Professional Documents
Culture Documents
Definition;
The contract sum is the price agreed with the contractor and entered into the contract. The
contract sum should be calculated and checked very carefully as errors are deemed to have been accepted
by both parties.
Changes to contracts
Claims by contractors for losses and / or additional expenses.
Costs associated with labor or construction materials testing and exposure to work.
Fees and charges for fixed connection to a public sewer, water, and regular electricity and
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The total contract price adjustment certificate must be prepared and remove when the total
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3
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changes in work.
Adjustment of the Contract Sum certificate must be signed by the PP and the original shall be
issued to the contractor. Other copies will be distributed to all parties listed in the certificate
includes the following parties: -
i
ii
Generally;
The contract allows the Contract Sum to be adjusted due to the following circumstances:a) Variations orders issued during construction
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b)
c)
d)
e)
f)
g)
h)
The adjustment of the Contracts Sum for the above is made by issuing JKR-PHK form.
1) Variations Orders
Every issuance of JKR-APK must be followed by the finalized through Form JKRHPK, even if there is no difference between the provisional amount and the final
Variations may also be deemed to occur if the contract documents do not properly
describe the works actually required.
Government Procedure
Any V.O. for government project shall strictly follow standard procedure are as
follows:
KPK Kelulusan Perubahan Kerja
APK Arahan Perubahan Kerja
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of
any
profit
mark
up
or attendance (such
as
material
In Construction the term PC sum is often confused with Provisional Sum. Whilst
both terms are associated to allowances being made for a specific activity or item,
there are distinct differences in these two terms. PC Sums are normally associated
with an average cost of a specific item whereas Provisional Sums are estimated
allowances. Let's look the usage of these two terms in the Construction environment.
Check that the works is awarded to the nominated sub-contractor / supplier. Omit the
original PC Sum and add the awarded NSCs/NSs contract sum and profit and
PC Sums that are not used shall be deducted from the Contract Sum.
PC Sum or otherwise referred to as Prime Cost Sum reflects the material allowance
being made in the rate for a specific item. A quoted rate normally consists of
Material, Labour, Plant and mark-up (profit + overheads). By using the PC sum
reference the builder identifies what material sum he has allowed for in his rate. This
is normally done when the specification of the item has not yet been clarified (for
example finishes, tiles, taps, light fittings, etc.). The builder would allow a reasonably
accepted average cost for that item which is generally based on the builders past
experience. Care must be taken in analyzing these allowances as builders understand
the impact this has on their price and could make below average allowances in order
to present the lowest bid.
apply
mark
up
their
overall tender price and make allowance for the work in the contract programed.
An example of a situation where a provisional sum might be appropriate is when
work is required below an existing structure, where the ground conditions cannot be
determined until the existing structure is demolished and the ground opened up.
Provisional sums can be 'defined' or 'undefined':
a) Defined provisional sums are considered to have been accounted for within
the contractor's price and programed. In effect the contractor is taking
the risk that their estimate will be sufficient.
b) Undefined provisional sums are not accounted for in the contractor's price
and programed. This means that the client is taking the risk for the works and
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the contractor
may
be
entitled
to
an
extension
of
time
and
additional payments.
The final cost of a construction contract may be influenced by provisional sums and
quantities. A provisional sum is a nominated amount of money, usually estimated by
a Quantity Surveyor, where the exact scope and cost of specific work cannot be
determined at the start of the contract, such as for removal of rock.
It is included in the original contract sum, but is monitored carefully so that the sum
can be adjusted as required. The provisional sum may be used for work carried out by
subcontractors or for materials and components to be provided by suppliers, or for
schedule of rates works, where an agreed price rate has been reached (e.g. $30/sq. for
plastering existing damaged walls). These items are included where no firm price can
be obtained or the full extent of the work cannot be determined at the time the
building contract is let.
The final adjusted contract sum will vary from the original contract sum when the
expenditure against these items differs from that nominated in the contract document.
Provisional sums and quantities should be kept to a minimum to minimize budget
variations.
