Here's a situation that arises probably more frequently than we would like to admit. We will use the FIDIC Red Book for this example.
The Contractor have poured the concrete and the first few bases and even a few columns are cast. The Interim Payment Certificate (IPC) has been submitted for approval but there was no item for formwork provided in the BOQ. Upon realizing there's no pay item for the formwork the Contractor immediately submits his claim, their position is clear, they installed formwork and expects to be paid.
The Clients Representative (CR) reviews the claim and rejects the claim immediately. Their stance is clear; the formwork rate should've been included in the concrete rate.
The CR's reasoning is straight forward, in the FIDIC Red Book (Clause 12.1 and 12.2 regarding measurement), the contract is strict. If the work is an item of Temporary Works or a means to an end to deliver the specified Permanent Works, and no Variation instruction was issued to change the scope, the Contractor is expected to have included the cost in their tendered rates.
Based on the above clause the CR is correct to reject the claim, but a contract must be interpreted as a whole and you can't pick specific isolated clauses only.
You need to look at the Contract as a whole, what does the specifications, method of measure, drawings etc. state? Then you need to look at the Priority of Documents (FIDIC Clause 1.5).
For example, if the Specification for concrete works in the Contract refers to SANS 1200 G (Concrete Works), you'll note that the specification clearly states that formwork will be measured and paid separately in m².
Typically, FIDIC Clause 1.5 organize the documents from most important to least important as: Particular Conditions -> General Conditions -> Specification -> Drawings -> Schedules/BOQ.
We can now clearly see in this case that the Specifications override the BOQ and the fact that the BOQ didn't allow for a m² rate for the formwork was an omission from the BOQ and becomes a measurement correction or a variation by omission, not a contractor error.
Thus, based on the above the Contractor has a valid claim but let's delve deeper.
Under FIDIC, a contractor cannot just quietly rack up costs on a known issue and spring a surprise on the payment certificate.
Clause 8.4 (Advance Warning/Early Warning): The contractor is required to notify the Engineer of specific likely future events or circumstances that may increase the Contract Price.
Clause 20.1 (Contractor's Claims): If the Contractor believed they were entitled to separate payment, they were contractually obligated to give notice within 28 days of becoming aware of the circumstance or when they should've become aware as an experienced Contractor.
An experienced Contractor should've noticed the omission of the formwork rate in the BOQ and raised the issue during the Tender Clarification. At the very least the Contractor should've picked up on this prior to starting the activity and raised the issue. Based on the above two clauses the CR now is entitled to reject the claim.
Always plan your Works properly and thoroughly in advance, submit your contractual documentation on time and raise issues early. Always ask yourself if I'm proceeding with the activity how will I get paid? If the method of payment is unclear you have an Issue and need to raise it immediately.
PMI Team Member
