Re-Measurement Contract

Also known as Unit Price Contracts

The Re-measurement Contract contains a Bill of Quantities ( BQ )provided by the employer or its consultants, however the BQ quantity is estimated and not final . The contractor will quote against each BQ item and enter a unit rate or unit price to build up the total contract price on basis of those BQ quantities .

During the construction period , the actual quantity of works executed under each BQ item will be jointly measured and valued at the quoted rate for interim payment purpose .

At completion of contract , the exact quantity of works finally executed under each BQ item will be again re-measured ( ie. the final measurement ) and valued at the quoted rate to evaluate the final account .

In case of instructed variation or additional works that are without basis of BQ rate(s) , the contractor can build up new rates or star rates for those works for valuation .

Re-measurement contracts are seldom used for an entire major construction project, but they are frequently used for agreements with sub-contractors.

Arguably , this type of contract is fair with the employer at risk for total quantities and the Contractor at risk for fixed unit price. Disputes situations are reduced because the final contact sum is based on a final re-measurement rather than being based on preliminary quantities set at tender but large quantity changes (>15-25%) can lead to increase or decrease in unit prices which can cause some intense negiotiations to settle.

Requires:  

1.  Adequate breakdown and definition of work units 
2.  Good quantity surveying and reporting system 
3.  Sufficient design definition to estimate quantities of units 
4.  Experience in developing bills of quantities 
5.  Payment terms properly tied to measured work completion 
6.  Owner-furnished drawings and materials must arrive on time 
7.  Quantity sensitive analysis of unit prices to evaluate total bid price for potential quantity variations 

Advantages: 

1. Complete design definition not required at tender
2. “Typical” drawings can be used for bidding 
3. Suitable for competitive bidding 
4. Easy for contractor selection 
5. Early project start possible 
6. Scope and quantities easily adjustable 

Disadvantages: 

1.  Final cost not known at outset since bills of quantities at tender time are only estimates 
2.  More staff maybe needed to measure, control, and report on units completed
3. Re-measurement contracts tend to draw unbalanced bidding