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Lump sum JCT contract variations can be valued using contract bills

July 2016 - Issue 83

In Mascareignes Sterling Co Ltd v Chang Cheng Esquares Co Ltd (Mauritius) [2016], the Privy Council upheld the quantity surveyor’s approach to valuing substantial variations under a lump sum JCT contract.

Chang Cheng Esquares (‘CCE’) was contracted by Mascareignes to construct an office building in Mauritius. The building contract was based on the JCT Standard Form of Contract with Contractor’s Designed Portion Supplement (1980 edition) and was a lump sum contract that the employer, Mascareignes’, quantity surveyor administered.

During the construction period Mascareignes completely redesigned the office building; resulting in a large number of variations to the scope of CCE’s work.

The evidence supplied showed that:

The court held that under clause 13.5 of the contract, additional or substituted work carried out under a lump sum contract may be measured and valued using the rates and prices contained in the contract bills if the following three conditions are satisfied:

  1. The work must be of a similar character to that set out in the bills of quantities;
  2. The work must be executed in similar conditions to that in the bills; and
  3. The work must not significantly change the quantity of the work contained in the bills.

If the conditions and/or quantity of the work are not sufficiently similar, the rates and prices in the bills may still be used but with a fair allowance being made for these differences. If the work is not of a similar character, then fair rates and prices must be used by the person valuing the work.

The quantity surveyor’s valuation of CCE’s work on a measurement basis was therefore upheld.

Clause 13.5 of the contract in this case is equivalent to clause 5.6 of the JCT Standard Building Contract, 2011 edition. The case demonstrates that valuing additional or substituted work in a lump sum contract can be fairly flexible and that contract bill rates and prices can be used where they form part of the contract and clearly specify the rate or price for any additional or substituted work.

JCT valuation rules are one of the key topics covered by the various training workshops we deliver regularly to our clients and prospects. If you are interested in learning more about the training support available from us for your organisation, please contact Rebecca Palmer.

Rebecca Palmer

Senior Associate

e rpalmer@prettys.co.uk

t 01473 298274

 

 

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