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Construction Law/VO for item not comparable to BOQ

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Question
QUESTION: Dear Jonathan,
Hi!
We are Subcontractor working under FIDIC 1999 red book.
Please advise on following scenario:
We have received variation instructions from the Contractor under sub-clause 3.3 to and also asked for proposal for the varied works but did not mention Cluase-13.
This varied work is in Main Contractor's scope in his contract with Client but not in our subcontract scope with Main Contractor.
Moreover, the varied work is not comparable to BOQ item and therefore we submitted new rate build up along with detail substantiation and manufacturer quotation.Please note that scope of work is supply and installation of elevators with stainless steel hairline finish and variation order is for putting special/decorated finishes on elevator doors.We prepared rate build up taking one door as one unit.

But recently we received response from the Contractor that the rate build up is not fulfilling the requirement and provided us their assessment by calculating stainless steel rate per tonnage which is comes out to be very low cost as compared to our submitted cost.

My questions are:

Can Contractor assess the proposal by taking raw material rates from the market?
Elevator measuring unit is number of doors and Contractor is measuring stainless steel weight can be used for fabricating door,please advise to respond on it?"

ANSWER: Hi Jawad,

I am not sure if I understand fully the scenario you mentioned. Anyway I will try to provide you some answers and hope will help you.

First, everything should be based on your contract conditions and not of that of the Main Contractor's contract with the Employer (unless of course if your subcontract is back to back with that of MC). Reference should be made to any existing rates in the contract. If none is the same, you can provide details on how you derived the Cost, which you already did.

You are correct with providing the MC with your substantiation on how you arrived with your proposal (i hope you include also the Time Schedule and impact to your Programme(if any).

Apparently you both don't meet with same methodology to measure and price the work.

Yes he may assess it based on the raw material (but it may not be reasonable for you since you will sublet this work also to another vendor because this is specialty work which means additional cost should be include in your proposal).

I suggest you talk to the MC's QS and explain your side and show your substantiation. He may misunderstood things which resulted in different approach.

Good luck and I hope the above helps.

Best regards,

Jonathan Peralta

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

QUESTION: Dear Jonathan,
Thank you very much for the reply.
Please note that the contract is back to back but in our sub-contract appendix,
Engineer and Employer are both our Main Contractor.
We are the only approved manufacturer for the subject project and we submitted manufacturer/vendor quotation along with  substantiation.
But our employer is ignoring our rate build up and giving his own assessment.
For example:
From the manufacturer perspective:
He will give standard door finish at USD 100 per door set
And
For some special finish manufacturer provided quote at USD 550 per door set

But our employer(Main Contractor) is calculating how much material will be used for special finishes in sq.meter and taking out its total weight then multiplying its weight with tonnage rate which in our case cannot be applied.

We highlighted that the varied work is related to the conveying system which is a specialized domain and required to be done by the approved manufacturer. Therefore, rate build up assessment should be done considering the nature of job and specific equipment measuring units whereas comparison can be done with an appropriate manufacturer.

Further our employer is not negotiating the matter on table and taking advantage of FIDIC that we cannot back out from the variation instructions.

Please advise.

Answer
Hi Jawad,

If this work is not part of your Scope of Works as mentioned on your earlier query, then you can opt not to proceed and inform that it is not part of your original SOW.
Alternatively, you can refer the matter to DAB and obtain a decision as per SC20.4

Regards,

Jon Peralta

Construction Law

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Jonathan L. Peralta

Expertise

Questions relating to construction claims, Extension of Time, Variations, Interim Payment and delay analysis under FIDIC Form of Contracts.

Experience

Experience in the following sectors: buildings, residential, infrastructure, civil and marine works. Have worked for different international contractors in Myanmar, Vietnam and the Philippines.

Organizations
AACEI, U.S.A., Dispute Resolution Board Foundation,U.S.A., ASCE, U.S.A., PICE,Philippines

Education/Credentials
Bachelor of Science in Civil Engineering, Registered Civil Engineer in the Philippines

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