You are here:

Construction Law/Design variation & cost impact in Lumpsum contract


Dear Mr Manish,
Let me share the following event –

Recently we are awarded nine hospitals at different locations in our state. State Govt. is the client & it’s a “Design & Build” contract on turnkey basis.Out of nine hospitals four are only 5 storied and will follow isolated footings instead of pile foundation . A payment schedule on percentage basis were agreed with client upon completion of certain milestones which specifies as stated below -
a)On completion of 50% foundation ( Pile only) @ 5.5% of Contract value
b)On completion of balance 50% foundation ( Pile only) @ 5.5% of Contract value
Now here is a dispute. .As per Payment schedule it seems payment will be made against pile foundation only. Now instead of pile foundation if we adopt isolated footings client may ask for savings by saying that they bought the building including pile foundation and raft etc which is now changed  to isolated footings which are more cost effective.  So , client may treat this event as a part of  “value engineering”  to issue a variation order in their favour.
As a contractor are we entitled to get full payment as agreed ?
Contractually  how to protect ourselves ?  If you kindly advise,  thanks
Regards - Kallol Seal , L&T- Kolkata , India

Dear Kallol

I agree with your concern. Please let me know if the issue relating to "chaning Piles to isolated footing" has been discussed openly with the Client?

Nonetheless, Client can ask for at least 50% savings due to this VE.

To advise you specifically; I need to have a look into your Contract Conditions.


Manish Gupta  

Construction Law

All Answers

Answers by Expert:

Ask Experts


Manish Gupta


I can answer questions related to Cost Planning, Contract Administration, Construction Law & Other Post Contract QS related areas.


7 Years with Contractors 12 plus Years with Owners & Consultants

Calgary Project Consultants, Jacobs International, Turner International, J Ray McDermott Inc. Hindustan Construction Company

MRICS, MCIArb, BE (Civil), PGDCM LLM-Constuction Law in Arbitration and Adjudication

©2017 All rights reserved.