Mar 11-Q&A-1

My comments are given below.
From: surabhi kp [mailto:surabhikp@gmail.com]

Sent: Monday, April 04, 2011 9:59 AM
To: sam99@eim.ae
Subject: Lump sum contract
Sir,
I am presently working in a contracting company at Al Ain. Our project is infrastructure
project which includes sewerage, storm water, water, irrigation, road works, electrical works
etc.
I have a doubt in our contract conditions.
The Engineer provided detailed BOQ for this project with quantities for all services, general
items and day works and we quoted price according to that BOQ. In the instruction to bidder,
it is stated that, "This is Lump sum Contract". The preamble saying, The Bills of Quantities
are headed with statement that the works there in are provisional. This is only to indicate that
the quantities may change and will be re measured. From the available information, it
sounds like a Lump Sum contract. If any items in the BOQ have headings called
Provisional, then only such items are subject to re-measurement.
Please let me know, How to measure the work items and how to measure the day works,
provisional sum and general items at the end of project period if these items are not
completed.
Work Items
A rationalized BOQ should be prepared correcting all missing/erroneous items, descriptions
and quantities (if any, found in the BOQ) to reflect the exact original scope of work which
should be priced, where appropriate using existing rates and, if such rates are not appropriate,
then using fair and reasonable rates, but keeping the total of all items in the BOQ adding up
to the Lump Sum Contract Price. (a minor + or adjustment item could be added at the end
of the Grand Summary to achieve this, if necessary). Thereafter, this rationalized BOQ should
be used to re-measure and value the completed work on site.
Day works
Using actual records of resources used for work instructed as Dayworks, and valuing using
the Dayworks rates and mark-ups in the contract BOQ.
Provisional Sums
Provisional sums under which no work is instructed will not be carried to the Final Account.
Where work is instructed, then re-measure and value using the rates of the rationalized BOQ
or new rates (where the work is carried out by the contractor), or using the actual cost of
carrying out the work based on invoices plus the contractors mark-up (where carried out by
nominated Subcontractors)
General Items
Proportionately, but ensuring that any under-recoveries are compensated.
We deal with these topics in detail (valuations following termination of contracts) under
FIDIC 1987 and FIDIC 1999 during the Advanced class. Your only opportunity to
attend the advanced class in 2011 could be in May. Timetable is attached.
Also please provide definition for Lump sum contract, where it is applicable and how to
prepare the valuation of the Lump sum contract. Lump Sum contracts are contracts where the
quantities are at Contractors risk and where the Contractor is paid the Full Lump Sum
Contract Price, on completion of the Works (without any deductions or without any remeasurements) subject only to instructed variations, adjustment of Provisional Sums, and any
claims.
Regards,
Prof. Sam.
Prof. Indrawansa Samaratunga PhD, DSc
FRICS, FAIQS, FIQSSL, FCIArb, FCIOB, FCMI, FASI, FBEng
Chartered Surveyor, Chartered QS, Chartered Manager, Chartered Builder
Arbitrator / Mediator - London Court of International Arbitration

Arbitrator / Expert - Dubai International Arbitration Centre, UAE
Middle East Representative - Australian Inst. of Qty. Surveyors
PO Box 23461, Dubai, UAE. T +971 50 4588949 F +971 4 3378668
Best regards,
Surabi.K.P.
Quantity surveyor,
From: kumaran somalinga [mailto:kumaransomalinga@yahoo.com]

Sent: Sunday, April 24, 2011 1:00 PM
To: sam99@eim.ae
Subject: Question
Dr. Sam
Hope you are well and Good
I attended the class at 2008 August batch and I am getting benefits through out my life career
as of now. Recently we have completed one small fit outs job. It was 3.3 million prices
submitted to client and finally agreed 2.9 million as a lump sum contract with 1987 fidic
short form contract. In 2.9 million, million as a provisional sum which we havent done the
work at site physically.
My Question is, We can eligible to claim 2.9 million as per agreed lump sum figure or we
should give a cost saving million for provisional sum.
I do not have the short form you are referring to. If it is similar to FIDIC 1999 Short Form,
then it is silent about Provisional Sums. Short Forms are not supposed to be used in contracts
having Provisional Sums. FIDIC 4th 1987 or FIDIC 1999 red books should have been used,
or additional provisions should have been written on how to deal with them. Since your
contract is silent about Provisional Sums, and since there are unlikely to be any provisions in
the law (in this part of the world) dealing with Provisional Sums, the existing practices
(Custom and Usage) would come into play. Since it is customary to deduct the Provisional
Sum where work is not instructed under it, that is how it is likely to be dealt with in an
Arbitration or litigation.
Regards,
Prof. Sam.

