Question 6

Mistake was made in rate for 50mm thick concrete blinding is RM 10 oeer m3. Item
was not rationalized during contract documentation. However, original quantity is
BQ is 100 m3 but re measured quantity is 2,000 m3. The contractor submitted a
loss and expense claim for RM50,000 and also claimed for revised rates.

According to clause 11.6(b) stated that where work is of similar character to work as set out in
the Contract Document which is executed under similar condition but there is a significance
change in quantity of work carried out, the rates and prices in the Contract Documents shall be
the basis for determining the valuation which include a fair adjustment in the rates to take into
account such difference. Therefore, if a variation in re-measured quantity, the contractor is
allowed to claim for the additional quantity with a fair adjusted rate.

Despite that, in case law Henry Boot Construction v Alstom Combined Cycle Ltd [2000]
BLR 247, the court held The contract rates were sacrosanct, immutable and not subject to
correction. The fact that a rate of price, which would otherwise be applicable, may be considered
too high or too low is immaterial. The court concerned the important of rate stated in contract
and cannot simply be avoided when one of the parties dissatisfied with the rates. The court of
Appeal judged that the contractor will be held to his rates in the contract for both original and
varied work.

In addition, the court of Aldi Stores Ltd. V Galliford quoted the judgment from case law Henry
Boot Coontruction v Alstom Combined Cycle Ltd [2000] BLR 207. Both cases applied the
similar principle, but had different opposite results. In Henry Boot case, the use of bill rates
resulted large profit to Henry Boot due to the high bill rate. While in Aldi Stoes case, the use of
bill of quantities resulted a significance loss to him. Although the court sympathy for the
Galliford incurred a great loss in work executed, the court still held that the rules of valuation
must be adhered to, and bill rates must be used if the work is similar character to work in priced
document.

It is dominant that the consultant carried out rate rationalization during the tender stage. Pricing
error made by contractor should be corrected before the contract formed. Failure in identifying
the mistake during tender stage will cause serious consequences to the contractor. The contractor
may have to bear a great loss due to the irrationalized rate prized during the contract
documentation as being stressed in case law Henry Boot Coontruction v Alstom Combined
Cycle Ltd [2000] BLR 207.
Case law Meigh & Green v Stockingford Colliery Co Ltd (1992), the contractor is required
and agreed to construct two cottage cording to plans and bill of quantities. However, the quantity
of brickwork is underestimated during tender stage. The contractor did not visit the site and
check for quantities before contract formed. Therefore, the court held that they were only entitled
to claim for extra brickwork which is necessary to carry out the work with the original unit rates
state in the bill.

From the above scenario, the contractor is only applicable to claim for extra quantity with said
original unit price. According to the contract, the contractor is applied to pay for RM 1,000 (RM
10/m3 x 1,000m3) for 50mm thick concrete blinding. Due to the variation in quantity in remeasured work, the contractor is only allowed to claim for 1,900m3 for original unit price which
is RM10 per m3. The total cost claimable is RM19, 000. As the result , the contractor will be
endure a windfall loss in acquiring extra labours, formworks and transportation of material costs
to meet the time frame of the project.

However, according to clause 11.7, the additional expenses incurred when carried out variation
work is being paid. In practice, the contractor would have executed additional work. The
additional expenses claimed can be the additional compaction test for concrete and rental of the
heavy equipment used such as truck mixer, concrete pumps and boom loader used in
constructing the additional work.

In order to claim for additional expenses, the contractor shall submit in writing his intention to
claim for such additional expenses together with the initial estimated of the claim for such
additional expenses together with an initial estimate if the claim duly supported with all
necessary calculations according to clause 11.7(a). Such notice must be given within 28 Days
from the date of Architect Instruction giving rise to his claim. And, based on clause 11.7(b), the
contractor shall send complete particular of his claim for additional expenses together with all
necessary calculation to the Architect and Quantity Surveyor within 28 Days of completing such
Variation. If the contractor fails to do so, he has waived his right to claim for such additional
expenses.

As mentioned in the question, the contractor has the intention to claim for the loss and expense
of RM50, 000 due to mistake made. In PAM 2006 according to clause 24.1, only when the
regular of the work is materially affected expressed in clause 24.3, the contractor is allowed to
claim loss and expense. In this situation, the additional quantity for 50mm thick concrete
blinding calculated in as built drawing is not compliances to any of the principle stated in clause
24.3. Therefore, the contractor may fail to claim for loss and expense and extension of time. As
the mistake is caused by the consultant in irrationalized the quantity as well as the contractors
failed in checking the specification before signing the contract. As a conclusion, loss and expense
and extension of time is not allowed in the current situation.