Civil Engineering Reference
In-Depth Information
provisions of the conditions and, subject to clause 2.14, any error (whether arithmetic
or not) in the computation of the Contract Sum shall be deemed to have been accepted
by the parties. Under the SBC, clause 2.14.1 provides for the correction of errors in
the preparation of the Contract Bills (which may be errors of quantity or description)
and such correction is treated as a Variation.
Under the SBC/DB, clause 2.14.1 provides that where the error or discrepancy is
in the Contractor's Proposals, its correction is without cost to the Employer. How-
ever, in terms of clause 2.14.2, where the discrepancy or error is in the Employer's
Requirements and the Contractor's Proposals do not deal with the error/discrepancy,
its correction is treated as a Change. Under the SBC, the provisions in the conditions
governing final adjustment of the Contract Sum are found in clause 4.3 (clause 4.2
under the SBC/DB). A fuller discussion of the matters which can give rise to adjust-
ment of the Contract Sum is contained in Section 8.2.
Measurement contracts
In what are commonly known as measurement contracts, no agreed price is ascertain-
able prior to the carrying out of the works. The price is calculated by measurement
of the work actually carried out during the currency of and on completion of the
contract and this work is then valued by applying a schedule of rates agreed at the
time of entering into the contract. The schedule of rates will often take the form of a
bill of quantities. Very basic forms of measurement contracts can be seen in the cases
of
Jamieson
v.
McInnes
(1887) and
Wilkie
v.
Hamilton Lodging-House Company Ltd
(1902). Measurement contracts are often used where it is impossible to ascertain the
full extent of the contract works at the time of contracting, or where there is insuffi-
cientinformationavailabletodoso.Forexample,inacontracttoconstructaroad,it
may not be possible, at the time of contracting, to ascertain the exact ground condi-
tions that the contractor will encounter.
Reimbursement contracts
Athirdmethodotenemployedtoascertainthepricetobepaidisthatusedinwhatare
commonly known as reimbursement contracts. In such contracts contractors are paid
for the cost of the work carried out by them, normally with an additional allowance for
overheads and profit or, alternatively, a fee for managing the contract. The additional
allowancetobepaidtothecontractorisnormallyagreedatthetimeofenteringinto
thecontractandisusuallyaspeciiedsumor,alternatively,anagreedpercentageofthe
total contract price. It is important when drafting reimbursement contracts to ensure
that the contractor only recovers costs properly and reasonably incurred in order to
avoid extravagance or inefficient working on their part.
Interim payments
Where the contractor has an entitlement to receive interim payments the contract
will normally contain a mechanism for ascertaining the amount of such payments.
This often involves the issue of interim certificates, discussed in Section 7.3. Interim
