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Bills of Quantities

Daniel Atkinson 07 December 2000

Nature of Bills Bills of Quantities comprise a list of items of work which are briefly described. The Bills also provide a measure of the extent of work and this allows the work to be priced. The work included in the item is defined in detail by the rules in the Method of Measurement. The item descriptions are therefore a shorthand to allow the relevant rules of the Method to be identified. The measure may be a single item or number, dimension (linear metre, s uare metre, cubic metre!, time (hrs, weeks! or weight. Function of Bills The Bills of Quantities may serve a number of functions as" # breakdown of the tendered price, with no contractual status, but providing information for the selection from tenderers$ #n estimate measure of the work for the tendered price, to be used to arrive at a revised contract price once the actual uantities of work carried out are measured. This is the remeasure form of contract. # schedule of rates as the contract basis for valuing variations in the work. # basis for measure of the value of work completed for interim payments. Method of Measurement Many contracts are let using Bills of Quantities, although this does not necessarily mean that the works are to be valued by re%measurement. The Bills of Quantities are re uired to be prepared using rules in a specified Method of Measurement. Many &tandard Methods of Measurement are now in common use. The Method of Measurement will specify the division of work into categories. 'n the building industry the division is usually on the basis of different trades, and are generally very detailed. 'n the engineering industry the division is usually less complex and composite items are used describing the completed construction operation. There is normally a division for preliminary items such as mobilisation, site set up and insurances. 'n contrast to the remainder of the Methods, preliminary items re uire large lump sums, in some cases time%related, but with little detail to allow the build%up to the item to be ascertained. &tandard Methods of Measurement have become increasingly more complicated. They give rise to claims for additional payment based on interpretation of the Method. The tendency has been for the Methods to provide detailed sub%division of work and therefore scope for claims based on ambiguities of interpretation, failure to measure the tendered Bills in accordance with the Method and the application of exceptions to measure. Practice in the Building ndustr! The item description simply identifies the extent of work priced, but the detailed re uirements are to be found in the &pecification and (rawings. 'n )*T +orms the specification of the works is included in the Bills of Quantities in the form of lengthy preambles. The practice in the Building industry is to set out in the Bills of Quantities particulars re uired by the *onditions of *ontract, with detailed specification for the work. (etermining the precedence of such documents in interpreting the contract may create difficulties, since the Bills of Quantities will be a specially written or ,one%off, document in contrast

to the printed standard conditions. The normal rule (in absence of express terms! is that specially prepared documents will take precedence over standard printed conditions " #$ans % &ons 'Portsmouth( )td *$* Andrea Mer+ano )td ',-7.(/ Mistakes in Bills Mistakes in the bill descriptions or uantities are unlikely to be remedied as a legal rectification of the terms of the contract to reflect the true intention of the parties. 't is more likely than not, that the common intention will be that the tendered price should prevail, rather than a price revised to account of the error. Most standard forms of contract which adopt Bills of Quantities make provision to deal with errors in bill descriptions and uantities, distinct from the effect of variations. A00ortionment of 1es0onsibilit! for Bills The use of a Bill of Quantities in a re%measurement contract re uires the responsibility for the conse uence of the following risks to be defined, independently of the effect of variations to the *ontract. The preparation of the Bills of Quantities may be incorrect, with items omitted which should have been included in the tendered Bill for the original work described in (rawings and &pecification$ The Bills of Quantities may not have been prepared in accordance with the &tandard Method of Measurement for the original work described in the (rawings and &pecifications$ The final uantities of work for an item may be different to the estimate in the tendered documents. The change in the final uantities of work for an item may so upset the balance of resources and plant and material and-or the method of working, to make the unit price for the item inaccurate. The actual uantity of work for an item may differ from the estimate at tender for a number of reasons. 'n the case of excavation for instance the removal of unsuitable material or the extent of rock or the extent of tunnelling in particular classifications of ground, may only be estimated from ground investigation information and not known until work is carried out. &imilarly the length of piles driven to a specified set may not be known precisely at each pile location. #s a matter of business efficacy, a term will be implied (in the absence of express terms! that the cost of the work for a Bill item which has not been priced by the contractor is included in the prices entered elsewhere in the Bill. 'n a measurement contract it is necessary to ascertain how the parties intended to price the differences between as% built uantities from those estimated at tender, independently of the effect of variations. The following item valuations are possibilities" #pply the contract rates unaltered to the changed uantities for the item of work$ #d.ust the contract rates for the item of work, if the difference in uantities makes the balance of the rate inaccurate, leaving all other items including preliminaries unaltered. 'f this is the intention contractors will need to have included in the price for uantities % related site overheads in the prices for work items and not in the /reliminary 'tem rates$ #d.ust the rates for other items of work, when planned execution is no longer valid due to the difference in uantity for the item of work. #d.ust the prices for preliminary items, which are affected by the difference in uantities. This will create difficulties unless the preliminary item is clearly time%related and the effect can be assessed on a time basis or if there is a build% up of the preliminary item prices.