Omit the original Provisional Sum and add the amount approved in accordance to the
200m2
$42.45/m2
$8,490.00
The above item clearly identifies the amount allowed for tiles is $25/m2 and the total
rate inclusive of labour, waste and mark-up amounts to $42.45/m2. That means that
the Client can buy or select tiles to the value of $25/m2 without it having any effect
on the Contract Price. This also mean that if a lower priced tile is selected the
the final adjustment is made after the whole of the Works is completed.
The Civil Works ensure the adjustment made must not exceed the quantities allowed
in Contract.
The valuation and circulation must be in accordance with the Special Provisions to
calculations.
Contractor to produce all invoices and QS to extract the quantity and
prices.
Labour is based on examination of the Contractor r time sheet to
Work category or
L= F x M
E
where:
L= F x M
E
where:
a)
b)
c)
KEWANGAN
MALAYSIA
SURAT
Factor
Figure 1
Figure 2
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Figure 3
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Figure 4
Figure 5
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FINAL ACCOUNT
1.0
Work Process
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The post contract stage of a building contract starts immediately after the contract is awarded. As
a member of the project team, a quantity surveyor (QS) works closely with other team members to ensure
the project will be delivered in accordance with the terms and conditions of the contact and within the
cost limit. The post contract quantity surveying services are: cost control and monitoring, certification of
payments to the contractor and valuation of variations and settlement of the final accounts.
Final accounts settlement shall be completed in three distinct stages starting from the
commencement of the measurement period. Progress of achieving each stage is closely monitored and
recorded. The final accounts process actually starts at the commencement of the post contract stage. QS
Liaises with the project team and the contractors to collect and collate information required for valuation
of variations and, where practicable, to agree the valuation as soon as these variations are issued.
Contractual provision
Either before or within a reasonable time after practical completion, Contractor should
send document related to preparing final account
Subject to Contractor compliance to this obligations, the QS shall prepare Final Account
within the provision time frame of final measurement and valuation as stated in the
appendix
When the Final Account complete, the Arch/S.O. shall send a copy to Contractor and
relevant extract to each NSC.
Sum to be deducted;
Prime cost sum and amount in respect of sub con & associated Contractor profit
Variations that are omission including omission of any other works carried out under
changed condition as a result of variations
Any other amount that is required by the Contract to be deducted from Contract Sum.
Sum to be added ;
Total amount of NSC finally adjusted in accordance with relevant sub con conditions
Where Contractor has tendered for the works, that was have been performed by NSC and
the tender accepted, the amount of tender suitably adjusted.
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2.0
Any amount payable by S.O. relating to statutory fees and charges, setting out the works,
opening up and testing, remedial works where the Arch/S.O authorized payment
Addition due to variations including addition for other works carried out under change
condition as a result of variations.
The value of works against provisional sums or provisional quantity included in the
Contract Bill.
Any amount payable by S.O. by way of reimbursement for direct loss and expense.
Any amount expended by the Contractor as a result of loss damage by fire or other perils
where the risks are insured by the employer and Contractor are entitle to reimbursement.
Any other amount that is required by the Contract to be added to the Contract Sum.
Variations
NSC account
Loss and expense caused by disturbance of the regular process of the works
The bulk of Final Account consist measured work priced at the original bill rates.
If Contractor has reason to doubt accuracy any of the original billed items, he can request
QS on work concern to be measured on site
When preparing final account, QS should give Contractor or his rep opportunities to be
present when measurements and details are taken or recorded
This in to enable the account to be finalized fairly soon after work complete as well as
interim payment to the Contractor represent realistic assessment of the value of work
performed.
Delay in settlement of the Final Account represents additional cost to the Contractor
related to the financial commitment.
The S.O/QS have a contractual responsibility to keep the date stipulated in contract for
complete the account with all necessary supporting data provide by Contractor
Any Addition to the original contract sum complete with KPK, APK and PHK
Any Omission to the original contract sum complete with KPK, APK and PHK
New Contract Sum will take after adjustment on addition and/or omission.
Final Certificate
The Arch/S.O to issue Final Certificate within three (3) month of the end of defect
liability period or of completion of making good defects.
The amount of the final certificate is the difference between the total of final account and
the amount previously stated due under interim certificate.
The payment shall be made within 28 days or any other period stipulated in the contract
after issuance of Final certificate
The final certificate provides conclusive evidence that the quality of material and
standard workmanship are to the reasonable satisfaction of the Arch/S.O.
