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What Are Preliminaries and How To Evaluate Them PDF
What Are Preliminaries and How To Evaluate Them PDF
Entrusty Group, a multi-disciplinary group of companies, of which, one of their specialisation is in project,
commercial and contractual management, has been running a regular contractual questions and answers section
for Master Builders member in the Master Builder Journal
In this instalment of this series, Entrusty Group will provide the answer to another frequently asked question:-
What Are Preliminaries and How to Evaluate Them?
Notwithstanding, the Preliminaries section in most BQs, comprises typically of claim for loss and/or expense suffered
the following headed items:- resulting from the Employers own
breach of contract i.e. delay and/or
1 Preliminaries particulars - project and 12 Safety, health and welfare
contract details, works, goods &materials non-payment, wrongfully termination
by others, contractual obligations and of the contract, etc.
liabilities, etc
2 Plant, tools and vehicles 13 Maintenance of publ and private
roads The Contractor may choose to claim
3 Scaffolding 14 Removal of rubbish, debris, etc
4 Site administration and security 15 Control of noise, pollution, etc under the relevant provisions in the
5 Transport for work people 16 Statutory compliance and contract or bring legal action in
obligations
6 Protection of work 17 Surety or performance bond
arbitration/litigation for damages
7 Water, lighting and power 18 Insurances resulting from the breach of contract.
8 Temporary telephone 19 Shop drawings, co-ordination
and record drawings
9 Temporary roads, hardstandings, 20 Progress photographs In simple terms, loss and expense
crossings, etc and reports items may include the following ;
10 Temporary accommodation 21 Schedules, charts, etc showing
progress of trades, works,
activities. i. Prolongation costs
11 Traffic regulations 22 Clearing, cleaning and handover
ii. Disruption costs
iii. Additional Preliminaries
In monthly progress payment but which he did not receive, because iv. Overheads
valuations, the priced items in the of one or more of those events listed v. Profit
Preliminaries section are normally in the conditions of the relevant vi. Finance charges
divided into three categories, namely contract, which entitle him to vii. Other additional costs/expenses
initial, recurring and final costs by the reimbursement of direct loss and /or not reimbursable under the
usually by the project consulting QS, expense and Expense as Any cost contract.
in consultation with the Contractor. to the contractor which is more than it
The proportion of initial and final costs would otherwise have been, because Under the standard forms
are usually fixed and payable upon of the events referred to above of building / construction contract
commencement and at completion, commonly used in Malaysia, the
while the recurring costs are then The word direct loss and expense, relevant loss and expense clauses
spread evenly over the project means the direct consequence of the are briefly described and discussed
completion period. act giving rise to the claim (A & B below.
Taxis Ltd v The Secretary of State for
The Relevant Provisions Under The Air 1922) or that which flows PAM Forms (1998 & 2006)
Common Standard Forms Of naturally from the breach, without
Building/Construction Contract In other intervening cause and Under PAM Form of Building Contract,
Malaysia ? independently of special there are two provisions that enable
circumstances (Saintline Ltd v the Contractor to claim for additional
Many standard forms of construction Richardsons, Westgarth & Co Ltd preliminaries. However, such claim
contract allow loss and expense to be 25 BLR140, 1940). In essence, for must fall under the specific
claimed by the Contractor and loss and expense to be admissible, it circumstances provided under Clause
ascertained by the Superintending cannot be costs arising from indirect, 24 Loss and Expense for both PAM
Officer (or the Architect / Engineer remote, consequential or contributory 98 and 06 and Clause 11.6 Variation
/PD/QS, depending on the form causes. for PAM 98 and Clause 11.7
applicable) for payment by the Variation for PAM 06.
Employer. The Contractor is usually entitled to
claim for loss and/or expense suffered In order to succeed in the claim for
In the Royal Institution of Chartered if the work is disrupted/ affected loss and expense (in this
Surveyors (RICS), UK (1987) had /delayed due to certain specific case, additional preliminaries), the
defined Loss as Any monies that the causes or events, which are of no fault Contractor must notify the Architect in
contractor should have received, of their own. In addition, he can also writing if the regular progress of
Works has been or is likely to be materially affected, which Clause 32.6 Failure to Comply
he had incurred or is likely to incur direct loss and/or
expense. Under the CIDB Form, it is a condition precedent that the
Contractor should notify the Superintending Officer within
Thereafter, the Contractor needs to submit together with thirty (30) days, if he intends to claim for Loss and
the loss and expense claim, the relevant information and Expense.