I am expecting your valuable responses.

Thanks & Regards
Kumaran Somalinga
From: Mukhtar Ahmad [mailto:mukhtarqs@gmail.com]

Sent: Sunday, April 24, 2011 11:09 AM
To: sam99@eim.ae
Subject: Variation
Dear Dr. Sam,

Hope you are fine and in good health, I had attended SCA classes in January
2011 which really increased my knowledge about sound contract administration.
I thank for providing such quality training program.
As discussed in the class about variation, Engineer' s instruction is required for
any change in the contract (No! It is a change in the scope of work!). I require
further clarification on this topic, let suppose there are two scenarios: A- A
particular work is shown in drawings but not priced in BOQ ie item is missing BItem is available for a particular work in BOQ but not shown in drawings etc.
Now how to deal with these scenarios?
1- Is Engineer's instruction required for both cases?
2- Is necessary to issue separate variation for these works?
3- Can we consider the both works as additional?

Lump Sum Contract
A. No instruction required. Contractor should carry out the item. No
additional payment.
B. Contractor is not under any obligation to carry out the item, yet he would
get paid the full Lump Sum Contract Price (without a deduction for the
item). If the item is required to be carried out, instruction is required which
makes it a variation and the Contractor can get an additional payment for
the variation despite an amount being already (available for it in the BOQ)
paid to the Contractor.
Re-measure Contract
A. No instruction required. Contractor should carry out the item. He can ask
for an additional payment for it as it is missing in the BOQ.
B. Contractor is not under any obligation to carry out the item. The amount in
the BOQ for this item will not be paid to the Contractor. If the item is
required to be carried out, instruction is required which makes it a
variation and the Contractor can get paid for the variation either at the
rate/price given in the BOQ for this item or using a varied rate/price if the
Contractor can demonstrate that the BOQ rate/price is inapplicable or
inappropriate.
Regards,
Prof. Sam.

I request for your comments on these scenarios.

Regards,
Mukhtar Ahmad
Quantity Surveyor
----- Original Message ----From: Yvette Tacuyan

To: "Prof. Sam" <sam99@eim.ae>
Date: Mon, 25 Apr 2011 23:15:09 -0700 (PDT)
Subject: Question regarding letter of award
Hi Prof Sam,
Our Client instructed us to prepare a Letter of Award to the selected bidder

to carry out the Work. I was on my way on preparing the Letter of Award,
when my Boss told me that I should prepare Letter of Acceptance. I know
that Letter of Award is the most appropriate document to issue to the
Contractor, Can you please help me explain what is the difference between
Letter of Award and Letter of Acceptance and When this document is
appropriate to issue and to whom.
Unless you are using a bespoke form of contract where the term "Letter of Award" is defined,
it is the incorrect term to be used for an acceptance of an offer. If the bidder has given an
offer to your client and if your client wants to enter into a contract with this bidder then the
correct term is Letter of Acceptance. FIDIC 1987 and 1999 both have the term Letter of
Acceptance clearly defined for this purpose.
(We will be discussing this further in the advanced class. If you wish to attend the May
2011 advanced class which could be the last class for this year, details are attached.)
Regards,
Prof. Sam.

Thanks and Best Regard,
yvette
From: Ranjana Kamalsiri [mailto:ranjanama@gmail.com]
Sent: Tuesday, April 19, 2011 12:40 PM
To: Prof. Sam
Subject: Difficulty to solve below mention contractual matters
Dear Pro. Sam
How are you sir ! I am Ranjana Kamalsiri Athurusinha Work in

Doha Qatar ( I attend SCA classes when I was in Dubai) I found
difficulty to solve below mention contractual matters in my
project. So I need your great help to overcome and find answers
to finalize this matter. Please help me sir
PROJECT : BUSINESS PARK & HOTEL FACILITIES DOHA QATAR
CONTRACT : MEP WORK , LUMP SUM CONTRACT 100 M QR, QATAR
CONSTRUCTION SPECIFICATION CONTRACT REF : PACKAGE II
FOLLOWING BUILDINGS ARE IN THE PROJECT

