Spec Finish

Quite often there will be a box identified for the contractor to include a percentage for OH&P. Then this percentage is applied to the Provisional Sum to create a sum of money that is included within the total contract price. Such sum is then adjusted, pro-rata, depending on the final cost of the Provisional Sum. If there is no provision for the contractor to include for their OH&P, then the Provisional Sum will normally be deemed to include allowance for the contractor’s OH&P. However, caution should once again be employed to understand any specific provisions with regards to pricing set out in the Preambles and Preliminaries documents. As there may be wording to the effect that the contractor’s OH&P should be included within the overall pricing. Even though no provision is made within the pricing documents for this. Once again, I consider this underhand and designed to trip up unwary and unsuspecting contractors. I see no equitable justification for such pricing documents not to be clear and transparent. How do the differing Principal Standard Forms deal with this issue? The JCT forms of contract compel the Employer to issue instructions to carry out work detailed in the Provisional Sums. Regardless of whether they are ‘Defined’ or ‘Undefined’. It is important to note this requirement. Any contractor who proceeds to undertake work, covered by a Provisional Sum, without the requisite instruction, does so at their own risk. The far safer approach is always to seek specific written instruction to undertake the works. However, under the JCT forms, the Provisional Sums form part of the scope of The Works. Whether or not the Provisional Sums are Defined’ or Undefined, and irrespective of the level of detail to which they are scoped or specified. As a result, an Employer who subsequently decides to omit the Provisional Sumworks and appoint another contractor to complete them, could be faced with a breach of contract claim; for the loss of profit suffered by the original contractor. To remove this potential risk, the contract can be amended to give the Employer a specific ability to proceed in this way. However, except in specific circumstances, I would question the need to do this. It is certainly contrary to the intent of the JCT. This is, of course, separate from the ability to omit Provisional Sum works altogether. This makes inordinate sense when talking about those items an Employer has always been unsure about the need for things such as contingencies and “nice to haves” which are perhaps budget dependent. The Architect or Contract Administrator may omit work covered by a Provisional Sum, if the work is not going to be done or if the risk does not materialise. However, they may not omit such work just to give it to someone else. So, I would caution all contractors to be very wary of accepting an amendment that allows the blanket omission of Provisional Sums and re-instruction to others. By contrast, NEC contracts do not provide for the use of Provisional Sums. This approach is adopted on the basis that clarity is the priority, and if an Employer cannot clearly define an aspect of the works at the time the contract is concluded, then that work should not be included in the contract. Under the NEC suite, the normal approach is for those items of work to be dealt with under the Early Warning System and Risk Register. If such work is required, it is valued as a Compensation Event in accordance with the provisions of the contract. It’s an entirely different approach andmay not suit a client who is perhaps more driven by speed on to site, or perhaps seeing an altered space beforemaking fit-out decisions. It is not unknown for NEC contracts to be amended to incorporate the concept of Provisional Sums. Detail them in your programme Under JCT provisions, where Defined Provisional Sums are included, the contractor is liable for including the time implications of these. To protect the contractor’s position, it is important that the Employer is made aware of the date by which the instruction for expenditure of these Provisional Sums is required. Like any other information request under a JCT contract, such date should be neither too early nor too late. So, it is important that realistic dates are provided. However, it is also important that a contractor provides dates that are robust and take account of the actions they need to take once instructed. These will include procurement, design (if applicable), and material, plant, and labour availability/ lead times. A contractor is not required to simply drop everything and deal solely with an instruction to expend a Provisional Sum. Therefore, the timing should allow for dealing with the above factors whilst also dealing with all those other requirements upon them, as anticipated at that stage. If the instruction for expenditure of a Provisional Sum ultimately details work that is noticeably different in scope or nature, from that detailed in the Provisional Sum, then, regardless of the requirement for the contractor to make allowance for the programme and Preliminaries requirements of a Defined Provisional Sum, such instruction will constitute a variation and the contractor will be entitled to seek an extension to his contract period, if the revised scope of work is likely to cause a delay. In such circumstances, the contractor must notify the Employer of this in accordance with the contract requirements. If the instruction to expend a Provisional Sum is issued late, the contractor is only required to employ the same measures to mitigate the delay as it is required to do by the contract in respect of all other delays, i.e., typically, reasonable, or best, endeavours. With respect to notifying the client of the required instruction dates, another option, and I would recommend that a contractor do both, is to include the instructions for the expenditure of any Provisional Sums as items within your Information Required Schedule (IRS). I would also suggest doing the same for the Undefined, as Day 1 milestones, both on your programme and in your IRS. That way you have flagged them up and they can be reviewed on a regular basis, at least monthly within Progress Reports and Progress Meetings. This way they are kept on everyone’s agenda and the contractor is more than fulfilling their responsibilities in respect of the Undefined Provisional Sums. This paper was written for information only and is not to be assumed as “advice”. To read the paper in full visit: www.cicvforum.co.uk/useful-links or email Richard at richardb@rbmandc.com Legal www.thefis.org 23