The contractor submitted a final claim for a variation order totalling RM55,000 for excavating 100m3 of rock. The original bill of quantities stated 10m3 of rock excavation priced at RM50/m3. However, there was a mistake in the original pricing and the quantity was significantly understated. As such, the quantity surveyor can value the variation using fair market rates to compensate the contractor for additional expenses incurred due to the mistake and change in quantity, as allowed for under the contract terms.

1. SCHOOL OF ARCHITECTURE, BUILDING &
DESIGN
BACHELOR OF QUANTITY SURVEYING (HONS)
PROFESSIONAL PRACTICE II
(QSB60904)
CHAN YI FUNG 0323057
FARAH AIDA BINTI SHAHAR SHAM 0322962
KIEW CHEE YUAN 0323297
LIEW WEI ZHEAN 0331225
NURAFIQAH HAJI ABD ZARIFUL 0321196
TAN KEN RIC 0318631
YEE JYH LIN 0322408
LECTURER : SR EDDIE LIM SEK CHEON
SUBMISSION DATE : 29th OCTOBER 2018
Question 1

2. The Letter of Award for the above works was issued for RM 81,200,000.00 based on
the tender sum submitted by the Contractor. As you were preparing the contract
documents for binding and signature, you found some errors in the rates for aluminium
windows works submitted by the Contractor, which were very low. Kindly advise the
actions that you will take.
Answer:
Clause 13.1 states that the Contract Sum shall not be adjusted or altered in any way
whatsoever, other than in accordance with the express provisions of the Contract. Any
arithmetical errors or any errors in the prices and rates shall be corrected and/or
rationalised by the Architect or Consultant without any change to the Contract Sum
before the signing of the Contract. This means that the arithmetical error or other human
errors can be altered under the circumstances that the contract sum doesn’t get
affected.
As a consultant QS i would advise to correct any errors done in the rates for aluminium
windows by the contractor. This is still possible before binding and signing of any
contract documents. After rationalizing the rate according to the market, and with the
consent of the contractor, the agreement should be fairly dealt to all parties. One of the
ways a contractor can make extra money is by a method call front loading. This method
will only reduce the risk of the supplier but increases the risk for employer if the
construction does not proceed. For this case of the errors in rates for the aluminium
windows works being slightly low, after rationalizing, the rates should fall into a
reasonable rate.
Based on a case law of Sist Construction v State Electricity Commission of Victoria
[1982] VR 597 of 606, the contractor priced lower rates on the item where they believe
that the actual quantities are likely to be less than the quantity stated in BQ. Court held
that the contractor has to act reasonable when pricing the BQ and it is necessary for the
consultant to rationalize the BQ. The reason for rationalizing the quantities is so that it
can avoid any intentional and unintentional errors of the rates by the QS.
Question 2 (a)(b)

3. In accordance with clause 30.10 of the contract, the contractor duly submitted his Final
Accounts within 6 months after the issuance of the Certificate of Practical Completion.
You are then required to assess this application and prepare the Final Account for the
apartment project based of the following valuations and adjustments made to the
Contract Sum:
The Architect had granted the Contractor’s first application for extension of time and
approved additional insurance premium amounting to RM 30,000.00 in accordance with
clause 24 of the contract due to the delay in the completion of the works caused by the
Employer’s late decision on the toilet design.
In his second application for extension of time, the Contractor submitted an an
application for extension of time due to exceptionally inclement weather and a loss and
expense claim for RM120,000.00 in his Final Accounts to you. The Architect approved
the extension of time as per Clause 23.8.
Answer:
Pam 2006 with quantities stated that contractor need to submit all necessary document
within 6 months after the issuance of the Certificate of Practical Completion for
preparation of final account. Quantity Surveyor and Architect shall complete the final
account within 6 months from the receipt of all document from contractor.
Contractor’s first application regarding additional insurance premium of RM 30,000.00
which accordance with clause 24.4(a) due to delay in the completion of the works
caused by the Employer’s late decision on the toilet design which is clearly employer’s
default, due to employer’s late decision architect will have to issue late Architect
Instruction to contractor regarding the toilet design. RM 30,000 of additional losses shall
be granted to contractor.
Contractor’s second application regarding exceptionally inclement weather which he
incurred losses of RM 120,000.00. Contractor’s second application will not be grant due
to it is not under clause 24.3. Exceptionally inclement weather is a neutral event which
is no either contractor or employer default which contractor and employer shall bared
their own losses.
Nominated sub-contractor’s final account such as lift services, air conditioning services
and electrical services, the nominated sub-contractor final account sum will be add into

