The re-measurable/remeasurement contract is the most popular type of contract used in the former construction industry. But even so, large construction companies are using this method to hire subcontractors for tasks such as painting, plastering, etc. In this method, the companies will receive the payment based on actual work. Compared to other procurement methods, the client’s risk is much higher, and the contractor’s risk is minimal in this method
There is a little difference between the term remeasurement and the term admeasurement. Remeasurement is the whole procedure of re-measuring the completed amount of work. On the other hand, the admeasurement is the difference between the estimated amount and the real amount.
What is Remeasurement contract / Unit price contract or Re-measurable contract
Remeasurement contracts, Re-measurable contracts or measure and pay contracts may be required on projects where the nature of the critical work can be stated in relevant detail when they are tendered, but not amount. For example, excavation work, It is difficult to estimate the quantity of excavation work until the job has started.
Instead of offering a fixed price, rates are provided in the contractor’s tender, either according to the price estimate or in the price schedule. The actual amount of work done then measured, and the tender rates apply to those quantities. The contractor gets payment based on his completed work. As a result, pricing may differ from actual estimates.
Re-measurable contract(re-measurement contracts) agreements can allow an initial start on site before the design is complete. It also supports the relatively smooth modification of works. However, there is inevitably some risk to the client because he does not know the cost of the works. The client is taking the risk of any ‘unknown persons’, and while this may result in competitive prices from contractors. The level of uncertainty for the client means that in addition to civil engineering projects, the re-measurable contracts are extraordinary.
Let me explain to you more, in re-measurement contracts(re-measurable contracts), completed work will depend on default unit rates. The contractors will get all payments based on their actual work done after measuring the complete work. Therefore, the final cost of the project will rely on the unit prices and the exact quantity. The contractor will provide its rates based on the BOQ supplied by the client.
Moreover, the contract is helpful for several tasks that quantities cannot determine in the initial stage as we mentioned in the lump sum contracts, the procurement process to perform the work mainly based on the client’s requirements. Such requirements may consist of the budget, quality, and time frame. Let me explain where measurable contracts are necessary;
- The client does not have a tight budget.
- The client wants to improve and change the design and the finishes at a later stage.
- And the client wants to start works immediately based on competitive unit rates.
Therefore, based on the above requirement, the project management team (consultants) should prepare a preliminary design and approximate BOQ to start work immediately. Most of the traditional closed envelope tendering method helps in this procurement method to select the right contractor. The team will choose the appropriate contractor after comparing the unit rates of each contractor.
All the above information is to help you to know about re-measurement contracts. But I didn’t stop here; there’s more to know about the plus and negative points of remeasurement contracts.
What are the advantages and disadvantages of remeasurement/re measurable or unit price contracts
Advantages of remeasurement contract (unit price contracts)
- works can start after finalizing the initial design and BOQ
- Can reduce the design cost.
- High possibility to do value engineering
- Prices (unit rates) will be competitive
- Contractor’s risk is comparatively low
Disadvantages of re-measurable contract/remeasurement contract (unit price contracts)
- Can not predict the final value of the project
- Delays in contractor’s payments (assessment of the measurements takes time)
- Client’s risk is comparatively high
- Controlling and reporting will be a difficult task
- A high number of consultant team may require for handling the project (Ex: for remeasuring)
lump sum contract vs remeasurement contract
Below are the main deferences between lump-sum contracts and remeasurement contracts
|Lump Sum Contracts||Re-measurable Contracts|
|Client’s risk is very low||Client’s risk is very high|
|Contractor’s risk is high||Contractor’s risk is low|
|Final contract value is fixed||Final contract value is unknown|
|Tendering process is lengthy||Easy and quick bid process|