Construction Law/Using similar item in BoQ vs contract price
QUESTION: Dear Sir;
We have this in our bespoke Contract Particular Conditions:
“The Contractor shall bear the cost of conducting soil tests and inspections, carrying out the approved recommendations related, performing the soil improvement works, or any other works prescribed by the Contract and its Documents without any consequent increase in the contract price or extension in the implementation period.”
According to this and if the recommendation of the soil report suggested a certain method to improve the soil;
- If this method has an item in the BOQ then the C is entitled to take it since now No increase in the contract price. OK
- If this method has no item in the BOQ then the C is not entitled to create an additional one (variation) since this will cause an increase in the contract price. OK
My question is:
If this method or part of it similar to another work which has an item in the BOQ , is the C entitled to get paid according to this similar item?
Please note that our contract is remeasured one.
Thank you Sir
ANSWER: Dear Khaled,
Thank you for your question.
Obviously, one would need more information for making a decision, but based on provided information, I see the situation as follows:
Indeed, if the method has an item in the BoQ, you're fine, it can be paid accordingly.
If no item in the BoQ, a Variation should be possible, but only up to Agreed Contract Price. Whatever goes beyond, it will be at Contractor's expense.
To do that, you can either use a similar item, or create a new one, but again, only UP TO Agreed Contract Price.
In brief, I do not agree that Contractor should not be paid anything if no item in the BoQ, nor a similar one.
Moreover, it might well be the case that Agreed Contract Price increases due to other reasons, e.g. increase of other quantities, or other Variations.
In which case, calculation of amount due to be paid to the Contractor should be calculated independently from such other reasons and solely in relation with original item in the BoQ.
Hope that helps, happy new year!
---------- FOLLOW-UP ----------
QUESTION: Dear Sir;
Perfect as usual !! you put me on the start of the right way , however still need slight clarification.
1- You said:"a Variation should be possible, but only up to Agreed Contract Price"and said also :"To do that, you can either use a similar item, or create a new one, but again, only UP TO Agreed Contract Price." ... my question is; how come a variation of creating a new item couldn't increase the Agreed C.P. ? I believe that if it is costs 1 dollar it will increase , right? .. I can understand that using similar item may not increase the Agreed C.P. if the original item is of an actual quantity that is less than the BoQ quantity and hence we have a space to use as similar until the limit of the BoQ quantity, am I right?
2- it is a general question Sir; is using a similar item to compensate the Contractor for a work under his obligation but without an express item in the BoQ, is this deemed a Variation? does it need the normal procedure of V.O. that we always use in practice by getting the approval of the authorized persons?
Sir, this issue is very important and urgent to me and I appreciate your help.
Thank you for coming back and happy new year!
Firstly, I recommend that you always use the "Follow-up" option, when in need for a further detailed answer to a previous question, as that helps me to avoid searching what was that previous question and also helps you to easier read the answers together.
1. To answer your new query, I understand the Contract includes for some item(s) for soil improvement, but whatever else needed but going beyond that available amount, is to be borne by the Contractor.
As such, Contractor is to be paid for whatever soil improvement is decided, but up to the Contract Price, i.e. within the amount available in the Contract.
Beyond that amount, as per the Contract, Contractor must cover that cost from their own pocket.
In my opinion, any other fluctuation of the Contract Price, up or down, due to other reasons, e.g. fluctuation of re-measured quantities, should be judged separately.
As such, I believe that reference to increase of Contract Price, relates solely to increase due to works for soil improvement, as their value must not exceed the amount already available in the Contract.
I appreciate this may sound a bit odd, but you must separate the works for soil improvement from anything else.
2. Obviously one need more information to answer that, including from Tender Dossier/ Bidding Document and Contract.
But in principle, if the original Contract did not foresaw an item and hence a price, for a certain specific work, that may well mean that in fact, related value is to be included at the tendering time, in the prices for other related works.
If there was no specific payment provided for a certain work, it can not be included after the works tendering.
Otherwise, if for whatever other reasons it is decided to include a certain item in the BoQ, against certain works that did not have one in the original Contract, I would recommend to always use a VO procedure, in order to formally amend the Contract.
Depending on applicable local law, or applicable procurement procedures of the financers, you may well need to conclude a Contract Addendum too.
Be very careful with such issues and always, make sure there is a signed paper behind any such kind of act.
Hope I properly understood your question and managed to give you a useful answer - good luck!