| Date | 24 June 1998 |
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| Judgment | A & J Rogers -v- Northern Ireland Housing Executive, QBD Northern Ireland April 1998 |
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| The Issue | Use of extra-over rates in Bills of Quantities. |
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| Implication |
The incorrect use of extra-over items in Bills of Quantities will lead to disputes. Courts may interpret these against the perceived financial effect in relation to the tendered amount. |
printNothing divides the industry quite so much as the argument over the use of Bills of Quantities. Those who would campaign for the use of Bills of Quantities have long recognised that the real challenge is to establish a standard method of measurement which can be used effectively and succinctly with all types of construction whilst being acceptable as a pricing document to all sectors of the industry. The civil engineering standard method of measurement has reasonably widespread acceptance within its industry. This cannot be said for the building SMM. Whereas there has been talk for quite some time of the need for an all new SMM 8, certain sectors of the industry remain content to continue to use the SMM 5th Edition. At least when problems arise they remain of the old fashioned, familiar variety. For example, what is meant by an "extra-over" rate? The case of A & J Rogers -v- The Northern Ireland Housing Executive considered this type of tricky question. The parties had entered into a JCT 80 contract with Bills of Quantities measured in accordance with SMM 5 for the modernisation of 24 houses occupied by tenants of the NIHE. The contractor was to provide temporary accommodation and stores to house the tenants and their belongings during the works. The Bills of Quantities contained the following items: "(a) Four-berth mobile homes (BS3632;1981, amended 1983); duration not exceeding one week; supplying, connecting temporary electricity supply, rates and charges; all maintenance; cleaning out and disinfecting as necessary; removing from site; making good. 12 no. @ £280 = £3360. (b) Extra-over item (a) for each additional week 288 no. @ £40 = £11520." The bill contained similar items in respect of the stores to be provided by the contractor. Pricing out these items as the contractor did, and allowing the total to form the basis of the tender amount, an independent observer would perhaps see problems brewing. Clearly each of these 12 mobile homes would be likely to be on-site for longer than one week. The question was, how much was to be paid for the second and subsequent weeks? The contractor's position was quite clear. Item (b) was stated to be "extra-over" item (a). That is, the rate of £40 was in addition to the rate of £280. In other words the second and subsequent weeks that each of these mobile homes were required on site would require to be rated at £320 per week. If you were to ask a room full of quantity surveyors whether this was a flight of fancy on the part of the contractor, the majority would answer absolutely not. This is the way extra-over rates operate. They are in addition to the rate to which they are described as "extra-over". You simply cannot have one without the other. Ask a room full of lawyers the same question however, where there might be little experience of this type of question and no experience whatsoever in taking-off Bills of Quantities, and the answer is likely to be quite different. I suspect the majority would answer that the additional weeks should be rated at £40. Indeed in this case the result appears to have fallen neatly on either side of this divide. In front of an arbitrator the matter was dealt with in accordance with accepted practice. The arbitrator awarded that the contractor should be entitled to £320 per additional week for each mobile home. Unhappy with this result the NIHE took the matter to the Queen's Bench division of the High Court in Northern Ireland. Whether the contractor had been estopped from arguing for the higher rate was considered and thrown out. Whether the employer was bound by a contra preferentum rule, in respect of any ambiguity in the contract, was considered and thrown out. Willis' standard textbook "Elements of Quantity Surveying" was considered and it seems either misinterpreted or ignored where it says "some items are measured as "extra-over" others, that is that they are not to be priced at the full value of all their labour and materials, as these have to a certain extent already been measured." The court was clear in its view that the form used by the NIHE in the Bills of Quantities was appropriate to convey the basis on which the tenderers' prices should be calculated and set out. More telling in the deliberations of the court, was the financial effect of all of this. The Judge stated "I am unable to accept that the contractor expected the contract price to exceed the figure which he presented as the (tender) amount ……". The appeal was allowed on the basis that the correct rate to be applied for each additional week for each mobile home was £40. Perhaps this will have at least covered the contractor's electricity bills. One is left with the obvious thought. Is the tendering contractor to "second guess" potential uncertainties or errors in the Bills, in order to reflect a likely "final account" sum in its tender, or does the tenderer price the Bills as presented? We have all been brought up to believe in the latter. Not according to the court.
CJ-9822
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