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Topics: Construction, Cost Management, Financial Services
When preparing cost estimation for work order for sub project. Incase we have items to be performed and not part of contract. Could we include it in the BOQ for the work order by increase quantities
Network:866



When preparing cost estimation for work order for sub project. Incase we have items to be performed and not part of contract. Could we include it in the BOQ for the work order by increase quantities of some contractual activities to cover the additional activites
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Network:123945



Your question is not very clear but if I understood you correctly, then adding those items by increasing the quantities beyond what contractually was agreed to is not something that is favorable or ethical I assume. You probably should issue a contractual addendum adding this scope officially.
Network:866



Dear Mr. Rami,
Thanks for your feedback!
Sorry if the question was not very clear.
Large project is divided into a multiple small projects. We used to prepare a bill of quantity/price for each small project. So in the described case, some activities which need to be performed are not part of the project contract.

We were informed/instructed by the client to prepare the cost estimation for this case by substitute these items with contractual one which has same cost in the BOQ but actually it will be executed.

Thanks,
Riad
Network:319



If I understand your situation correctly, you have new client requested work identified which is not part of the existing contract. Your client wants you to add it to the quote by simply increasing the quantity of other items already in the contract which have the same cost.

You could use analogous estimating and state that new task A is equivalent to the cost of existing task B and use the cost of task B as the the basis of estimate for new task A. In that way, you are explicitly including task A. I would absolutely not simply add to the quantity of task B. That would imply that you are doing the same type of work twice, rather than additional and different work, even though it costs the same. That can be very problematic if there are future contract issues/disputes.
Network:866



Dear Keith,
Thanks for you valuable feedback!. What is the best time effective and in line with the contract solution to solve this in your opinion.
Network:123945



I prefer if you discuss this with the client and be transparent about what is included and what is not before adding anything that is not contractually agreed for. Hope this helps !
Network:319



Riad,
The most efficient way to adjust the contract will depend on the type of contract (firm fixed price, cost plus, etc.), the contracting and change processes followed, and how far along you are in the contracting process.

After the contract is signed, change orders which act like a stand-alone amendments to the original contract are often preferred to revising the original contract itself. With a separate amendment, you have limited the scope of the change. When revising the original contract, some parties use that as an opportunity to try and change other things at the same time, opening "Pandora's box". "While we're in there, let's also adjust X, Y, and Z..." That can require further negotiations and cause significant delays while all the details are getting worked out, and your work can be held hostage until all the details of unrelated changes are formally agreed upon.

The disadvantage of having a contract plus changes is that to understand the entire workstatement, you have to fit the pieces together from the different sources rather than seeing it all in once place.
Network:12



I think you still in planning phase and still not have any official or approved project management plan. So, analyzing your situation not only has an impact to costs but, What about schedule and scope, quality and so on...?
So, you must discuss and make a change request and formally add this scope officially to the project scope to direct and manage only and only the approved scope.
Network:866



Dear Haitham,
Thanks for your reply. It is client decision to go this way, as according to them, variation order will have time impact. They guide us to write the contractual item in the subject while the description will have the details of the additional items .
Network:500



Riad,

If I understand your situation right, you have two identical tasks to be performed (task A and task B). You current subcontract includes only task A and some quantities against it (say 100 units). Now it is known that another task B would also be required (say 50 units). It is assumed that task A and B require same efforts and resources. Your contract is not yet awarded.

In this situation, your Client is asking you to make quantity for task A to be 150 (100 for task A + 50 for task B) and proceed. Later during execution, you would clarify that instead of task A, task B also needs to be performed. Your assumption is that as both tasks require same efforts and resources, there is no change in scope.

I further understand that the reason for doing so is that the Client is worried that bringing up this change at this stage, the contractors would ask for more time than what should be normally required. May be you are very close to awarding this contract and want to avoid project document change cycle at this stage and at the same time want to protect this project against a change claim.

If this understanding is correct, I will say that it completely depends on how identical these two tasks actually are. I would guess that there is at least some difference otherwise you would not have defined them as separate tasks.

It could be like installing lights in building room 1 and building room 2. If the task A was defined as installing lights in room 1 and now you require installation in room 2 as well. In this case, you want to say that instead of 100 lights to be installed in room 1 and 50 in room 2, 150 lights would be installed in room 1. Later, you would clarify the correct location and you think that it would not cause any change.

If my understanding of the problem is correct, below suggestion may help.

I think this can vary on a case to case basis and you would need to make assessment of similarity between these two tasks. Contractor while executing the task identifies some differences (additional efforts or resources during the execution) and it may lead to extra cost. In the example I gave, it could be that he needs to relocate his equipment from one place to another or that he is not able to complete both rooms at the same time and extra costs would be incurred to mobilize and demobilize his resources. It totally depends on with what certainty you could say that the tasks are same. Have you considered all aspects?

I would rather go with a scope document that specifies two tasks. This avoids the risk of a dispute later on. You could explain the identical nature of these tasks and avoid any schedule extension claim by the bidders. On a practical note, I think that the bidders would tend to accept or absorb a small changes right now rather than during the execution.
Network:866



Thanks Retwik for your input.

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