NEW ENGINEERING CONTRACT AND ACTIVITY SCHEDULE

NEC calls schedule of values an activity schedule. How NEC interprets activity schedule in Option A:Priced contract with activity schedule.

Activity schedule is prepared and priced by tenderers. It is not part of the works information and must not be used to describe the works.

The prices entered by the tenderers for each activity are lump sums, not unit rates as in the bill of quantities. The tenderer decides how to break up his work into activities, enters them on the schedule and prices each one. If the employer wants to specify particular activities which the contractor is to identify in the activity schedule he may do so, stating his requirements in the instructions to tenderers.

Use of Option A of the NEC does not require a bill of quantities to be issued to tenderers or to be used subsequently. Consequently, tenderers have to calculate quantities from the works information where they need to know a quantity in order to estimate the cost of the work. For many contracts (including process plant, building construction etc) this is a significant task.

In order to reduce the cost and time involved during the bid preparation period, employers may wish to calculate quantities before inviting tenders and then issue a copy of the quantities list to all tenderers. When this is done, it must be made clear that the tenderer will have used the quantities and relied upon them entirely at his own risk of their inaccuracy or incompleteness. No amendment to the contract or addition to the contract is necessary to achieve this as the contract is clear that the contractor's obligation is to carry out the work described in the works information. There's no mechanism for this obligation to be qualified or modified by the issue of quantities to tenderers.  

The total of the prices of the items in the activity schedule is the tenderer's offer for providing the works. The cost of any items the tenderer may have omitted is deemed to be included in the prices for the other items.

RE:SHEDULES OF VALUES

Dear Cadgas,

I'm impressed how many project managers make mistakes when dealing with schedules of values. Sub-Clause 14.1 (d) The Contract Price  (Red book-FIDIC 1999 edition) says:

Unless otherwise stated in the Particular Conditions:

(d) the Contractor shall submit to the Engineer, within 28 days after the Commencement Date, a proposed breakdown of each lump sum price in the Schedules. The Engineer may take account of the breakdown when preparing Payment Certificate, but shall not be bound by it.

Indeed, if lump sum, there's no need for method of measurements or BoQs. And indeed if you want to include them do it only for evaluation of interim payments. It means that you can use BoQs but only for the purposes stated in the schedules and may be inapplicable for other purposes.To have a transparent tender and tenderers will know from the beginning what they are to expect explain carefully what these BoQs mean. 

I prefer not using BoQs because they mislead the contractors. I usually instruct the contractors to send me a proposed breakdown of each lump sum price in the schedules within some period after the commencement date.

But be careful because no matter how correct is your design, there will be inevitable changes. It means you should specify in advance how you will manage the evaluation of the changes.

Hope this answer your question.

Best regards

Rado

SHEDULES OF VALUES

Dear Rado,

We are the PMC of a multi-use development project. The Client intends to go into a lump sum contract with FIDIC Red Book 99 form. The design will be 100% complete before going into tender. The Designer has prepared a BOQ and Method of Measurement along with Specs and Drawings.

I think that:

a)The tender documents should only include a Schedule of Prices, together with Specs, Drawings.. etc. (No BOQS and Method of Measurement).
b) I dont actually suggest any BOQ to be incorporated whatsoever. Nevertheless, if insisted, I may not object the Contractor (after the tender is awarded) is given the BOQ prepared by us (with or without quantities) to provide breakdowns for his lumpsum price. This BOQ will be non-contractual and for only valuation of variations.. etc.

Not so-experienced PM thinks that:

a) The BOQ and MOM will be submitted during tender phase, but it will be stated that the contract is Lump Sum. Payments will be made as per BOQ items.

I strongly believe that using a BOQ instead of a Schedule of Prices has no use, especially considering that the design will be 100% complete, i.e. changes are not likely to occur. A Schedule of Prices itself is very useful for Cash Flow Calculations, Scheduling etc. as well.


I am also of the opinion that, submission of BOQ's during tender phase gives Tenderers the impression that (even clearly its purpose is stated) the BOQ is contractual, and it is hard to explain people that, they are supposed to do everything written in their contract as "lump sum" but get paid on BOQ items basis. It has, and it will, mislead people to think that their responsibilities are bound with what is stated in the BOQ.
I think that, in lump sum contracts the payments / remuneration shall ne through a "Schedule of Prices". If still a BOQ is desired for valuations, etc., it might be requested after the Tender is awarded, i.e. from the Contractor, not the Tenderers. I seriously hesitate on using  "Lump Sum Contract with Bill of Quantities" even though it's widely used, especially in the Gulf region.

What do you suggest on this one? Is a Schedule of Payments alone the best solution, or can both (BOQ & SOP) be used? Can you give further recommendations as it will be a FIDIC Red Book 99 type of Contract?
I'd appreciate your prompt answer,

Kind Regards, 

Cadgas

ТАБЛИЦАТА СЪС СТОЙНОСТИТЕ (SCHEDULE OF VALUES)

Напоследък наблюдавам доста голямо объркване, дори от признати консултанти, при провеждане на търгове на твърда цена и боравенето с таблицата на стойностите (schedule of values). Преди да продължа с разсъжденията по темата бих искал да задам въпроса-кога трябва да се представи таблицата със стойностите? По време на търга или след подписване на договора за изпълнение на строителството?