G+7 BUILDINGS 2 NOS
G+5 BUILDINGS 3 NOS
SHOW ROOM BUILDING G+3
CONFERENCE BUILDING G+2
HOTEL & APPARTMENTS G+6
PACKAGE II MEP MECHANICAL-HVAC SCOPE OF WORK FOR CONFERENCE
& HOTEL/APPARTMENTS IS ONLY VERTICLE DUCT WORK IN SHAFTS AS
PER THE ATTACHED SCOPE OF WORK MATRIX FOR MECHANICAL AND
ELECTRICAL SEPARATE GIVEN BY THE ENGINEER DURING TENDER STAGE
FOR PRICING OF PACKAGE II BOQ. THESE HORIZONTAL DUCT AND
ACCESSORIES WERE SHOWN ALSO IN TENDER DRAWINS.
THERE WERE ITEMS WITH UNIT RATE AND PRICES IN PACKAGE II BOQ
FOR HORIZONTAL DUCT WORK, INSULATION & ACCESSORIES. (please find
attach HOTEL AND CONFERENCE HVAC BOQ)
DURING EXECUTING THE P II MEP WORK PIII ALSO AWARDED WITH
EXCLUDING HORIZONTAL DUT, INSULATION AND ACCESSORIES .
SO ALL HORIZONTAL DUCT ,INSULATION AND ACCESSORIES WORK
HAVE BEEN STARTED TO EXECUTE AND SUBMITED VARIATION FOR THESE
WORK AS ADDITIONAL TO BOTH P-II AND P-III WORK.( Our variation
amount nearly 10M)
NOW THE ENGINEER ISSUED SITE INSTRUCTION TO OMMIT THESE BOQ
ITEMS IN P-II BOQ WHILE APPROVING THE VARIATION. ACCORDING TO
THE ENGINEER SAYS DUE TO THE MISTAKE DURING TENDERING THESE
ITEMS HAD BEEN ADDED TO THE BOQ HORIZONTAL DUCT, INSULATION
AND ACCESSORIES .
QUESTION : PLEASE VARIFY BELO MENTIONED QUESTIONS
1. CAN THE ENGINEER OMMIT THESE ITEMS IN BOQ ( HORIZONTAL
DUCT, INSULATION AND ACCESSORIES) WITH ISSUING THE SITE
INSTRUCTIONS ? ( It will come Nearly 5M) Whether the contract is
lump sum or re-measure, no variations can be instructed to
add/omit/vary BOQ items. Only the original scope of work can be
varied! Therefore the Engineer cannot instruct to omit these
items from the BOQ.
2.
CAN THE CONTRACTOR OBJECT AS PER THE CLEAR MATRIX FOR
MECHANICAL SCOPE OF WORK GIVEN DURING TENDERING?
( MECHANICAL MATRIX ALL HORIZONTAL DUCT , INSULATION AND

ACCESSORIES IN P III, BUT VERTCLE DUCT AND INSULATION IN P II ) I did
not go through all your attachments because in this short Q&A
forum, attachments and lengthy questions cannot be
accommodated. You need to establish from the Contract
Documents (excluding the BOQ), what exactly is the scope of
work agreed for each package, and the contractors obligation is
only to execute that work for which the contractor has the right
to get paid the lump sum contract price of each package without
any deductions.
Regards,
Prof. Sam.

Best Regards
Ranjana
From: Samiullah khan [mailto:achalgarh@yahoo.com]
Sent: Monday, April 04, 2011 2:22 PM
To: Dr.s Sam
Subject: Q&A
Dear Sir,
Our contract is re-measured and some item mention in Specification but same
thing is not included in BOQ like-Supply and lay/fix XLPE/SWA /PVC Cu cable
including all necessary, containment , terminations- cable trays, trunking or
conduits internally and in service trenches externally with PVC ducts at access
crossing (Builders work-excavation of trenches and associated earthworks by
Main contractor)
Cable tiles & warning tape are not mentioned which is shown in General
specification.
hence cable tiles & warning tapes we can consider as a variation.
Since the requirement of cable tiles and warning tapes are mentioned in the
Specification, in the first place, it is not a variation. It is original scope of work.
If it is not in the BOQ, then it could be claimed as a missing item (and therefore
to be measured and valued for payment), if:1. The Preamble or any item in the BOQ (or any other provision in the
Contract) does not state that its cost should be included in any other item
in the BOQ, or
2. The Method of Measurement used in the preparation of the BOQ:-
Requires it to be measured as a separate item, or
Does not state that its cost should be included in any other item, or
Silent about it.
Regards,
Prof. Sam.

