Hi, quick question: If a subbie is working to a lump-sum contract (priced on a BoQ provided by the main-contractor); completes work to an area and the quantity is say 100 m2; however, the BoQ stated 300 m2 are they entitled to payment for the full 300 m2 of just the 100 m2 of actual work complete?
Under a lump-sum contract, the contractor is entitled to payment for the full contract sum, regardless of the actual quantity of work performed. This is because the contractor has assumed the risk of the actual quantity being less than the estimated quantity. In the example you provided, the subbie would be entitled to payment for the full 300 m2, even though they only completed 100 m2 of work. There are a few exceptions to this rule. For example, if the contractor fails to complete the work within the agreed timeframe, they may be entitled to a reduction in the contract sum. Additionally, if the contractor fails to meet the specified quality standards, they may be liable for additional costs. However, in the absence of any such exceptions, the subbie would be entitled to payment for the full 300 m2. This is because they have assumed the risk of the actual quantity being less than the estimated quantity.
Can you guys please have a class explaining preliminaries in detail 🙏
Hello Dominic,
This is something we can produce in more detail. Keep tuned for a new video.
Hi, quick question: If a subbie is working to a lump-sum contract (priced on a BoQ provided by the main-contractor); completes work to an area and the quantity is say 100 m2; however, the BoQ stated 300 m2 are they entitled to payment for the full 300 m2 of just the 100 m2 of actual work complete?
Under a lump-sum contract, the contractor is entitled to payment for the full contract sum, regardless of the actual quantity of work performed. This is because the contractor has assumed the risk of the actual quantity being less than the estimated quantity. In the example you provided, the subbie would be entitled to payment for the full 300 m2, even though they only completed 100 m2 of work.
There are a few exceptions to this rule. For example, if the contractor fails to complete the work within the agreed timeframe, they may be entitled to a reduction in the contract sum. Additionally, if the contractor fails to meet the specified quality standards, they may be liable for additional costs.
However, in the absence of any such exceptions, the subbie would be entitled to payment for the full 300 m2. This is because they have assumed the risk of the actual quantity being less than the estimated quantity.
Site overhead (indirect manpower cost - supervisor, engineer, PM, autocad designers, planner, QS etc) can also be indirect cost?
Hello, thanks for the comment. It depends on the contract structure but they can be indirect costs in a lot of circumstances