The three forms of works contract
Belgian rules distinguish three ways of determining price, which may coexist within one contract. Their coexistence within one contract is common and is read item by item.
| Form | What is fixed | What varies |
|---|---|---|
| Lump-sum contract | one fixed price for the whole | nothing, absent a change to the contract |
| Schedule-of-rates contract | the unit rates | the quantities |
| Mixed contract | a combination | by item |
One point of vocabulary avoids a widespread confusion. In a schedule-of-rates contract it is the unit rates that are fixed, while quantities are provisional or expressed within a range. The fixed element bears on price, not on quantity.
Provisional quantity
This is the commonest regime in building works. It is the regime of provisional quantities.
The quantity entered in the bill is an estimate prepared by the designer. The rate is firm, and payment is made on quantities actually executed, agreed on site.
Three practical consequences.
The contract sum is not the final sum. The total of the bill is a forecast, and a gap with the final account is normal, not abnormal.
Quantity risk falls on the client. Where actual quantity exceeds the forecast, the excess is due at the agreed rate.
The rate is protected. The contractor cannot revisit it because the quantity has varied, save in the cases and conditions provided by review clauses.
Lump-sum quantity
The regime reverses.
The quantity is fixed contractually. Any difference between stated and executed quantity gives rise to no adjustment, upward or downward.
Quantity risk therefore falls on the contractor, who prices it in. This deserves attention when comparing tenders: a lump-sum item is priced with a safety margin that a provisional item's rate does not contain.
A practice worth knowing: making an item lump-sum because the quantity is poorly known does not remove the uncertainty, it shifts it, and its cost reappears in the price. A lump sum shifts the risk without removing the technical uncertainty.
Who bears what, in summary
| Situation | Provisional quantity | Lump-sum quantity |
|---|---|---|
| Actual quantity higher | excess due by the client | borne by the contractor |
| Actual quantity lower | saving for the client | no effect |
| Designer's error | corrected at final account | regime of bill errors |
| Predictability of final cost | low | high |
A contract composed mainly of provisional quantities is fairer but less predictable. A mainly lump-sum contract is more predictable but dearer at equal brief, the risk premium being priced in.
Review clauses and their time limits
This is the point practitioners often discover too late. It concerns the scope for derogating from the general performance rules.
Belgian rules provide for review clauses allowing, in certain circumstances, revision of the contract conditions. But their operation is confined within strict time limits, on pain of forfeiture.
A contractor seeking to apply a review clause must send a written, quantified justification of the claim, notably:
before expiry of the contractual periods, where an extension of time or termination is sought;
at the latest ninety days from notification of the certificate of provisional acceptance, where another revision of the contract or damages is sought.
Beyond those limits the right is lost, however strong the merits. It is one of the few points where the calendar entirely overrides the argument.
A drafting point
The provisions governing these mechanisms are among those from which derogation is possible, but not freely. The derogation must be reasoned and listed to take effect.
Certain derogations must be the subject of a formal statement of reasons in the particular specification. A particular specification derogating without reasons exposes the derogating clause.
For a quantity surveyor reading a particular specification, the presence of a list of derogations is therefore first-order information: it shows where the standard regime has been set aside. It is read before the bill itself.
What this means for a professional
Four rules.
Identify the form of each item before pricing. A mixed bill is not read uniformly.
Do not compare a lump-sum rate with a provisional rate without allowing for the risk premium in the former.
Track quantities during construction, because under the provisional regime it is the final account that makes the final sum.
Note the claim time limits at provisional acceptance, not when the disagreement crystallises.
This article reflects the position of the rules at the date of checking and serves professional orientation. It does not constitute legal advice and does not replace assessment of the individual case.