SBQ 3722 PROFESSIONAL PRACTISE III

ADJUSTMENT OF CONTRACT SUM & FINAL ACCOUNT

BySHAZLYN BT. APIUTIMOTHY THOMAS

RUBBY DEAN

QUESTIONS :

1) DESCRIBE THE WORK PROCESS FOR THE SERVICE

2) UNDERTAKES THE PLANNING & ORGANIZING OF ITS SOURCES TO ACCOMPLISH

3) IDENTIFY THE PROBLEMS AND NECESSARY SUGGESTIONS TO IMPROVE

4) MONITORING MECHANISM

ADJUSTMENT OF CONTRACT SUM

& FINAL ACCOUNT

Adjustment of Contract SumThe Certificate adjustments of Contract Sum were introduced for the purpose of adjusting the amount of the contract price. The total contract price shall be adjusted to take into account any additional or lack of the total contract price.

Adjustment of Final AccountFinal account is an accounts that are provided to show the payments that have been made including defects, claimfor damages or extra expenses.Final accounts must be provided as soon as possible after the contractor to meet its obligations under the contract

• Adjustment of the contract sum in the final account falls under several relevant items which is listed in the standard form of contract and conditions

• Sums that are to be Deducted :- a) prime cost sums b) provisional sums c) variations that are omissions d) any other amount that are to be deducted from the contract sum/

• An important part of the contractor’s quantity surveyor’s work is the agreement of the Final Account.

• Both Client’s Quantity Surveyor and Contractor’s Quantity Surveyor to work together to produce an agreed statement of the amount money to be paid at the end of a building contract by the employer to the contractor

The person who is responsible to prepare the Adjustment of Contract Sum and Final Accounta) Contract Managerb) Senior Quantity Surveyor

Duties:c) Re-measurements usually done by the junior Qs.d) Adjustment, VO, Form APK & PHK & negotiation with the

contractor by the Sr. QS.e) Final Account by the Contract Manager

Adjustment of Contract Sum includes :

a) APK – Arahan Perubahan Kerja

b) PHK - Pelarasan Harga Kontrak

c) Provisional Sum

d) Prime Cost Sum

Adjustment of Contract Sum includes

a) APK – Arahan Perubahan Kerja• Continuity of board approval on V.O, APK are required.• Consist of instructions to be carried out by the Contractor • Any claim due to this VO will be highlighted in this form.• S.O and Contractor to signed (if agreed)

b) PHK - Pelarasan Harga Kontrak• After finalized the APK, new contract sum will be adjusted

accordingly• All collective APK will be summarized • Endorsement and agreement from both parties are required

Adjustment of Contract Sum

c) Provisional Sum• For a specific element of the works that is not yet

defined in enough detail for tenderer to price.• Together with a brief description, allows tenders to

apply mark up and costs within their overall tender price.

• The adjustment is made after completion of works and final cost is ascertained. Provisional Sums that are not used shall be deducted from the Contract Sum

Adjustment of Contract Sum

d) Prime Cost Sum• is an allowance that calculated by the consultant for

the supply of work or materials to be provided by a contractor or supplier that nominated by the client.

• The works is awarded to the nominated sub-contractor / supplier. Omit the original PC Sum and add the awarded NSC’s/NS’s contract sum and profit and attendance which is allowed in Contract.

• The final adjustment is made after completion of works and final cost is ascertained. PC Sums that are not used shall be deducted from the Contract Sum.

Adjustment of Contract Sum

e) KKS – Kelulusan kuantiti Sementara• is an allowance that calculated by the consultant for

the supply of work or materials to be provided by a contractor or supplier that nominated by the client.

• The works is awarded to the nominated sub-contractor / supplier. Omit the original PC Sum and add the awarded NSC’s/NS’s contract sum and profit and attendance which is allowed in Contract.

• The final adjustment is made after completion of works and final cost is ascertained. PC Sums that are not used shall be deducted from the Contract Sum.

Example PHK Form

• Pelarasan Harga Kontrak PHK bagi item “ Credit for Material for the Material on Site”.

• Pelarasan harga dinilai mengikut kiraan yang telah ditetapkan.

Example APK Form

• Arahan Perubahan Kerja-kerja tambahan untuk membekalkan Peralatan Elektrik.

Example APK Form• Arahan Perubahan Kerja-

kerja tambahan untuk membekalkan Peralatan Elektrik.

• Permohonan untuk mendapatkan kelulusan Perubahan Kerja.

• Di nyatakan huraian kerja, anggaran perubahan kerja & Penca-punca perubahan kerja.

Preparation of Adjustment Contract Sum

• Total contract price adjustment certificate must be prepared and remove when the total contract price should be adjusted. It covers variation order.

• All items in the certificate must be properly filled• Date is the date the certificate is a certificate signed PP• Calculation detail of the adjustment must be

appended except for adjustments due to changes in work.

• The certificate must be signed by the PP and the original shall be issued to the contractor.

• The contractor have to provide the architect or QS with all documents necessary for the final account preparation not later than 6 months after practical completion. Within 3 months of for the architect or QS to prepare the final account sum and send this to the contractor

• The area to be cover under preparations of Final Account:– Variations– Re-measurement of provisional quantity in the Contract Bills– NSC account– Nominated supplier account– Loss and expense caused by disturbance of the regular process

of the works• It’s about sense of finality to the negotiations leading up to the

agreement of the Final Account between the parties to the contract.

Preparation of Final Account

• If there a doubt about the accuracy of any the original billed items, he can make a request to the QS for work concerned to be measured on-site.

• Sums to be deducted:a) Provisional sums and the value of work for which

approximate quantities are included in contract bills.b) Variations that are omissionsc) Amounts allowable to the employer under the fluctuations clausesd) Any other amount that is required by the contract to be

deducted from the contract sum.

Preparation of Final Account

• Sums to be added:

a) Total amounts of nominated subcontracts finally adjusted b) Where the contractor has tendered for work that was to have

been performed by a nominated subcontractor and his tender has been accepted, the amount of the tender suitably adjusted

c) Any amounts due to nominated suppliers, including cash discounts of 5 per cent

d) The contractor's profit on the above amounts

Preparation of Final Account

• Variation Orders (VO) are often a cause of contract conflicts and may lead to negotiation, mediation / arbitration. It includes changing in design, quantities, quality, working conditions, and sequence of work.

• The contractor fails to agree with the valuation of work. The disagreement may cause delay in certifying the amount of final account.

• There a rate that the contractor had to follow in certain specification but the contractor normally put the item rate uncertain because of strategies.

Problem faced by the Firm

Necessary Suggestions To Improve

• Verify the work progress within one(1) month period.

• Held a meeting at least twice a week to solve small problem that occur at site .

• The architect has the authority to order minor changes in the work not involving adjustment in the contract sum. Such changes shall be done in writing and shall bind with owner and contractor.

Monitoring Mechanism

• Review actual site practices and processes to control expenditure for materials, labor plant/machinery and subcontractors.

• External relationship and information; communicating with, coordinating with, and influencing related management units, stakeholders and clients.

• Internal relationship, including the use of inter-unit committees within the same management systems and communicating with other individuals

• Monitoring physical, financial, accounting and social effects; and Periodic evaluation of performance at indicator events and timely adjustment of plans.

THANK YOU