Page 17 - Civil Engineering Project Management, Fourth Edition

Civil Engineering Project Management
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1.2 The most widely used contracts for construction
One of the most frequently encountered risks in civil engineering construction
is that the ground conditions met during construction will not be as expected,
because trial boreholes and test pits cannot reveal the nature of every cubic
metre below ground level. This means that quantities of excavation, filling,
rock removal and concrete, etc., for such as the foundation of structures or lay-
ing of pipelines actually found necessary may differ from those estimated.
The risk that the promoter will need changes also arises from the relatively
long time it takes, often 2 years or more, to get a civil engineering project designed
and constructed. During this time it is always possible for newer processes
or equipment to be developed which the promoter needs to incorporate in the
works, or there may be revised forecasts of demand for the project output.
The traditional way of dealing with these risks of change is for the design of
the works to be completed first, and then to produce a construction contract for
which civil engineering contractors are invited to tender. The price bidders ten-
der for such a contract is based on a bill of quantities which lists the estimated
quantities of each type of work to be done, ‘taken off’ (i.e. measured) from the
completed drawings of the works required. Against each item a contractor bids
his price per unit quantity thereof, and these, multiplied by the estimated
quantity of work to be done under each item, when totalled form ‘the Contract
Sum’. This system permits the contractor to be paid pro rata to the amount of
work he actually does under each item, and also eases valuation of the pay-
ment due to the contractor for executing changes to the design of the works
during construction to overcome some unforeseen difficulty or make an add-
ition. The promoter can thus make reasonably small alterations or additions to
the works required during the construction period – provided these are not so
extensive as to ‘change the nature of the contract’.
A standard form of contract using the ‘bill-of-quantities method’, was first
introduced by the UK Institution of Civil Engineers in 1945. This standard form,
known as the ICE Conditions became very widely used, and in the 7th edition is
known as the ‘Measurement Version’. A similar form of contract, known as the
FIDIC Conditions, was developed by the International Federation of Consulting
Engineers for worldwide use.
A basic provision of both these standard forms is that the contract between
the promoter and the contractor for construction of the works, is administered
by an independent third party – ‘the Engineer’ – who has the responsibility of
seeing that the provisions of the contract are fairly applied to both promoter
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and contractor. The Engineer has power to ensure the contractor’s work is as
the contract requires and issues certificates stating how much the promoter is
obligated to pay under the terms of the contract. This avoided the bias that
might occur if either the promoter or contractor decided these matters.

1 ‘The Engineer’ (with a capital E) is used to distinguish the engineer appointed to administrate a contract
for construction under ICE or FIDIC or similar conditions.