CON4541 CONSTRUCTION CONTRACT MANAGEMENT

4. Contract Administration (refer Private Standard Form with Quantities for HK)
Contd

Architects Instructions & Variations

Topic outline
Architects Instructions ()
Written instructions ()
Oral instructions (, )
Instructions issued by Architects Representative ()
Variations ()
Valuation of Variations ()

I Architect's Instructions (Clause 4)

Architect may issue instructions up to the issue of the Final Certificate (Clause 4.1)

The Architect may issue instructions that he is empowered to issue under the
Conditions to the Contractor at any time up to the issue of the Final Certificate

Architect to issue instructions in writing (Clause 4.2)

There are 3 ways in which Architects Instruction may be conveyed to the Contractor:

Written instruction issued from the Architect

Oral instruction given by the Architect and he must be confirmed in writing

within 5 days from giving the said oral instruction.

Written instruction issued by the Architects Representative with the power

delegated by the Architect (Clauses 12.2 and 12.3)

If the Architect gives an oral instruction that the Contractor believes requires a
Variation and it shall have no immediate effect until the following procedures:-

The Contractor shall confirm the oral instruction requiring a Variation in writing
within 7 days.

If the Architect has not dissented in writing within 7 days from receipt of the
Contractors confirmation, the Variation shall take effect on the expiry of the
latter 7 days.

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The Architect shall then issue the written instruction for a Variation for record
purposes.as soon as possible (ASAP)

Compliance with Architects instructions (Clause 4.3)

The Contractor shall comply () with Architect's Instructions which are issued
under empowered within the Conditions, i.e. with express authority ().

The Contractor may disagree that the Architect is empowered by the Conditions to
issue an instruction.

If that is the case, the Contractor may within 7 days of receipt of that instruction
require the disagreement to be resolved by settlement of dispute specified
under Clause 41.

The disagreement covers whether an instruction involves a Variation but the

Contractor shall in any case be required to comply with the said instruction and
referred the disagreement to settlement of dispute under Clause 41..

If the Contractor does not begin to comply with the properly authorized instructions (
) within 7 days after receipt of a written notice from the Architect
requiring compliance with that instruction:

Subsequently, the Architect issue a certificate to that effect by a special

delivery to the Contractor,

Then the Employer may employ other persons to carry out the instructed
works.

The cost of such work shall be recoverable () from the

Contractor by the Employer as a debt () or may be deducted from monies
due () to the Contractor under the Contract.

Clauses which empower instructions

The Architect is expressly empowered to issue instructions under the following

provisions:

discrepancies () found between the Contract Drawings and the Contract

Bills

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Contract Drawings do not comply to the regulations

errors discovered by the Contractor during setting out

opening up for inspection ( )

removal of materials or goods delivered on site which are not in accordance with
the Contract

dismissal () of persons employed on the Works

ordering or confirming Variations

expenditure of provisional sums or prime cost sums

making good of defects () during defects liability

period

removal of any of the debris after storm, flood or fire

postponement () of work under the Contract

nomination of subcontractors

nomination of suppliers

perform special works e.g. protecting the works during typhoon

removal of debris (; ) from Site

antiquities () found on Site

The Architect has no express powers to issue instructions to :

vary or waive the terms of the Contract

vary the nature of the Works

omit work so that it may be carried out by any other contractor or the Employer

nominate a subcontractor or supplier unless a prime cost sum has been provided
in the Contract Bills.

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J. Variations (Clause 13)

Architects authority to issue instructions requiring a Variation (Clause 13.1)

Variation is defined in clause 1.6 as a change instructed by the Architect to the design,
quality or quantity of the Works including:

the alteration ( ) to the type, standard ( ) or quality ( ) of any

of the materials or goods comprising the Works;

the addition ( ), substitution ( ) or omission ( ) of work; and

the removal from the Site of materials or goods and the demolition and removal
of work except where the materials or goods are not in accordance with the
Contract.

or the imposition of an obligation or restriction instructed by the Architect regarding:

access to the Site or use of any parts of the Site;

limitation of working space;

limitation of working hours; or

the sequence of carrying out or completing work;

or the addition or alteration to or omission of such obligations or restrictions imposed

by the Contract

It should be noted that all Architects Instructions do not necessarily constitute or

contain Variations to the Contract. Some may be explanatory and others may
instruct the Contractor to remove from the site materials not in accordance with
the Contract.

