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LSTK Contract

6 replies [Last post]
Thu, 2010-04-29 03:43
Raphael Adeyemi, ...
User offline. Last seen 10 years 11 weeks ago. Offline
Joined: 23 May 2007
Posts: 51
Groups: Petro-Chem / Oil & Gas
Dear All,

I have a Colleague that he has a project under LSTK (Lump Sum Turn Key) contract that include a BOQ. The project is 90% completed now and the Supervising Consultant is about to pay the Contractor based on re-measurement which will bring the contract sum down by 91%.

There is no provision for remeasurement in the contract as it based on lump sum and the Contractor is responsible for the final design while the approval lies with the consultants.

I am of the opinion that the BOQ is meant to arrive at the Lump sum contract at the time of tender and also to admnister any contract change orders in post contract administration.

The funny thing is that the consultant based his monthly valuations on the actual quantities executed within the period.

My friend new additional advise as I have advised him to reject the Consultant Anticipated Final Account based on measurement.

I waant your comments you guys

Ciao

Rafel
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Replies

Tue, 2010-06-22 07:01
#1
mimoune djouallah
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Joined: 14 Oct 2006
Posts: 388
Groups: Petro-Chem / Oil & Gas, Spider Project Team
hi all

"The funny thing is that the consultant based his monthly valuations on the actual quantities executed within the period"
actually i find this approach very practical, and where i work it is a common practice. even in the case of a lump sum contract, sure when you finish the work you will get the 100 % of the original amount.

what’s about payment based on intermediate milestone ? you have to complete a whole area to be payed. that’s what i call funny ;)

best regards
Mimoune
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Mon, 2010-06-07 06:42
#2
Karim Mounir
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Joined: 5 Apr 2006
Posts: 314
Groups: None
we have a similar "funny" cl. in a LS Contract that says:

Employer shall reserve the rights to add/omit any items and/or cancel any parts of Works from the Contract and the sum incurred thereby shall be adjusted from the total price accordingly.

Don’t understand how to revise a LS total price Contract after award, and the most funniest thing is that the Employer utilized this cl. and deleted nearly 15-20% from the scope till now!

Karim
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Sat, 2010-05-01 03:38
#3
Raphael Adeyemi, ...
User offline. Last seen 10 years 11 weeks ago. Offline
Joined: 23 May 2007
Posts: 51
Groups: Petro-Chem / Oil & Gas
Thank you all.

What I meant by 91% completion is the current progress status.

All your advices are noted and the CoC will be followed

Warmest regards
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Thu, 2010-04-29 15:21
#4
Samer Zawaydeh
User offline. Last seen 5 years 38 weeks ago. Offline
Joined: 3 Aug 2008
Posts: 1664
Groups: Civil Engineering, Regional Representatives
Dear Raphael,

We need to repeat the two golden rules;

1. Read your conditions of Contract.
2. Documentation of any extra works.

What Gary and Mike said is correct. The Lump sum amount should be paid in full.

I would like to bring to your kind attention that it seems to me that your consultant is doing something wrong in reducing your invoiced amount by changing your contract amount. This is not up to them. They can’t change the Contract amount.

I woul recommend that you start applying your conditions of contract and seek professional expert opinion in your industry to serve on dispute resolution if it arise in the future.

With kind regards,

Samer
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Thu, 2010-04-29 10:17
#5
Mike Testro
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Groups: Building Information Modelling, Content Moderators, GPCCAR Editors
Hi Gary

The phrase "by 91%" should probably be "to 91%".

Who prepared the BOQ? - If it was 10% underpriced would the consulant pay the extra?

You are right - if there is no remeasurement clause then there is no remeasurement.

Best regards

Mike Testro
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Thu, 2010-04-29 06:24
#6
Gary Whitehead
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Joined: 24 Mar 2009
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Groups: Building Information Modelling, Content Moderators, Petro-Chem / Oil & Gas, The GrapeVine
Can I just check my understanding here: Lump Sum contract was let, 90% of the job is complete but based on re-measurement, less than 10% of the original BOQ has been used? How can this be possible?
If this is the case, I completely understand why the consultant would be keen to avoid overpaying by a factor of ten.

Nevertheless, it seems clear that if there is no provision for re-measurement in the contract, then re-measurement cannot be used to determine payment.

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