- Project plans
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- Industry context
Last edited 28 Feb 2018
Schedule of rates for construction
However, on a much larger scale, a 'schedule of rates term contract', 'term contract' or 'measured term contract' may be used when the nature of work required is known but it cannot be quantified, or if continuity of programme cannot be determined. In the absence of an estimate, tenderers quote unit rates against a document that is intended to cover all likely activities that might form part of the works.
As the extent of the work is unknown, the unit rates include overheads and profit. General preliminaries such as scaffolding, temporary power, supervision and temporary accommodation will also have rates. On projects longer than around 18 months there might be escalation provisions based on annual percentage increases.
 Pros and cons
The advantages of schedule of rates term contracts include:
- Variations are easier to estimate and normally cheaper than on fixed price traditional contracts.
- The client can stop and start work at a pace that might be determined by cash flow or funding.
- A larger pool of contractors can be asked to tender as the process is inexpensive and quick.
- It is flexible in relation to scope and contractual commitment.
- As a fully-detailed design is not required the client can obtain tenders at the early stages of a project and begin construction before completion of the design. So to this extent it is 'fast track'.
The disadvantages include:
- Additional resources are required to measure work and certify payments.
- The client does not have a final price when committing to starting work.
- It is difficult for contractors to plan long-term resources and so might mean changes to personnel with loss of continuity.
- Contractors may be tempted to front-load costs in case later work does not materialise.
- There is no real incentive for contractors to treat such work with any sense of urgency and its best staff will be placed on the projects where the contractor is carrying more risk.
Tender documents might have the following headings:
- Methods of measurement.
- Qualification of star and proportional rates.
- Site preliminaries.
- Treatment of overtime rates.
- Codes of practice.
- Inclusion of protection, waste, transportation and health and safety compliance.
- Approved list of suppliers.
- What is included in rates,such as all subsistence and travel expenses.
- Client direct supplies and directly employed tradesmen.
- Testing and commissioning.
- Curved work premium.
- Definitions as used in the document.
- Geotechnical investigation.
- Concrete work.
- Brick and blockwork and masonry.
- Roofing and tanking.
- Scaffolding and staging.
- Carpentry and joinery.
- Steel and metalwork.
- Fire shutters.
- Plasterwork, floor, wall, ceiling finishes.
- Plumbing and drainage including cable ducts.
- Fixtures, fittings and soft furnishings.
- Demountable partitions, dry walling and cubicles.
- External works.
- Plant and equipment hire.
- Electrical installation.
- High voltage switchgear.
- Low voltage switchgear.
- Standby generators.
- Air conditioning and ventilation.
- Building Management System (BMS) controls.
- Fire services.
- Town gas.
- Catering equipment.
- Intruder alarm.
- Public address system.
- External lighting and electric gates.
- Cleaning cradle system.
Each of these headings will cover numerous elements which then have to be broken down into pricing units. For instance brick, blockwork and masonry might include a section called natural marble or granite slabs/tiles of any shape, size pattern or colour :
 Benchmark rates
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