The Contractor may be instructed to carry out Variations for the following
reasons:

the Architect needs or wishes to change the design and specifications

a discrepancy is discovered in the contract documents

a discrepancy between statutory requirements and the contract documents

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an error or omission in the Contract Bills

expenditure of the prime cost and provisional sums

restoration () of damaged work caused by perils ()

protective work upon an outbreak of hostilities (~)

removal of debris (; ) as a result of war damage.

All Architects Instructions requesting for Variations (as commonly known as

variation orders (V.O.) must be in the form of written instructions.

The Valuation of Variation is allowed in the Interim Certificates for payment and
is subject to retention. The amount valued for Variations is included in the Final
Account for the adjustment of the Final Contract Sum.

Valuation of Contractors work (Clause 13.3)

It is the Quantity Surveyors responsibility under the Contract to measure and value
work including Variations, remeasurement of Provisional Quantities, Items and
Sums.

Valuation rules (Clause 13.4)

The Works shall be valued by the following rules:

by Contract rates

by Contract rates with fair adjustment (pro-rata rates ())

by fair rates () (star rates)

by daywork rates

Contract rates

Works of same or similar in character and is carried out under the same or similar
conditions and where Variation does not substantially change the quantities of that
work, use Contract rates in the Contract Bills to determine the valued rates

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Contract rates with fair adjustment

Works of same or similar in character but is not carried out under the same or
similar conditions or Variations substantially changes the quantity of that work,
use Contract rates with fair adjustment for the difference in conditions or quantity.

The word conditions shall mean physical conditions and not financial conditions.

Fair rates

Works is not the same or similar in character to any work priced in the Contract Bills
the work shall be valued at fair rates.

A fair valuation is an estimate of the cost of carrying out an item of work,

including overheads and profit. It may be valued by:

build up a unit rate from basic principles taking into account all factors
such as invoice cost of materials, wastage allowances, transportation
and handling cost, standard labour constants, cost of plants,
overheads and profit.

obtain prices from building price books, quotations, etc.

extract rates from bills of quantities used on different projects of a

similar nature and adjusting such factors suitable for the individual case
(adjust for time and location difference.

Daywork rates

Works that cannot be properly measured or valued and with prior consent of
the Architect use daywork rates included in the Contract or other means if no
dayworks rates included in the Contract.

Dayworks are intended to establish a reasonable price for any Variation (ie.
emergency works being valued in this way.

In this case, the Contractor should be very careful on the accuracy of keeping
the records of dayworks .

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Variations related to change of character and conditions of works

Clause 13.4 deals with the situation when work is not of a similar character or executed
under similar circumstances.

The contract rates will be the basis for the same, in as far as they may be reasonable, but
failing which a fair valuation is to be made.

Note : it is only necessary to prove that one of the two facets is dissimilar, i.e. (i) character
or (ii) conditions.

The onus of proof for using fair valuation lies on the shoulders of the Contractor. It is the
responsibility of the Contractor to apply for fair valuation if the Contractor finds it necessary.

(i) Character

The meaning of character should refer to the style, quality, distinctive type, sort, nature,
constitution, plus the possibility of being either good or bad. To all intents and purposes,
character must relate with quality.

For example, if a school contract was varied by building a chapel at one corner of the main
building. And the work to the chapel demanded a higher standard of workmanship and
quality of materials. This section of the work would be priced at the pro-rata rates to reflect
the difference in quality of the work required.

Another example of a contract for a factory, together with some flats for managerial staff.
The Architect by a Variation, introduced a small theatre into the Contract. The theatre was
different in character to the repetitive work of the factory or flats. The standard and class of
workmanship involved in building the theatre was different too. Therefore, this section
would also require fair rates to reflect the differences in quality required.

(ii) Conditions

The contract documents generally set out the circumstances, state or situation under which
the building operations are to be undertaken. No matter how good or bad these conditions
are.

They are the norm for the specific contract in question. The conditions of a contract are
those forecast or anticipated at the time of tendering but if subsequently these conditions
change during the contract period.

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The change of condition under which work is executed might be as follow :

(a) summer or winter

(b) day or night
(c) normal or abnormal
(d) cheap or expensive
(e) low or high
(f) cold or hot
(g) clear or foggy
(h) clean or dirty
(i) free or restricted
(j) accessible or inaccessible
(k) possession or non-possession
(l) plain time or overtime
(m)covered or exposed
(n) level or sloping
(o) empty or occupied
(p) fast or slow
(q) mechanical or manual
(r) contractual or ex-contractual

If there is a clear provable instance of change, then a variation order must be asked for by
the Contractor to distinguish the work from that payable at contract bill rates.

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