmail.com.
I be grateful if you could send a copy of the case studies as well.
From my own experiences on lump sum contracts with BQ, the engineer needs to omit, add or change the drawings and specifications, simple.
Regards,
John
Dear Andy
interesting question and great answer
would you please mail me those case studies too
thanks in advance
Best Regards,
amir
Hi Amir – Thanks for your comments. I’ve asked Nina, my GM, to send the case studies across to you.
Dear Andy,
I would really appreciate it if you could provide me with the above mentioned case studies.
– Looking forward to attending your 2- day class in September.
Best Regards,
Alan.
Hi Alan – I’ve asked Nina, my GM, to send the case studies across to you. Thanks for your comments and pleased to hear you will be joining us in London in September. I look forward to meeting you.
Dear Andy,
i would be really thankful to you, if you could send me the case studies which you are referring to.
Regards,
Damith
Hi Andy
I’m interested in your mentioned case studies. If possible would like to have a copy emailed to me please. Thank you.
Kind Regards
Alexis
Very interesting indeed. Would be grateful if I could also access the case studies.Thanks.
Hi Andy,
I am sorry I could not respond to your comments as I was on leave from the 18th of Feb.
My e mail ID is karuthedath64@yahoo.com
Would you mind sharing the above mentioned case studies please.
Many thanks.
Best Regards,
Gopinathan
Dear Andy,
I would also appreciate a copy of interesting case studies sent to my email. Thanks in advance.
Sanjeva
Hi Sanjeeva – Sorry for the delay, I have been travelling. Of course, I will ask Nina to send these to you asap. Regards, Andy.
Hi Andy,
I am Gopinathan, Contracts Manager, Projacs International, Doha Office, Qatar.
I follow you on linked-in and read many of your articles from time to time.
On the above subject, would be grateful if you could send me the case studies that you are referring to.
Many thanks.
Best Regards,
Gopinathan
Hi Gopinathan – Thanks for your comments, we will send you the case studies via email.
Hai,
its very useful answer,it will be great if you can sent me the case studies.
May I request copy of the case study?
Hi Gopinathan – thanks for your comment, I’ll issue the case studies via email shortly. Regards, Nina.