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Hi sir, for construction contracts, variations in the work should be included as part of contract revenue if
• it is probable that it will result in revenue
• the amount can be realiably measuredProbable that it will result in revenue could depend on whether the customer agrees to pay right sir ?
If the customer agrees to pay , then it is probable that it will result in revenue.
If the customer refuses to accept responsibility then it is not probable that it will result in revenue for the entity right sir ?
Penalties arising from delays caused by the contractor should reduce the contract revenue regardless whether the contractor agrees to it or not right sir ?
“Probable that it will result in revenue could depend on whether the customer agrees to pay right sir ?”
yes, and that depends on whose fault it was that caused the delay and / or whether the possibility of delay and its consequences were foreseen at the time the contract was drawn up
“If the customer refuses to accept responsibility then it is not probable that it will result in revenue for the entity right sir ?”
Not necessarily. I don’t believe that it’s a simple question of asking / hoping that the customer will accept responsibility
“Penalties arising from delays caused by the contractor should reduce the contract revenue regardless whether the contractor agrees to it or not”
I’m not convinced about this statement of yours. For one thing, English Courts don’t like the concept of ‘penalties’ in contracts
And, secondly, it’s more probable that these ‘penalties’ (if applied) will be treated separately as an expense rather than being treated as a reduction of revenue
OK?
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