Contract types - Firm price vs Fixed. Lump Sum

Feargalpatrick

I'm doing the RIAI exams in a month and although I am getting a good grasp of the details of the forms of contract Im struggling with pinning down a few general definitions im my mind and was hoping somebody could help me out.

Firstly what is a Lump Sum contract? When somebody says it is a fixed price lump sum contract, what is the significance of the lump sum bit. I have had a few conflicting definitions.

Secondly, what is a firm price? I know fixed price is where clause 36 on wage and price variations has been struck out. Is this the same?

My notes say that a blue or yellow form is for use on a firm price lump sum contract. Am i right in saying that a yellow or blue form is not fixed unless clause 36 is struck off and thus, according to my notes firm price is not the same as fixed price?

I would appreciate any help on this.

DOCARCH

Hope this makes sense, but both the RIAI yellow and blue forms of contract are fixed price contracts but are fixed price contracts subject to (valid) variation and/or omission. Deleting Clause 36 only eliminates one of the variables in terms of variation.

I have never heard of an RIAI contract being reffered to as a 'lump sum contrcat'? I am sure this is the same as it being referred to as a 'fixed price contract'.

The only time I have heard the phrase 'firm price' being used, in connection with the above contracts is when, prior to signing a contrcat, any provisional sums that a contrcaor my have included in their tender are firmed up on. E.g., a contractor might submit a tender with a provisional sum say of E 10k for electrics. If that contrcator is to be considered, you may ask for that provisional sum to be firmed up on, i.e. to become an actual cost (rather than provisional).

kkelliher

DOCARCH wrote: »

Hope this makes sense, but both the RIAI yellow and blue forms of contract are fixed price contracts but are fixed price contracts subject to (valid) variation and/or omission. Deleting Clause 36 only eliminates one of the variables in terms of variation.

I have never heard of an RIAI contract being reffered to as a 'lump sum contrcat'? I am sure this is the same as it being referred to as a 'fixed price contract'.

The only time I have heard the phrase 'firm price' being used, in connection with the above contracts is when, prior to signing a contrcat, any provisional sums that a contrcaor my have included in their tender are firmed up on. E.g., a contractor might submit a tender with a provisional sum say of E 10k for electrics. If that contrcator is to be considered, you may ask for that provisional sum to be firmed up on, i.e. to become an actual cost (rather than provisional).

Not 100% correct

RIAI yellow form of contract is a contract where the quantities in a BOQ form part of the contract. It is not a fixed price contract in that any change in quantity must be accounted for in the contract.

RIAI blue form of contract is where the quantities DO NOT form part of the contract and therefore once an item is shown on a drawing or spec or implied by same it is deemed to be included in the Contract sum and no price increase is allowed.

Clause 36 of the contracts relate to Wages and price variaions. All contracts allow for fluctuation in these costs ie inflation. In order to have a fixed price contract you would need to delete clause 36.

In simple terms a "Fixed Price Contract" is a contract signed under a blue form of RIAI with Cluase 36 deleted therefore the only changes to the contract can be variations by instruction

highkings

KKelliher
Re the blue form of contract - You say that the blue form is where the quantities do not form part of the contract. Should a bill of quantities still be issued with the tender documents though or is it the responsibility of the tendering contractor to draft his own boq?

kkelliher

A bill of quantities can be issued as a tender document but it is the responsibility of the contractor ot ensure that the quantites and items measured cover the scope of works required by the drawings and specification. The bill of quantites assists in getting a clearer comparison between contractors and is a very benificial tendering method.

In practice contractors price the bill and if they are in the running they will then check the quantities and raise any issues that may arise out of same.

jblack

highkings wrote: »

KKelliher
Re the blue form of contract - You say that the blue form is where the quantities do not form part of the contract. Should a bill of quantities still be issued with the tender documents though or is it the responsibility of the tendering contractor to draft his own boq?

You will often find a schedule of rates with the blue form, this may be used to base the pricing of variations. In theory a blue form is not suitable for projects over €500k but this is dependent upon a number of factors not just limited to complexity.

If you want to investigate the effect of fixed price contracts and how they differ from re-measure then have a look at a few cases, the seminal one being

Sharpe v San Paulo Brazilian Railway Co (1873) LR 8 Ch App 597

fclauson

kkelliher wrote: »

A bill of quantities can be issued as a tender document but it is the responsibility of the contractor ot ensure that the quantites and items measured cover the scope of works required by the drawings and specification. The bill of quantites assists in getting a clearer comparison between contractors and is a very benificial tendering method.

In practice contractors price the bill and if they are in the running they will then check the quantities and raise any issues that may arise out of same.

and remember ANY variation in spec or drawings will mean a variation in price.

Supertech

jblack wrote: »

In theory a blue form is not suitable for projects over €500k but this is dependent upon a number of factors not just limited to complexity.

Is it not the small works form which covers works up to €500,000 ?

jblack

Small works does also but I'd be wary of using it for anything over €100k