Page 230 - Civil Engineering Project Management, Fourth Edition

Civil Engineering Project Management
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17.4 Rates for ordered variations
Under the ICE conditions Clause 52 a proposed variation can be the subject
of a quotation from the contractor either before or after it is instructed. If a quota-
tion is not accepted an ordered variation can be valued in one of three ways:
• ‘where the work is of similar character and carried out under similar condi-
tions to work priced in the bill of quantities it shall be valued at such rates
and prices contained therein as may be applicable’; or
• if not ‘the rates and prices in the bill…shall be used as the basis for valu-
ation so far as may be reasonable failing which a fair valuation shall be
made’; or
• the engineer can order the work to be carried out with payment to be made
by dayworks if he thinks this necessary or desirable.

In addition, if the effect of any variation is such that any rate in the contract
is ‘rendered unreasonable or inapplicable’ the engineer can fix such rate as he
thinks ‘reasonable and proper’. This allows the engineer to look at the effect of
any variation on the contract as a whole and to allow modification of other rates
if necessary. Hence if a variation has the effect of extending the time to com-
plete the works, any time-related or similar preliminary rates can be adjusted
to allow for the consequence of instructing the change.
Where bill rates do not directly apply, an appropriate bill rate can some-
times be deduced by extrapolation of quoted rates. For example, if rates exist
for trench excavation not exceeding 1.5 m depth and not exceeding 2.0 m depth,
a rate can be extrapolated for not exceeding 2.5m depth. However, this simple
approach is not always possible because rates often exhibit discontinuities.
Thus if there are rates for 100 and 300mm diameter pipelines, the rate for a
200mm pipeline may not lie halfway between them. To fix a new rate it may be
necessary to break it down into its component parts. The price of the pipe and
its weight for handling and laying may not be pro rata to diameter because of
increased wall thickness; and the trench excavation width may be virtually the
same for a 200mm pipe as for a 100mm pipe. A rate derived from build-up of
prices should be compared with one derived by deduction or addition from bill
rates. The latter may prove fairer to both parties because bill rates will include
the addition chosen by the contractor for overheads, risks and profit.
A problem arises when a bill rate or price which could be used for extra
work appears unjustifiably high or low, either by error or, in the case of a high
rate, perhaps by intention. One party or the other may feel it is unjust to use
such rates or base new rates on them for varied work. However, it can be
pointed out that the use of existing rates is what the contract requires, and other
rates in the contract must have been correspondingly low (or high) to arrive at
the tender total. Even when existing rates cannot be used directly, using them
as a basis for new rates, or adopting similar levels of overhead and profit can
be seen to give a fair result under the contract.