details to substantiate his claim to the Architect for his
ascertainment, accordingly. JKR/PWD Form 203A (Rev. 10/83 & Rev. 2007)
CIDB Form (2000) Under JKR/PWD Form, the Contractor is entitled to claim
Under the CIDB Form of Contract, the contract provisions for additional preliminaries under Clause 44 Loss and
concerning loss and expense claim are Clause 1.1 Expense caused by delays, and/or under Clause 5 (d)
Definition, Clause 31 Claims for Loss and Expense and Claims for compliance with the Superintending Officers
Clause 32 Procedure for Claims. (SO) instructions a provided in JKR 203 (Rev. 10/83) and
for Loss and Expense claims under Clause 44 of JKR 203
In Clause 1.1 Definitions, Loss and Expense comprise of (Rev. 2007).
actual costs and percentage of the said costs.
Similar to other aforesaid forms, the Contractor is required
Loss and expense may comprise of:- to notify the SO in writing of his intention to claim if the
regular progress of Works has been materially affected
i. the direct relevant costs of labour, Equipment, which he has incurred direct loss and/or expense due to
materials, or goods actually incurred on the Site by the following specific reasons:-
the Contractor; and
44 (c) suspension of works under Clause 50; 44 (f) the Contractor not having received in due time
instructions in regard to the nomination of sub-contractors
44 (d) directions given by the SO, and/or suppliers provided in this Contract, necessary
consequential upon d i s p u t e s instructions, drawings or levels for the execution of the
with neighbouring owners provided the Works from the SO due to any negligence or default of
same is not due to any act, negligence the SO PROVIDED THAT the Contractor shall have
or default of the Contractor or any specifically applied in writing on a date which having
sub-contractor,nominated or otherwise; regard to the Date for Completion stated in Appendix or
to any extension of time then fixed under this clause, was
44 (e) SO's instruction issued under Clause 5 neither unreasonably distant from nor unreasonably close
hereof, PROVIDED THAT such to the date on which it was necessary for him to receive
instructions are not issued due to any the same;
act, negligence, default or breach of
this Contract by the Contractor or any 44 (h) delay on the part of artists, tradesmen or others engaged
sub-contractor, nominated or by the Government in execting work not forming part of
otherwise; this Contract
Additional preliminaries claim will fall under Clause 43 and 5 (d), which is similar to JKR Clause 44, except in IEM Form,
which provides an additional clause, Clause 43 (g) to cover for reason of delay in giving possession of the Site as provided
under Clause 38 (b) (i).
The following are the grounds for claims under loss and/or expense as provided in the aforesaid PAM 1998/2006, CIDB
2000, JKR 203A and IEM 89.
Contract Clasue
Grounds for Loss and/or Expense PAM PAM JKR IEM CIDB
2006 1998 203A 1989 2000
1 Late drawings, information, confirmations and/or instructions 24.3(a) 24.2(i) 43(f) 43(f) 31.1(b)
2 Ditto, in regard to P.C. Sums & Provisional Sums 24.3(a)
3 Failure or delay in giving possession of site 24.3(b) 43(g) 31.1(e)
4 Compliance with the contract administrators instructions, eg. to resolve
discrepancies 24.2(iii) 5(d) 5(d) 31.1(c)
5 Variation 5(d) 5(d) 31.1(h)
6 Postponement of any work by Contract Administrator 24.3(c) 24.2(v)
7 Suspension of works by the Contract Administrator 24.3(c) 31.1(g)
8 Delays by artist, tradesmen or others employed by the Employer 24.3(d) 24.2 (iv) 43(i) 43(i) 31.1 (f)
9 Delay or failure supply of goods and materials by the Employer 24.3(e) 24.2 (vi)
10 Test and Inspection 24.3(f) 24.2(ii) 5(d) 5(d) 31.1(d)
11 Any acts of prevention or breach of contract by the Employer 24.3(g) 24.2
12 Contract Administrator's instruction on antiquities and fossils 24.3(h) 31.1(i)
13 Appointment of a replacement Architect/Engineer/QS/Specialist Consultant 24.3(i)
14 Dispute with neighbouring owners 24.3(j) 43(c) 43(c)
15 Reason of the execution of work for Provisional Quantity which the Architect is
not a reasonably accurate forecast of the quantity of work required 24.3(k)
16 Failure of the Employer to give access to site in time or any passage to the site
which is in possession or control of the Employer 24.3 (l) 24.2 (vii)
17 Suspension of works by the Contractor due to late payment and the withdrawal
of the Architect and/or Consultant 24.3 (m)
18 Suspension of works by the Authority but not due to the Contractor's/Nominated
Sub-Contractor's negligence, omission, default and/or breach of contract 24.3 (n)
19 Any other ground for Loss and Expense mentioned in the Contract 31.1 (j)
20 One or more of the Excepted Risk 31.1 (a)
Grounds for Loss and/or Expense provided under the various Standard Forms of Constructions Contracts in Malaysia
termination/determination instead of It is often very difficult to value to what Contractors preliminaries claim, a
based on actual costs. The QS for this extent of the preliminaries items or good knowledge and understanding
project should undertake this works that had been executed. In of the cost structure and pricing of
valuation task, accordingly. valuing preliminaries, one would contract is essential to enable a fair
wonder whether the Contractor had and reasonable valuation to be made,
Quoting from Hudsons Building and priced the cost for example a tower accordingly.
