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Construction Law/Note on Pricing provision/ Variation

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QUESTION: As per Qatar GCOC as Stated:
Clause 6(2)Dcocument Mutually Explanatory
Delete CLause 6(2) and substitute thge following:
Except if & to the extent otherwise provided by the contract the provisions of these conditions of contract shall prevail over those of any other document forming part of the contract.The details shown in the drawings & provisions of the specs shall prevail over the DESCRIPTIONS given in the BOQ; My question:
- BOQ 812 m2, Tender drwg 300sqm, New design 450sqm; the contractor submit variation as per computation 450sqm -300sqm =150sqm. I told the contractor that there is no variation since the BOQ covered already 450sqm.Contractor insisted that drawings shall prevail i told them BOQ since this was the priced document not TDrwg. Am i correct pls clarify this issue?The contract is LS variation happened due to changes in design.

Thank you again in advance

Regards
Reggie of Qatar

ANSWER: Dear Reggie,

Once again, thanks for your question.

I can understand your question. It is not uncommon in this part of the world where most contract are offered out to Contractors on a Lump sum basis. May I say that, if your contract is a Lump sum contract, then, you would not be correct to say that the BOQ quantity of 812M2 has covered the varied works. The reason is that, the principle upon which Lump sum contract is conceived is to fix the contract sum for the works defined in ALL the contract except where the contract specifically defines otherwise. It then follows that, once the Contract sum is fixed, the nothing shall change the sum except when the contract scope changes. It is a general principle of Lump sum that the quantity in the BOQ is "uncertain" and does not represent the actual scope of the works to be done and that is the reason why both parties have agreed to retain risks on the contract sum agreed for the scope of the works.The question therefore is that, what is the contract scope and where can we find; or which of the documents shows; the contract scope?  Under a Lump sum contract as this, the scope of the works (i.e. Quantity, Quality & workmanship) is neither valid as presented in the BOQ since BOQ is just a basis of establishing the basis for valuation of change (i.e. it is as good to call it schedule of rates) and not necessarily represent the accurate quantification of the works but it is the pricing of the works with RISKS in-built either for Quantity or for Price. The actual quantity for the scope of the works is therefore basically as shown on the drawings (Quantity, quality and workmanship) and as described in the specification / preambles (Quantity, quality and workmanship) . Therefore, any variation on any of the contract scope would either take effect on the drawings or specifications otherwise, nothing has changed under the contract. But if the drawings changed by increasing quantity as a result of increased dimensions, then, you must compare the Tender drawings with the Revised drawings and pay the difference (plus or minus). If you compare with the BOQ, the Contractor has only priced for the drawings and specs and not the quantities in the BOQ as the quantities in the BOQ are quantities for which both parties have retained the risk through the agreed contract sum and any variation compared with this BOQ will be taking away the risk priced for and agreed by the parties. Lump sum contract is all about risks. The correct variation in your circumstance is 450m2 minus 300m2 = 150m2 (net addition to be paid to the contractor).

Hope this clarifies your doubt?

Femi

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

QUESTION: 1   Generally


1.1   The Bills of Quantities have been prepared in accordance with the Standard Method of Measurement of Building Works dated 28th February 1973 (25th Muharram 1393) issued by the Ministry of Public Works, State of Qatar (hereinafter referred to as the Qatar SMM).  However this is not so in every respect and each departure from the Qatar SMM has not been individually highlighted.  The method of measurement as expressed in these documents must be accepted where applicable.

1.2   Notwithstanding the provisions of the several sections of the Qatar SMM none of the general items to each section have been included as an item in the pricing sections of these Bills of Quantities. They are however deemed to be included within the rates and prices given.

1.3   The Contractor shall price every item in the pricing sections of the Bills of Quantities.  Any item left unpriced shall be deemed to have been allowed for in the prices of other items.  No claim for payment in respect of unpriced items will be admitted.  Lump sums set against groups of items are not acceptable.

1.4   Descriptions of work and materials are not necessarily complete in the Bills of Quantities and reference should be made to the Conditions of Contract, Specifications and to the Drawings for this information.  The prices inserted in the bills of Quantities must be comprehensive and should be the full inclusive cost of the work in every respect and of general liabilities and obligations set forth or implied in the documents on which the Tender is based.  The completed prices must truly reflect the value of the item described.

1.5   The rates and prices shall be deemed to include for all costs in respect of local religious holidays and customs and the provision of all amenities customary in the State of Qatar.

1.6   The Notes on Pricing are to be read in conjunction with the item descriptions given in the pricing sections of these Bills of Quantities and shall apply wherever relevant.

1.7   The attention of the Tenderers is drawn to Clause 55 Quantities of the General Conditions of Contract and note should be made that the Works will not be re-measured.  With regard to the priority of the several documents forming the Contract as stated within the first paragraph of Clause 6(2) Documents Mutually Explanatory, of the Conditions of Particular Application, the Contractor shall check the descriptions and quantities and allow where provided for any errors, additions or omissions considered necessary to establish a lump sum firm price.  At any time, if requested by the Engineer the Contractor shall provide a complete and detailed breakdown of any such insertions.  Payment will be made only for quantities in the Bills of Quantities, which upon award of the Contract are to be taken as the actual and correct quantities of the Works.

