Dayworks are often perceived to be the bane of the construction industry, but, if managed correctly, can be a vital source of record keeping.
Dayworks are a method of valuing works on the basis of the cost of labour, materials and plant plus a mark-up for overheads and profit. This method should only be used if the normal valuation mechanism is not appropriate. Unfortunately, sometimes dayworks are submitted for varied works in order to achieve better margins than using contract rates.
There are two basic options as to how daywork rates can be established:
Option A – a percentage addition:
Prime cost to which a percentage is added for overheads, profit and incidental costs.
Option B – all-inclusive rates:
All-inclusive rates are quoted at tender and incorporated in the contract documents. These include an allowance for overheads and profit, either fixed for the period of the contract or, if allowed in the contract, subject to an inflation allowance.
The first thing to remember is that submission of a daywork sheet for varied works does not automatically entitle the contractor to payment on a daywork basis. If the works are substantially the same as the contract works, then the works should be valued using contract rates with the daywork sheet used as a record only.
If it has been agreed that the varied works should be valued as dayworks and the resources have been agreed by the Contractor’s representative, the Quantity Surveyor has no right to reduce the hours and other resources on the sheets.
When the Contractor’s representative is presented with daywork sheets, they will usually check they are happy that it is an accurate reflection of the resources used to carry out the works. They will also sometimes add the phrase “For record purposes only”, or just FRPO. The QS will then decide if the works should be valued on a daywork basis, or using contract rates.
If the resources detailed on a daywork sheet are disputed by the Contractor’s representative, this should be raised when the sheet is submitted so an accurate record can be agreed. If this does not happen, it is the responsibility of the Contractor’s representative to prove the claimed resources are incorrect. There is therefore the risk of having to prove at a later stage that the information included in the records is wrong or otherwise payment will have to be made in full.
In summary, check for a “Daywork Procedure” which may be incorporated into the Sub-Contract. If you feel the varied works cannot be valued using another method, and dayworks are appropriate, make sure you get agreement prior to starting to prevent arguments after the works are complete.
