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Payment on a Lump Sum Basis

Introduction
The purpose of this section is to give
guidance on the preparation of the Part II
Clause necessary to amend the Part I -
General Conditions for a lump sum form of
contract. In this case, there is no bill of
quantities and no re-measurement. Payments
to the Contractor are based on a sum of
money submitted as part of the tender. If it is
decided to adopt a lumpsum basis, the
amendments listed below should be
incorporated into the Part II document of the
particular contract. In addition revised
wording for the Tender and Agreement are
included herein.
A lump sum form of contract is suitable
for projects where the design has been
developed by the Employer to a
sufficiently complete stage that, from the
information supplied in the tender
documents, the Contractor can prepare all
drawings and details necessary fo
construction without having to refer back
to the Engineer for clarification or further
information and no design variations of
substance are likely.
In these circumstances
Contractor may be able to tender
a lump sum. Further design by
the Contractor under th
provisions of Sub-Clause 7.2 is
not a prerequisite for a lump sum
Contract, but in some instances
significant design input by the
Contractor may be required.
The lump sum form of contract maintains
the essential traditions of Fll)IC philosophy
without diluting the authority of the
Engineer. It is intended primarily to reduce
the cost of measurement for interim and
final payments by eliminating the Bill of
Quantities and to provide some reassurance
for the Employer on the final cost.
However, the sum itself is not fixed and is
adjustable in accordance with the various
provisions of the Contract.
To avoid possible claims resulting from
discrepancies between Tender and construction
drawings, the latter have been made the
responsibility of the Contractor, who is required
tc prepare them for the Engineer to approve.
They may be the Engineers tender drawings
resubmitted, with or without additional detail
and/or modifications, drawings resulting from the
Contractors own design if called for in the
Contract or other drawings which the Contractor
may feel are necessary. It is therefore important
to ensure that the tender documents properly
reflect the requirements of the Contract and that
the Contract contains precise instructions on the
preparation of construction drawings and the
standards to which they must comply.
In order to allow a reasonable
assessment to be made of the value of
work achieved for the purposes of
interim payments a schedule which
contains a Breakdown of the Lump
Sum defining the components of work
should be annexed to the Tender form
for completion by tenderers. Interim
payments should be made on the basis
of percentage completion of the
components listed.

The intention is that this lump sum form should
be used for works which are simple and straight
forward, of relatively low value (say less than $1
000 000) and of short duration (say less than
twelve months). However, neither the value nor
duration are rigid and the lump sum form may be
applicable to works of significantly higher value.
Price variation clauses may not be required. For
larger works it is recommended that the FIDIC
Conditions of Contract for Design-Build and
Turnkey (which is also a lump sum form) should
be used. Should circumstances dictate, further
amendments may be added.