Settlement where a design change reduces the quantities: adjustment rules for unit-rate and lump-sum contracts, compensation for outright cancellation of an item, and the linkage of preliminaries
The settlement principle for reduced quantities is "re-measure against the confirmed as-varied quantities and settle the difference either way". Re-measurable (unit-rate) contracts: where the reduction is not more than 15% (inclusive), settle at the contract rates; where it exceeds 15% (exclusive), the rates may reasonably be increased because the purchasing price advantage has been lost; for lump-sum contracts, whether to adjust or negotiate depends on whether the contract rates apply to the valuation of variations. Where an item of work is cancelled outright for reasons not attributable to the contractor, the employer shall compensate the contractor's losses and reasonable anticipated profit; preliminaries and the main contractor's attendance and coordination provisions follow the variation, and failure to submit the scheme in writing in time is deemed a waiver of the right.
Applicable Codes
- GB/T 50500-2024 建设工程工程量清单计价标准
- T/ZBD 100.5-2023 建设工程结算审核作业指引
Topic Positioning
How the settlement price is adjusted when a design change (including outright cancellation of an item of work) reduces the quantities - covering all-in rate adjustment under unit-rate and lump-sum contracts, compensation for cancellation, and the linkage of preliminaries and the main contractor's attendance and coordination provisions. Based on GB/T 50500-2024 "Pricing Standard for Bill of Quantities of Construction Works" and T/ZBD 100.5-2023 "Guidelines for Settlement Review Practice".
Core Conclusions
Reduced quantities are "confirmed first, then settled": re-measure under the confirmed variation instruction and drawings and the contract's agreed measurement rules (7.4.1). Re-measurable (unit-rate) contracts (8.9.1/8.9.2): where the reduction is not more than 15% (inclusive), the contract all-in rates apply - identical item descriptions and conditions take the contract rate, similar ones are converted and adjusted, and with neither identical nor similar items the rates are negotiated and built up; where the reduction exceeds 15% (exclusive), the rates may reasonably be increased because the purchasing price advantage is lost - "less quantity, higher rate". Lump-sum contracts (8.9.3): where the contract rates apply to the valuation of variations, the above two clauses apply equally, otherwise the parties negotiate; a lump-sum contract is not adjusted for BOQ errors (8.2.3), but reductions caused by variations remain adjustable, and at review the unexecuted or inconsistent portions may generally be disallowed. Outright cancellation of an item of work for reasons not attributable to the contractor (8.9.8): the employer shall compensate the contractor's losses and reasonable anticipated profit (materials already purchased, amortisation of mobilised resources, standby costs), except where the work is transferred to others for execution or is already included elsewhere. Linkage of preliminaries (8.9.6/8.9.7): preliminaries related to the permanent works follow the varied quantities; independent competitive preliminaries follow the contract or the tendered pricing; percentage-rate preliminaries are recomputed on the changed base and rate; where a variation changes the preliminaries, the scheme must be submitted in writing before implementation, failing which the right is deemed waived. Where a specialist subcontract or a specialist work directly let by the employer is cancelled, the corresponding main contractor's attendance and coordination provisions shall be deducted (8.5.3).
Applicable Boundaries
Applies only to quantity reductions caused by variations; BOQ errors (omissions, non-conforming item descriptions, quantity differences) are handled separately under 8.2.1 - do not conflate. 15% is the default boundary; contrary contract agreements prevail. That a lump-sum contract is not adjusted for BOQ errors is the contractor's pricing risk, different in nature from variation adjustment.
Further Reading
GB/T 50500-2024 clauses 7.4.1-7.4.2 (measurement of variations), 8.9.1-8.9.3 (rate adjustment), 8.9.6-8.9.8 (preliminaries and cancellation compensation), 8.5.3 (deduction of the attendance and coordination provisions), 8.2.1/8.2.3 (BOQ errors); T/ZBD 100.5-2023 clauses 3.1.5 (disallowance on lump-sum) and 3.1.6 (fixed-rate review and adjustment of preliminaries).