Construction projects are executed through a contract signed between the owner of the project (called the client or employer) and the contractor. The construction contract allows for the introduction of new works whose scope may not have been captured in the original contract, through variations.
This new work is valued using the contract unit rates in the priced bills of quantities or adjusted contract rates through prorate pricing. The mentioned bills of quantities are an important contract document that forms the basis for efficient cost management by the project quantity surveyor (QS) and for fair compensation of the contractor for the value of work done and materials delivered on-site.
However, in some situations, it is not fair to compensate the contractor by applying these normal valuation rules under the contract. In this case, a contract ought to have been designed in a way that provides for the use of dayworks, upon agreement by the contract parties as guided by their professional construction consultants.
What is Dayworks in Construction?
Dayworks can be described as additional or substituted work in a construction contract which cannot be properly valued using the quantity take-off and traditional quantity surveying measurements but is subject to payment on a time basis for the labour, associated materials, and construction plant and equipment used.
According to Tamara, strategic product consultant at Procore, the project owner reimburses the contractor for the materials they use and the labour hours they bill on a project; along with the agreed markup for their profits and overheads.
A good example of work that can be treated as dayworks is in the case where unforeseen obstructions are encountered while the contractor is carrying out groundworks.
It is common practice to ask the contractor at the tender stage to submit schedules of rates for labour, materials, plant and equipment and their percentages for profits, with provisional quantities. These schedules of rates are heavily relied on when doing valuation of dayworks.
Valuation of Dayworks
To facilitate the valuation of dayworks in a construction contract, we have seen that a daywork schedule should be included if the probability of unforeseen work, outside the items included in a bill of quantities, is relatively high.
The daywork schedule should comprise the following:
- A list of the various classes of labour, materials, mechanical plant and equipment, and sundry items that will be spent on the works,
- Daywork rates and prices for various categories of labour are to be inserted by the tenderer, together with a statement of the conditions under which the contractor will be paid for work executed on a daywork basis,
- A percentage to be entered by the tenderer against each daywork item to cover profits and overheads, and
- Sub-total amount of labour, materials and plant, including the contractor’s profit, overheads, supervision and other charges.
According to Clause A9 of the Revised Standard Method of Measurement for Eastern Africa, the term ‘daywork’ covers work for which the contractor is to be paid based on the cost of materials, labour and plant plus an agreed percentage for overheads and profits. This definition summarizes the components of the daywork schedule very succinctly.
During the actual valuation of works, the professional quantity surveyor (representing the project owner) and the contractor’s quantity surveyor, meet and agree on the factors of labour, materials, plant and equipment, establishment charges, profits, and overheads to be captured in the calculation for the value of the dayworks.
The contractor is required to present factual evidence of the expenditure incurred to execute these works in the form of invoices, billing charges, receipts for materials and mechanical plant, and a list of labourers and the man-hours invested by each in the project. This information will be verified by the consultants led by the professional quantity surveyor before a final determination is reached.
Therefore, if you are working as/for a contractor, it is essential to keep accurate records of dayworks in a daywork sheet, properly verified by the clerk of works and the consultants on the site to aid with backing up your payment claims.
The four components that form part of the calculations for the value of dayworks are as follows:
- Labour: can be given as a sum or in a schedule of the different types of labour considering a provisional quantity for each of the hours of each category. These include wages, bonuses, and allowances according to the existing contracts to be paid to the people concerned.
- Materials: the cost of materials can be given as a sum or in a schedule of materials with provisional quantities. These costs are paid net as invoiced, which includes the costs of delivering the materials to the construction site.
- Plant and Equipment: this details the cost of plant and equipment employed exclusively on that specific work section, and can be given as a sum. Alternatively, it can be captured as a schedule of the different categories of plant and equipment containing a provisional quantity of the hours or other periods of hire/use as may be appropriate for each category. The costs for plant and equipment include the cost of fuels, consumables, stores, repairs, maintenance, and insurance.
- Establishment Charges, Overheads and Profits: this includes costs related to the employment of labour (that is the cost of acquiring labour, such as costs for advertising for the positions and conducting interviews); costs related to the storage of materials including storage and wastage on site, and contractor’s administrative arrangements.
The expenses for temporary works (scaffolding, formwork, casework etc.) and sundries are also factored in. Sundries are miscellaneous works or items that do not fit in any particular category – they are often small inexpensive and useful items that help in the execution of the desired work in the contract.
Conclusion
We have seen that dayworks provides a flexible means of valuing adjustments and additional work that was not captured in the normal contract bills of quantities items. These may arise during the construction phase of the project when the contract scope has already been established and agreed on.
It is common practice to have schedules of rates for labour, materials, construction plant and equipment, and profits and overheads annexed to bills of quantities and contractors asked to price them at the tender stage. These will form the basis for the valuation of dayworks when they occur in the project.
By understanding dayworks, construction professionals will prepare tender documents that accurately capture all the details that are required to make cost management and control during the construction phase an easy task.
Also, contractors and their technical staff will benefit from adopting the practice of keeping accurate documentation of their work expenses and inputs to aid in settling claims if they arise during the contract.