Valuations and interim certificates

Purpose Value the works taking account of: – the physical work done on site; – any extra work ordered by the client; – the work of any specialist-nominated subcontractors; – the cost of running the site (the contractor’ s preliminaries); – the value of any materials delivered to site. © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 2

Timing In accordance with the JCT SBC/Q 2011, Interim Valuations shall be made by the Quantity Surveyor whenever the Architect/Contract Administrator considers them necessary for the purpose of ascertaining the amount to be stated as due in an Interim Certificate Under the ICC – Measurement Version, the methodology is different because it is the Contractor who shall submit to the Engineer … a statement showing the estimated contract value … carried out up to the end of that month. It is the opinion of the Engineer that decides the amount to be certified for payment. © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 3

Methods of payment Stage payment – Link to contract sum analysis and programme – Link to agreed value profile Measure and value – Remeasurement and application of contractor rates Payment notices – The act requires notices to be provided. Retention – Alternatives- bonds – Release of moieties – Retention limit under the ICC conditions – the physical work done on site; – any extra work ordered by the client; – the work of any specialist-nominated subcontractors; – the cost of running the site (the contractor’ s preliminaries); – the value of any materials delivered to site. © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 4

Retention limits © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 5

Principles Accumulation – Cumulative Deduction of previous payments Types of valuation – External valuation – Internal valuation – Subcontract valuation © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 6

Valuations…. © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 7

Techniques Inspection – Easy and quick – But inaccurate Measurement – On site or from revised drawings – Accurate and agreement assured – Timely and difficult to isolate variations Ogive curve (reference to a model of planned expenditure) – Simple and adjustments to forecasts can be made – Inaccurate and slow progress may lead to over payment Gantt chart – Easy to agree and relate to stage payment – Inaccurate and can be abused by loading © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 8

Materials on site Lists and inspection Retention of title – Sale of good act 1979 – Dawber Williamson – Ensure entitlement © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 9

Interim valuation © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 10

External valuation- Contract provisions © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.

Components of an interim valuation measured work completed; ● incomplete measured work; ● work which may not be built to specification (but overlooked); ● work completed or partially completed which may be a variation to the contract; ● extra work carried out to the verbal instructions of the architect/engineer; ● work done by the contractor which may have to be valued on a prime cost basis (i.e. daywork); ● preliminaries, that is the contractor’ s fixed and time-related costs of running the site; ● materials brought to site which the contractor is entitled to be paid for; ● materials or components being prepared or fabricated off-site; ● the impact of progress which might be ahead of or behind the master programme; ● the contractor’ s entitlement to loss and expense for non-culpable delay and/or disruption; ● circumstances where the contractor may be entitled to extra preliminaries; ● the impact of adjustments to the time for completion of the contract; ● deductions from the contractor’ s payment due to set-off by the employer; ● deductions for liquidated and ascertained damages where the contractor has exceeded the time for completion of the contract. © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 12

Valuation of variations For similar items of work carried out under similar conditions with no significant difference in quantity – use bills of quantities rates. For similar items of work carried out under dissimilar conditions and/or with significant differences in quantity – use bills of quantities rates as a basis for the valuation. For dissimilar items of work carried out under dissimilar conditions and/or with significant differences in quantity – value the work at fair rates. Where an approximate quantity proves to be a reasonably accurate forecast of the quantity of work required – use the rate or price in the bills of quantities. Where an approximate quantity is not a reasonably accurate forecast of the quantity of work required – use the rate or price in the bills of quantities as a basis for valuation. Where the work involved in a variation cannot be properly valued by measurement – use daywork as the means of valuation. © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 13

Daywork- prime cost and uplift © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 14

Daywork- records © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 15

Preliminaries © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 16

Internal valuation- relationship to external valn. © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 17

Subcontractor valuations © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 18

Final accounts © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.