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Construction Law/Variations and Adjustments

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Question
Dear Sir,
I am in a water supply project as the ARE. I have several issues which I would like to share with you. These are:

1.A pipeline 30 Km long was costed in the BOQ as a provisional sum. When broken down into the different item and the Contractor asked to quote, he insists on using rates that are different from those in in BOQ saying that this is a new item. My thinking is that he should use the same rates as those in the original BOQ. Is this correct?

2. A water storage tank is be constructed outside the locality where the  other works were being done (40 Km away)-the tank does not alter the project cost by more than the allowed percentage to require approval by the Client- .
Question: Should we have a new rate for the tank (all the work items had rates in the original BOQ). If yes, how should this rate be arrived at? - My take would be that we apply the old rates plus cost of transport to the new site but the contractor wants a new rate even for the materials.

3. A casing was to be made for a borehole. Whereas the BOQ specifies the diameter (12" PVC), it was silent on the class of pipe to be used. Now, when we specify the class of the casing pipe, would it amount to a variation? Is the contractor supposed to carry his cross that he quoted for something he didn't know and did not care to seek clarification or should he be allowed to quote for the casing?

4. The Contractor is late in doing the boreholes which are the source of water for the project. The boreholes yield would have been used to determine the size of the rising main (this was designed assuming water yield will be adequate). Now the contractor is doing the rising main before doing the borehole, suppose we stopped him for doing the rising main, would he be entitled to any claims and would also be entitled to claims due to delayed borehole drilling?

5. Suppose a contractor underquotes for an item, is it in order for him to claim any compensation (in this case the the contractor quote a rate for pump which is 30% of the market price). Should there be anything like assisting the contractor who puts himself in a mess?

I will very much appreciate your considered opinion on the above issues.

Thanks

George.

Answer
Hello George,


Thank you for your well detailed questions, to which my answer is:

1. If Provisional Sum, then the Contractor is fully entitled to change it. But of course, he must sustain that change and explain the probable increase.

Should that have been a Lump Sum, situation would have been different. Assume you have a definition of Provisional Sums in the Contract, suggest you read it carefully.

2. Indeed, rates existing in the Contract should be used and amended in case of eventual differences between original description and new situation, like as you say, an increased distance.

3. I am afraid the Contractor is at a high risk. As long as tender documents (drawings, specifications, BoQs, etc) shown clearly that he has to execute that work, then he should have either include related costs in related rates, or raise a question prior submitting his tender.

You can either let him 'carry his cross', or use that as a bargaining coin, in case you are merciful and agree to reduce the burden.

But, prior making a decision, suggest you check again the tender documents/ Contract.

4. I think you can let him do it, but notify he will be responsible in case of failure and will have to redo everything.

Otherwise, I think you could also stop him, providing the Contract says clearly the order of execution of the boreholes. Again, a careful prior check is recommended.

5. That's entirely Contractor's fault and I have no mercy for those that ruin the market offering dumping prices just for taking a contract they are uncapable to get out later on.

Should you be way too merciful, of course, you can always accept a price increase, but definitely do not encourage that.

It is because of such unprofessional tenderers that the industry is going down!

Hope that helps, good luck!

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Florin NICULESCU

Expertise

Questions related to Civil Engineering Contracts, using FIDIC or other Conditions of Contract, concerning Procurement procedures and documents (pre-qualification, tendering and contracting) and Services/ Works Contracts implementation matters including Determinations, Payments, Time Extensions, VOs, Claims/Disputes. Additionally, questions related to dealing with International Financing Institutions. Can also answer questions in Romanian. Can not answer improperly formulated questions.

Experience

Over 20 years of experience in the field of design, works supervision, construction, management of aid funds and technical assistance for various types of contracts implementation, including severe conflictual contractual situations leading to Claims and disputes. Claims/ Contract management, Disputes adjudication, Arbitration.

Organizations
Member of Romanian Professional Association of Roads and Bridges; Listed on President's List of Adjudicators of Romanian Association of Consulting Engineers www.aric.org Former member of the Disputes Resolution Board Foundation (DRBF) of United States – nominee on DRBF President’s Disputes Board Members List www.drb.org and of DRBF Chapter for Eastern Europe http://dabdrb.googlepages.com Former member of Polish Association of Consulting Engineers (SIDiR) – nominee on SIDiR President’s Disputes Board Members National List http://www.sidir.pl/sidir/index.php?action=czlonkowie&a2=r Member of “AllExperts.com” volunteers pool http://www.allexperts.com/user.cgi?m=4&expID=85358&catID=914 Member of the "Constructions Disputes Resolution Services” International Panel of Construction ADR Specialists" of United States www.constructiondisputes-cdrs.com

Education/Credentials
- Graduate in 1994 the Construction Institute - Graduate of several FIDIC,Procurement and other courses - Graduate of first Disputes Board Members Mentoring Scheme (http://www1.fidic.org/resources/adjudicators/pupilage.html) - FIDIC Accredited Adjudicator

Past/Present Clients
- Several State organisations/Ministries , such as Ministry of Transport, National Admistration of Roads, Ministry of Regional Development (former Ministry of European Integration), Public Works and Housing, Central Contracting and Financing Unit in Romania and also in Turkey, Croatia and Macedonia - Numerous Western based private consultancy companies - full CV and other relevant information available at www.abinitio.ro

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