It is commonly understood in the
construction industry that unit price contracts entitle the contractor
to payment for the actual executed quantities. However, a question
arises as to whether this statement holds when the contractor fails to
undertake his duty to seek clarification for patent omissions in the
bill of quantities during the tender stage, which can result in these
omissions surfacing as changes during the construction stage with a
possibly unanticipated and significant cost overrun borne by the
employer. All too often, in this case of clash of principles between
the contractor’s right under a unit price contract for compensation of
actual quantities, including those resulting from patent design
omissions, and the principle of not compensating the contractor due to
his failure to seek clarification of a patent design omission, there is a
heated debate in the industry between employers (including their
representatives and project management firms) and the contractors.
Contractors argue that the obligation to provide a complete design rests
with the employer and the action of not compensating the contractor for
actual quantities executed for any cause confuses the delineation
between a unit price contract and a lump sum contract. Employers, on
the other hand, argue that the contractor gained an unfair advantage by
not identifying patent omissions during the tendering stage and
consequently submitting a non-responsive and misleading tender price.
Although this clash of principles is often encountered in the construction industry worldwide, it is seldom discussed in the literature. This paper sheds light on this topic and elaborates on the two opposing views. Case studies from three major projects in Egypt are discussed to illustrate the complexities of this scenario and how it was handled on each project. The paper concludes with a number of considerations and recommendations to construction practitioners that can contribute to a balanced and fair outcome to the contracting parties.
Although this clash of principles is often encountered in the construction industry worldwide, it is seldom discussed in the literature. This paper sheds light on this topic and elaborates on the two opposing views. Case studies from three major projects in Egypt are discussed to illustrate the complexities of this scenario and how it was handled on each project. The paper concludes with a number of considerations and recommendations to construction practitioners that can contribute to a balanced and fair outcome to the contracting parties.