4. the final account and the profit will be 2% of the final sum and the attendance will
remain the same as the original amount.
On the other hand, provisional sums for guard house are awarded to the nominated
sub-contractor therefore RM 1,250,000.00 of the nominated sub-contractor final account
sum will be added into the final account and profit and attendance are included as well.
For the amount of profit and attendance for guard house will be 2% each of the final
sum of nominated sub-contractor’s final account.
Question 2 (c)(i)
The contractor had priced RM130,000.00 for the Contractor All Risk Insurance policy in
the Preliminaries Bills. The contractor failed to purchase this insurance when the works

5. commence. The Employer, then, bought and paid for the said insurance for
RM180,000.00 on behalf of the Contractor, for which the Contractor agreed. The
employer wants to recover this cost.
Answer:
Under the contract, it is the contractor’s responsibility to provide and purchase the
insurance. The preliminaries have included this item to be priced by the contractor.
Insurance is one of the most important item in the preliminaries which covers indemnity
for injury to person or loss and/or damage of property and indemnity to the employer.
Based on Clause 18.0 of PAM Contract 2006 (with Quantities), it clearly states the
importance of insurance.
The insurance which must be purchase by the contractor is:
● Contractor’s All Risk commonly abbreviated as ‘CAR’
● and insurance for Workmen’s Compensation or commonly referred to as ‘WC’.
Based on Clause 20.A.1 The insurance policy should be valid up to the Completion
Date and the extended maintenance cover shall be for the Defect Liability Period plus a
further three (3) Months.
Under clauses 20.A.3 stated if contractor makes default in insuring or continuing the
insure as aforesaid, the employer may insure against any risks in respect of which the
defaults has occurred and the amount of premiums and any other cost incurred or paid
by the employer shall be set-off by the employer under clause 30.4.
For this case, the Contractor had priced the insurance for RM130,000.00. Due to some
circumstances, he had failed to secure the insurance on time. The employer then
purchased the insurance on the Contractor’s behalf , however the insurance for the
work as quoted by the insurance company which was agreed by both parties came to
RM180,000.00 which means the Contractor had underpriced for the Insurance
Premium.
In order for the employer to recover his cost, the employer may choose to pay the
Contractor RM130,000.00 during the progress payment first, but set off RM180,000.00
at any time the employer wishes to do so. This means the Contractor bears the extra
cost of RM50,000.00 and it cannot be claimed from the employer. The employer’s right
to set off against this item and any other items is mentioned on Clause 30.4.

6. However, this set off is not to be included in the Final Account. This is based on Clause
30.11(f) which states that this matter shall not be included in the Final Account and are
matters to be resolved separately between Employer and the Contractor.
Question 2 (c)(ii)
Under the Preliminaries, the Contractor is required to provide a black and white
photocopier machine on site for the Resident Engineer’s use but this item was left un-
priced, i.e. BQ item was left blank in the rate/amount column in the contract document.
During the progress, the Architect instructed the Contractor to provide a colour

