Evaluation of Variations on Lump Sum Contracts

At a recent Claims Class Construction Claims training course, one delegate raised a frequently asked 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.

We have published two case studies that have relevance to this subject, which we would be happy to share with you on request.

To request the case studies, please send an email with your contact details to hello@instituteccp.com with “Evaluation of Variations case studies” in the subject line.

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Leave a comment 5 Reader Comments
  1. Written by

    i would like to read this artical please

    1. Written by
      Tarryn Troth

      Hi Mazhar, thank you for your comment and interest in this article. I’d be happy to share with you and will send via email shortly. Regards, Tarryn.

  2. Written by
    Lorenzo Nunag

    Dear Sir/Mam,

    I would like ask a question regarding price escalation and if we are entitled to get a variation cost for a government project.

    This is the scenario, On December 16, 2017 we won the bid for design and build government building project and having compliance the post qualification and evaluation. Therefore, we are the winning bidder for the said project and few days the gave us the NOA or notice of award but the Notice To Proceed (NTP) was 2 Months late from the day we received the NOA, for that reason we were given a 45 days for the design period and upon approval of the design plan and permit. To make the story short we’re about 4 months delay for the construction from the date we received the NOA. the problem is from december 2017 the price of rebars was 36 pesos per kg on our Program of Works (POW) or BOQ and 4 months later, the price was increased to 44 pesos per kg.The Total Rebar in the POW is about 150,000 kg.

    What are are we going to do to get back our losses. If you have any idea regarding this case or any legal or article that may help us, please kindly give us an advice of what we should do.

  3. Written by
    Andy Hewitt

    Hi Lorenzo,
    Firstly, I must preface this advice by saying that you must read the terms of contract and the notice of award very carefully.
    In principle however, if you have been delayed by the Employer and due to this delay, you have been prevented from buying the rebar during the planned period, you will have incurred additional cost (or loss and expense) due to this act of prevention. On the face of it and under many forms of contract, you may have grounds to claim for the difference in price between the planned and the actual dates of purchase.
    I hope this helps.
    Andy Hewitt

  4. Written by
    Ajaz Hussain

    A good article as my project is a lump sum contract.

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