"remeasure" procurement contract issue

[ragg987]

Hi there, looking for some input to this issue I am facing. I will keep the descriptions "vague" and avoid specifics.

I signed a remeasure contract for some works without fully understanding the implications. Contractor is now claiming a significant variance to the quoted price and using the remeasure to defend the change, something I am not convinced holds true.

Prior to quote the architects details were issued and contractor issued a quote on a proforma form. The form stated items, quantities and price per quantity, hence giving total price. Most of the line items in the form show quantity zero, hence price zero for that item. Some of the items show a quantity and hence a price.

After job is completed, contractor has now "remeasured" and added quantities to some of the items previously marked as zero quantity. On top, they have increased quantity on other items hence increasing the price again.

From my understanding, the remeasure applies where there is a degree of uncertainty at quote phase - e.g. as design is incomplete or the actual condition are not known (e.g. underground works). This does not apply in this case - the design was complete and scope of works fully defined - it was down to the contractor to convert this to a bill of quantities and price it up. My view is that if they stated a quantity as zero then they did not intend to use it at quote phase, not that they expected to use it but had not stated as such.

Any thoughts on how I can handle this? And a caution to anyone about REMEASURE - tread with caution!

(Apologies if this is posted in the wrong forum - seemed closest place for it. Perhaps we need a "Procurement" area?)

[Jeremy Harris]

Re-Measurement Contracts are OK IF, and ONLY IF, you keep a running track of the variances on the submitted B of Q as the work progresses.  In my view it's absolutely essential that such a contract includes provision for the contractor to submit a regular (say weekly or monthly) revised B of Q showing the variances, so that you are in a position to accept or account for them as they arise.

From what you describe, it seems as if the B of Q was not revised during the contract, but only at the end, and now you are facing a nasty surprise.  Legally, as long as the contractor can show that the final B of Q pricing is valid, and the items were included in the work, then you have to pay up.

Personally I'd try and avoid a Re-Measurement Contract for domestic-scale work, as it's unlikely that there would be time for B of Q variances to be collated and agreed at sensible stages during the work, unless it was for a long-duration complete build.  I'm of the view that for groundworks in particular, you are better going for a firm price contract, even though that carries the risk of being more expensive because of risk pricing, as at least you will know up front what the price will be.  BTW, worth noting that a fixed price contract is not the same, and the final price of a fixed price contract may not be the agreed price, as variances for things like exchange rates are allowable.  A firm price contract is a fixed price (confusing, I know) in contracting terms.

I have a feeling that it is normal practice to put "unknown unknowns" as zero in the B of Q for a Re-Measurement Contract, and that legally this will be binding.  I wish it weren't, because this doesn't give you a good outcome.  You can certainly challenge the final B of Q, in fact I'd very definitely challenge it and ask for evidence for all the increases.  You may well find that the contractor has played a bit fast and loose with their pricing, so, depending on the value involved you might want to consider getting a QS to go over the B of Q prices.

[ragg987]

55 minutes ago, JSHarris said:

I have a feeling that it is normal practice to put "unknown unknowns" as zero in the B of Q for a Re-Measurement Contract, and that legally this will be binding.

This may be a key point - "unknown unknowns as zero", in my case I would argue that the items were not unknown and should have been in the original BOQ. The job could not be done without some of these items (something I did not know at the start but know now).

Thanks for your input. Case of buyer beware, I agree, just trying to make the best from where I am. Have a QS on the case.

[ProDave]

This sounds a bit like sharp practice and very much "buyer beware"

If they omit to price for any of the materials (and put the quantity at 0) then it gives a somewhat false and very cheap impression of what the contract price is, leaving a nasty shock for the customer later.

That's fine if the customer is aware that there is no costing for some of the materials and that the final price will be higher, but was that made clear? or do they assume all customers understand "contract speak"?

[Jeremy Harris]

My experience has been that bigger companies, in particular, tend to try it on a bit like this. 

We had quotes from some that were apparently reasonable, until you looked at all the things they had carefully missed out, and often the missed out items were not clear from the quote.  When we were looking to place the ground works contract we had no end of problems like this, despite me having given every bidder a full and proper specification, including a volume of muckaway calculation from the topo survey versus the finished levels, including the excavation volumes for the retaining wall, house and garage foundation.  The majority of the quotes we had "hid" the true muckaway cost (which we knew was going to be substantial).  The company we went with in the end won the contract for two reasons.  The first was they sent me their breakdown of costs from their QS and gave me his phone number and email address to discuss these with him directly if I wished, the second was that I liked the chap that ran the company and felt he was a decent and honest bloke (which he was).

[Temp]

On ‎05‎/‎06‎/‎2016 at 15:22, ProDave said:

If they omit to price for any of the materials (and put the quantity at 0) then it gives a somewhat false and very cheap impression of what the contract price is, leaving a nasty shock for the customer later.

+1

When you get your initial quotes they should be adjusted so they are on a like for like basis and checked/adjusted for omissions. Otherwise it's impossible to compare them.

[ragg987]

Agree - hard lesson learnt !