Follow up question:
- Can u interpret this provisions in NOte on Pricing if this will back up my stand for the (-) & (+)variation coz our chartered QS when i asked him that i should follow the priced BOQ quantities.
- All items in the BOQ with unit as Lump sum should remain lump sum?
- to elaborate further that the contractor cannot claim BOQ qty 800m2 with rate 50 QR, Tender drwg qty 1000m2 & new design qty 900m2, u mean that if i follow tender drwg qty w/c is 1000m2 - 900m2(new qty) = - 100m2 x 50 = - 5000 QR therefore this negative variation?

Thank u again for the time & help, i do really appreciated it so much.

Regards,
Reggie

ANSWER: Dear Reggie,

Thanks for your question.

Note on pricing are generally like complimentary preambles which are principally meant to give sufficient information to the tenderers pricing the tender to put into consideration certain assumptions and hidden or silent risk costs elements that should be considered to be priced along with the tender price to be submitted on the form of tender. These notes could tell you on what are the shortcomings and assumptions on the measurements and the quantities inserted in the BOQ; it may tell the tenderers need to do a thorugh job to retain risks on the costs of items, labour, materials and workmanship that are deemed to be included in tenderers' bid sums. Note of pricing certainly can assist anyone evaluating a variation or claims during post contract stage to back up any decision compliant with such notes.

Reagrding items with lump sums, yes, these items would remain lump sums but in a situation where only a part of the lump sum items are concerned with the variation, then, such lump sum would have to be broken down into the costs and to determine the new cost for the part concerned and then, sumed up again with other remaining original broken down cost of the remaining parts to make a new lump sum. In that wise, the original risk elements is still retained.

About the change in design issue. This is a clear variation of quantities in the contract changing from 1000m2 #drawing Qty# to 900m2 in the new design and this results to a negative variation. This is evidently supported by the clause 1.4 cited in your question. A clear statement has been made that, the BOQ is not neccessarily complete and as such, Conditions...specification and particularly drawings should be consulted for such information. This is an express terms under the scope of work clarification. it means the scope of work is not found in the BOQ but in other documents which drawing is inclusive and plays a major role.

Hope this helps?

Femi

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

QUESTION: Hello again Femi,
Here are added contract document info to consider the quantity on the BOQ as my previous query since mostly the BOQ qty were more than the qty in Tender drwg, hope this will make sense for my stand.
Clause 51(1)- Variations
The Engineer has authority to make any variation in the form or quality of the Works or
any part thereof. By virtue of this authority he has the power to order the Contractor to do
and the Contractor must do any of the following:
(a) Increase or decrease the quantity of any work included in the Contract.
(b) Omit any work.
(c) Change the character or quality or kind of any such work.
(d) Change the levels lines position and dimensions of any part of the Works and
(e) Execute additional work of any kind necessary for the completion of the
Works.
No such variation will any way vitiate or invalidate the Contract. but the value (if any) of
all such variations shall be taken into account in ascertaining the amount of the Contract
Price.
Article 16 of Law No 8 of 1986 amended by Law No. 26 of 2005 restricts the right of the
Engineer to increase or decrease the Works by more than 20% of the Contract Sum.

Clause 55 - Quantities

This clause conftrmS the concept of a Lump Sum Contract. The quantities in the BOQ are
to be taken to be the actual and correct quantities of the Works to be executed by the
Contractor in fulfilment of his obligations under the Contract. The Employer therefore
has tremendous responsibility to ensure that the BOQ supplied is accurate. To this extent
the Qatari Government requires that all BOQ's should be prepared by approved QS firms
in order to fix accountability. Private Owners will be well advised to follow suit.
Contractors similarly should ensure when tendering, to the extent possible, that the
quantities measured in the BOQ are reasonably correct as any error in or omission from
the BOQ will not be any grounds for adjusting the Contract Sum or vitiating or
invalidating the Contract.
The exceptions are as provided for in Clauses 51 and 58 (1)


NOTE on PRICING
1.7   The attention of the Tenderers is drawn to Clause 55 Quantities of the General Conditions of Contract and note should be made that the Works will not be re-measured.  With regard to the priority of the several documents forming the Contract as stated within the first paragraph of Clause 6(2) Documents Mutually Explanatory, of the Conditions of Particular Application, the Contractor shall check the descriptions and quantities and allow where provided for any errors, additions or omissions considered necessary to establish a lump sum firm price.  At any time, if requested by the Engineer the Contractor shall provide a complete and detailed breakdown of any such insertions.  Payment will be made only for quantities in the Bills of Quantities, which upon award of the Contract are to be taken as the actual and correct quantities of the Works.



