Dayworks in the Construction Industry
Dayworks are bound to come up from time to time since it is impossible working from a Bill of Quantities to cover all eventualities. Daywork is work for which the contractor is paid on the basis of cost of labour, materials, and plant plus an agreed percentage for overheads and profit. Payment in this way is usually reserved for items that cannot be measured and priced in the normal way.
All contracts normally provides that the first point of reference for the evaluation of variation orders, change orders or additional works instructions is the existing contract rates and prices. However, in the event that the work is different in nature or no similar item exists in the bill then only may dayworks rates be applied. Daywork payments may arise in contract variations for items such as breaking up unexpected obstructions excavations or for the adjustment of provisional sums.
There two options how Daywork rates can be priced in the bill.
Option 'A'- Percentage Addition, is based upon the traditional method of pricing labour, plant and material in dayworks, and allows for a percentage addition to be made for incidental costs, overheads and profit, to the prime cost of labour, plant or material applicable at the time the dayworks is carried out.
Option 'B' - All Inclusive Rates, includes not only the prime cost of labour but also an allowance for incidental costs, overheads and profit. The all-inclusive rates are deemed to be fixed for the period of the contract. However, where a fluctuating price contract is used, or where the rates in the contract are to be index-linked, the all-inclusive rates shall be adjusted by a suitable index in accordance with the contract conditions.
Using Option 'B' (All Inclusive Rates) gives the employer price certainty in terms of the labour rate to be used in any daywork during the contract, but there is the potential that the rate will be higher, as the contractor is likely to build in a contingency to cover any unknown increases in labour, plant or material rates that may occur during the contract period.
We offer a dayworks template as part of the Commercial Management Package.