Some of you may have noticed that my background is in Quantity Surveying and specialized in commercial issues and disputes.
Even though I don’t provide this service, I still have discussions with architects and friends in the industry regarding their projects.
One story ticked me off as to how a contractor was swindling a poor homeowner.
Some background on the project
The project is based in Central London, and it is for the renovation of a £5million 2 storey flat. I wasn’t given the address, but I was given a brief of the issue and had to review the proposal from the contractor.
Some high-level details:
- The main architect had a good relationship with the contractor
- My friend was working with a different interior designer for the design
- The price came around £1.9m for the renovation
- The procurement route was traditional as some of the works had specialist (I’ll explain this in a future post)
- Some of the M&E design was not done yet so it was passed on to the contractor as a contractor’s design portion which they put in as a provisional sum.
Issues I found when looking at the price
- The price was hard to understand as it was not using any standard method of measurement. That to me is a big red flag.
- As some of the design for the Mechanical and & Electrical was not complete, you would expect some provisional sum for it. However, it was not defined. Another red flag.
- The listed 10% of the contract value as a Provisional sum but when I totaled up the additional comments throughout their pricing sheet, it came up to 45%. All of which were not defined. Another red flag. Most of the comments were related to structural design not complete. I was a bit confused as the structural engineer already provided the drawings for all of the necessary items.
I flagged these to my mate.
Why it was a problem
As a homeowner, you won’t be aware what a provisional sum is, and you could expect a reasonable amount on certain projects but! not 45% of the contract value.
You can learn more about the provisional sum on this post. But in brief…
having a provisional sum in the contract means that
- It’s not part of the contract to be delivered by the contractor, and you need to formerly instruct them
- the price will definitely change because the provisional sum has not been defined. Even the NEC contract
- As the client, you are taking the risk of the provisional sum activity
- You will need to pay more if the provisional sum is instructed as it will delay the program of works. This goes back to point 1. As the item of work is not part of your contract.
Need more information about provisional sum? Read this
… or still confused?
think of provisional sum as an item on a quote that is just a really rough estimate as the person who gave you the quote doesn’t know how much it will cost because he doesn’t enough information. So he took an educated (not really) guess of how much it costs.
Problem is that you’ll be taking a lot of risk on the item he couldn’t quote properly.
A good way to avoid this is to get
- a complete design of the property
- a Quantity Surveyor to create a bill of quantity for you
- to instruct the contractor to price it against a standard method of measurement such as the NRM 2 (New Rules of Measurement 2). This can potentially help consultants later in your project understand what has been priced exactly.
- or get the contractor to go on a design and build contract where they take the risk of the incomplete design.