The legal issues involved in the pricing principle in the construction contract of the construction project are analyzed.

Key words:Bill of Quantities Valuation Standard, Settlement, Risk Burden

Abstract:This paper analyzes the common price agreement problems in the process of construction project contract performance, and the legal issues related to visa and settlement in the process of performance, and puts forward the author's own views on adjusting the project price, the method of changing the project price and the project settlement in the case of the dead price.

The price of construction project is one of the core contents of construction project contract, which has always been paid great attention in the process of signing and performing the construction project contract. For the contractor, it reflects the core content of its cost control; for the contractor, it is the ultimate purpose of its construction. Undoubtedly, it is also a frequent area of disputes in practice. Because the project payment involves many issues such as material supply and migrant workers' wages, it is also one of the key contents regulated by China's laws and regulations. China's Ministry of Finance, the Ministry of Construction has issued a special "construction project price settlement interim measures" on the project pricing method, settlement methods and so on to make provisions. Now the author combines the provisions of laws and regulations and the problems in practice to make a simple combing of the legal issues involved in the construction project price.

Overview of 1. construction project price

1, the development of engineering pricing.

Pricing basis and three stages of the development of pricing model: 1. planned economy period Pricing basis: the determination of the project cost is mainly to calculate the project quantity according to the design drawings and unified calculation rules of the project quantity, and apply the unified quota and unit price to calculate the direct cost of the project, then calculate the indirect cost and related costs according to the specified charging standard, and finally determine the estimated budget of the project, which is undertaken by the construction unit, and after the completion of the preparation of the settlement and final accounts, after the audit is the final cost of the project. Pricing during the 2. transition period: the construction and installation project costs are divided into direct costs, indirect costs, planned profits and taxes, and then direct costs are calculated according to various project budget quotas and related price adjustment methods. On the basis of direct costs, indirect costs are calculated according to the rate stipulated by the cost quota, profits are calculated according to the planned profit rate stipulated by the government, and taxes are calculated according to the prescribed tax rate. 3. the current pricing method: the current project cost management model and fixed pricing method and the implementation of the project cost management model and list pricing method both coexist. That is: the unit valuation method (material unit price method) and the comprehensive unit price method (project quantity list pricing method) both coexist, forming a "two-track system" situation.

2, the basic basis of project pricing.

A construction project can be divided into several individual projects (the so-called individual projects refer to complete construction and installation products with independent significance and capable of exerting functional requirements); A single project can be subdivided into several unit projects (the so-called unit project refers to a project with independent design drawings and corresponding budget estimates, which can organize construction independently, but cannot independently form production capacity and exert use effect after completion); A unit project can be subdivided into several sub-projects (the division of the so-called sub-project is determined according to the professional nature and the construction site. Such as earthwork, foundation and foundation engineering, masonry engineering, ground engineering, decoration engineering, pipeline engineering, ventilation engineering, general equipment installation engineering, container engineering, automation instrument installation engineering, industrial furnace masonry engineering, etc.); Divisional engineering can be decomposed into sub-projects according to different construction methods and different specifications of different materials. And the order of a project pricing is: part of the project unit price-unit project cost-individual project cost-total cost of construction projects.

The so-called quantity unit price method refers to the unified consumption quota of the region issued by each construction administrative department or its authorized project cost management organization in the form of unit valuation table, which is determined according to the prescribed calculation method and the wage unit price, material budget price and machine-team unit price of the region, which belongs to the phenomenon of "quantity and price integration. Unit price of materials = labor cost, material cost, machinery cost (labor cost = ∑ (labor quota consumption × labor day unit price), material cost = ∑ (material quota consumption × material unit price), inspection and test cost, machine shift usage fee = ∑ (machine shift usage quota consumption × machine shift usage unit price) The so-called comprehensive unit price method refers to the labor cost, material cost, machine usage fee, management fee and profit required to complete a specified measurement unit item in the bill of quantities, consider the risk factors. The comprehensive unit price includes the full cost of completing the qualified product of the prescribed unit of measurement, taking into account the reality of our country, the comprehensive unit price includes all costs except fees and taxes.

3, China's provisions for project pricing.

