Construction Law/variation and relevant BoQ items
QUESTION: Dear Sir
1- our remeasured contract states in the scope of work included in the Particular Conditions that the Villa's gate is from wrought iron, whereas in the BoQ the relevant priced item states that the Villa's gate is from Hard Steel. Now, applying the contract properly leads to use the wrought iron since P. Conditions prevails above BoQ. Accordingly a new price will be established for this item. My question is: is this case considered Variation and should follow the contract procedure of Variation administration (although the wrought iron was foreseen upon tender stage)?
2- To manage the above case, we (as the Engineer) will ask the Contractor to submit his proposal of the wrought iron thru a price breakdown, my question is; should this be from scratch OR the existing price of the hard steel gate could be relevant and he should base his proposal upon it? i.e. he should submit 2 breakdowns one for wrought iron and one for hard steel and just the differences between different items such as the price of the material and workmanship cost, etc. shall be applied.
3- if we base the new price on the BoQ priced one as mentioned above, should we maintain the markup (OH&P) of the BoQ priced item? if Yes, what exactly to be maintained, the markup as percentage or as a figure? e.g. if the hard steel price is $120 and the direct cost is $80, so the markup is 50% and meanwhile it is $40. if we get from the Contractor that the direct price of wrought iron is 60, what markup we should maintain; 50% (i.e the new price will be 90) OR $40 (i.e. the new price will be 100)?
Thank you Sir and sorry for my long message,
ANSWER: Dear Khaled,
Thank you for your question.
Without mincing words, i can let you know that, the requirement / specification stated in your Particular Conditions supersedes that of the BOQ and since tis has already been made known and agreed to, by both parties during the time of entering into the contract, it means, both parties have agreed that, the Contractor will deliver the works (including the ones stated in the Particular Condition) within the agreed Contract sum. As a result of this, the question of variation does not arise. The Contractor does not need to submit anything. He only need to comply and execute the Wrough iron gate. Except in a situation that, the wrought iron gate is changed again, then, we can be talking of doing such analysis you have described. But if not, there is no change under the contract. The requirement for wrought iron gate was known to both parties and was never an alien to the Contract.
I hope i am clear please.
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QUESTION: Hi Sir
I got your point, so it is not a variation since it was foreseen by both parties however you didn't answer my question regarding the cost or generating a new price for the wrought iron unless you wanted to say that the Contractor would execute the wrought iron on the same unit rate given in the BoQ for the hard steel, is it possible?
If No, then we must have a new price (new rate) and a new BoQ item ID. in our contract, new prices of variations should ,after assessment by the Engineer, take the final approval of the Employer. SO how can we deal with this issue now since the case is not a variation but needs a new price.
Moreover, may you please comment on the mechanism of creating the new rate as questioned by me in points 2 and 3 ??
Thank you Sir
ANSWER: Dear Khaled,
As i said, i considered that your question on the rate is not relevant since there is no variation to consider. The Contractor is expected to provide the wrought iron gate at the price in the BoQ. But for sharing sake, a new rate can be built either from the scratch or either by contractor submitting proposal (for cost of supply and install i.e direct costs) and then after due analysis of the rates in the BoQ, the same proportionate oHP could be applicable.
I hope this answers your question.
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QUESTION: Dear Mr. Femi
Wonderful , and thank you for clearing the issue to me.
However, a very simple question is balance.
when asking the Contractor to submit the direct costs of the wrought iron, I believe that the price of row material for example can't be applied as the current prices which are definitely higher than they were 3 years ago upon tendering time. It is not fair to us (The client) to use the current prices to fix the new rate as this error should have been noticed by the Contractor on the time of estimating his tender. We have the attached clause in our Contract, please read it to understand what I am aiming at then reply to me for the last time .
Thank you Sir
Please get my response correctly.
Regarding this issue, there is no need for any variation to the Contractor. You do not need to ask him to give you any price or proposal whatsoever, what you need to do is to issue instruction to him to comply with execution of the wrought iron gate in line with the Particular Conditions of the Contract.
I hope this is okay?