Civil Engineering Project Management (4th Edition)

3
Payment arrangements, risks
and project cost estimating
3.1 Methods of payment under different types
of contract
(a) Rates only contracts
These contracts call for tenderers to quote only their rates per unit of work of
different kinds. They are used for work whose quantity cannot be defined in
advance, such as for site investigations, grouting work or the sinking of boreholes.
Any quantities entered in such contracts will be for indicating the amount
of work expected and do not form a basis of the contract.
The tenderer has to ensure that his rates for each item of work carry enough
oncost to pay for his overheads and profit. However, the items listed can
include ‘lump sum’ prices for ‘one off’ costs, such as ‘For bringing and setting
up grouting plant on site’ and so on.
In some overseas countries the government, local government authority, or
public utility may publish its own standard rates for a range of civil engineering
operations. Many of these will be for the provision of labour only, since
pipes, steelwork and steel reinforcement are often supplied by the authority.
Tenderers bid a percentage of the employer’s standard rates to be applied to the
quantities of work set out. Due to inflation and failure to update the standard
rates, the percentages tenderers quote are often well over 100 per cent addition.
(b) Rates and prices for re-measurement contracts
These apply where ICE or FIDIC (or similar) measurement contracts are
used, incorporating a bill of quantities for pricing, as described in Chapter 1