Construction Law/Preliminary and General cost - re-measurable
In general(for most types of contracts with Bills of Quantities) can prelimanary and general cost be seen as re-measurable? Most BoQ's will not have detail P&G items for instance you will get an item listed under time related section of the P&G like supervision which will then be priced at a lump sum or monthly rate in your tender BoQ. Most client's will ask for a detail breakdown of your P&G cost as supplementary information and once provided the client wants to withhold payment for resources not provided as listed in the detail breakdown thus assuming it's re-measurable. But it is my view that the contractor takes the risk for the cost provided under the P&G section and thus should he require more resources than originally estimated in his tender price to complete the original scope within the agreed time then he will bear the cost but likewise should he require less resources or it takes him less time to complete the original scope he should be compensated the full tendered cost under the P&G section barring all obligations in terms of the contract was met. It is my view that the detail breakdown of the P&G cost should only be used to value any addition or omissions to the original scope and associated extensions or decreases in time related cots. What is your view?
Thank you for this question.
Based upon your narrative, I concur with your position. Under a remeasure contract it is generally not the level of supervision (for example) which is measured but the time for which the supervision is required. The risk of assessing the level of supervision rests with the Contractor.
I do not agree that the tendered requirement for P&G items cannot be reduced; it can by way of variations or by the Contractor failing to provide an item in good time. Further although the initial risk of the level of supervision rests with the Contractor there are circumstances under which he could claim for additional resources.
Imagine a scenario where a contractor prices a contract and determines that an accommodation unit will be required for 100 weeks. If the contractor does not bring the accommodation unit to the site until week #3 say, the payment should be for 97 weeks only, assuming that completion is achieved in week #100.
Where the contractor is instructed to perform additional work which requires additional labour resources it is possible that he will require an additional accommodation unit. This requirement arises as a consequence of the variation and ought to be a part of the evaluation of the variation; however it may be reflected in additional payment of the relevant P&G items.
Where a contractor is delayed there is a possibility that his claim may include for a valid increase in the supervision levels. In many contracts the contractor is under an express obligation to mitigate the additional cost to the Employer. In some legal jurisdictions there will be a requirement also that the contractor mitigates his own additional costs. Those scenarios may give rise to a need for additional supervision to reduce the otherwise projected time overrun; the cost of the extra personnel being less than the costs flowing from the extension of time for completion that would be warranted otherwise.
I hope that this assists you.
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