Back to Basics #1 - Valuing Change under JCT D&B 2016

Valuing Change under JCT D&B 2016

 

Under JCT D&B 2016 a “Change” is broadly either a change in the Employers Requirements in terms of design, quality or quantity (Clause 5.1.1) or the imposition by the Employer of an obligation or restriction (Clause 5.1.2).

The value of the change can either be agreed or valued in accordance with the Contract (Clause 5.2).

Clause 5.4 details how change should be valued and includes;

Clause 5.4.2 – consistent with the values set out in the Contract Sum Analysis (CSA) if similar or as the values set out in the CSA with an allowance if the quantity or conditions are different or if no similarity with CSA items by “fair valuation”.

Clause 5.4.1 states that design cost should be included within the valuation as should allowance for “additional” site administration, site facilities and temporary works (Clause 5.4.4).

Two common Questions are 1. “Does Clause 5.4.4 allow me to claim for the prolongation costs associated with a change?” and 2. “What is a fair valuation?”.

Answer 1 perhaps not as this should probably considered as Loss and Expense under Clause 4.21.1.

Answer 2 is more complex. The RICS guidance note on valuing change says that the valuation should be based on “fair rates and prices” and “…should therefore be cognisant of the contractor’s cost of carrying out the works..”. In Weldon Plant Limited v The Commission for New Towns [2000] EWHC 76 (TCC) HH Judge Humphrey Lloyd QC described a fair valuation as “…based upon the reasonable costs of carrying out the work, if reasonably and properly incurred…” and should also include “..an element on account of profit…”, the Judge also decided that head office overheads could be included in such a fair valuation.

If you are struggling to get paid your entitlement to change / variation Ramskill Martin’s team of Consultants can assist you and ensure that you recover your entitlement under JCT D&B 2016 or any other form of contract.

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