&tandard Forms The &tandard +orms of contract normally used for civil engineering adopt the bills of uantities for re%measurement. 'n the building industry the price is usually a lump sum, and the bills are intended to be simply a guide to allow the price to be determined. 0owever matters are not so simple, and provisions for the ad.ustment if there are errors in the bills makes the standard )*T with uantities form effectively re%measure. #ll forms use the rates and prices in the bills as a schedule of rates for valuation of variations. F D 2 ,--3 Forms 1f the three +'('* +orms, only +'('* 2ed Book refers to a Bill of Quantities, although even then this is not the only method envisaged for establishing interim payments due. The +'('* 2ed Book has moved away from the over% dependance on Bill of Quantities of other standard forms, and allows the *ontractors build%up of his tendered price to be in the form of an appropriate &chedule, but still re uires a method of measurement to be stated, and still allows additional payment for differences in uantities which are not minimal. The Bill of Quantities where used, is the basis for valuation of variations. *lause 3.3.3.3 of the 2ed Book defines the *ontract in terms of documents which include the ,&chedules,. *lause 3.3.3.4 defines &chedules to mean those documents which are entitled ,schedules, and completed by the *ontractor and submitted with the 5etter of Tender and states that it may include the Bill of Quantities. *lause 3.3.3.36 defines Bill of Quantities to be the documents so named (if any! which are comprised in the &chedules. The +'('* 2ed Book does not therefore re uire a Bill of Quantities for pricing but allows instead a schedule of rates and-or prices. *lause 3.7 provides that the documents forming the *ontract are to be taken as mutually explanatory of one another. +or the purposes of interpretation the priority of documents is given, in which the &chedules have the lowest priority. *lause 38.3 further defines the status of the Bill of Quantities in defining the work. *lause 38.3 (c! provides that any uantities which may be set out in the Bill of Quantities are estimated uantities and are not to be taken as the actual and correct uantities of the 9orks which the *ontractor is re uired to execute. The Method of Measurement is dealt within *lause 3:.:(b! which provides that except as otherwise stated in the *ontract and notwithstanding local practice, the method of measurement shall be in accordance with the Bill of Quantities or other applicable &chedules. 't is necessary therefore for the Bill of Quantities (if any! to state, usually in the /reamble to the Bill, the method applicable. *lause 3:.; deals with the effect of differences between the uantities in the original tendered Bill and the as%built uantities. The modern trend is to avoid claims for items which have little conse uences and this is reflected in *lause 3:.;(a! which re uires four criteria to be satisfied if a new rate is to apply to an item of work" the measured uantity of the item differs by more than 36<, and the change in uantity multiplied by the original rate exceeds 6.63< of the #ccepted *ontract #mount, and The change in uantity directly changes the *ost per unit uantity of the item by more than 3<, and the item is not specified in the *ontract as a ,fixed rate item,. The new rate is then derived in the same way as new rates for variations. *lause 38.3(a! re uires the *ontractor to submit to the =ngineer, within :> days after the *ommencement (ate, a proposed breakdown of each lump sum price in the &chedules. The =ngineer can take this into account when preparing /ayment *ertificates, but is not bound by it. This is a useful provision since the &chedules (including the Bill of Quantities! are used as a &chedule of 2ates for rating variations. The provision is particularly useful in relation to /reliminary 'tems.

