BPM109: Discuss why Variation Clauses are Inserted in Construction Contracts: Contract Administration Assignment, SUSS, Singapore

Question 1
(a) Discuss why variation clauses are inserted in construction contracts.

(b) In any contract, variation work is almost always inevitable. Explain any FIVE (5) methods of valuing variations, illustrating each method with a practical example from the building and construction industry.

Question 2
(a) The contract sum for a bungalow project is $3,000,000. The limit of retention is 4%, the retention sum for work done is 8% and the retention sum for materials is 20%.

The following costs are recorded and claimed by the Contractor:

• Excavation works – $30,000
• Cement bags – $5,000
• Drinks and cakes for a site meeting – $200
• Blockwall to the first story – $30,000
• Piling to foundations – $250,000
• T16 steel reinforcement $50,000
• Pile caps – $15,000
• Calculate the first payment due to the contractor.

(b) “Parties to construction contracts prefer to settle disputes in arbitration before applying for adjudication.” To what extent do you agree with this statement and explain why this is the case.

(c) Explain to the contractor the contractual procedures to finalize the accounts with the Owner’s representative under the SIA Measurement Contract (9th Edition)