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Construction Law/Lumpsum contract - variation / deletion of item.


Dear Sir,
The contract is lumpsum. The main contractor was asked to quote for 20 warehouses based on the specifications and systems followed on the already existing 6 warehouses in the same plot. A BOQ is attached with the contract which has many errors in quantities and rates. A huge discount is also given by the contractor from the total of BOQ amount to finally arrive at the agreed lumpsum amount.
Later when the drawings were submitted for approval from concerned authorities, there are some mandatory additional fire safety requirements from the civil defense insisting on implementation of new fire fighting systems on the warehouses for which the contractor claims for variation.
The contractor was asked to re-quote for the firefighting & fire alarm system incorporating all the requirements as insisted by the authorities. The client now wants to cancel the item from the main contractor and assign a new sub-contractor from his side to execute the job. My question is:-
1. According to FIDIC, In a lump sum contract - is it possible to cancel an item from   the main contractor's scope and assign the same to another independent contractor?

2. If so, Can the BOQ amount (as per the original scope) be deducted from the contractor / the deduction can be made only on the basis of existing market rate as argued by the contractor.

3. Does the client still need to pay 15% OH & Profit to the main contractor  as claimed by the contractor even if the the item is executed by another contractor.

I know these are a lot of questions to you, but kindly answer them as I am awaiting for your valuable advice regarding the issues.

Dear Manoj,
Re:   Lump Sum Contracts, Deductive Change / Variations
Thank you for your inquiry.  Let us address the questions in the order stated:
1.   Question -1:   According to FIDIC, under a lump-sum contract - is it possible to delete an item from the main contractor's scope and assign the same to another independent contractor?  
Answer-1:  Yes, unless stated otherwise in the Conditions of the Contract, the Owner usually has the authority to modify the scope of the Contract and delete certain scope, and transfer it to other contractor/party.  However, such transfer is not free, for the Owner who deletes the scope from the contractor who already committed to the job has to pay the contractor the expected profit allocated to deleted scope which the contractor has expected to make should he be allowed to complete the 100% of scope as stated in the original BOQ.  However, in the Middle East, the BOQ-based contracts usually include a clause which allows the Owner/Employer to either increase or decrease the scope within 20% of the original Contract Price without renegotiating the rates in the original BOQ.
2.   Question -2:  If so, Can the BOQ amount (as per the original scope) be deducted from the contractor / the deduction can be made only on the basis of existing market rate as argued by the contractor.
Answer-2:   See above.  If the deductive change falls within the ambit of the 20% clause, the scope under BOQ can be reduced without renegotiating the rates in the original BOQ.

3.   Question -3:  Does the client still need to pay 15% OH & Profit to the main contractor as claimed by the contractor even if the item is executed by another contractor.
Answer-3:   In my opinion - and this is only on a general law of the contracts containing the negotiated scope under a BOQ - the Owner/Employer has to pay the Contractor the expectation of Profit (not the Overhead component) allocated to the work soon to be deleted.  Usually, the Contractor has to disclose the proprietary bid information in order to prove to the Owner its profit calculations allocated to the soon-to-be deleted scope, as the Claimant / Contractor has to carry its burden of proof for any claim of entitlement.   

I hope these answers are responsive to you inquiry.
Gerry Sverdlin, PE, Esq.

Construction Law

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Gerry Sverdlin


Questions I can answer or provide assistance to reflect the following subjects: contract terms and conditions, interpretation of ambiguity, construction management and practices, claims for costs and time, variation / change orders, disputes, dispute resolution techniques and organizations, claims for extra work or materials, delay analysis, disruption or interference, defective design and negligent supervision, construction risks and mitigation, warranties and insurance. Questions I can NOT answer: too numerous to list here.