China's "Interim Measures for the Settlement of Construction Project Price" stipulates that "the issuer, the contractor at the time of signing the contract for the project price of the agreement, can choose one of the following agreed methods: (1) fixed total price. For works with a shorter contract duration and a lower total contract price, a fixed total price contract may be used. (II) fixed unit price. The parties agree in the contract on the scope of risks included in the comprehensive unit price and the calculation method of risk costs, and the comprehensive unit price will not be adjusted within the agreed scope of risks. The method of adjusting the comprehensive unit price outside the scope of risk shall be agreed in the contract. (III) adjustable price. Adjustable price includes adjustable comprehensive unit price and measure fee, etc. Both parties shall agree on the adjustment method of comprehensive unit price and measure fee in the contract. The adjustment factors include: 1. Changes in laws, administrative regulations and relevant national policies affect the contract price; 2. Price adjustment by the project cost management organization; 3. Approved design changes; 4, the contractor changes the approved construction organization design (except for the correction of errors) resulting in increased costs; 5, other factors agreed by both parties.

In today's implementation of the project quantity list pricing model of the environment, more and more construction units use the project quantity list pricing method for engineering construction. China's Ministry of Construction also launched a new "Construction Engineering Volume List Pricing Standard" in 2008, which provides detailed provisions for the pricing method of this method.

2. the legal issues of the relevant agreements in the cost contract of construction projects.

1, on the total price package of death agreement.

In judicial practice, we often encounter agreements like this: "The price of this contract is guaranteed at one time without any adjustment. No adjustment will be made due to policy price adjustment during the construction process, market price adjustment of materials and equipment, etc". The first party of the project often hopes to fix the total cost of the project through similar agreements.

There are different understandings of the validity of the agreement. One view is that, in accordance with the principle of freedom of contract and the principle of compliance with the contract, the agreement of the parties to the contract should be respected and observed, and that the agreement is at the risk and should be valid. Another view was that the premise that the contract must be complied with was that the parties to the contract had sufficient knowledge and understanding of the basis of the contract at the time of its conclusion, in other words, there was no misunderstanding of the content of the contract. However, under the current bill of quantities pricing method, first of all, due to the differences between drawings and bill of quantities, the problem of inaccurate pricing occurs from time to time, and secondly, the change of construction drawings in construction practice is inevitable. Therefore, the premise that the project contract price can be wrapped up is that the content of the construction is completely consistent with the content reflected in the bill of quantities when the price is determined. We agree with this theory. In practice, due to the current situation of engineering management in our country, it is common to adjust the construction drawings after the bidding is completed (the contractor's quotation is completed), and the adjustment of the drawings often makes the cost change, sometimes a big change. All package prices will not be easily supported due to changes in the basis of contract formation.

In view of the above-mentioned disputes, it is common in the engineering contract as follows: "If the Contractor considers that the drawings and data provided by the Employer are incomplete, the Contractor shall raise objections to the Employer within a certain period of time after receiving the drawings, otherwise the Contractor shall not have the right to raise any objections to the engineering drawings. The drawings in the bidding process of the project are not in conformity with the bill of quantities, which shall be deemed to have been included in the contract price." The purpose of this agreement is obvious and is intended to prevent uneven quotations and to transfer the risk of discrepancies between the bill of quantities and the drawings to the contractor. But its effectiveness is equally problematic. 2008 3.1.2 of the "Construction Engineering Volume List Pricing Specification" clearly stipulates that "the use of engineering volume list bidding, the engineering volume list must be used as an integral part of the tender documents, its accuracy and perfection are the responsibility of the tenderer." And make it clear that this article is mandatory. Project construction bidding can be contracted in a variety of ways, but the use of bill of quantities tender projects, the bill of quantities must be part of the tender documents, the tenderer should be the bill of quantities together with the other contents of the tender documents issued (or sold) to bidders. The tenderee shall be responsible for the accuracy (quantity) and completeness (no missing items and missing items) of the bill of quantities prepared. The bidder shall make bid quotation according to the bill of quantities, and shall not have the obligation to verify the bill of quantities, let alone the right to modify and adjust. It is also stipulated in Article 4.1.9 that "for works priced by bill of quantities, the risk content and its scope (range) shall be specified in the tender documents or contracts, and the risk content and its scope (range) shall not be specified in unlimited risk, all risks or similar statements."

In the process of engineering construction, there are many risk factors affecting engineering construction and engineering cost. According to the characteristics of China's engineering construction, bidders should fully bear the risk is technical risk and management risk, such as management fees and profits, should be limited to bear the market risk, such as material prices, construction machinery use fees and other risks, should not bear the risk of changes in laws, regulations, rules and policies. Therefore, the author believes that the agreement can not transfer the effect of the calculation of the bill of quantities.

2, the project price change agreement.

