Construction And Engineering Contracts: What’s In A Rate?

Rates have been used in construction and engineering contracts for centuries. Some of the advantages of work being charged for on the basis of particular rates is that it can simplify pricing, and reduce pricing risk (for contractors) if the quantity and duration of work is unknown. However, one of the recurring issues with the use of rates in contracts is what works and costs are and are not included in any particular rate or other item.

Carillion v SP Power Systems

In Carillion v SP Power Systems (for our Law-Now article on a related judgment click here), Carillion entered into a framework agreement to perform various excavation, cable laying, backfilling and reinstatement works for SP Power, primarily on roads in Scotland. The framework agreement contemplated works orders being placed, where Carillion would be paid for the work according to a schedule of rates.