When is bills of firm quantities contract used?

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.