*lause 38.8 anticipates that 'nterim /ayments may not be on the basis of measurement of the 9orks. 'f the *ontract includes a schedule of payments specifying the installments, then payments are made against the schedule ad.usted for progress. 1therwise the *ontractors &tatement under *lause 38.;(a! is simply stated as the estimated contract value of the 9orks executed. There is no reference to the Bill of Quantities but *lause 3:.3 re uires the work to be measured and valued for payment and 3:.: re uires the method of measurement to be in accordance with the Bill of Quantities. The +'('* 2ed Book does not provide a mechanism for dealing with errors in measurement of the 9orks, omitting items which were re uired to be included by the Method of Measurement. 0owever it appears to follow from the re uirements of *lause 3:.3 and 3:.: that omitted descriptions will need to be included in the final measure and appropriate rates used. *lause >.8(a! provides that the *ontractor may be entitled to an extension of the Time for *ompletion for substantial change in the uantity of an item of work included in the *ontract. 2# 7th #dition The '*= 4th =dition Measurement ?ersion is a measurement form in which the Bill of Quantities is a central document. *lause 3(3!(e! defines the *ontract in terms of documents and this includes the Bill of Quantities. *lause 3(3!(h! defines Bill of Quantities to be the priced and completed Bill of Quantities. *lause 7 provides that the several documents forming the *ontract are to be taken as mutually explanatory of one another. There is no order of priority stated for the interpretation of the *ontract, so that the Bill of Quantities has the same status as drawings and specification. 0owever, *lause 77(3! provides that the uantities set out in the Bill of Quantities are the estimated uantities of the work, but that they are not to be taken as the actual and correct uantities of the 9ork to be carried out by the *ontractor. *lause 77(:! deal with errors in description in or omissions from the Bill of Quantities. These do not release the *ontractor from his obligations under the *ontract. 0e is re uired to carry out the whole of the 9orks according to the (rawings and &pecifications. #ny such error or omission is corrected by the =ngineer and the value of work ascertained under *lause 7:(:! or (;! in the same way as a variation. =rrors omissions or wrong estimates in the descriptions rates and prices inserted by the *ontractor are not rectified. *lause 74 provides that the Bill of Quantities is deemed to have been prepared and measurements made in accordance with the &tandard Method of Measurement referred to as ,*ivil =ngineering &tandard Method of Measurement, (*=&MM!. This provision is sub.ect to an important proviso that general or detailed description or any other statement do not clearly show the contrary. *lause 7@(3! deals with the value of work, which is re uired to be ascertained by admeasurement, unless otherwise stated. *lause 7@(:! deals with the situation where the actual uantities for an item differ from the uantity in the Bill. 'f in the opinion of the =ngineer such difference of itself so warrants, then the =ngineer determines the increase or decrease of any rate tendered unreasonable or inapplicable in conse uence. *lause 73(8! provides that a written order from the =ngineer is not re uired for increase or decrease in the uantity of any work, where it results from the uantities being different to those stated in the Bill of Quantities and not from an order under *lause 73. 't appears then that such a change is a variation to the contract and re uired to be priced as a variation under *lause 7:. The relationship between *lauses 73(8! and 7@(:! is not clear. &ome guidance is given in a number of cases see the article Pa!ment * 4aluation of 4ariations5 and a legal commentary on the decided cases 6enr! Boot and 7eldon *lause 88(3!(b! provides that increased *ontractor to an extension of time. uantities under *lause 73(8! is one of the events which may entitle the

#22 2nd #dition 1ptions B and ( include a bill of uantities and is in traditional form. Mistakes in the measure are corrected and are dealt with as compensation events, and changes in uantities which are not minimal are also compensation events. The =** :nd =dition does not define the *ontract. The *ontract (ata /art Two which contains the contractors offer defines bill of uantities as a document identified by the contractor, for 1ptions B and (. *lause 77.3 provides that information in the bill of uantities is not 9orks 'nformation or &ite 'nformation. &ince the definition of 9orks 'nformation is that it specifies and describes the 9orks, this provision effectively creates an order of precedence between the 9orks 'nformation and the bill of uantities in defining the 9orks. The bill of uantities is intended to be solely a means of defining the price for the 9orks. *lause 33.:(:3! defines the /rices as the lump sums and the amounts obtained by multiplying the rates by the uantities for the items in the bill of uantities. *lause 33.:(:7! of 1ption B defines the /rice for 9ork (one to (ate based on the uantity or proportion of work carried out and the rates and prices in the bill of uantities. # standard method of measurement is not stated, but is re uired to be specified in the *ontract (ata /art 1ne together with any departures. #ny mistakes in the bill of uantities which are departures from the method of measurement or are due to ambiguities or inconsistences are corrected by the /ro.ect Manager, and each correction is a compensation event under *lause @6.@. The effect of differences between the total final uantity of work done and the uantity for an item in the bill of uantities at the *ontract (ate are dealt with in *lauses @6.8 and @6.7. *lause @6.8 provides that a difference is a compensation event if it causes the #ctual *ost per unit of uantity to change and if the change in the Total price of final total uantity multiplied by the rate is more than 6.3< of the total of the /rices at the *ontract (ate. 'f the difference delays *ompletion then it is a compensation event under *lause @6.7. *lause @;.A allows the rates and lump sums in the bill of uantities to be used as a basis for assessment of #ctual *ost and resulting +ee for the assessment of compensation events, but only if the /ro.ect Manager and *ontractor agree. "28 ,--3 The )*T 3AA> +orm /rivate with Quantities is the traditional route in the Building 'ndustry to construction with a Bills of Quantities. The form provides a number of different pricing mechanisms, including #ctivity &chedule, the use of #pproximate Quantities, the use of /rovisional &ums and *ontractors &tatements. The second recital to the #rticles of #greement, states that the *ontractor has supplied the =mployer with a fully priced copy of the Bills of Quantities, and that document is referred to as the *ontract Bills. The third recital states that the *ontract Bills have been signed by or on behalf of the parties. *lause 3.; defines the *ontract (ocuments to comprise the *ontract Bills, the *ontract (rawings, the #rticles of #greement, the *onditions and the #ppendix. There is no reference to a &pecification. *lauses >.3.3 provide that all materials and goods shall be of the kinds and standards described in the *ontract Bills, and workmanship also is to be the standard described in the *ontract Bills. *lause 3;.3.: anticipates that obligations or restrictions in respect to access to the site or use of any specific part of the site, limitations of working space, limitations of working hours and the execution or completion of the work in any specific order, are to be stated in the *ontract Bills. #ny change is a variation. *lause :.:.3 provides that nothing contained in the *ontract Bills shall override or modify the application or interpretation of that which is contained in the #rticles of #greement, the *onditions or the #ppendix. This will be

