INTERNAL & EXTERNAL VALUATIONS: SIMPLIFIED SCENARIO
CONTRACT SUMMARY OF
PARTICULARS:
(1) Job: Excavation (900m3 qty)
(2) Contract duration: 30 days
(3) Method statement:
Method: Excavate and load using
loader, and transport using using
dump trucks.
Plant: 1 loader @ $60/day, and 2
dump trucks @ 2 x $60/day
Labor: 1 gang @ $60/day
Output per day: 30m3
(4) Contract Sum (priced at 20%
margin)
Cost = $240/day x 30 = $7200
Contract Sum = 1.2 x 7,200 =
$8,640
(5) Clause x.xx [Delays caused by
authorities] gives the contractor
entitlement to claim cost in the
event.
FACTS
During performance, 5 days
of delay occurred as a result
of delays caused by
authorities..
An EOT has been granted
and the contractor completed
the job in 35 days.
The actual charges the
contractor was paying for
resource throughout the
contract period were:
Plant: 1 loader @ $70day, and
2 dump trucks @ 2 x $70/day
Labor: 1 gang @ $70/day
The contractor submitted a
cost claim established on the
actual costs incurred as a
result of the delay.
EXTERNAL
VALUATION
(1) Payment Application:
IPAs to the employer are based on
the contractual rates and (not the
actual charges the contractor was
paying) + 20% margin:
Cost = 30 days x [$60 + (2 x $60) +
$60] = $7,200
profit = 20% x $7,200 = $1,440
Value of work done = $7,200 +
$1,440 = $8,640
(2) Contractor Claim:
Ascertained by the Engineer based
on the actual cost incurred during
the delay
Cost = 5 days x [$70 + (2 x $70) +
$70] = $1400
(3) Final Account =
$8,640 + $1400 = $10,040
INTERNAL
VALUATION
Cost/Value reconciliation (CVR):
(1) Value of work done:
Based on the external valuation, as per
the contractual rates:
Cost of work done = 30 days x [$60 +
(2 x $60) + $60] = $7,200
profit = 20% x $7,200 = $1,440
Value of work done = $7,200 + $1,440
= $8,640
(2) Cost of work done
Based on the actual cost/charges the
contractor was paying for resource
= 30 days x [$70 + (2 x $70) + $70] =
$8,400
(3) Profit statement
Forecasted Profit = $1,440
Loss due to increased cost = $1,200
Actual Profit = $8,640 - $8,400 = $240