Projects

Site Penalties : Rock Situation

Consider this:  Rock is discovered on site after demolition and, you learn, it has not been included in the builder’s contract.

The builder gives you a verbal price of $275/m3 to remove it.

The quantity is suspected to be in the order of more than 50m3 – So what do you do?

You could, of course, agree to the verbal price of $275/m3. But be careful:

  • Does it include GST?
  • Does it include disposal costs?
  • Does it include the extra time costs and preliminaries that will be associated with the time being added to the contract due to the extra work for the rock?
  • Does it include the replacement? i.e. blinding concrete or crushed rock maybe where the rock is removed, and maybe excavated.
  • Does it include overheads & profit?
  • Who will quantify the rock?
  • Will the quantity be ‘gross’ or ‘nett’ i.e. inground before bulking, or, as-excavated and after-bulking)?

All these extra costs could inflate the original ‘agreed’ rate of $275 to something far in excess of this – potentially creating costly blowouts and plenty of bad-will.

Or you could ask the builder to take the risk and include now a fixed price for it – if this is the case; the builder may then say 75m3 @ $275 + 20% mark-ups, or more, plus GST. And so the price could be high. But then again, if the builder is being asked to take the risk, this is what you might expect.

Or – the client could take the risk and pay an agreed daily rate of say $2,000 for a machine to excavate. However, this too is risky:

  • Does it include GST?
  • Does it include disposal?
  • Does it include the extra time costs and preliminaries that will be associated with the time being added to the contract due to the extra work for the rock?
  • Does it include the replacement? i.e. blinding concrete maybe where the rock is removed, and maybe excavated.
  • Does it include overheads & profit?
  • What about the credit (money and time) for the dirt to be excavated already included in the contract price?

Or a PC allowance of say $25,000 could be included in the contract now and then the actual costs sorted out later. However, some pre-agreed rates ($/m3 and time costs) would be beneficial. A $25,000 variation at the start of a contract is not a good way to get going.

Remedy: A soil test prior to commencing design may have solved the problem, along with a provisional quantity of rock being included in the contract documents, or a provisional $ sum for rock removal being included.

A tricky situation for all and not one that can always be solved prior to it popping up.

 

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