What is Included in ‘Lump Sum’?
A simple matter that often causes confusion is exactly what a lump-sum price includes.
Take a typical contract designed by the employer. The contractor is required under the contract to provide the works defined on the drawings and in the specification. In other words, the drawings show the extent and the configuration of the design. The specification describes the composition and quality of the work. Thus, it is clear that the lump-sum requires the contractor to provide whatever is included in the drawings and specification.
Confusion
Confusion often arises when introducing a bill of quantities into the mix. Such confusion is increased when engineers or other contract administrators try to insist something included in the bill of quantities is included in the lump-sum price. Particularly when it is not detailed in the drawings or specification. This may manifest itself in the engineer’s insistence that additional work is provided with no addition to the lump-sum price. Or, even that the lump sum price be reduced if work included in the bill of quantities is not required.
Consider that in many cases the party appointed to administer the contract by the employer is often the designer. Could the engineer have a vested interest in covering up design errors, omissions and inaccuracies in the bills of quantities? They may not wish to be the bearer of bad news of this nature to the employer.
The Contract Wins
The contract will always place the drawings and specification in a higher order of precedence than the bill of quantities. Therefore, these are the ruling documents in the case of any conflicts. Employers often try to have their cake and eat it. They may include a provision to the effect that if something is required by one document but not required by another, it shall be provided within the contract price.
However, this will not work when the contract also includes provisions to the effect that:
- The bills of quantities are only an estimate.
- They are provided only for the purposes of calculating monthly payments and for the evaluation of variations.
- The bills of quantities may not be relied upon.
- They should not be taken as being accurate.
In such cases, the employer or engineer cannot argue that such a provision may be used to define the lump-sum. Particularly when drawings and a specification exist that are accurate enough to be used to construct the project.
One-Way Traffic
It is not all one-way traffic however. If a contractor relies on the bill of quantities when pricing, they only have themselves to blame if it does not contain everything shown on the drawings and in the specification. Nor can the contractor complain if the quantities are under-measured. Furthermore, the contractor’s tender will not be competitive if they price for work that is included in the bill of quantities but not in the drawings and specification.
Key Considerations:
The following questions may help you to ascertain the correct principles to apply to your project:
- If something is shown on the drawings and/or in the specification but not included in the bill of quantities, can the contractor claim additional payment? No. The drawings and specification define what the contract price includes.
- If something is measured in the bill of quantities but not shown on the drawings and/or in the specification, can the employer make a deduction from the contract price? No. The drawings and specification define what is included in the contract price.
- If the bill of quantities contains lower quantities than those accurately ascertained from the drawings, can the contractor claim additional payment? No. The accurate quantities measured from drawings define what is included in the contract price.
- If the bill of quantities contains greater quantities than those accurately ascertained from the drawings, can the employer make a deduction from the contract price? No. The accurate quantities measured from drawings define what is included in the contract price.
- If a work item or items are to be omitted entirely and the bill of quantities include different quantities to those shown on the drawings, which should be used as the basis for the omission? The quantities shown on the drawings are deemed to be included in the contract price so, whether they are greater or less than those shown in the bill of quantities, these should be the omitted quantities.
- If the bill of quantities includes a higher or lower specification for a measured item to that included in the contract specification, which is included in the contract price? The quality or item included in the contract specification is deemed to have been included.
Find out more:
For more information on how our training courses can help you, take a look at our e-courses or get in touch today.
thanks a lot for all responses, further i need to have public opinions on the below issue-
In a lump sum contract, the contractor has loaded a good amount of cost in a particular system, which was found by the client after awarding the contract. in this case, contractually is it possible to remove that particular system / scope fully and give it to some other vendor directly by client / consultant and save the cost for their benefit.
In a lump sum contract an item is given in the BOQ which is priced as per the quantity given, in reality during execution, it is not used or not required to be installed as per drawing or the specification. is this quantity to be omitted from the Lump Sum contract BOQ.
No, shouldn’t be omitted since it part of contract price regardless it’s existing in the dwg/spec’s or not. You get paid fully for such not existing item.