7. photocopier machine costing RM8,000.00 instead of the black and white one as
specified. Contractor submitted a variation claim for RM8,000.00.
Answer:
According to this situation, the contractor must firstly consider several factors before
claiming for variations. In accordance to Clause 11.1 in the PAM Contract 2006,
“Variation” is defined as the alteration or modification of the design, quality or quantity of
Works. Therefore, in this sense, the Contractor’s claim may be considered a variation
as the change was requested by the Architect. Stated in Clause 11.1 (a) is “the addition,
omission or substitution of any work…” which thusly applies, as stated in the preliminary
that “the Architect instructed the Contractor to provide a Color Photocopier Machine”.
According to Clause 11.6 (c), “where work is not of a similar character to as set out in
the Contract documents, the Valuation shall be at fair market rates and prices
determined by the Quantity Surveyor”. The case is presented as such that the black and
white photocopier machine was not given a price in the Contract Documents; thus, in
order to omit the Black and White Photocopier Machine from the preliminary, the
assigned Quantity Surveyor must determine the price of said item based on fair market
rates and prices.
Moreover, as stated in Clause 11.6 (e), “the rates and prices in the Contract Documents
shall determine the valuation of items omitted. If omissions substantially vary the
conditions under which any remaining items a of work are carried out, the price of such
remaining items shall be valued by under Clause 11.6(a), (b) or (c)”. Since it was
discerned that the Black and White Photocopier Machine stated in the preliminaries
were not priced, the Quantity Surveyor shall omit said item and ascertain or establish
the price of the varied item, in this case the Color Photocopier Machine, with basis on
Clause 11.6(a), (b) or (c).
To summarize and finalize in conclusion, the concerned Quantity Surveyor shall exclude
the price of the Black and White Photocopier Machine as it was not thusly priced on the
preliminaries. Subsequently, the price of the replacement item which in this instance,
the Color Photocopier Machine (RM 8,000.00), must be added with emphasis on fair
market rates and price. The price difference between the two items, which are the Black
and White Photocopier Machine and the Color Photocopier Machine, shall delineate as
the Variation. Finally, the Final Account must include the omission and addition of items
in detail and in accordance to Clause 30.11 (a), the Final Account of Works shall show
all the adjustments engendered in the Contract Sum.

8. Question 2 (c)(iii)
The Contractor had delivered to site all marble floor tiles needed for the lift lobbies as
specified in the contract and construction drawings. However the Architect decided to
use granite floor instead and instructed the Contractor to remove all the marble tiles
from site. The Contractor paid RM50,000.00 for the marble tiles. The Contractor
returned the marble tiles to the supplier but only managed a refund of RM30,000.00.
The Contractor submitted a claim for the loss of RM20,000.00 that he suffered.

9. Answer:
Based on PAM Contract 2006 (With Quantities), Clause 11.1 the term “Variation” means
the alteration or modification of the design, quality or quantity of the works. Supported
with Clause 11.1(c) which states that the removal from the site of any work executed or
materials and goods brought thereon by the Contractor for the purpose of the works
other than work, materials and goods which are not in accordance with the Contract. In
this case, a variation occur because Architect instructed the contractor to remove all the
marble floor tiles as specified in the contract and replace granite floor tiles which means
contractor able to claim for loss and expenses under the Clause 11.1(c).
In order to claim for the loss of RM20,000.00 that he suffered, contractor able to claim
under Clause 11.7 where a Variation has directly caused or likely to cause the
contractor suffer additional expenses for which he would not be paid under any
provisions in Clause 11.6. However, the contractor must claim for such additional
expenses followed the procedure written under Clause 11.7(a) and (b).
Beside this, contractor need to follow Clause 11.8, stated contractor shall keep
contemporaneous records to substantiate all his claims for additional expenses under
Clause 11.7 and shall submit all particulars to the Architect and Quantity Surveyor. All
such documents shall remain available in accordance with this clause until all claims
have been resolved.
Based on Clause 11.9, after the architect certified the amount of Variations and/or
additional expenses claimed by the Contractor under Clause 11.7, the amount shall be
added to the Contract Sum. When an Interim Certificate is issued after the date of
ascertainment such amount shall be included in the certificate.
At the same times, contractor must use his endeavours to prevent further loss because
the duty to mitigate is on the part of the claimant to take all reasonable steps to reduce
the extent of damage or loss suffered as a result of breach of contract. A party cannot
recover for loss that he could have avoided. In our situation, Contractor had perform the
duty of mitigate because he returned the marble tiles to the supplier however only
managed to refund RM30,000.00.
In Final account, under variation work will Additional for the granite tiles price,
Omissions RM50,000 and Additional Expenses Rm20,000.

