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<p>Disputes in Contracts in the construction industry are becoming common today. The construction disputes vary in their nature, size, and complexity. If contract documents are poorly drafted and badly managed, the results will be inevitable additional costs and additional liabilities to the Client.</p>
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<p>Before becoming disputes or recognized as disputes, the parties to the contract generally present their entitlement in the form of a construction claim and establish their disagreement to the issue at the early stage of the dispute. Despite the fact how disputes occur, it is recognized payment issues are the most common area and route cause of construction disputes today.</p>
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<p>As a result of this, drafting a proper contract document becomes a vital aspect in terms of dispute avoidance and management. Particularly, Bills of Quantities which are a part of the Contract document are essential in establishing contractual claims and in the dispute resolution process.</p>
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<h3 class="wp-block-heading"><strong>Contractor’s Approach</strong></h3>
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<p>Whilst discharging obligations of the Contract, the contractors may undertake a strategy of achieving profit by challenging the errors and omissions of the Bill of Quantities and contract document. At the height of the discrepancies or ambiguities or disputes, more effort was being put into claims, than ensuring production targets were reached.</p>
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<h3 class="wp-block-heading"><strong>Engineer’s Approach</strong></h3>
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<p>Where the parties claim their entitlements as per their interpretations of the documents, it is a general understanding that the Engineer shall determine a fair and reasonable manner.</p>
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<h2 class="wp-block-heading"><strong>Contract Documents including the BOQ</strong></h2>
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<p>The Contract between the Employer and the Contractor which is laid down either by the issuance of the Letter of Acceptance or signing of the Agreement by the Parties includes many documents.</p>
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<p>As per many Standard Bidding Documents, contract documents comprises of the following documents;</p>
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<li>The contract agreement – if any.</li>
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<li>The Letter of Acceptance.</li>
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<li>Memorandum of understanding – if any.</li>
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<li>The Form of Bid.</li>
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<li>The Contract Data – Part II.</li>
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<li>Contract Conditions – Part I.</li>
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<li>The Specifications.</li>
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<li>The Drawings.</li>
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<li>The Bill of Quantities.</li>
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<li>Any other documents as may expressed in the Letter of Acceptance.</li>
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<p>BOQ has several uses in the construction industry. Primarily, it provides a uniform basis for tendering and pricing for the contractors and during the construction stage as a tool for payments and evaluation. The Engineer uses the quantities given in the BOQ to monitor progress at the site. BOQ is also used as a basis for planning and procurement of materials and supplies.</p>
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<p>As mentioned in the above, a Contract which is made in writing frequently consists of more than one document. Accordingly, the BOQ must be read in conjunction with all other documents in the Contract and the Contractor shall be deemed to have thoroughly acquainted himself with the detailed descriptions of the Works to be done and how they are to be carried out. The whole of the Works is to be executed to their true intent and meaning and the entire satisfaction of the Engineer.</p>
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<p>In the event of discrepancies or ambiguities that lead to disputes between the parties, the priority of the contract documents will be a very important factor to consider when finding a solution for a contract dispute.</p>
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<p>As per many SBDs, the several documents forming the contract are to be taken as mutually explanatory of one another, but in case of ambiguities or discrepancies for interpretation priority of the contract document shall be in the following sequence;</p>
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<p>1. The contract agreement – if any.</p>
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<p>2. The Letter of Acceptance.</p>
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<p>3. Memorandum of understanding – if any.</p>
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<p>4. The Form of Bid.</p>
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<p>5. The Contract Data – Part II.</p>
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<p>6. Contract Conditions – Part I.</p>
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<p>7. The Specifications.</p>
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<p>8. The Drawings.</p>
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<p>9. The Bill of Quantities.</p>
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<p>10. Any other documents as may expressed in the Letter of Acceptance.</p>
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<h2 class="wp-block-heading"><strong>Root causes for common disputes out of issues relating to BOQ</strong></h2>
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<p>1. Incomplete and inaccurate BOQ descriptions – errors, defects, and ommissions.</p>
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<p>2. Due to copied BOQ descriptions from past projects.</p>
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<p>3. Disputes related to the method of measurements.</p>
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<p>4. Dispute due to the inclusion of trade names in the BOQ descriptions.</p>
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<p>5. Unrealistic tender pricing – misunderstanding the real scope of the project.</p>
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<p>6. Ambiguities.</p>
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<p>7. Discrepancy of documents such as BOQ vs. Specifications, BOQ vs. Drawings, etc.</p>
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<h2 class="wp-block-heading"><strong>Avoiding Claims and Disputes arising from BOQ</strong></h2>
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<li>It is necessary to ensure that BOQs are measured by the standard method as applicable and measure items as accurately as possible at the tender stage on the information available.</li>
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<li>Given the situation that there are uncertainties in respect of the design or specification at the time of tender documents being prepared, it is advisable to use provisional sums or prime costs appropriately and to state the sum as “provisional”.</li>
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<li>These situations can also be avoided to a certain extent by adopting the correct procurement system. Where the Contractor-designed items are the major part of the project, it is appropriate to consider the Design and Build approach. BOQ should be organized accordingly.</li>
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<li>Further, when tenders are received, the Consultant’s Quantity Surveyor must examine the rate for high rates, low rates, and inconsistencies or anomalies and identify carefully the consequence of each.</li>
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<li>The documents forming part of the Contract should be mutually explanatory and complementary. In the event of a discrepancy between the documents, preference should be given to the order of precedent.</li>
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