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A lump sum contract may be based upon bills of quantities which are priced by the
contractor, in competition or negotiation. This does not destroy the contract’s lump
sum nature, as the priced quantities serve as a subsidiary analysis of a total price
which is primary. This is so even if the quantities are approximate and the proper
lump sum is not known until final settlement.
When the quantities are firm, it is necessary to have firm design information, so that
overlapping of the design and construction stages is again not possible. On the other
hand, the exercise of complete analysis to produce quantities does throw up most
design snags and gaps and so saves delays and disturbances during construction. It is
suggested that the process often forces designers to make up their minds at an earlier
stage than would otherwise be the case, even though they may revise some of their
decisions later, i.e. issue variations.
The provision of quantities saves each tenderer having to produce his own, even
though he would do this in less sophisticated form, when only he has to understand
them. These costs in unsuccessful tenders must be recovered in those which are
successful.
Tenderers do not need to include allowances for errors in the quantities, as these will
be adjusted later – in either direction. Pricing can therefore be keener, even though
the client is liable for the adjustments – but in either direction. When the contract is
running, quantities provide much detail for pricing variations, making interim
payments and calculating fluctuations amounts. This is true even for interim
payments, where contracts do not specifically require the quantities to be used in
supporting calculations.
They also provide data for cost control during progress and for cost planning and
other estimating on future projects. It is also possible for tenderers to distribute
money within bills in such a way as to suit their own purposes, but not to show the
‘true’ distribution for contract purposes. This problem is not unique to bills of
quantities.
Often firm quantities are used when schemes are not fully designed. The quantities
then contain allowances which are dressed up to look more firm than they really are.
This is an abuse of the system. Used properly, the system gives quite close cost
control, but cannot ensure that later design changes and other disruptive features do
not occur at the wrong time, so putting costs out of control.
Firm quantities suit the larger schemes. Below some threshold, they are too
cumbersome and expensive. For extremely large schemes, the time needed for firm
quantities may be excessive, while the design may be developing at differing speeds
between sections of the whole. For innovative work, major decisions may not be able
to be made until some time after construction has begun. In these situations and
whenever drastic variations are foreseen as inevitable, it is better to settle for
approximate quantities and remeasurement.
