Construction Law/new item rate

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Question
hi,

      I am working for a maintenance project in abu dhabi, and the problem is simple that i want to ask about. I have a provisional item in the BOQ for recycling of asphalt that is non-existent in the specifications. Our cost estimators have priced it incorrectly with a huge loss and the item needs to be given a new rate orelse the contractor could suffer a huge loss if the client orders the contractor to use this item in all work orders, is it the right of the contractor to request a new rate for the item i await your kind reply to this issue.

Answer
Dear Ruyhan,

According to Sub-Clause 1.1.4.10 “Provisional Sum” means a sum which is specified in the Contract as a provisional sum, for the execution of any part of the Works or for the supply of Plant, Materials or services under Sub-Clause 13.5. Provisional Sums may be for extras or for some items which cannot be precisely estimated.
The Contractor will be entitled to the sum determined by the Engineer in respect of work covered by the provisional sums. The Engineer may issue instructions in relation to provisional sums for work or the supply of materials etc either by the Contractor who is to be paid pursuant to clause 52 (Valuation of variations) or by a nominated Subcontractor who is to be paid pursuant to clause 59.4 (Payments to nominated Subcontractors). Unless the work is valued in accordance with existing rates or prices, the Contractor shall produce all documentation relevant to provisional sums.

The question arises as to whether provisional sums fall within the definition of "varied work" within clause 52.1 (Valuation of Variations). The question is relevant under clause 52.3 (Variations exceeding 15%) and whether the value of work executed in relation to provisional sums is to form part of the calculation bearing in mind that the provisional sum entered into the Bill of Quantities will be excluded from the calculations.
"Varied work" includes "all variations referred to in clause 51". Instructions relating to the expenditure of provisional sums do not fit into any of the categories of variation listed in that clause. Alternatively, varied work may be "any additions to the Contract Price which are required to be determined in accordance with clause 52". Whilst the current sub-clause refers to clause 52, the reference is not in the context of an addition to the Contract Price. This is because the provisional sum forms part of the Contract Price and is then replaced by the actual value of any work ordered.

The question is, whether a Contractor is entitled to an extension of time and additional cost for carrying out work, supplying Plant, Materials or services instructed against a Provisional sum. If the Provisional sum is for defined items, there will be no
entitlement to such claims. Hence, the Contractor is deemed to have made appropriate allowances elsewhere in his tender. Contractors would be well advised to make it clear in their tenders what allowance, if any, has been made in their programme and preliminaries for the provisional sums. However,you may have a case if you document it well that lack of technical specification may cause improper cost estimation which gives an argument to contractor for re-pricing the item.

Best of luck,

IRVALI

Construction Law

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ALI IRVALI

Expertise

FIDIC, Arbitration Procedures, Claim Management, Project Management.

Experience

I have experience of working at 6 countries in MENA region (algeria, Libya, Saudi Arabia, Oman, Pakistan)as the Regional Director and General Manager of a construction company. I have experience on various applications of FIDIC and construction law, arbitration procedures, claim management, project management.

Organizations
CEO of TURCON Construction presently. www.turcon.com.pk

Education/Credentials
M.S. Civil Engineer, Various Courses on Project Management, Seminars on FIDIC.

Past/Present Clients
National Highway Authorities of various countries, Water and Power Development Authorities, Karachi Port Trust, etc.

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