All term and condition with regards to the adjustment of the contract sum have been
implemented.
Quantity Surveyors can deal with the final account preparation, submission & subsequent
agreement on behalf of consultants such as architects including both private and public sector clients.
A final Accounts service which that provided to consultants and clients ensures the following:-
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Clear statement showing the contract sum followed by all necessary adjustments to that
sum
Prepared in accordance with the terms and conditions of the relevant contract e.g. JCT
Quantity Surveyors prepare the final account in the manner that is best suited for the
particular project with the original contract sum as the starting point. An important part of the
contractor's quantity surveyor's work is the agreement of the final account. Under the terms of the
contract the private quantity surveyor is responsible for its preparation, but in reality the best
approach is for both the client's quantity surveyor and the contractor's quantity surveyor to work
together to produce an agreed account.
A Final Account in construction contracts is the agreed statement of the amount of money
to be paid at the end of a building contract by the employer to the contractor. A final account
brings about a sense of finality to the negotiations leading up to the agreement of the Final
Account between the parties to the contract.
A Quantity Surveyor ensures that in accordance with common practice both Employer
(or the Employers representative) and the Contractor sign the Final Account Statement to signify
that the Final Account figure represents the full and final settlement of all claims etc. The
settlement of the final account negotiations between the contractor, and the architect or quantity
surveyor will in due course trigger the issue of the final account statement and ultimately, enable
the architect to issue the final certificate.
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Under the terms and conditions of the contract the contractor is to provide the architect or
quantity surveyor with all documents necessary for the final account preparation not later than 6
months after practical completion. Within 3 months of receipt of these documents the architect or
quantity surveyor is to prepare and ascertain the final account sum and send this to the contractor.
The bulk of the final account will generally consist of measured work priced at the
original billed rates. If the contractor's quantity surveyor has reason to doubt the accuracy of any
of the original billed items, he can make a request to the quantity surveyor for work concerned to
be measured on-site.
The adjustment of the contract sum in the final account normally falls under several
relevant items, although the quantity surveyor must have regard to all the matters listed in
the standard form of contract and conditions. The contract conditions tabulate all the matters that
shall be dealt with in the final account in order to adjust the contract sum in accordance with the
conditions.
Sums to be deducted:
1.
Prime cost sums and amounts in respect of named subcontractors and associated contractor's
profit;
2.
Provisional sums and the value of work for which approximate quantities are included in contract
bills;
3.
4.
5.
Any other amount that is required by the contract to be deducted from the contract sum.
Sums to be added:
1.
The total amounts of nominated subcontracts finally adjusted in accordance with the relevant
subcontract conditions;
2.
Where the contractor has tendered for work that was to have been performed by a nominated
subcontractor and his tender has been accepted, the amount of the tender suitably adjusted;
3.
Any amounts due to nominated suppliers, including cash discounts of 5 per cent, but excluding
VAT;
4.
5.
Any amounts payable by the employer relating to statutory fees and charges, opening up and
testing, royalties and patent rights, and insurances;
6.
The value of work carried out against provisional sums or approximate quantities included in the
contract bills;
7.
Any amounts payable by the employer to the contractor by way of reimbursement for direct
loss/and or expense arising from matters materially affecting the regular progress of the works;
8.
Any amount expended by the contractor as a result of loss or damage by fire or other perils where
the risks are insured by the employer and the contractor is entitled to reimbursement;
9.
10.
Any other amount that is required by the contract to be added to the contract sum.
All relevant items must be shown separately in the final account, and the net amount of each
variation and amounts due to each nominated subcontractor and nominated supplier listed. When
preparing the final account the quantity surveyor should give the contractor's quantity surveyor the
opportunity to be present when measurements and details are taken or recorded, so that the document is
prepared in full liaison with the contractor.
Delays in the settlement of the final account represent additional cost to the contractor and in the
majority of cases the employer is anxious to know his ultimate financial commitment. The architect and
the quantity surveyor have a contractual responsibility under the contract to keep to the date stipulated in
the contract for completion of the final account and the contractor should produce every assistance in the
prompt provision of subcontractors and suppliers accounts, agreement of measurement and prices, and
the supply of all necessary supporting data.