Regards,
Samiullah Khan
Quantity Surveyor
From: Siju Alias [mailto:SAlias@emaar.ae]
To: sam99@eim.ae
Subject: [!! SPAM] RE: Question
Dear Prof Sam,

Let me introduce myself as Alumni of your June 2010 SCA batch.
Request your valuable comments on issues pertaining to one of our Contracts as
narrated below
Contract : EMAAR Standard Conditions of Contract.
1. Extended Prelims calculation in Prolongation Cost.

As per Engineers EOT assessment Total delay(Theoretical) from Employer is
450days by evaluating various delay events/notices. However as per the actual
work completion at Site(TOC date)
Delay is only 400days.
Out of recommended EOT, 100days is concurrent delay from Contractor and

hence
Engineer recommends total EOT as 400days(As per actual) and
compensable delay period as 300days(Deducting concurrent delay
period as per Contract)
But in prolongation cost calculation, under the head extended preliminaries

Engineers calculation takes into account of 350days prelims cost(Theoretical
EOT-Concurrent delays), but not
300days and explains as
300days could be considered only for calculation of Additional HO overhead
charges and Loss of opportunity charges.
PLease comment whether this is the Correct method of calculation. Sounds

reasonable. Too vast a subject for this short Q&A
forum.
2.
There is another Cost head named as Loss of interest in retention money
Calculation is done by applying Bank interest rate on max retention money (10%
of contract sum) for the compensable delay period of 300days.
However as per the actual work progress, Value of work done on Contractual
completion date is only 50% of Contract sum and hence the retention amount
held by Client is also
Only half of the theoretical value.
My suggestion to the Engineer was to calculate the interest only on the actual
monies retained (as per eg shown below)but Engineer do not agree to this,
stating delay is from Client and Contractor not be penalized for that.
PLease put your Valuable comments on this Sounds reasonable, if the claim does
not carry a head of Claim for interest charges resulting from reduced revenue
as discussed during Session 4 of SCA.
Eg: Assume Contract sum as Aed 300M, Limit of retention as Aed 30M and
Contractual completion date as 31Dec 2008.
Engineers calculation shows Value as 6% interest on 30M for period of
300days.(Split as 15M from TOC date and balance 15M after DLP)
However work progress at 31Dec 2008 is only 150M and hence only 15M held by
Client. My recommendation was
Interest = 6% x 15Mx300days + 6% x 1.5Mx270days(Considering progress value

on Jan 2009 is 165M)+ 6% x 1.5Mx240days(Feb progress 180M)+
.
See above comment.
3. Additional HO overhead calculation

Additional HO overhead calculation (As per Hudson method) on number of delay
days is Lesser than the overhead considered for Valuation of Variation works.
IN other words the Value of Variation works is very high.
Can we apply reduction due to this?
Eg ; Contract Value 300M and defined OH is 3%. As per Hudson formula
additional HO overhead cost for 300days delay is 5.4M Only.
As per variation works valuation, total OH calculated is Aed 6M.
Can we apply deduction of Aed 500K (Contract is silent about deduction of OH
based on increased in Contract Value) If the contract does not have a Clause
similar to 52.3 of FIDIC, then any OH recovered through variations can be set-off
against the OH claimed for prolongation. (We discussed the corollary during
Session 5 of SCA. Alumni are entitled to 50% discount for any repeat sessions in
the June 2011 SCA class. Timetable is attached)
Regards,
Prof. Sam.

Kind regards,
Siju Alias
From: TAJUDEEN N [mailto:ntajudeen@asconuae.com]
To: sam99@eim.ae
Subject: Re: Q&A + Important News about Job Market
Respected Prof. Sam,
i have a question like, " A well known Client issued vide Tender Addendums for
some of the items are excluded in the scope of contractor and when the job is
awarded during the agreement, their policy is amending all the addendums in
the contract and hence they siad the Tender Addendums are not part of the
contract. Contract agreement has signed but the Client not incorporated all the
addendums in the contract (almost 32 addendums) and contractor also
overlooked. Now the Client take advantage of this, asked the contractor to do
the works.
Please comment. It is too late now. Contractor is bound by the provisions in the
Contract Documents. Try to complete all work to the full satisfaction of the Client
and raise an ex-gratia claim for his sympathetic consideration by demonstrating
that you made a loss due to the oversight of including the Addenda in the
Contract.
Regards,
Prof. Sam.