strictly applied. 'n #nglish ndustrial #states 2or0oration $ 9eorge 7im0e! % 2o )td ',-72( 2A 7B)1,2. the form of contract was the )*T 3A@; +orm in which *lause 3:(3! was in similar terms to *lause :.:.3)*T 3AA>. =nglish 'ndustries wished to rely on two special provisions in the bills of uantities in interpreting the contract. 1n settled principles the printed conditions would have taken second place to the special insertion in the bills. 't was held that *lause 3: re uires the court to either disregard or even reverse the ordinary and sensible rules of construction. 't was held that the bills should be taken into account in construing the contract, or at least in order to follow what was going on, but if any conditions were inconsistent with the bills, the bills would be re.ected. That was not found to be the situation in this case, the various provisions could be reconciled. 'n Mood! $ #llis ',-3:(2A 2.B)1;< the form of contract was also )*T 3A@; and *lause 3:(3! again in issue. 't was held that *lause 3:(3! did not prevent the provisions in the Bill of Quantities from being incorporated into the building contract. &ince in this case there was no uestion of a particular provision overriding, modifying or affecting the conditions, there was no reason why it should not take effect in the normal way. The use of a bill of uantities does not mean that the works are sub.ect to re%measure. The )*T +orm with Quantities is a lump sum contract with special remedies relating to the preparation of the *ontract Bills and the uantities therein. *lause :.:.:.3 provides that sub.ect to *lause :.:.3, the *ontract Bills are to have been prepared in accordance with the &tandard Method of Measurement of Building 9orks 4 th =dition, unless otherwise specifically stated in the *ontract Bills. *lause :.:.:.: deals with departures, errors and omissions in the *ontract Bills, which are re uired to be corrected and treated as if they were a ?ariation re uired by an instruction of the #rchitect under *lause 3;.:. The departures and errors falling under *lause :.:.:.: are" departure from the method of preparation referred to in *lause :.:.:.3$ error in description of an item$ error in uantity of an item$ omission of an item$ error in or omission of information in an item which is the sub.ect of a provisional sum for defined work. *lause 38.: provides that sub.ect to clause :.:.:.: any error whether of arithmetic or not in the computation of the *ontract &um shall be deemed to have been accepted by the parties. *lause 3;.3.3 defines ?ariation to include alterations or modifications in the uantity of the 9orks. *lause 3;.8.3.3 provides that variations are to be valued under #lternative # which re uires a /rice &tatement or, if not implemented or not accepted, #lternative B which adopts valuation rules based on the rates and prices set out in the *ontract Bills. *lause 38.3 provides that the uality and uantity of the work included in the *ontract &um is deemed to be that which is set out in the *ontract Bills. *lause :.; re uires the #rchitect to issue instructions for any discrepancy or divergence between specified documents including the *ontract (rawings and the *ontract Bills. Bnder *lause :7.8.7.3 such instruction is a 2elevant =vent which may entitle the *ontractor to an extension of time. Bnder *lause :@.:.; any such discrepancy or divergence is a matter which may entitle the *ontractor to claim loss and expense. 'f a uantity for work is identified in the *ontract Bills as an approximate uantity, then all that work is valued as if it was a variation under 3;.8.3.3. 'f the approximate uantity is not a reasonably accurate forecast of the uantity of work re uired, then this is a 2elevant =vent under *lause :7.8.7.38 which may entitle the *ontractor to an extension of time, and is also a matter under *lause :@.:.> which may entitle the *ontractor to claim loss and expense. *lause ;6.: deals with ascertainment of amounts due in 'nterim *ertificates, which is the total value of the work properly executed by the *ontractor. #lthough not stated expressly, the *ontract Bills are the appropriate means to

