Overheads & Profit on Variations

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CONSTRUCTION AND BUILT ENVIRONMENT FORUM | BUILDING | GENERAL CONSTRUCTION | OVERHEADS & PROFIT ON VARIATIONS
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Overheads & Profit on Variations

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08-01-2010, 04:12 PM

richardo1505
Getting Comfy

Post: #1
Posts: 8
Joined: Dec 2009

Overheads & Profit on Variations

Hi all, great forum and loads of good knowledge............

Does anyone have some good advise regarding the application of Overheads and Profit within variations. I would agree that profit is
reasonable and as employer I would not object to paying it. It is more the application of overheads........... if the variation has resulted in
extended use or procurement of additional resources then this is a reasonable overhead........ but how about management time for the
additional coordination required, time to order materials, delivery to site, etc. This is also an overhead so again I would accept this as part of
an application............ but if you have a separate line item for management time, say 3-4 hours for coordination of resource, etc, surely this
cannot be added to the variation along with Overheads and Profit.

08-01-2010, 04:45 PM

PeeBee
Proof that negative IQ's exist

Post: #2

Posts: 2,780
Joined: Nov 2008

RE: Overheads & Profit on Variations

richardo1505 Wrote:
... but if you have a separate line item for management time, say 3-4 hours for coordination of resource, etc, surely this cannot be added to
the variation along with Overheads and Profit.
Hell, yes! Basic Law of Supply and Demand, pal You want it...
I've got it...
Here's the price!
Simples

12-01-2010, 08:20 AM

uk_tom21
Building Regular

Post: #3
Posts: 17
Joined: Aug 2009

RE: Overheads & Profit on Variations

I take it you already have a contract in place and have signed up to a % for post-contract variations?
You can't charge the time for your procurement resource, as this will be deemed to be included within that OH&P rate; however, you can
charge delivery to site (providing of course that you can provide an invoice substantiating the cost)

12-01-2010, 10:20 PM

http://forum.building.co.uk/forums/showthread.php?tid=983

Post: #4

1.12.2016.

Overheads & Profit on Variations

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Posts: 8
Joined: Dec 2009

richardo1505
Getting Comfy
RE: Overheads & Profit on Variations

uk_tom21 Wrote:
I take it you already have a contract in place and have signed up to a % for post-contract variations?
You can't charge the time for your procurement resource, as this will be deemed to be included within that OH&P rate; however, you can
charge delivery to site (providing of course that you can provide an invoice substantiating the cost)
Many thanks UK_Tom21. This is along the lines I am thinking..........the cost for management time for ordering of materials should already be
included within the OHP, therefore a separate line item would be unreasonable.
I also think there is another step in this scenario to state that the application of overheads as a simple % is not correct as in effect we are
dealing with |Loss & Expense where additional overheads would need to be proved (production of an invoice like you say). A percentage for
OHP against variations has not been stated in the contract so I guess it is open to the employer to play things really hard if the are minded.
Thanks again, this is a great forum

13-01-2010, 08:16 AM

Post: #5

uk_tom21

Posts: 17
Joined: Aug 2009

Building Regular
RE: Overheads & Profit on Variations

What is the form of contract and what is the variation for?

13-01-2010, 09:04 AM

Post: #6

Posts: 1,849
Joined: Oct 2008

Fatandskint
Modern Day Old Fogey

RE: Overheads & Profit on Variations

Of course, there is always the method I used when Contracting.

Just submit your application requesting what you want.
It's up to their QS to argue the toss. You can always apologise for your stupidity / error after. I usually found most QSs never questioned it.
They would pick up you charging 1,000 instead of say 100, but rarely questioned the title.
Remember, Honesty may be the best policy, but it takes much longer to get rich !
Trust me, if you have missed something very few will remind you

13-01-2010, 04:45 PM

Post: #7

richardo1505

Posts: 8
Joined: Dec 2009

Getting Comfy
RE: Overheads & Profit on Variations

uk_tom21 Wrote:
What is the form of contract and what is the variation for?
thanks uk_tom21. The contract is JCT MWD05. OHP has been applied to all variations togerther with additional prelim costs for management
and supervision. I believe you can only have 1 but not both.

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