CAN EXPENSE AND LOSS CAUSED BY ISSUING OF CONTRACT INSTRUCTIONS BE RECOVERED BY THE CONTRACTOR?
Clause 32.5 of the JBCC Series 2000 Principal Building Agreement provides the Contractor with the right to recover any extra expense or loss which he suffers arising from the Principal Agent issuing contract instructions or failing to issue contract instruction or issuing them late.
The issue of a contract instruction usually calls for a change of materials or a change of a method of construction or a variation to the design involving additional work.
Clause 32.2 lays down the procedure for pricing this additional work, either using the rates in the bills of quantities, adjusted to allow for varying conditions under which the work is executed or priced at new rates with a 10% markup.
Clause 32.12 calls for the Contractor's Preliminary and General items to be adjusted where these have been affected by extra value of work done or extra time taken to do the work.
Even after the additional work has been valued in this way and the required adjustments to the contract value have been made the Contractor may still be facing a loss situation.
The Contractor has undertaken to carry out the work according to the original contract documents and he may well find that the issue of contract instructions will now involve changes to his methods, sequence of work, and staffing, plant and scaffolding requirements, accompanied by an interference with the normal progress of the works and costly disruption for which he cannot be properly remunerated under the provisions of clauses 32.2 and 32.12.
Clause 32.5 comes to his assistance because it is expressly provided that, if compliance with contract instructions involves expense or loss - which is something quite apart and additional to the cost of executing extra work - beyond that reasonably contemplated by the contract, then the Contractor is to be compensated.
Thus the position is made quite clear. The Employer is entitled, through his Principal Agent, to issue instructions for additional or varied work. The Contractor must comply with any such instruction but, if in doing so he suffers loss or expense not contemplated by the original scheme of work, then he is entitled to be compensated.
In this important respect it is clearly recognised that the arbitrary powers of the Principal Agent to alter the work ought not to be exercised to the financial detriment of the Contractor.
The Contractor importantly, when he finds himself facing a loss and expense situation must give proper notice in terms of clause 32.6 in order to avoid the time barring provisions.
BACK TO LEGAL & CONTRACTUAL FAQS
