Method-related Charges (MRC) : the cost effects which related to the claims

Abstract

In construction projects, the Bill of Quantities (BQ) is used to provide a detailed description of the total value of an item and serve as a normal payment mechanism for work procured by the related parties, such as contractors. However, the Bill of Quantities (BQ) has some essential flaws, the biggest of which being that construction costs are rarely directly proportional to the quantity. The effect of this flaw may be minimal if changes in the scope of the works are few, as the difference between the contractor’s costs and income will remain small. The concept of Method-related Charges (MRC) will increase the change in scope that can be accommodated. Nevertheless, friction often results when significant changes in scope or methods occur, as the contractor struggles to justify any additional entitlement and to show where his extra costs come from. This research aims to investigate the issues pertaining to the Method-related Charges (MRC). The focus of the research is on how to evaluate the cost effects of Method-related Charger (MRC) on construction and to develop measures to minimize the impact of cost related issues raised under Method-related Charges (MRC) claims. Another difficulty arises with Method-related Charges (MRC) items, which is that the Civil Engineering Standard Method of Measurement (CESMM) clause states that a Method-related Charges (MRC) does not bind the contractor to use the method defined; it is not subject to admeasurement; and is not to be increased or decreased for any change method adopted by the contractor. This research uses an explanatory paradigm approach in exploring the issue by employing a qualitative method. Data collection is comprised of interviews and document reviews that aim to investigate the issue of Method-related Charges (MRC), to evaluate the cost effects of Method-related Charges (MRC), and therefore to minimize the cost related issues in the claim of Method-related Charges (MRC). Interviews were conducted among construction practitioners and content analysis was used to analyse the data collected. Validation of the findings from this research is achieved through triangulation of interviews and document analysis. The findings from this research found that Method-related Charges (MRC) enables the contractor optionally to enter separately in the tender such non-quantity proportional charges as considered will have a significant influence on the cost of the works and for which the contractor omits to enter into Method-related Charges (MRC). The significant outcomes of this research are expected to give a new perspective on the Method-related Charges (MRC).