PROJECT: ADDITIONAL 5 FLOORS FELCRIS CENTRALE TOWER C
RF. NO: Corr-INT-21-037
INTER-OFFICE MEMO
DATE
:
November 22, 2021
TO
:
ENGR. ELIZER
Property and Mall Manager
FROM
:
Engr. Adrian Christian Lee
Quantity Surveyior – Bldg C. Expansion
SUBJECT
Consumables
:
Evaluation on RPH letter ref. FHRC-EX-004-21 re
Sir,
This is in reference to the reply of RPHinlog SDCSI re supply of Consumables on their letter with
reference FHRC-EX-004-21. We would like to evaluate their claim on two angles: Contractual and
Technical.
CONTRACTUAL
The contract, specifically under Section 2: Item 13, states that the contractor shall “provide & supervise
all labor, consumables, and access to the works.” Therefore, although it may not have been priced
explicitly in the Bill of Quantities, it must be interpreted that it has been considered in the contract sum
(either in the labor rate, miscellaneous cost, or elsewhere) as it has been defined to be part of the
Contractor’s Scope of Works in the Contract.
On the other hand, when RPH claimed that this part of the contract provision is a “miscommunication…
of the contract as it was clearly discussed during the pre-bid conference that the package covers supply
of labor, tools, and equipment only, consumables excluded”, the CSA Team urges all parties to honor the
contract which has been mutually agreed by the parties involved. The contract shall supersede and
supplant all other prior communications and promises, whether oral or written.
TECHNICAL
In the submitted cost breakdown by RPH for consumables cost, the following rates were applied to
determine the rates of consumables:
Operated by:
FELCRIS HOTELS & RESORTS CORPORATION
Quimpo Boulevard, Barangay 40-D, Davao City
Telephone Number (082) 237-7777
PROJECT: ADDITIONAL 5 FLOORS FELCRIS CENTRALE TOWER C
RF. NO: Corr-INT-21-037
Direct Cost
For items with Labor and Materials package: Maximum of 5% of the cost
For items with Labor only package:
Maximum of 10% of the cost
Direct Cost Total: Php 5,391,858.76
Indirect Cost
Overhead, Supervision, Cont. & Misc:
Contractor’s Profit:
VAT:
Indirect Cost Total: Php 1,186,208.93
5% of Direct Cost
5% of Direct Cost
12% of Direct Cost
As there is no standard reference for cost computation of project consumables cost, our team has referred
to BOQ reference from other projects of other contractors to evaluate RPH’s percentage rate. The
percentage rate used for consumables cost on other projects plays around 10% of the total unit rate of
labor and material cost, which RPH’s rate has fall within. However, the rate for consumables in other
projects is usually inclusive already of overhead, supervision, contingencies, profit, and VAT. Thus, the
fair rate for RPH’s consumables cost based on percentage must be the Php 5,391,858.76 to be inclusive
of all other indirect cost involved already.
As additional comparison reference, the rates used for bidding of the Davao Centrale Hotel is shown
below:
Works
LVL Labor and
Consumables
Deformed reinforcing bars Php16/kg
Ready Mix Concrete
Php1720/cum.
Steel Fabrication
Php50/kg
RPH Labor Rate
Note: Inclusivity of Consumables is Being
Evaluated
Php12.7/kg
Php635/cum
Php20.32/kg
Note: Rates are inclusive of VAT and other indirect cost
If we look at the unit rate of LVL against RPH for the labor and consumables, RPH’s rate falls significant
below than that of LVL. Based on this comparison, it may be justified that RPH has not considered the
cost for consumables in their unit rates.
Operated by:
FELCRIS HOTELS & RESORTS CORPORATION
Quimpo Boulevard, Barangay 40-D, Davao City
Telephone Number (082) 237-7777
PROJECT: ADDITIONAL 5 FLOORS FELCRIS CENTRALE TOWER C
CONCLUSION
RF. NO: Corr-INT-21-037
The CSA Team recommendation is limited to the bounds of the contract; that is, the consumables is part
of RPH scopes and must have been considered in the contract sum. The parties must duly perform the
duties established by the contract without regards to the high or low profitability of the works.
The technical evaluation above is made as additional reference to give context to the claim of RPH. The
unit rate provided for their labor cost is lower than the market rates for the corresponding works. As such,
cost for consumables may have not been included in their consideration.
Best Regards,
Engr. Adrian Christian Lee
Quantity Surveyor
Operated by:
FELCRIS HOTELS & RESORTS CORPORATION
Quimpo Boulevard, Barangay 40-D, Davao City
Telephone Number (082) 237-7777