10. Question 2 (c)(iv)
Mistake was made in the price for excavation through rocks at RM50 per m3. Item was
not rationalized during contract documentation. However, original quantity in BQ is 10
m3 but re-measured as-built quantity was 100 m3. The Contractor submitted a claim for
RM55,000 based on a revised rates of RM550 per m3 for the total quantity of 100 m3.
Answer:

11. According to this case, the significant change of quantity allowed contractor entitled to
claim a valid variation order. Under PAM Contract 2006 Clause 11.1 defined variation
as the alteration or modification of the design, quality or quantity of the Works and
supporting with Clause 11.1(a) which stated that any addition, omission or substitution
of any Work.
For this case, the variation is valued under PAM Contract 2006 Clause 11.6(b) which
the work is carried out in a similar character as set out in the Contract which is to
excavate through rocks and is executed under similar conditions but there is a
significant change in the quantity of work carried out. According Clause 11.6(b) stated
that the rates and prices in the Contract Documents shall be the basis for determining
the valuation which shall include a fair adjustment rates, which mean the Contractor will
only be paid RM50 per m3 as agreed in the Contract Document. On the part of
quantities, Clause 11.6(f) stated in respect of Provisional Quantity, the quantities stated
in the Contract Documents shall be re-measured by the Quantity Surveyor based on the
actual quantities executed. Hence, the Quantity Surveyor shall use the re-measured of
100 m3 as the actual quantities executed to value the work.
Besides, PAM Contract 2006 Clause 13.1 stated that any arithmetical errors or any
errors in the prices and rates shall be corrected and/or rationalised by the Architect or
Consultant without any change to the Contract Sum before signing the Contract.
Comply with Clause 11.1 also mentioned the Contractor should bear the entirely cost of
work if there is any changes intended to rectify any negligence, omission, default and/or
breach of contract by the Contractor. Hence, the Contractor should bare for all the rates
and prices once signed the Contract which include those mistakes and the rates or
prices whether are rationalised or not. In the case of Henry Boot Construction Ltd v
Alstom Combined Cycles (2000), the English Court of Appeal held that the rates and
prices in the Contract should be given full effect notwithstanding that the Contractor has
made a mistake in his tender. Although the Contractor has made a mistake in his
tender, the Contractor is still should bear for all the rates and prices of the Contract
when he signed the Contract.
In this case, although the Contractor is bear for the rates and prices in the Contract
Document. The Contractor can still be able to claim for the additional expenses incurred
under Quantum Meruit or under Loss & Expenses claim to recover his loss. Quantity
Surveyor can consider to value this variation by the fair market rates. For Loss &
expenses claim, the Contractor can claim under PAM Contract 2006 Clause 11.7 stated
that the Contractor may make a claim for additional expenses if the Contractor is not be
paid for the variation under any provisions in Clause 11.6. Other than that, Contractor

12. can also claim under Clause 24.3(k) which stated in the opinion of the Architect is not
reasonably accurate forecast of the quantity of work required. The Contractor can claim
for loss & expenses as the quantities was not rationalised during Contract
Documentation.
As result, the concerned Quantity Surveyor shall value this variation with the rate of
RM50 per m3 for 100 m3 which is RM5,000. The revised claim should transfer into the
Final Account as an adjustment to the Contract Sum. The Quantity Surveyor should
omission the provisional sums of RM500 that stated in original BQ and made an
adjustment of addition RM5,000 into the Final Account as based on PAM Contract 2006
Clause 30.11. Hence, the revised claim for the excavation through rocks is valued as
RM4,500 into the Final Account.