The Interpretation on the Application of Legal Issues in the Trial of Construction Contract Disputes stipulates that "the parties have agreed on the pricing standard or pricing method of the construction project in accordance with the agreement to settle the price of the project. If the project quantity or quality standard of the construction project changes due to the design change, the parties concerned may refer to the pricing method or pricing standard issued by the local construction administrative department at the time of signing the construction contract. As can be seen from this sentence, the quota has become the basis for the change of price.

Reasons for 2.1 change of price

Regarding what is engineering change, according to the provisions of FIDIC (International Federation of Consulting Engineers), ICE (British Institute of Civil Engineers), JCT (British Joint Arbitration Committee for Contracts) and China's Construction Contract (Model Text) on engineering change, engineering changes generally include: changes in design drawings, schedule, construction conditions, process quantity, technical specifications, contract conditions, etc. In the construction process, the following situations can be regarded as engineering changes: ① the change of the number of any work content included in the contract; ② the change of the quality or other characteristics of any work content included in the contract; ③ the change of elevation, alignment, position and size of any part of the project; ④ the change of the agreed sequence or time arrangement of any part of the project; ⑤ Any additional work, materials or equipment required to carry out the engineering change.

2.2 Change Price Method Analysis

2.2.1 If the contract already has a price applicable to the change of the project, the contract price shall be changed according to the existing price of the contract. This situation is essentially due to the number of works in the bill of quantities is wrong or design changes caused by the increase or decrease of the amount of work, the most simple to deal. Because when the change project and content are directly applicable to the existing project in the contract, because the unit price and price of the project quantity in the contract are provided by the contractor at the time of bidding, it is easy to be accepted by the contractor, the contractor and the engineer, and it is fair from the contract. However, it should be noted that under the project quantity list pricing, the comprehensive unit price is used. Due to the management fee and profit sharing, the change of the project quantity will inevitably affect the unit price agreed in the contract. Therefore, when the increase or decrease of the engineering quantity is within the range agreed in the contract (for ancillary works), the original comprehensive unit price should be implemented. For projects beyond the range agreed in the contract (for additional projects), whether it is necessary to adjust the unit price agreed in the contract, on this issue, the existing cases have not put forward targeted demands for this. At present, a basic principle should be to follow the principle of free agreement, adjustments shall be made to the unit price change of the project caused by the change of the project.

2.2.2 If there is only a price similar to that of the modified project in the contract, the contract price may be changed by reference to the similar price. When the change project and the content are similar to the existing projects in the contract, the unit price and price of the bill of quantities of the existing projects in the contract can be used indirectly, that is, according to the bill of quantities, after conversion, or partially, that is, according to the project list, take a part of its price to use. According to the above two articles, the interpretation of the Supreme People's Court is that if the parties have an agreement on the pricing standard or pricing method of the construction project, the project price shall be settled in accordance with the agreement. If the contracting unit and the contracting unit agree on the project pricing standard or pricing method in the contract, they should first agree from it and fully respect the wishes of the parties.

2.2.3 If there is no price applicable to or similar to the change project in the contract, the Contractor shall propose an appropriate change price, which shall be implemented after confirmation by the Employer. When the two parties cannot reach an agreement, the opinion of the Supreme People's Court is to determine it based on the quota of the project site.

Analysis of legal issues involved in the settlement of 3. projects

For the settlement of the project, the dispute mainly comes from the following aspects: 1, the time of the project settlement. 2, the scope of the project settlement. 3, on the issue of the settlement of the submitted price.

1. Time of project settlement

The "Engineering Volume List Management Specification" stipulates that "after the completion of the project, the two parties shall handle the completion and settlement of the project within the time agreed in the contract." The Interim Measures for the Settlement of Construction Project Price stipulates that "after the completion of the project, both parties shall settle the completion of the project in accordance with the agreed contract price and the contents of the contract price adjustment and the claims." I do not know whether it is intentional or unintentional, the Ministry of Construction for the completion of the project settlement conditions in order to "project completion". With regard to the completion and completion of the project, a common understanding is that the completion of the project refers only to the completion of the project agreed in the contract by the contractor, while the completion of the project refers to the acceptance of the project. Therefore, the vagueness of this provision makes the completion acceptance of the project and the settlement of the project out of touch, making the contractor lose a powerful tool to restrict the contractor. The author has come into contact with many cases, all of which are caused by the unclear statement of the settlement time in the project contract and the lack of clear provisions in the law. In order to get the project payment as soon as possible, the general contractor often submits the settlement data to the employer before the project has been fully completed and accepted (the completion acceptance in practice requires a lot of procedures and requires the filing of the administrative department, which often takes a long time), while the employer refuses to pay the project payment because it thinks that its project has not yet been accepted and filed.

