Construction Law/Provisional sum

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QUESTION: Dear Florin,

We have a road project (Fidic 1987 reprinted 1992) we have provisional sum amount specifically dedicated for underground services with an amount say 100,000 AED my questions as below:

1) If the contractor needs to use the P.S (for above mentioned purpose) and agreed by the engineer does he (contractor) have to submit invoice for this unforeseen work as a variation or just invoice to fix the rates?

2) if the total work (for P.S) exceeds the 100,000 AED (the amount of P.S in the contract) in this case how we will deal with that? it will be considered as a variation and it is the employer responsibility to find budget for that or what is the status contractually?

Thanks

ANSWER: Hi M.dzaie,


Welcome back!

In case of Provisional Sums, Contractor is paid at its actual Costs.

If he has to purchase something, say a car, a copy machine, etc, he is paid the amount on the related invoice and possibly, depending on Contract provision, overhead and profit. Possibly, but not mandatory.

If he has to execute some works under that Provisional Sum, Unit Rates available in the Contract shall be used.

If amount established by the Employer at the time of tender and which the Tenderers/ Contractor had to include in their offers, without changing it, is not sufficient, Employer must top that up, for Contingencies, or whatever other resources they may have.

If that amount is not consumed entirely, remaining difference stays with the Employer and they can use it in any other way they please.

Anyway, when invoicing, Contractor must provide supporting documents, bills/ invoices from suppliers or calculation of value of executed works for the respective item.

Hope that answers your query.

---------- FOLLOW-UP ----------

QUESTION: Thanks for replying,

But still I did not get the answer whether the contractor has to submit the invoice under a variation ?

and also what if the actual amount exceeds the p.s in the boq? as per questions 1&2 above.

Thanks

Answer
Dear M.dzaie


Thank you for coming back.

If you speak about an invoice issued by the Contractor to the Employer, no, it should be enough to include respective amount, properly highlighted and detailed in the Monthly Statement.

If you speak of eventual invoice from suppliers to the Contractor, yes, that should be included as a supporting document.

And in respect of exceeding the amount, that has been answered in my previous message, Employer must find the additional money to cover the cost.

Hope it is clear now.

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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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