Engineering Contracts, 11th Edition, p crane spread across the trade rates or
1602 explains the person who is in the preliminaries items. A distinction Methods In Assessing Additional
appointed to undertake this valuation has to be made as to the Contractors Costs Of Preliminaries
task; fixed costs (e.g. mobilisation and
demobilisation); time related costs In practice, it is common to use
It has been held that if a man is, (e.g. site management, plant and recurring costs based upon estimation
on account of his skill in such equipment, etc.) or quantity related or prorated time basis or formula
matters, appointed to make a costs (utilities, protection, etc.). method or negotiated basis from the
valuation, in such manner that in priced preliminaries in BQ.
making it he may, in accordance In the Singapore Institute of Architect
with the appointment, decide (SIA) form of contract, for example, Can this practice apply in evaluating
solely by the use of his eyes, his the Contractor is required to indicate the additional preliminaries? The
knowledge and his skill, he is not in his tender price for preliminaries following are a few methods
acting judicially: he is using the items in the form of quantity related, employed in evaluating additional
skill of a valuer, not of a judge. In time related or fixed cost so that any preliminaries.
the same way, if two persons are additional expenses for the
appointed for a similar purpose, preliminaries items, the indicated On Amended Contract Basis
they are not arbitrators but only tender price of the preliminaries items
valuers. They have to determine shall be used as the basis for In the Malaysian construction industry,
the matter by using solely their valuation and adjustment. the standard form of contract used
own eyes and with knowledge and are often subject to addendum/
skill. Consequently, when evaluating the supplementary /modification/
amplification/special provisions or PWD DB/T Clause 45.2 & 46 under Bond/Performance Sum
conditions to suit the circumstances Special Provisions, which is based on Guarantee, of the Contract Value
prevailing on the project concern. the Special Formula for calculation of OC = Original Contract Value
compensation for Loss and Expense CEP = Total Claimable Extended
An example of an Addendum to claim under Preliminaries and Period
PAM98 Clause 24, is as follows: General Requirement, as follow: BLR = Base Lending Rate per
annum as on Date of Original
The Contractors claim for loss and/or a) Cost of Extension of Insurance Completion of Work
expense (if any) under this Clause Policies
shall be confined only to those c) Other Items
recurring cost of Preliminaries items A x CEP/TDP (i) For Building Works:
which have been priced for this 14% x PL x CEP/OP
Contract and only for those A = Amount of premium paid for (ii) For Civil Engineering Works:
Preliminaries items which are deemed the whole duration of the 20% x PL x CEP/OP
applicable. The Contractor shall not extended insurance period as
be entitled to claim on any other basis provided under the Contract PL = Amount of Preliminaries
other than the aforesaid basis as he CEP = Total Claimable Extended Work and General Requirement
shall be deemed to have allowed for Period in the Contract not inclusive of
all other loss and/or expense TDP = Total Delayed Period Provisional Sum and specific
(excluding the recurring Preliminaries items for the Contract (e.g.
expenses) directly or indirectly b) Cost of Extension of Design and supervision fees,
incurred by him caused by Performance Bond/Performance Traffic management plan,
disturbance of regular progress of Sum Guarantee Environmental management
Works under this Clause. plan, I-Supervision, Aerial
5% x OC x CEP x BLR/365 survey, Digital slope mapping,
On Formula Basis Permanent diversion of
Another example is the JKR 203A 5% = Maximum percentage services, KTMBs flagging and
Clause 5(d), 44 & 48(d) and JKR amount of Performance inconvenience charges, Road