Mr. Sverdlin provided over 20 years of services in dispute resolution and expert opinion of complex construction claims for extra work, delay & acceleration, defective design & installation, unauthorized deviations, differing site conditions, productivity loss, labor & material shortage, owner’s interferences, force majeure, bonding, warranties and insurance coverage. Mr. Sverdlin participated in dispute resolution proceedings regarding 10 mile sub-aqueous outfall tunnel at Deer Island Treatment Plant – Boston Harbor Project, and claims arising out of construction of the South Boston / South Bay Interchanges for the Central Artery/Tunnel Project in Boston, Massachusetts, USA, and multiple proceedings Middle East. Specialties: Mr. Sverdlin established expertise in construction contract preparation under EJCDC, AIA, FIDIC and agency-specific bespoke contract frameworks: procurement administration, resolving defects in scope of work coverage, specification and estimates, change order processing, project controls & cost recovery. Engineering practice encompasses design & procurement management of highway & rail transportation systems, wastewater treatment and drainage networks, key performance indicator regimen.

2011 - CIArb Member Grade 1999 - Attorney at Law – Massachusetts Bar, BBO # 642980 1992 - Registered Professional Engineer - PE: Lic. MA-36839 - Civil Affiliated Memberships: MBA - Massachusetts Bar Association DRBF - Dispute Review Board Foundation TASA - Technical Advisory Service for Attorneys

2010 - 2011 - American University in Dubai -Grad. Sch. of Business Administration Construction Contracts, Means & Methods, Claims & Changes, Project Controls March 2009 - Chamber of Commerce, Colombo, Sri Lanka – Construction Management Seminar Changes & Claims, EOT/Delay Damages, Loss of Productivity – Measured Mile 2000- 2007– Boston Architectural Ctr & Wentworth Inst. of Technology - Construction Law 1991- 1993 - Northeastern University, Boston, MA – Land Surveying, Sewage Disposal System Numerous continuing education specialty courses Suffolk University Law School - Juris Doctor, law -1993 – 1997 Northeastern University - MS, Construction / Public Works Management - 1993 Polytechnic University - BS, Civil Engineering 1982 – 1985

Past/Present Clients
Representative Projects Dubai International Airport UAE Muscat & Salalah Int'l Airports Oman South River Dredging Mechanical Scituate, MA Permitting / Boundary Dispute (Title V) Worcester, MA Hazardous Material Site Assessment New Bedford, MA Groundwater Pollution Monitoring Burlington - Woburn, MA Hazardous Material Disposal - Site Clean-up Wrentham, MA Sewer Rehabilitation Project – STEP Abu Dhabi, UAE Dubai Metro - Road & Transportation Authority, Dubai, UAE Boston Harbor Project - Deer Island MWRA - BHP Winthrop, MA 1,200 MGD Waste-Water Treatment Plant Doha North Sewerage Treatment Works Ashghal, Doha, Qatar 254K m3/d STP, 25-km triple force mains, 33-km Interceptor Sewers 10,000 l/s PS Central Artery / Tunnel Project - MHD / MTA Boston, MA 116 lane-miles Old Colony Railroad - Commuter Rail (Boston, MA 70+ mi) Cherry St. Reconstruction Full-Depth Bridgewater, MA 2.1 mi Scenic Roads Reconstruction Town-wide Wayland, MA 8.7 mi Strawberry Hill Rd Reconstruction Full-Depth Concord, MA 1.7 mi Craigsville Beach Rd Reconstruction Full-Depth Hyannis, MA 3.4 mi Water Main Replacement Southborough, MA EMAAR – Gulf III Towers, Dubai, UAE Mixed-Use Hi-Rise Peabody Properties Residential Hi-Rise Lynn, MA Bristol Properties Shopping Mall Attleboro, MA May Institute (children w/special needs) Institutional Randolph, MA Bear Hill Executive Park Commercial Waltham, MA Prospect Hill Executive Park Commercial Waltham, MA Residential Community Subdivision 128 lots Hopkinton,MA Retirement Community Subdivision Residential – 126-lots Warren,MA Independence Mall Retail Kingston, MA Mashnee Village Subdivision Residential – 54-lots Buzzards Bay, MA Hyannis Industrial Park Heavy Commercial

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