-N.Tajudeen B.E., BSc Qs., F.I.V.(India)

Manager - Estimation
From: Roselma Martinez [mailto:Roselma.Martinez@brookfieldmultiplex.com]
To: Prof. Sam
Subject: Query regarding Sub Clause 13.2 Value Engineering
Prof. Sam,
Good day!!!
I have a query regarding Sub Clause 13.2 Value Engineering. This is the situation the
Contractor has a Lump Sum Contract. The Client wanted to omit totally an item on the BOQ.
However the Contractor believes that this is a part of the Value Engineering wherein the
Contractor previously proposed to omit this item. Is it correct that the Contractor is entitled to
50% savings of the total contract value of the item regardless of the value for item (i) and
(ii)?
The Contractor is also required to demonstrate that there is no reduction in value to the
Employer of the varied works, under item (ii), in order to qualify for 50% saving. However,
please note that the change/reduction should not be by omitting a BOQ item. It should be by
changing/reducing part of the scope of work, which when valued result in the reduction.
Regards,
Prof. Sam.

Hope you could help me regarding my query.
Thanks,
Roselma
----- Original Message ----From: Bharathraj
To: sam99@eim.ae
Date: Wed, 20 Apr 2011 09:11:45 +0300
Subject: RE: Q&A
Dear Sir,
Its my pleasure to inform you that I have been offered to study MSc in
construction law & dispute resolution @ Kings college London. My classes will
start from Sept 2011.
I attended your classes in Abu Dhabi & Dubai and your classes are been a great
inspiration for me to apply for this course.
CONGRATULATIONS !
Thank you very much.
Best regards
Bharathraj Shivamurthy
Planning and Cost control
Please try to avoid FIDIC 1999 questions. When you join CA-AC Alumni you will
get an opportunity to study all the CA-AC Q&A mostly related to FIDIC 1999 and
other advanced matters.

Mar 11-Q&amp;A-1

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Mar 11-Q&amp;A-1

Uploaded by

Copyright:

Available Formats

My comments are given below.

From: surabhi kp [mailto:surabhikp@gmail.com]

Arbitrator / Mediator - London Court of International Arbitration

From: kumaran somalinga [mailto:kumaransomalinga@yahoo.com]

Arbitrator / Mediator - London Court of International Arbitration

I am expecting your valuable responses.

From: Mukhtar Ahmad [mailto:mukhtarqs@gmail.com]

Dear Dr. Sam,

3- Can we consider the both works as additional?

Arbitrator / Mediator - London Court of International Arbitration

I request for your comments on these scenarios.

----- Original Message ----From: Yvette Tacuyan

Our Client instructed us to prepare a Letter of Award to the selected bidder

Arbitrator / Mediator - London Court of International Arbitration

Thanks and Best Regard,

Dear Pro. Sam

How are you sir ! I am Ranjana Kamalsiri Athurusinha Work in

FOLLOWING BUILDINGS ARE IN THE PROJECT

( MECHANICAL MATRIX ALL HORIZONTAL DUCT , INSULATION AND

Arbitrator / Mediator - London Court of International Arbitration

Requires it to be measured as a separate item, or

Silent about it.

Arbitrator / Mediator - London Court of International Arbitration

Dear Prof Sam,

Contract : EMAAR Standard Conditions of Contract.

1. Extended Prelims calculation in Prolongation Cost.

Out of recommended EOT, 100days is concurrent delay from Contractor and

But in prolongation cost calculation, under the head extended preliminaries

PLease comment whether this is the Correct method of calculation. Sounds

There is another Cost head named as Loss of interest in retention money

Interest = 6% x 15Mx300days + 6% x 1.5Mx270days(Considering progress value

3. Additional HO overhead calculation

Arbitrator / Mediator - London Court of International Arbitration

Respected Prof. Sam,

Arbitrator / Mediator - London Court of International Arbitration

-N.Tajudeen B.E., BSc Qs., F.I.V.(India)

Arbitrator / Mediator - London Court of International Arbitration

Hope you could help me regarding my query.

You might also like

Mar 11-Q&A-1

Mar 11-Q&A-1