PERFORMANCE OF MEASUREMENT AND LUMP SUM CONTRACTS IN THE CONTEXT OF VALUING VARIATIONS

Abstract

There are two main types of contract used in Singapore; Measurement and Lump Sum Contract. From the literature review, inadequate designs and drawings could have led to the choice of the different contracts. Lump Sum Contracts are usually utilized when finalized designs are not involved. This could possibly lead to difficulty in valuation of variations as the SOR is drafted from incomplete designs, unlike if Measurement Contract is used. With the lack of comprehensive BQ or SOR, a fair valuation is to be made, resulting in the formation of star rates. The underlying principle in fair valuation and star rates is the idea: quantum meruit. As a result, there are many methods of deriving the star rates, increasing the time involved in valuing variations. Therefore, this paper aims to raise awareness of the performance of valuation of variations in Lump Sum Contract compared to the Measurement Contract.

This paper proposes the comparative study of the construction documentation from projects of each type of contract. The comparative study helps in investigating how they would value variations, such as which contract resulted in a greater number of star rates. It is concluded through pattern matching that Lump Sum Contract results in greater difficulty in valuing variations as it has more star rates. However, the limitation of this study is the results could not be generalized to the general population due to the lack of time. Nevertheless, the study remains significant as it encourages the consideration of post-contract problems when choosing the type of contract.