HOW DOES A CONTRACTOR OR SUBCONTRACTOR RECOVER THE EXTRA COSTS INCURRED WHEN VARIATIONS OR CHANGES IN DESIGN OR MATERIALS DISRUPT THE REGULAR PROGRESS OF THE WORK?
It may well be that a Contractor who has undertaken to erect a building according to certain plans and specification will find that instructions involving changes to the design or materials will impose upon him extra costs for which he cannot be properly remunerated by the application of revised unit costs for the work performed.
The issuing of such instructions or, sometimes worse, the delay in issuing such instruction can have a disruptive effect on progress on site; it can lead to work being performed out of the planned sequence, delays, uneconomical performance of work, loss of productivity and many other costly consequences.
The Architect or Principal Agent is normally given very wide powers to order extra work, to omit work or to change the nature or character of the works and it has long been recognised that these arbitrary powers ought not to be used to the financial detriment of the Contractor or his Subcontractors.
In the JBCC Series 2000 Principal Building Agreement and it's related Sub-contract agreements, clause 32.5 comes to the rescue and provides Contractors and Subcontractors with the right to recover any expense or loss for which reasonable compensation has not been made in the revaluation of the unit prices for the varied work.
The ability to recognise situations quickly where such loss or expense is being incurred is essential because notice in writing must be given in terms of clause 32.6 within forty working days of becoming aware of the event, otherwise the time bar operates to deny the right to compensation.
Once this notice has been given, the time bar is overcome, and the Contractor or Subcontractor can now take their time in carefully quantifying their claim, which should encompass all the loss and or expense which has been incurred and for which they have not been recompensed under any other provision in the contract.
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