Variations - Building Contract Claims - page 310

bills must be used as the basis and only be adjusted to take account of the
changed conditions and/or quantity. The contractor has contracted to carry
out variations in the work, and the employer has agreed to pay for them on
this basis, and neither can avoid the consequences on the grounds that the
price in the bills was too high or too low 588 . A contractor will sometimes
take a gamble by putting a high rate on an item of which there is a small
quantity or a low rate on an item of which there is a large quantity in the
expectation that the quantities of the items will be considerably increased or
decreased respectively. If the contractor's gamble succeeds, he will make a
nice profit. Quantity surveyors checking priced bills at tender stage will be
alert to such pricing, but there is little to be done about it. It is not unlawful,
but rather part of a contractor's commercial strategy 589 .
With respect to what may be considered 'fair rates and prices' for valu-
ation under clause 13.5.1.3, it seems that the word 'fair' must be read in the
context of the contract as a whole. A 'fair' price for varied work in a contract
where the prices in the bills are 'keen' may be a similarly keen price 590 . The
quantity surveyor should determine his 'fair rates and prices' on the basis of
a reasonable analysis of the contractor's pricing of the items set out in the
bills, including his allowances for head office overheads and profit.
There is a very simple rule for the valuation of omissions from the
contract works; they are to be valued at the rates set out in the contract
bills. However, the operation of clause 13.5.5 must not be overlooked and if
the omissions substantially change, the conditions under which other work
is executed must be valued accordingly.
In valuing omissions, additional and substituted work, the quantity sur-
veyor must take into account factors other than the prices set out in the
contract bills against individual items or his fair valuation of measured
items. He must, by clause 13.5.3.2, make allowance for any percentage or
lump sum adjustments in the contract bills; that is, any such percentages
or lump sums (usually to be found in the general summary at the end of the
bills) must be applied pro rata to all prices for measured work.
By clause 13.5.3.3 the quantity surveyor is also required to make allow-
ance, where appropriate, for any addition to or reduction of preliminary
items of the type referred to in the Standard Method of Measurement, 7th
Edition, Section A (Preliminaries General Conditions). It is to be noted that
the clause does not actually bind the quantity surveyor to use the rates and
prices set out in the bills against such items, but simply to make allowance
for any addition to or reduction of such items.
In relation to the adjustment of preliminaries, it would be appropriate to
draw attention here to the limitation on the duty and power of the quantity
surveyor with regard to the valuation of variations set out in the proviso at
588 Dudley Corporation v. Parsons & Morrin Ltd , 8 April 1959 CA unreported; Henry Boot Ltd v. Alstom
Combined Cycles Ltd [1999] BLR 123.
589 Convent Hospital v. Eberlin & Partners (1988) 14 Con LR 1. The case went to appeal, (1989) 23 Con
LR 112, but not on this point.
590 Some support for this view may be extracted from the judgments in Cotton v. Wallis [1955] 3 All
ER 373 and Phoenix Components v. Stanley Krett (1989) 6-CLD-03-25.