value the works. 2#2A Blue Form The *=*# Blue +orm is either a lump sum or a measure and value form, to be decided by the Main *ontractor when inviting bids by selection in the Third &chedule. 'f Bill of Quantities are used, then these are identified in the &econd &chedule, usually by extracts from the Bill of Quantities from the Main *ontract, but without prices. The &ub%*ontract 9orks is defined by reference to the documents specified in the &econd &chedule, and the /rice by means of the sum specified in the Third &chedule, *lauses 3(3!(c! and (e! respectively. *lause A(3! provides for the valuation of variations which are to be ascertained by reference to the rates and prices (if any! specified in the &ub *ontract. #ny measurement of a variation made under the Main *ontract is to constitute the measurement under the &ub *ontract, *lause A(;!. 1ther than this statement, no method of measurement is specified. *lause A(8! provides that save where the contrary is expressly stated in the bill of uantities, no uantity stated is to be taken to define or limit the extent of any work to be done. 0owever any difference between the uantity billed and the actual uantity executed is to be ascertained by measurement, and valued under *lause A as if it were an authorised variation and paid under the &ub%*ontract. *lause @(:!(a! provides that the &ubcontractor may be entitled to extensions of time for any ordered variations. This therefore would not appear to include increased uantities. 'f however the increased uantities entitle the Main *ontractor to extension of time under *lause 73(8! of the '*= +orm, then under *lause @(:!(a! the &ubcontractor may be entitled to extension of time. *lause 37 deals with payments and *lause 37(;! provides that the value of work is to be determined in accordance with the rates and prices specified in the &ub *ontract. D=M>, #rticles 3.: provides that the &ub *ontractor shall carry out and complete the &ub *ontract 9orks shown in the &ub *ontract (ocuments and sub.ect to the &ub *ontract (ocuments. *lause 3.; of the *onditions defines the &ub *ontract (ocuments as &ub%*ontract (1M-3 and the Cumbered (ocuments. The Cumbered (ocuments are referred to in the +irst 2ecital of the #rticles and are re uired to be listed in the #ppendix /art :. The &ub *ontract is a re%measure and value, if #rticle :.: has been selected and completed, as opposed to #rticle :.3. 'n that case *lause 37.: applies and price of the &ub *ontract 9orks is sub.ect to complete re%measurement. *lause 34.3 also applies and re uires measurement of the work to be valued in accordance with the rules in *lause 34.; which use the bill rates and prices as the basis for valuation. 9hether or not &ub *ontract is measure and value, if the &ub *ontract includes a bill of uantities in the Cumbered (ocuments then *lause 3>.3.3 provides that unless otherwise specifically stated they are to have been prepared in accordance with the &tandard Method of Measurement of Building 9orks, 4 th =dition. *lause 3>.3.: provides that any departure from the method of preparation or any error in description or in uantity or omission of items, then such departure or error or omission shall be corrected and treated as if it were a variation re uired by a direction of the *ontractor. *lause 3@.: provides that where the &ub *ontract (ocuments include schedules of rates or prices for measured works, then they are to be used in the valuation of variations under *lause 3@.;. *lause 3@.;.;.3 provides that where bills of uantities are a &ub *ontract (ocument, measurement is to be in accordance with the same principles as

those governing the preparation of the bills as referred to in *lause 3>. *lause 3@.8.3 provides that where bills of uantities are included the Cumbered (ocuments, if the uantity for work for which an #pproximate Quantity is included in the bills is more or less than in the bills, and this substantially changes the conditions under which any other part of the &ub *ontract 9orks are executed, then that affected part is to be treated as if it was sub.ect to a direction from the *ontractor re uiring a variation and valued in accordance with *lause 3@.;. 'f the uantity of an #pproximate Quantity in the bills of uantities is not a reasonably accurate forecast of the uantity of work re uired then it is a 2elevant =vent under *lause 33.36.38 which may entitle the &ub *ontractor to payment of direct loss and-or expense. # discrepancy between the *ontract (rawings and-or the *ontract Bills and-or Cumbered (ocuments is also a 2elevant Matter. *lause :3.> provides for the #scertained +inal &ub *ontract &um to include the amount of valuation under *lause 34 were *lause 37.: applies.