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Construction Law/Difference between Lumpsum, Actual & Correct & Remeasureble contract

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Question
QUESTION: Dear Sir,
Could you please explain what is the difference between lumpsum contract, Actual and correct Quantity contract and Remeasurable contrat in construction.


Chinchu
Oman

ANSWER: Dear Chinchu,
Please,  am in transit and the connection seems bad. If you can send me reminder in few days,say 5 days time, I will be happy.
Thanks.

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

QUESTION: Could you please explain what is the difference between lumpsum contract, Actual and correct Quantity contract and Remeasurable contrat in construction.

Answer
Dear Chinchu,

Thanks for your question.

The major difference between the lump sum contract, Actual and correct Quantity contract and Remeasurable contract is basically in the nature of the quantities of items of works (scope of the works) under the various contracts.

Lump sum contract has it quantities of items of works (in the BOQ) under the contract firmed up at a firmed, fixed (lump) sums agreed under the contract, and therefore such quantities are not subject to change or remeasurement (even if there are errors) as long as there is no change in the contract drawings and specifications. It therefore means that, all the works described or shown in the contract drawings, specifications and other contract documents would be executed at same sum (firmed sum or lump sum) agreed for the contract. This is based on the intent of the contract as understood by both contracting parties under this contract, deemed it understood, construed and agreed that, the quantities stated in the BOQ are "actual, correct and accurate" and the parties has undertaken certain risks in this regard (i.e in case, there are errors in the BOQ in terms of quantities / description of the scope of the works shown in any other portion of the contract) and has evaluated such risks and as included the cost of such risks within the agreed contract sum. It is this understanding that makes the contract derive its name as (ALL RISKS LUMPED TOGETHER IN THE CONTRACT SUM) which is now known as "LUMP SUM CONTRACT". Under this type, no remeasurement is allowed (as the contract understands that the quantities indicated in the BOQ truly represent the actual and correct works to be done) except for variation works which will therefore be evaluated by applying the contract rates in the BOQ to the varied quantities resulting in nett addition or nett omission to the agreed contract sum.



Actual and correct Quantity contract (even though this name is uncommon) but i believe you are referring to contract with measured and construed correct quantities of works (scope of works) as contained in the drawings, specification and other contract documents to the extent reasonably forseable by the parties. This principle is also the principle upon which the lump sum contract operates as lump sum contracts assumed that the quantities of the works are correct and actual and therefore not subject to change under the contract. Under this type, no remeasurement is allowed (as the contract understands that the quantities indicated in the BOQ truly represent the actual and correct works to be done) except for variation works which will therefore be evaluated by applying the contract rates in the BOQ to the varied quantities resulting in nett addition or nett omission to the agreed contract sum.

Remeasurable contract is different from the two above. This is purely on the principle that both contracting parties understands that the quantities of works as indicated in the BOQ are not necessarily in their correct and actual quantities and therefore do not represent the actual and correct scope of the works under the contract as may have been shown in the drawings, specification and any other portion of the contract. This therefore entitles both parties to re-measure the works as being executed and the final contract sum will therefore be determined by the re-measured quantities but at same agreed rates under the contract.

Hope the above clears your doubts?

femi

Construction Law

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Femi Alofe

Expertise

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

Experience

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

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

Past/Present Clients
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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