The most direct way to avoid the above-mentioned disputes is to settle the project in the contract of the project, and to be precise, to agree on the time for the contractor to effectively submit the project settlement information. It is expressly agreed that after the completion of the project and acceptance, the settlement payment of the project will be made.

2. Scope of project settlement

About the scope of the project settlement. The essence lies in whether the contracting parties can claim other costs in addition to the settlement value of the project, such as the breach of contract in the course of the performance of the construction project, compensation, etc.

Cases in practice show that many construction projects in the completion of the project settlement, the settlement value is determined, often to the other party to claim compensation in addition to the settlement value of the project, such as the loss suffered by the delay in performance. Article 11 of China's Interim Measures for the Settlement of Construction Project Prices stipulates that "after the completion of the project, both parties shall settle the completion of the project in accordance with the agreed contract price and the contents of the adjustment of the contract price and the claims." Another 2008 "Bill of Quantities Valuation Management Standard" stipulates that "the completion and settlement of the project shall be based on: 1. This specification; 2. The project price agreed in the contract; 3. Project completion data; 4. Quantities confirmed by both parties; 5. Both parties confirm the additional (reduced) project price; 6. Claims, on-site visa matters and prices confirmed by both parties; 7. Bidding documents; 8. Bidding documents; 9. Other basis. Based on the above provisions, it seems possible to conclude that the settlement of the construction price should include claims for the construction in the course of the performance of the construction contract. However, Article 14 of the Interim Measures for the Settlement of Construction Project Prices also provides for the settlement of the completion price of the project, the settlement of the claim price and the settlement of the construction price of sporadic projects outside the contract, and the juxtaposition of the above three settlements seems to indicate that the settlement of claims should be independent of the settlement of the completion of the project.

The author does not want to comment on the above differences, because the essence is still the question of whether the parties should pay or receive the amount in the course of the performance of the project contract. In view of this, in the settlement of the project need to remind the contracting parties is, must be in the project settlement book to the two sides according to the project involved in the amount of money constitutes a clear agreement. This is the point to avoid the final dispute.

3, on the issue of the price submitted for review.

The Interpretation on the Application of Legal Issues in the Trial of Disputes over Construction Contracts for Construction Projects clearly stipulates that "if the parties agree that the contractor will not reply within the agreed period after receiving the completion settlement documents and is deemed to have approved the completion settlement documents, it shall be handled in accordance with the agreement. If the contractor requests to settle the project price in accordance with the completion settlement documents, it shall be supported." This provision is called "subject to the submitted price" by the industry. After the promulgation of this provision, it immediately caused many lawsuits requiring settlement according to the submitted price. As a result, on April 25, 2006, the Supreme People's Court issued [2005] Minyi He Zi No. 23 "On whether the employer will not reply within the agreed time limit after receiving the contractor's completion settlement documents, whether it is regarded as a reply to approve the completion settlement documents". The view of the reply is: "The prerequisite for the application of Article 20 of the judicial interpretation is that the parties have agreed that the employer will not reply within the agreed time limit after receiving the completion settlement documents, shall be deemed to be an approved completion settlement document. The completion settlement documents submitted by the contractor can be used as the basis for the settlement of project funds. The provisions of Article 33, paragraph 3, of the general terms in the format text of the construction contract formulated by the Ministry of Construction cannot simply infer that both parties have the employer's failure to reply within a certain period of time after receiving the completion settlement documents, then it shall be deemed to approve the agreement of the completion settlement documents submitted by the contractor, and the completion settlement documents submitted by the contractor shall not be used as the basis for the settlement of project funds."

In practice, however, the problems are often more complex. For example, some contracts stipulate that the settlement of the project shall be subject to the Interim Measures for the Settlement of the Price of Construction Works. However, there is a clear provision in this provision that "after the contractor receives the completion settlement report and complete settlement information, if it fails to make any comments on the settlement report and information within the period stipulated in these Measures or the contract, it shall be deemed to be approved. If the contractor fails to provide complete project completion settlement information within the specified time, and fails to provide or does not give a clear reply within 14 days after being urged by the contractor, the contractor shall have the right to review according to the existing information, and the responsibility shall be borne by the contractor.", Therefore, the contractor also claimed to the contractor on this ground that the principle of submitting the price shall prevail. Based on the above understanding, our suggestion is to make a clear agreement on the delivery price in the contract. In the process of contract performance, the project settlement data submitted by the construction unit must be replied as soon as possible.