Construction Law/calculate the Lump sum items
QUESTION: Dir Sir ,I am contacting you to inquire about an issue related to calculate a ratio from the excuted works which their's item is " number or lump sum "
because the financial of our project do not approved to set any items in the interim payments which mentioned above unless the contractor finshed the items such as the items in the electrical works >>>sockets ... unit light ...doors ...septic tank ,... water tank ...
we considering FIDIC 1999
the second question can i calculate ratio from the items which are " number or lump sum
interim payment "
ANSWER: Dear Sir,
Thank for your two questions which somehow are not very clear to me. So I will attempt to give a general response.
Q-1: It appears that the Contractor was to quote lump sum rates for some items but he failed to do so. If this is the problem, these rates can even now be agreed by both sides by mutual discussion and then issuing an amendment to contract stating agreed rates.
Q-2: I do not agree with the approach to calculate ratio but a rate analysis of all materials and labour input has to be prepared and then an agreed figure for site specific and head office specific markup is to be added to arrive at the rate. This can be then a basis of negotiation and agreement between the two parties.
I hope this will be found useful. In case it do not answer your question please come back with clarity so that I may answer your question accordingly.
---------- FOLLOW-UP ----------
QUESTION: Referenced to the above mentioned subject, I am contracting you again to clarify my previous questions, firstly, is it allowed to calculate the percentage ratio of the executed works in the interim payments, which relates to fixed units (lump sum) in the unit price tenders according to FIDIC red book of 1999.
The donors of the project rejected any percentage ratio related to any items which relates to fixed unit (lump sum, number). As prominent example;
- the donor rejected calculating any electrical works, such as sockets, lighting units, claiming that these items are related to fixed unit(number), which cannot be calculated unless its fixed and installed.
- the donor rejected to calculate door works, since they are not fully installed, for example if we have 45 doors to be installed, and 45 frames of these door were fixed, the donor refused to consider part of these doors since contractor did not fix the 45 doors.
- the donor rejected to calculate water tank lump sum, including the following construction activities “ excavation, foundation, walls, slabs” claiming that contractor accomplished 70% of the previous mentioned construction activities, and donor confirmed to calculate the water tank lump sum after contractor accomplishes 100% of it.
Thank you for clarifications made.My general response on the subject will be as follows
The lump sum items are generally payable on on full completion/execution unless provided for otherwise in the contract.So i tend to agree with the approach adopted by the donor