Lump Sum Contracts, Variations & Contingency Sums

Spencer Lion are professional surveyors in Slough & Windsor, providing structural surveys, building surveys & dealing with party wall matters.

What Are Lump Sum Contracts, Variations and Contingency Sums? 

Spencer Lion are contract administrating an external refurbishment of a luxury block of flats that overlook Hyde Park.  It is an interesting job in that the building is one of the earliest forms of reinforced concrete frame. The building is clad in Ham stone which is a rare stone with only two quarries based in Somerset.  The main part of the project is to sensitively clean the stone and undertake stone repairs. The repairs consist of indents and plastic repairs (coloured mortar repairs).

The project is being carried out under Section 20 of the Landlord and Tenant Act and the act is very prescriptive as to how the works are procured and notified to the lessees.  Invariably under Section 20, works have to be procured under a lump sum contract. This is the traditional form of procurement and comprises a specification and drawings.

These were sent out to tender and monies were collected from the lessees via the managing agent to pay for the works. Critical with Section 20 works is that the project value cannot exceed monies collected as there simply wouldn’t be an easy mechanism to raise additional funds. 

Under lump sum contracts there is an allowance for variations to the scope of the works.  These have to be measured against the specification item for scope and if possible new costs should be pro-rata the individual prices given within the tendered document. Given the nature of the project the stone repairs can only be fully ascertained on defrassing and cleaning the stonework from a scaffold (the building is seven storeys high).

The basis of the specification is therefore difficult and in this instance, largely inspected using binoculars and inserting provisional quantities for various types of repair and in that way the rates can be pro-rata for any variations. Additionally, sample repairs were undertaken to confirm a reasonable match to the existing stonework. The constituents of the repair were specified as part of the pre tender specification.

As part of the tender a contingency sum was allowed and is approximately 10% of the contract value (circa £400k). This is to cover any unforeseen items and is a standard approach with lump sum contracts. Part of the contingency has already been expended and is a necessary cushion to cover items that could not be anticipated in the tender.

Professional Surveyors In Slough & Windsor

Spencer Lion is one of the leading building surveyors in Slough and Windsor. We have been established for over ten years, with more than 25 years of experience, acting for both residential and commercial clients. To find out more or to arrange a surveyor in Slough please call us on 01753 850304 or email info@surveyorsslough.co.uk