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VARIATION
AND INTERIM
PAYMENT
VALUATION
PAYMENT PROCEDURES
Contractor submits a claim
CONTENT OF
CERTIFICATE OF PAYMENT
VALUATION
METHOD OF VALUATION
Preliminary Cost based on a specific time
frame until at the date of valuation done.
Actual amount of works completed
proportion of payments is valued and
evaluated from inception of the construction
until the works completed at the date of
valuation is conducted.
- Elements of works are evaluated following
the stages of construction works.
- The value include work items in bills of
quantities.
VALUATION
METHOD OF VALUATION (contd)
Unfixed materials all materials that are bought
to the site which are still unfixed are evaluated.
The contractor need to provide price list at the
date of valuation.
Nominated Sub-Contractors/Suppliers
proportion of works completed by the NSC/NS will
be evaluated and verified. A verification or
certificate will be issued by the respective
consultants who are responsible to the NSC/NS
works.
Price adjustment if there is provision of
fluctuation of prices, an adjustment will be made
to all prices accordingly (increase or decrease)
VALUATION
METHOD OF VALUATION (contd)
Retention Sum 5% of the contract sum will be
retained as retention at maximum. In case if the
value of work done has not reached to 5%
maximum, 10% is retained out of the overall value
of works.
Liquidated Damages A sum deducted as
penalty to the contractor for delay f completion
of construction. Usually a certain rate per day is
charged according to the contract.
VALUATION
METHOD OF VALUATION (contd)
Value of Variations Works as per following
rules:-
1. The prices in the Contract Bills shall
determine the valuation of work of similar
character under similar conditions.
2. Where the work is of a similar character
but not executed under similar conditions,
the Contract Bill rates and prices so far as
may be reasonable shall be used with a
fair allowance for the difference in
conditions
VALUATION
METHOD OF VALUATION (contd)
Value of Variations Works as per following
rules (contd) :-
3. Where the work is not of similar character
to the Contract specification, the
valuation shall be at fair market rates and
prices determined by the QS
4. Where work cannot be properly
measured and valued, the Contractor will
be allowed day-work rates. If no rates
have been inserted in the Contract, the
actual prime cost to the Contractor plus
15% will be taken into account
VALUATION
METHOD OF VALUATION (contd)
Value of Variations Works as per following
rules (contd) :-
5. The Bill prices determine the valuation of
the omitted work. If the omission
substantially changes the conditions under
which any remaining items of work are
carried out , the prices of the remaining
items are ascertained in accordance with
Rule 1, 2 or 3.
6. For Provisional Quantity, the quantities
stated in the Contract shall be re-
measured by the QS based on the actual
quantities executed.
VARIATION
VARIATION
The term variation means:
The alternation or modification of the design,
quality or quantity of the Works as shown upon
the Contract Drawings, Bills of Quantities and/or
Specification,
The addition, omission or substitution of any work,
the alternation of the kind or standard or any of
the materials or goods to be used in the Works,
The removal from the Site of any work, materials
or goods executed or brought thereon by the
Contractor for the purposes of the Works other
than work, materials or goods which are not in
accordance with this Contract.
VARIATION
PROCEDURE OF VARIATION
In a process of variation, a Consultant QS must be
aware of the correct procedure for variation, so
that it became valid and undisputed to parties of
the contract:
I. To check and to observe the clauses and terms
provided in the contract document for issuing
of variation orders;
II. ii. All variations instructed must be in a written
instruction. Verbal instructed cannot be taken
as a valid VO
III. iii. The instruction for VO must only be by the
authorized person or party allowed under the
contract. (i.e. Architect or S.O. or by the Client
himself)
VARIATION
PROCEDURE OF VARIATION
In a process of variation, a Consultant QS must be
aware of the correct procedure for variation, so
that it became valid and undisputed to parties of
the contract (contd):
IV. The VO instructions must be clear and proper to
the understanding of the contractor.
V. All necessary reference such as drawings,
catalogues, etc. must be provided and
attached to the VO.
PAYMENT
CONTRACTORS APPLICATION
PAYMENT
CONTRACTORS APPLICATION
(CONTD)
PAYMENT
SUSPENSION OF WORKS
If payment is not made to the contractor, the
contractor can either:-
1. Determine his own employment, or
2. Suspends the works
If the contractor does not receive his payment within
the Period of Honouring Certificate, the contractor
may send the following notices to the employer:-
Notice 1 warning to suspend the works if he is not
paid.
Notice 2 suspension of works if payment is not
made within 14 days of the first notice. The
suspension can be made until payment is received
by the contractor.
PAYMENT
SUSPENSION OF WORKS
PAYMENT
RETENTION FUND
Retention money is a mechanism to protect
the employer in the case of defective works
and non-performance by the contractor.
The employers interest in any retention money
held is fiduciary as trustee. There is no
obligation upon the employer to invest the
money.
The gross value of work done and materials
delivered as ascertain in the certificate is
subject to deduction for retention money.
PAYMENT
LIQUIDATED DAMAGES
Liquidated and ascertain damages is pre-
estimate of a certain sum of money to be paid
as compensation if a breach actually takes
place.
The amount is fixes and stated in Appendix to the
Condition of Contract.
The Contractor has to pay liquidated damages
to the employer if he fails to complete the work
within the contract period or within such
extended time granted
PAYMENT
The
deduction for LD is made in the interim
payment certificate if necessary.
PAYMENT
FINAL ACCOUNT
Final account in construction contracts is the agreed
statement of the amount of money to be paid at
the end of a building contract by the Employer to
the contractor.
Both the Employer and the Contractor reach an
agreement on final amount of the Contract and
will sign the Final Account Statement;
Final Account figure represents the full and final
settlement of all claims;
The Architect will then issue the Final Certificate
of payment for the Employer to pay the
Contractor.
FINAL ACCOUNT
Contractor QS to Disagreem QS to
to submit prepare ent / amend/
Final Claim Final agreement not
Account on Final amend
Account the Final
Account
FINAL ACCOUNT