Q&As regarding the modification of a work contract

...And as a follow-up to supply contracts and their modification, below some questions and suggested answers regarding the modification of a work contract:

a) Is the use of the Provisional sum/contingency by the Engineer considered as a financial change to the contract subject to PRAG rules on contract amendments (Administrative orders/Addenda)? in other words is the mobilisation of the contingencies considered as a change?

• No-the amounts in works contracts are estimates, and the mobilisation of the contingencies is therefore not subject to an addendum as it concerns a simple application of what is already foreseen in the contract i.e. the possibility to change the estimated amounts.

• This principle is also reflected in Section 18.6.1 DEVCO Companion 2016 (p.422) which states that: "Increases vis-à-vis the initial contract price, which are the sole result of the measured actual quantity exceeding the stated bill of quantities or price schedule, do not represent a change of the contract and do not require an administrative order for modification nor a contract addendum. Likewise, it can occur that the application of the price revision clause of the contract will have the same effect. Again, since the price revision formula is already agreed upon by the contracting parties in the initial contract, no modification of the contract is required to allow increases vis-à-vis the initial contract price to deal with their effect".

• On this basis, the use of the provisional sum/contingency by the Engineer should be done via explanatory note sent from the Engineer to the Contracting Authority and then uploaded in CRIS. An SL rider should be encoded in CRIS to formally acknowledge this exchange of communication. For further information see:  http://www.cc.cec/wikis/display/crisknowledgebase/CTR+-+Chapter+25#CTR-Chapter25-AB_rider

b) Changes to the Accepted Contract Amount once the Provisional Sums/Contingencies  have been completely used and exhausted (financial variations of more than 10% which requires additional funds to be taken from the BPA - Bilateral Project Agreements) are subject to PRAG rules on contract amendments?

If so, the Provisional Sums/Contingencies of 10%  of the Permanent works shall be considered or not in order to apply the PRAG thresholds of 15% or 50% triggering (or not) the need for a negotiated procedure before a formal addendum?

• Yes,changes to the Accepted Contract Amount once the Provisional Sums/Contingencies have been completely used and exhausted (financial variations of more than 10% which requires additional funds to be taken from the BPA - Bilateral Project Agreements) are subject to PRAG rules on contract amendments. The FR procedures of article 114a for modifying the contract are a different issue than the flexibility procedure within the contract  due to variation of quantity up to 10%. Therefore the Provisional Sums/Contingencies of 10%  of the Permanent works shall not  be considered in order to apply the PRAG thresholds of 15% or 50%.