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Construction Law/OH & Profit to Main Contractor

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Question
I am working as a Project QS from client side. The client has already appoint a Main Contractor for the project. In the Contract the enabling works (piling work)is included in the main contractor's scope along with their civil RCC works etc. Apart from that all specialized works mentioned as provisional sum with an addition of 10% OH & Profit to M/C. Now the enabling contractor has onboard to do the piling work under the subcontract with the M/C. Now the question have arises because the M/C submitting the monthly invoices of enabling contractor's with the claim of 10% OH & Profit to the subcontract's value. My question is, are the M/C entitle to get this 10% OH & Profit. Where as in the contract (between client with M/C & M/C with enabling works subcontractor) nowhere it is mention that the 10% OH & Profit to be entitle to M/C. Where as the M/C is not providing them any facilities or services to the enabling subcontractor and also not holding any responsibility of delay. These are mentioned in their contract also. If I need to breakdown the OH and profit separately, what it would be on % basis.

Answer
Dear Nasir,

Thank you for this question.

The structure of the contract, with such extensive amounts of work being described as Provisional there is significant risk attached.

In relation to the piling work, if the piling was included in the contract as a provisional sum then the Contractor will be entitled to claim the 10% uplift; however if the piling was detailed work outside of the provisional sums allowances the Contractor is not entitled to the uplift.

As to a breakdown of the OH & Profit if the figure is stated in the contract it is likely that no further definition is necessary; where it is not in the contract the information should be requested from the Contractor.




I hope that this assists you.

Kind regards,
John Dowse

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John Dowse

Expertise

Legal; contract interpretation; quantum; delay analysis. Practitioner in arbitration, adjudication and mediation.

Experience

Thirty-three (33) years experience in building and construction, at all levels both within contracting and consulting organisations. Practising arbitrator, adjudicator, and mediator. Faculty approved trainer for the Chartered Institute of Arbitrators. Lecturer on construction contract forms and dispute resolution practices.

Organizations
Chartered Institution of Civil Engineering Surveyors Chartered Institute of Arbitrators Institute of Directors Society of Construction Arbitrators

Publications
Various UK and International construction and legal publications.

Education/Credentials
LLB (Hons), Pg Dip (Legal Practice), MCInstCES MCIArb MIOD Barrister

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