August 23, 2022
How Should Variations Be Priced When There Has Been an Adjustment to The Tender Price?
An ICCP member recently asked my opinion on how an adjustment to the Tender Price agreed upon during tender negotiations should be applied when pricing variations. This is a matter that often causes contention so I thought it would make a worthwhile blog subject. The following is a typical scenario: The Contractor submits a tender accompanied by a priced bill of quantities for the tender price. The Employer meets with the Contractor and negotiates a reduction, and the contract sum is agreed at a lesser figure than the tender price. The contract documents are prepared and include a bill of quantities which shows the final price in the bill of quantities agree with the contract sum. There is no clear record of the form of the price reduction that was negotiated. The problems start when variations occur that are to be measured and evaluated at the contract rates and prices. The Contractor argues that the rates and prices should be those shown in the bills of quantities and the…
October 20, 2021
Q&A: Entitlements Under the FIDIC White Book
The following questions, related to contractual issues arising from COVID-19, were posed during our fifteenth Construction Clinic, held in July 2020. Andy Hewitt's responses have been summarised from the original. The entire webinar may be viewed on-demand on YouTube. Question 1 Question: (Part 1 of 3) This question is in several parts. It is related to the FIDIC consultancy contract, which is the White Book, in terms of management of a consultant on his project. The first part of the question asks what is allowable and what is not. [Note: this blog post on the Practical Law Construction Blog has more information on the White Book.] Answer: The White Book is not one of the contracts that I deal with on a regular basis, so I had a quick look at it. There's absolutely no definition of cost in the White Book. So, if it concerns a variation to the consultant’s services, redesigning something, designing variations, possibly being deployed on an extended period because the Contractor didn't…
August 20, 2020
5 Tips For Success When Claiming for Variations
During CPD talks and training courses, I am often asked if it is necessary to submit claims for a variation. Unfortunately, I am going to have to give a lawyer’s answer to this and say it depends. If the party responsible for administering the contract follows the procedure set out in most forms of contracts for instructing variations, then the answer is “no”. The variation has been acknowledged and it will either be measured and evaluated as part of the remeasurement (on a remeasureable contract) or as a separate evaluation leading to a change of the contract price of a lump sum contract. We all know, however, that in many cases, consultants do not formally issue instructions for variations to the contract and often give instructions which are not acknowledged as being variations. Examples can often take the following forms: Issue of revised drawings; Comments on shop drawings which require changes to the contract drawings; Comments on materials submittals which change the…
January 15, 2019
Does a Variation Lead to One Claim or Three?
In my work for my consultancy practice and in my role as tutor for Claims Class students, I get asked a lot of questions. And here's one that I get a lot: If a variation causes additional work, a delay to the completion date and leads to entitlement to the payment of associated prolongation because all the entitlement stems from the variation costs, should one claim be submitted for the whole matter? And I am afraid that I will have to give a lawyer’s answer and say... it depends. If the variation causes additional work, delays the completion date and therefore entitles the contractor to prolongation costs, then it is strictly speaking one claim because all this stems from the variation. If you think about the management of the claim from both a contractor’s and an engineer’s point of view however, in most cases I would advocate submitting separate claims as follows: Evaluation of the additional work The quantity surveyors/cost consultants can usually be relied upon to finalise this…
May 24, 2017
Construction Information Management: Proactive Tips to Increase Your Success Rate of Claims, a 5-Part Series – Part 3
Part 3: “Extra, Extra, …!” – Dealing with Extra and Changed Work Despite the best efforts of design professionals to establish a well-defined scope of work at the beginning of a project, there is no escaping the fact that extra work and changes inevitably occur. How they are dealt with during the course of the work can have a major impact on cost and schedule. Here are a few keys that can help expedite the processing of extras and changes and mitigate the development of prolonged disputes that can lead to substantial claims and schedule impacts. 1) Read the Contract. This can’t be said often enough There are provisions for dealing with extras and changes, including those issues discovered by the contractor that are not identified via a change directive or change notice. If a contractor believes any work to be extra to its scope it has an obligation to notify the other party in writing with the pertinent details, usually within a specified time period. Pay particular attention to…