The situations:
1. We had a project the original contract amount is QR. 377M due to changed in design & other additional works the amount now is amounted to QR. 642M (70% variation in relation to Clause 51).
2. The contractor submitted variations mentioning over 20% so they have the right to insert new rates and omit the original BOQ and prepare new BOQ.
Questions:
1. if the total variatioin is 70%, meaning the new rate will be applicable in the 21st% e.g. 70%-20%=50%, therefore, the variations within the BOQ item will be treated thesame rate, the same unit while the new item not on the BOQ will be treated new item with new rate + profit?
2.Am i right with the approached i mentioned to Contractor as i mentioned in my question no.1?
3. The COntractor claimed variation by addition & omission with this approached,(e.g. Tender Drgw qty= 1000m3 of excavation work, priced BOQ qty= 3000m3 excavation work, redesigned drwg qty 2000m3, contractor is claiming additional 2000m3-1000m3= 1000m3)with the clause 55 i rejected the 1000m3 as variations instead i told them that no variations claim for this excavation since the qty although due to redesigned was already covered in the priced LS BOQ? but according to contractor as per Clause 6(2) Documents Mutually Explanatory:Except if and to the extent otherwise provided by the Contract the provisions of these Conditions of Contract shall prevail over those of any other document forming part of the Contract. The details shown on the drawings shall prevail over the provision of the specifications.  The details shown on the drawings and the provisions of the Specification shall prevail over the descriptions given in the Bills of Quantities.
Subject to the foregoing the several documents forming the Contract are to be taken as mutually explanatory of one another but in cases of ambiguities or discrepancies between the several documents or discrepancies within any of the several documents the same shall be explained and adjusted by the Engineer who shall thereupon issue to the Contractor instructions directing in what manner the work is to be carried out.  Provided always that if in the opinion of the engineer compliance with any such instructions shall involve the Contractor in any expense which by reason of any such ambiguity or discrepancy the Contractor did not and had reason not to anticipate the Engineer shall certify and the Employer shall pay such additional sum as may be reasonable to cover such expense.


My interpretation on this is: to prevail documents over another only mention on the description of items to follow or to use (e.g. kind & quality of materials, finishes etc others but not the qty) .Correct me on this.

Again thank u.

Answer
Dear Reggie,

Yes, you are right as you mentioned in (1) above.

Reggie, i must be honest with you, your contractor is correct. The reason is that, the BOQ quantity of 3000M2 is assumed correct for pricing and establishment of contract sum but that the actual and correct full details and scope of the works under the contract is described with prevailing authority of specifications and drawings. It means that; notwithstanding the fact that the BOQ quantity is 3000M2, if the quantities based on drawings and or specification is 1000m2, it would be assumed under the contract that the prevailing quantity of work to be done is 1000m2 as the BOQ quantity is not meant for execution of the works but for rating purposes whereas the quantity based on the drawings and or specs is for execution of the work. If any variation instruction then cause any change in the quantity of work to be executed; then; such changes would be valued based on comparation of new drawings / or documents with the documents showing the scope of work to be done i.e. drawings and specs.

In actual sense, the purpose of the BOQ under LS contract (except if specifically mentioned otherwise under the contract) is to serve as "schedule of rates".

Hope i sounded clear?

Femi

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Femi Alofe

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I can answer all questions relating to the followings: 1. Contract Administration - variations, contract clauses interpretation, all post contract procedures, valuations and certificates questions, extension of time issues and prolongation cost matters. 2. Contract Practice - Any questions regarding forms of contract like JCT, FIDIC & other Bespoke forms. 3. Quantification, measurements and Estimating questions 4. Contracts and construction law questions and dispute resolutions problems. 5. All FIDIC Conditions of contracts

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Out of my 24 years experience in construction industry, i have the following specific experience: 1. Contract Administration - 15 years in contract administration with over 10yrs in Managerial positions covering africa and the middleeast. 2. Contract Practice - 15 years experience with over 10yrs in Managerial and expert positions covering africa, north america and the middleeast. 3. All pre-contract procedures, Tendering, Quantification, measurements and Estimating questions - 20 years experience. 4. Contracts and construction law questions and dispute resolutions problems - 15 years experience with over 10yrs in Managerial and expert positions and 5 years expert witness and active practice in arbitration proceedings covering africa and the middleeast.

Organizations
1. FAIQS - Fellow, Australian Institute of Quantity Surveyors, Australia 2. FRICS - Fellow, Royal Institution of Chartered Surveyors, UK 3. CCP - Certified Cost Professional AACEI, USA 4. PQS - CIQS, CANADA 5. ACIArb. - CIArb, UK 6. MNIQS - NIQS, NIGERIA 7. RQS - QSRBN, NIGERIA

Publications
1. AACEI RP on Estimating, 2010

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1. B.Tech (QS) 2. RICS professional course, CEM - UK 3. MSc , UK NARIC 4. Professional Doctorate ( to commence 2016)

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1. Larsen & Toubro Ltd, Dubai UAE 2. Larsen & Toubro (oman) LLC 3. Archi + Web consortium, Abuja Nigeria 4. George Dike & Associates, Minna Nigeria 5. Public works Authority (Ashghal), Doha Qatar

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