Can the work value be offset in the lump-sum contract?

Wed, 22 Sep 2021 16:02:00  |  Print  |  Email   Share:

Construction contracts with lump-sum contract prices may only be adjusted according to the provisions of Clause 2, Article 36 of Decree 37/2015/ND-CP.

Mr. Nguyen The An'senterprise (Thai Binh), the investor of the project funded by the State budget, signed a construction contract with a contractor in the form of a lump-sum contract.

The construction work is almost completed. In the actual construction process, there are some quantities of work that are undercounted in the contract (for example, it is 100m3 of construction as per in the contract but the actual construction is 120m3 of construction following the drawings) and some work quantities are not implemented (excess quantity, for example, it is to install 10 air conditioners in the contract but there are actually 8 air conditioners installed under the drawings).

Mr. An asked if he could sign an appendix to the contract with the contractor to adjust the value of the work quantity from the quantities not performed to compensate for the higher quantities executed than the contract's (providing the value for unexecuted quantities is greater than the value for the undercounted quantities (not exceeding the signed initial contract price)?

The Ministry of Construction responded to this issue as follows:

The adjustment of the contractual price, payment, and settlement of the contract shall be made under the contents of the contract signed between the parties, the invitation to bid, the request for proposals, and the provisions of law applicable to the contract.

According to the provisions of Clause 3, Article 15 of Decree No. 37/2015/ND-CP dated April 22, 2015, of the Government detailing regulations on construction contracts, the lump-sum contract price is the contractual price that is unchanged throughout the implementation period for the quantity of work within the scope of work under the signed contract (for the contract for work execution, adjustments are made to the additional quantity of work beyond the design’s scope of work, requirements of the invitation to bid or request for proposals) except force majeure events or compulsory changes to the scope of work.

Construction contracts with lump-sum contract prices may only be adjusted according to the provisions of Clause 2, Article 36 of Decree 37/2015/ND-CP.

Thus, in case the contractor has fully performed the obligations under the contract, the actual scope of work has not changed in comparison with the signed contract, the investor is responsible for paying to the contractor according to the signed contract price (quantity and unit price signed in the contract).

By: Online Newspaper of the Government/ Translator: Viet Nguyen-Bizic

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