Final account-contractor
A Quantity Surveyors offer to undertake all works entailed to settle the final account. We are
involved in the final account preparation, submission & subsequent agreement on behalf of both main
contractors and sub-contractors.
Our Final Accounts services which we provide to both main contractors and sub-contractors
ensure the following:
All work executed by the contractor including variations, provisional sums and quantities, day
works etc. are accurately assessed and included
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Accurate final payment is received at the appropriate time for all work executed on site including
the above items
3.0
Changing drawing last minutes by the Architect due to site condition or Clients
requirements. We cannot expect to not having a changing along this construction process.
When the new drawing had been issued, the Qs have to revise or re-measurement the
drawing again.
2.
Variation Orders (VO) are often a cause of contract conflicts and may lead to negotiation,
mediation / arbitration. It includes changing in design, quantities, quality, working
conditions, and sequence of work.
3.
Include both by main contractor and consultants, such as contractors delay in submitting
claims and failure to follow the procedure as stipulated in the contract agreement.
4.
The contractor fails to agree with the valuation of work. The disagreement may cause
delay in certifying the amount of final account.
5.
Problem with the contractor is that they do not keep the records properly to claim the
final payments.
6.
7.
The clients or main contractor overpay to the contractor, this happen when the Qs slightly
verify by not looking into work progress or wrong quantities. So when the auditing spot
check, the claims are overpaid.
8.
Besides that, problem can occur due to maintenance items in the contract documents
where the contractors still have not been paid after the expire of the defect liability period
(LAD). Any forms of contract including PWD203, PAM, FIDIC and other states that
final account will be paid after the LAD. These factors slightly give the implication to the
delay or problems in preparing or closing final accounts.
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9.
Adjustment contract sum, there will be additional or omit the tender price, mostly
because of the variation order (VO).
10.
There a rate that the contractor had to follow in certain specification but the contractor
normally put the item rate uncertain because of strategies.
The Solution
1.
Prepare detailed change order proposals to reduce the time associated with the
construction administrator regarding the change order. Price and schedule analyses
alternative to solve problem especially the variation order that commonly happen.
7. If the client overpay, the must have a re-measurement together with the supporting
document .After that, tally the amount and quantity with consentience together.
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4.0
3.
4.
5.
6.
7.
8.
of output and cost/benefit standard. The performance plan must balance and relate the
availability of materials and financial resources, technology, information, skills and time,
with the products and services of the activity in order to produce specific outcomes. It
9.
10.
Conclusion
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Scope/Quality
The scope of a project (often called the Scope of Work) is a clear, specific statement as to what has been
agreed to be performed/achieved in a particular project. In other words, the scope expressly lays out the
functions, features, data, content, etc. that will be included in the project at hand. You could also say that
the scope clearly expresses the desired final result of a project.
Resources/Cost
This second element of the Triple Constraint is known as either Resources or Cost. Resources always cost
money so the two are interchangeable in many ways. When we talk about the cost of a project, we are
talking about what needs to be applied or assigned to the project in terms of money and effort in order to
make things happen. This can be resources like manpower/labor, it can be materials needed for the job,
resources for risk management and assessment or any third party resources that might need to be secured.
Time/Schedule
Time, in project management, is analyzed down to its smallest detail. The amount of time required to
complete each and every component of a project is analyzed. Once analysis has taken place, those
components are broken down even further into the time required to do each task. Obviously from all of
this we are able to estimate the duration of the project as well as what and how many/much resources
need to be dedicated to that particular project.
References
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Zakaria, Z., Ismail, S. and md. Yusof, A. (2014). Modelling the determinations Influencing the
Need of Computer Simulation framework in Improving the closing of Final Account and
Construction Projects Advance Science Letters, 20 (1), 321325.
Zarabian Zakaria, Syuhaide Ismail, and Aminah Md. Yusof (2013). Fundamental Variables of
Final Account closing success in Construction Projects in Malaysia. Worlds Academy of Science,
Engineering Journal of Social, Human science and Engineering Vol:7 No:10
3.
PM. Abdul Wahid Kamarulzaman (2014), SBQ 3722 Nota Amalan Ikhtisas III , Universiti
Teknologi Malaysia, Skudai Johor.
4.
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