No, it’s part of your scope to form the contract amount, unless in contract mentioned that any thing mentioned in one document and not exist in others, shall be executed as a part of contract scope. Otherwise, u get paid fully 4 such unexisting item as the drawings are the priority & not required to construct such item. BOQ item to be fully regardless of qty or description, we consider it as dum item with only budget amount to get paid full according to lumb sum contract condition.
if the boq of a lumpsum contract of a motorway indicate more quantities of overhead bridges than actually executed after a site reassessment with deletion /addition of new location of some overhead bridges ,does this reduction call for any reduction in cost?
Of course, if some overhead bridges been omitted from Drawings, then the BOQ item to be omitted accordingly (entire BOQ item) regardless of exact measurements at site
I agree with Aladdin Fayoumi on point 5, if an item to be omitted entirely, it should be omitted as in the BOQ not the drawings, as the amount of this item in the BOQ is the total amount of the actual quantity in the drawings.
Omitting the drawings quantity, in my opinion, is taking advantage of the quantity risk the the contractor take in a lump-sum contract.
Exactly, in lump sum contract, the contractor get paid via BOQ qty regardless the qty in the BOQ is accurate or even match with drawings. The same concept applied in the omittion. Noted that documents priority to construct the items in the drawings regardless it’s matching with BOQ qty or even not exist in the BOQ. Unless mentioned in the contract that if some items are missing in some documents, and regardless of priority, it’s part of contractor scope & should be installed.
If something is measured in the bill of quantities but not shown on the drawings and/or in the specification, can the employer make a deduction from the contract price? No. The drawings and specification define what is included in the contract price.
In reference to the above explanation, i have a question, in Lump sum contract drawings and specifications have priority so when the item included in the BOQ is not shown in the drawing and for sure the contractor is not going to execute that item so why the employer cannot deduct it from the BOQ.
Because the BOQ is not forming the contract scope, it’s just for payment purpose, and the drawings, spec’s & contract are the main documents forming the contract scope.
The omission applied for item show in the drawings & the entire BOQ item shall be omitted regardless of qty mention in the BOQ.
What would be the consideration of omitting an item from a BOQ in a Design and Build Contract, does the same concept applies, where the employer provides the complete set of drawings and specifications?
If an item is shown on the bid drawings but not reflected in the BOQ, and it was not executed, can the employer make a deduction from the contract price for this item?
Hi Manny – I think you may find this article useful as it answers a similar question: https://www.constructionclaimsclass.com/omission-of-items-included-in-the-bill-of-quantities-but-not-shown-on-the-drawings/
Based on the above scenario I see no involvement of the design team responsibilities in providing an accurate and coordinated design package?
I see no fair approach to ask the tendering department of a contractor to validate and coordinate the entire design package, during a short period of a tender process. With this approach, any contractor should have a bright design team that should be part of the tendering department which is not sustainable.
Absolutely agreed, that why I prefer to keep the same designer as a supervision consultant and any variances due to design mistakes or discrepancies has to be under Engineer responsibility & penalty applied as of variation amount.
If the item included in BOQ is not found in drawings, does employer reserve rights to deduct respective amount from BOQ?
No, such BOQ item is not forming the scope & u should get paid for such non existing BOQ item since you complied with your scope in drawings and Spec’s.
If item is shown on the drawings and/or in the specification and/or included in the bill of quantities , and the bill of quantities in this case is a contract document ,
then the employer for a reason decided not to execute this item ,
is the employer entitled to deduct this item from payment?
Sure shall be omitted, since the item in the drawings/spec’s, it’s part of your scope and u didn’t contruct. The deduction rate based on similar BOQ item or quotations & qty omission based on exact qty measured from Drawings.
For item 5. I believe omission should be omitted entirely from the BOQ regardless of drawings quantities. What the scenario will be if there is balance quantities if we consider the drawings quantities instead of BOQ quantities. The entire BOQ item shall be omitted since its forming the contract value.
Because the BOQ is not forming the contract scope, it’s just for payment purpose, and the drawings, spec’s & contract are the main documents forming the contract scope.
The omission applied for item show in the drawings & the entire BOQ item shall be omitted regardless of qty mention in the BOQ.
Please keep updating