Project managment

Quotations from a contractor for undertaking variations

On being instructed to vary the work or experiencing unforeseen conditions, it is sometimes the practice of a contractor to submit a quotation for dealing  with the extra work involved, including perhaps some unspecified sum for overcoming any consequent delay alleged to have been caused. The resident engineer should not accept such a quotation, but should refer it to the engineer.

The ICE conditions recognize that a quotation may be desirable and allow the engineer to request this for ordered variations. If the engineer finds the contractor’s quotation unacceptable he can assess the variation at bill rates or similar (see Section 17.4). It is thus clear that the base line for any agreement is to be the existing bill rates. The position is different under design and construct contracts and the ECC whose provisions are discussed at the end of this section.
It may seem that acceptance of a contractor’s quotation has the advantage that it avoids complicated problems of checking costs and assessing any delay.
But it can prove highly advantageous to the contractor and disadvantageous to the employer. The contractor need not justify the amount of his quotation and, as he makes the quotation before he undertakes the necessary work, the engineer can only make an estimate of what the contractor’s costs might be to check the quotation. Similarly, with no work done, there is no factual evidence as to what delay, if any, the extra work would cause. Sometimes work on two or more variations can take place at the same time, or otherwise be so closely connected (using the same equipment, for example) that it becomes difficult, or even impossible, for the engineer to judge whether the contractor’s quotations contain elements of double charging of costs or double claiming for delay.
It should be noted that both the ICE design and construct conditions of contract and the ECC (see Section 4.2(d) and (f)) require the ‘quotation approach’ when variations are ordered. But those contracts are not necessarily based on a priced bill of quantities but often on lump sums, in which case the quotation method is appropriate (see Section 17.3). However, both the design and construct and the ECC are administered by the employer’s representative or his project manager and not by an independent engineer, hence the contractor’s power to quote in advance for extra work can be seen as strengthening his position. It is true that under those contracts the employer’s representative or his project manager can reject the contractor’s quotation, substituting his own, but this must inevitably raise a dispute.

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